GridAI Technologies (Nasdaq: GRDX) pivots to AI energy while warning on going concern
GridAI Technologies Corp. filed its annual report outlining a strategic shift into AI-focused energy orchestration software while retaining its Adrulipase drug program. The company acquired Grid AI Corp. and 75% of AMPX, rebranded from Entero Therapeutics, and now centers on software for AI data centers and legacy biopharma R&D.
Grid AI’s platforms are early stage with minimal revenue and no commercial deployment yet for its AI data center solution. Adrulipase remains the main drug asset but had no active trials in 2025. At December 31, 2025, cash was about $0.9 million against an accumulated deficit of roughly $208.8 million, and auditors raised substantial doubt about continuing as a going concern.
The company defaulted on an 18% revolving loan and is exploring strategic alternatives, including potential merger, sale, wind-down or bankruptcy, while also managing past and current Nasdaq listing compliance issues. Only two parent-level employees remain, underscoring the scale-back as GridAI pursues a high-risk turnaround around its AI energy orchestration platform.
Positive
- None.
Negative
- Severe going-concern risk: At December 31, 2025, cash was about $0.9 million with an accumulated deficit near $208.8 million, recurring losses, and explicit disclosure of substantial doubt about the ability to continue as a going concern.
- Debt default and constrained financing: The company is in default on a $2.0 million revolving note at 18% interest, faces a lender repayment demand, and must rely on highly dilutive or uncertain financing and strategic alternatives to continue operating.
- Execution risk on unproven businesses: The new AI energy orchestration platform has no commercial deployments and minimal revenue, while the remaining drug asset Adrulipase has mixed clinical results and stalled trials, leaving both sides of the business early stage and capital intensive.
Insights
GridAI faces severe liquidity stress, debt default, and going-concern risk.
GridAI ended December 31, 2025 with only $0.9 million of cash and an accumulated deficit of about $208.8 million. Management discloses recurring losses, negative operating cash flow, and states there is substantial doubt about the company’s ability to continue as a going concern.
The company defaulted on a $2.0 million revolving note bearing 18% interest, and the lender has demanded repayment. Management is evaluating highly consequential options such as merger, asset sales, liquidation, or seeking U.S. bankruptcy protection. Existing shareholders face high dilution risk from preferred stock, warrants, and any future financings.
Debt pressures, limited cash, and dependence on external funding mean execution of any turnaround depends on successfully raising new capital or restructuring obligations. Subsequent filings and creditor negotiations will be critical to understanding whether GridAI can stabilize its balance sheet and avoid more drastic outcomes.
GridAI is a high-risk pivot story, combining nascent energy software with a challenged drug asset.
The company transformed in 2025 by acquiring Grid AI Corp., shifting focus to software that orchestrates power for AI data centers and distributed energy resources. This platform is still in development, with no commercial deployments and only limited trial and consulting activity to date.
Legacy Adrulipase remains the principal biopharmaceutical program after other pipelines were divested or discontinued. Recent Phase 2 studies showed mixed efficacy, and no trials ran in 2025 as liquidity preservation took priority. Any renewed development will require fresh capital and careful regulatory planning.
The diversified model spans regulated energy markets and complex drug-approval pathways, both capital-intensive and execution-sensitive. With only two parent-level employees and recent board and management turnover, maintaining operational focus and governance stability will be challenging while the company reassesses strategy and funding options.
Key Figures
Key Terms
going concern financial
exocrine pancreatic insufficiency medical
virtual power plant technical
Series H Non-Voting Convertible Preferred Stock financial
reverse stock split financial
exempted orphan medicinal product regulatory
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of common stock held by non-affiliates of the registrant, based on the closing price of a share of the registrant’s common stock on June 30, 2025, which is the last business day of the registrant’s most recently completed second fiscal quarter, as reported by The Nasdaq Capital Market on such date, was approximately $
There were
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GRIDAI TECHNOLOGIES CORP
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
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PART I | 1 | |
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Item 1. | Business | 1 |
Item 1A. | Risk Factors | 20 |
Item 1B. | Unresolved Staff Comments | 56 |
Item 1C. | Cybersecurity | 56 |
Item 2. | Properties | 57 |
Item 3. | Legal Proceedings | 57 |
Item 4. | Mine Safety Disclosures | 57 |
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PART II | 58 | |
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 58 |
Item 6. | Reserved | 59 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 59 |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 69 |
Item 8. | Financial Statements and Supplementary Data | 69 |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 69 |
Item 9A. | Controls and Procedures | 71 |
Item 9B. | Other Information | 72 |
Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 72 |
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PART III | 73 | |
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Item 10. | Directors, Executive Officers and Corporate Governance | 73 |
Item 11. | Executive Compensation | 78 |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 82 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 87 |
Item 14. | Principal Accountant Fees and Services | 88 |
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PART IV | 89 | |
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Item 15. | Exhibits and Financial Statement Schedules | 89 |
Item 16. | Form 10-K Summary | 92 |
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Signatures | 93 | |
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Index to Consolidated Financial Statements | F-1 | |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, or this Annual Report, contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Annual Report other than statements of historical fact are forward-looking statements, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market opportunities or growth. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements.
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
These forward-looking statements include, among other things, statements regarding:
| ● | our ability to maintain compliance with the continued listing requirements of The Nasdaq Capital Market |
| ● | our ability to satisfy our existing payment obligations and other obligations as they become due |
| ● | the impact of geopolitical events, including the war in Ukraine and conflicts in the Middle East, on our operations, access to capital, supply chain, third-party relationships and broader market conditions |
| ● | the availability of capital to satisfy our working capital requirements |
| ● | our current and future capital requirements and our ability to raise additional funds to satisfy those requirements |
| ● | the impact of the completed rescission transaction involving our former IMGX subsidiary, including any retained or assumed liabilities and related accounting and operational effects |
| ● | the accuracy of our estimates regarding expenses, future revenue and capital requirements |
| ● | our ability to continue operating as a going concern |
| ● | our ability to operate, develop and expand the Grid AI and AMPX business |
| ● | our plans to preserve, develop or commercialize our retained legacy biopharmaceutical assets, including Adrulipase |
| ● | our ability to initiate, continue and complete clinical trials and other development activities for Adrulipase |
| ● | regulatory developments in the United States and foreign jurisdictions |
| ● | the performance of our third-party vendors, service providers, consultants, collaborators, contract research organizations, contract development and manufacturing organizations and other third parties with whom we conduct business |
| ● | our ability to obtain and maintain intellectual property protection for our core assets and technologies |
| ● | the size of the potential markets for our products, technologies and product candidates and our ability to serve those markets |
| ● | the rate and degree of market acceptance of our products, technologies and product candidates |
| ● | the success of competing products, technologies and product candidates developed or commercialized by others |
| ● | our ability to attract and retain key management, technical, operational, scientific and development personnel |
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| ● | other risks and uncertainties, including those described under Part I, Item 1A, “Risk Factors,” of this Annual Report. |
Factors that may cause actual results to differ materially from current expectations include, among other things, the risks and uncertainties described under Part I, Item 1A, “Risk Factors,” and elsewhere in this Annual Report. Any forward-looking statement in this Annual Report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, financial condition, industry and growth strategy. Given these uncertainties, you should not place undue reliance on these forward-looking statements as predictions of future events.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update or revise any forward-looking statements contained in this Annual Report to reflect new information, future events or circumstances, or otherwise.
This Annual Report also contains estimates, projections and other information concerning our industry, our business and the markets for certain products, technologies and product candidates, including data regarding estimated market size, projected growth rates and the prevalence of certain conditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from those reflected in such information. Unless otherwise expressly stated, we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources. We have not independently verified the data obtained from third-party sources, and in some cases we do not expressly identify the sources from which such data are derived.
In this Annual Report, unless otherwise stated or the context otherwise requires, references to “GridAI,” the “Company,” “we,” “us,” “our” and similar references are to GridAI Technologies Corp. and its subsidiaries on a consolidated basis. References to “FWB” refer to First Wave Bio, Inc., a wholly owned subsidiary of the Company. Reference to “Grid AI Corp.” refer to Grid AI Corp., a Nevada corporation and our wholly owned subsidiary. Reference to “AMPX” refer to AMPX UK Holdings, a Cayman Islands company of which Grid AI holds 75% ownership interest. References to “IMGX” refer to ImmunogenX, LLC (formerly ImmunogenX, Inc.), which was previously a wholly owned subsidiary of the Company and was disposed of on December 31, 2025 in connection with the rescission transaction.
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PART I
ITEM 1.BUSINESS
Overview
GridAI Technologies Corp., formerly known as Entero Therapeutics, Inc., is a diversified technology and life sciences company operating through two principal areas: (i) energy orchestration and grid optimization software solutions through our subsidiary Grid AI Corp. and (ii) legacy biopharmaceutical development activities centered on Adrulipase for the treatment of exocrine pancreatic insufficiency. Effective December 1, 2025, the Company changed its name from “Entero Therapeutics, Inc.” to “GridAI Technologies Corp.” and changed its Nasdaq trading symbol from “ENTO” to “GRDX.”
On September 30, 2025, the Company completed a share exchange transaction pursuant to which it acquired 100% of the outstanding equity interests of Grid AI Corp., a Nevada corporation. At the time of the acquisition, Grid AI Corp. owned 75% of the issued and outstanding equity interests of AMPX UK Holdings, a Cayman Islands company, which holds the operating subsidiary AMPX Limited. Following the transaction, Grid AI Corp. and its subsidiaries, including AMPX, became consolidated subsidiaries of the Company.
Grid AI Corp. develops software and services designed to accelerate power availability and optimize energy infrastructure for artificial intelligence (AI) data centers and other large energy users. Grid Ai Corp. is currently in the development stage of an AI data center platform. This platform aims to use and optimize distributed energy resources, including battery energy storage systems, on-site generation, and grid interconnections. Currently, there is no revenue generated from this AI data center platform. Grid Ai Corp.’s commercial pipeline has recently been re-established and is continuing to develop through consulting-led engagements and targeted business development initiatives.
For the year ended December 31, 2025, the Company’s consolidated financial statements include the post-acquisition results of Grid AI Corp. and AMPX beginning on September 30, 2025. Prior to the Grid AI Corp. acquisition, the Company operated primarily as a clinical-stage biopharmaceutical company focused on targeted, non-systemic therapies for gastrointestinal diseases. Non-systemic therapies are non-absorbable drugs that act locally, such as in the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation. In May 2024, the Company changed its name from First Wave BioPharma, Inc. to Entero Therapeutics, Inc.
The Company’s continuing legacy biopharmaceutical focus is Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in patients with exocrine pancreatic insufficiency, including patients with cystic fibrosis and chronic pancreatitis. The Company plans to continue development activities relating to Adrulipase. The Company’s former Latiglutenase and CypCel programs were part of the ImmunogenX business, which was disposed of on December 31, 2025 in connection with the rescission transaction described below. The Company has also discontinued its Capeserod and Niclosamide programs. The Company terminated its license agreement with Sanofi relating to Capeserod on February 26, 2025 and no further payments were due thereunder.
In March 2025, the Company entered into a rescission agreement with ImmunogenX, LLC, formerly a wholly owned subsidiary of the Company, and the former shareholders of ImmunogenX. Under the rescission transaction, the parties agreed to unwind the Company’s prior acquisition of ImmunogenX by rescinding the previously issued Common Stock and Series G Preferred Stock issued in the transaction, conveying the equity interests of ImmunogenX back to the former ImmunogenX shareholders, and canceling the assumed ImmunogenX options and warrants. The Company retained approximately $695,814 of ImmunogenX accounts payable, while ImmunogenX remained responsible for approximately $9.3 million of secured debt and certain other obligations. The rescission transaction closed on December 31, 2025. Following the closing, ImmunogenX ceased to be a subsidiary of the Company, and the Company no longer held any ownership interest in that business.
As a result, as of December 31, 2025, the Company’s operations consist of (i) its newly acquired subsidiary, Grid AI Corp., and (ii) its continuing Adrulipase development program, which is conducted through its wholly owned subsidiary, First Wave Bio, Inc., together with related corporate activities.
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Our Grid Optimization Software Solutions
Grid AI Corp. develops software and services designed to accelerate power availability and optimize energy infrastructure for artificial intelligence (AI) data centers and other large energy users. Grid Ai Corp. is currently in the development stage of an AI data center platform. This platform aims to use and optimize distributed energy resources, including battery energy storage systems, on-site generation, and grid interconnections. Currently, there is no revenue generated from this AI data center platform. Grid Ai Corp.’s commercial pipeline has recently been re-established and is continuing to develop through consulting-led engagements and targeted business development initiatives. Current discussions are primarily with battery energy storage system (BESS) providers and energy infrastructure participants, including companies such as Mango Power and Nomad Transportable Power Systems. While prior trial deployments, including in Australia, have not yet resulted in significant commercial revenue, these efforts have informed management’s strategy to focus on lower-friction, near-term opportunities that can be pursued with limited incremental cost. Market conditions vary significantly by geography, and the Company is prioritizing regions and use cases where its platform can be more readily adopted. Grid Ai Corp. does not have any major customers at the present time and in the future aims to primarily serve AI data center developers, hyperscalers (large-scale cloud service providers that operate extensive computing, storage, and networking infrastructure to support enterprise applications and AI workloads), and energy infrastructure developers in North America and Australia.
Notwithstanding the early-stage nature of commercialization, Grid AI Corp. continues to prioritize development of its data center energy orchestration platform, which remains its core strategic focus and is expected to serve as the foundation for future revenue generation.
Legacy Technologies
Prior to Grid AI Corp.’s acquisition of AMPX in February 2025, AMPX had developed and operated two principal technology platforms focused on residential and distributed energy management: DLS developed technology and ALICE Home Energy Management Systems (“HEMS”). While Grid Ai Corp. currently supports these technologies, there is very minimal revenue and Grid Ai Corp.’s current focus is on data centers. DLS (Dynamic Load Shaping) is Grid Ai Corp.’s front-of-meter optimization platform designed to manage and optimize large-scale distributed energy resources, such as utility-scale battery energy storage systems and solar arrays, by determining when to charge, hold, or discharge energy based on market and grid conditions. ALICE is Grid AI Corp.’s HEMS platform, which enables residential users to optimize energy usage across devices such as batteries, solar systems, and household appliances through data-driven orchestration.
While historical deployments and trial activity, including in Australia, have not yet resulted in significant commercial revenue, management believes these efforts have provided valuable operational insight and market feedback that inform Grid Ai Corp.’s current strategy. Grid Ai Corp. is actively evaluating lower-friction, near-term commercial opportunities related to these technologies, which may be pursued on a limited, low-cost basis as part of its broader development efforts.
Management has not assumed that all previously contemplated pipeline opportunities related to these legacy platforms will be realized; however, based on current market dynamics and increasing demand for energy optimization solutions, management believes it is reasonable that certain opportunities, including those that may be delayed, could be achieved. Accordingly, management continues to monitor the commercial viability of these platforms and incorporate such assessments into its broader strategic planning and impairment analyses.
Strategic Pivot and Operational Restructuring
Following its acquisition of AMPX, Grid AI Corp. assessed the commercial viability of the above platform offerings, in particular the potential for ALICE. This assessment was informed through discussions with potential customers, investors active in the sector (including venture capital and private equity firms), and executives of adjacent companies and competitors, as well as feedback from trial deployments. Based on this outreach and market feedback, Grid AI Corp.’s management determined that, while customers recognized the technical capabilities of the platform, many were unwilling to replace existing deployed systems that were viewed as sufficiently effective. The Company, together with Grid AI Corp., is currently re-evaluating these opportunities across different geographic markets, including the United States, United Kingdom, and Australia, where market conditions, customer needs, and adoption dynamics may differ from prior deployments.
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Following the above assessment, Grid AI Corp.’s management initiated a strategic pivot in 2025:
This pivot represents a significant shift in both market focus and technological architecture.
AI Data Center Developed Technology
Following Grid AI Corp’s acquisition of AMPX in February 2025, Grid AI Corp. commenced development of a new technology platform focused on AI-optimized energy orchestration for large-scale data center campuses.
Grid AI Corp. plans to generate revenue from its AI data center platform through:
| ● | Base platform fees for operational visibility and orchestration |
| ● | Performance-based fees tied to power cost optimization |
The platform is designed to deliver AI-optimized infrastructure by integrating data center operations with advanced energy systems. Core functionality includes data integration across site-level assets (including engines, battery systems, substations, and building systems), real-time monitoring through a centralized “single pane of glass” dashboard, historical data access, and reporting capabilities.
The platform also incorporates a proprietary digital twin model of each site, enabling simulation of energy usage, asset behavior, and grid interactions under various scenarios. This is supported by forecasting models for load, generation, and market conditions, which inform optimization decisions.
Based on Grid AI Corp. management’s experience to date, including discussions with data center operators, energy infrastructure participants, and industry consultants, the Company has not identified a direct competitor offering an equivalent fully integrated solution combining data center orchestration and energy optimization at scale; however, Gris Ai Corp. operates in a broader competitive landscape that includes partial or adjacent solutions.
In addition, the platform includes a co-optimization engine that participates in energy markets (including day-ahead, real-time, and reserve markets, where applicable) while prioritizing uninterrupted data center operations. An orchestration control layer ensures that energy assets operate in accordance with both market commitments and the operational requirements of the data center.
Target customers include enterprise and government entities operating large data center campuses.
Based on current projections:
| ● | A majority of Gris AI Corp.’s projected 2026 revenues are expected to be derived from the AI data center technology. |
| ● | The contribution from this platform is expected to increase substantially in subsequent years. |
Gris Ai Corp. markets its legacy technologies and intends to pursue commercial deployment of its AI data center platform through direct sales and strategic partnerships with energy developers, system integrators, engineering firms, and other industry participants. Gris Ai Corp. has commenced early-stage development activities related to its data center orchestration platform in connection with a potential future deployment at a customer site. As of the date of this Current Report on Form 8-K, the platform has not yet been commercially deployed. Initial development and integration activities are ongoing, and any future commercial deployment will depend on the progress of customer projects, including construction and operational readiness milestones, as well as the availability of customer funding.
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Sources and Availability of Raw Materials
Grid AI Corp.’s business is primarily software-based and does not rely on raw materials. Customer deployments may depend on third-party equipment and services, including battery systems, generation assets, and grid infrastructure.
Dependence on Major Customers
Grid AI Corp. is in an early stage of commercialization and expects that a limited number of customers may account for a significant portion of revenue in the near term. Amp Z, which is a related party (see Note 16 within financial statements), is a current customer with whom Grid AI Corp. has been engaged in ongoing collaboration since October 1, 2025; however, as of the date of this report, the parties remain under a letter of intent and have not yet finalized a definitive commercial agreement. Grid AI Corp. has not generated material revenue from Amp Z to date. Accordingly, Grid AI Corp. does not have any major customers at the present time.
Patents, Trademarks, and Agreements
Grid AI Corp. relies on proprietary software, trade secrets, trademarks, and contractual protections. Grid AI Corp. does not currently rely on material labor agreements.
Government Approvals
Grid AI Corp.’s software platform itself generally does not require direct government approvals to operate. However, its solutions are deployed within regulated energy markets and are therefore indirectly subject to a range of federal, state, and local regulatory requirements.
Customer deployments may require regulatory approvals, permits, interconnection agreements, and market participation approvals, which are typically obtained by customers, utilities, or project partners. These approvals may relate to grid interconnection, participation in wholesale electricity markets, local permitting, and compliance with applicable energy regulations.
Grid AI Corp.’s platform is designed to operate within complex and evolving regulatory frameworks, including those governing distributed energy resources, virtual power plants, and wholesale market participation. Changes in laws, regulations, market rules, or regulatory interpretations could impact the ability of customers to deploy Grid AI Corp.’ solutions, participate in energy markets, or realize the expected economic benefits of the platform.
In addition, Grid AI Corp. relies on integrations with third-party systems and market operators, including utilities, grid operators, and energy market platforms, which are themselves subject to regulatory oversight. Delays in obtaining required approvals, changes in regulatory requirements, or limitations imposed by regulators or market operators could adversely affect Grid AI Corp.’s business, operating results, and financial condition.
Effect of Government Regulation
Grid AI Corp. operates in regulated energy markets. Regulatory changes affecting energy storage, distributed energy resources, interconnection, or energy markets could impact its business.
Environmental Compliance
Grid AI Corp.’s operations are primarily software-based and are not expected to incur material environmental compliance costs. Customer projects may be subject to environmental regulations that could affect project timing.
Our Legacy Biopharmaceutical Activities
As of December 31, 2025, our legacy biopharmaceutical activities are centered on Adrulipase, our recombinant lipase enzyme program for the treatment of exocrine pancreatic insufficiency, or EPI. We are no longer developing the Latiglutenase, CypCel, Capeserod or Niclosamide programs. Following the closing of the rescission transaction involving ImmunogenX, LLC on December 31, 2025, the Latiglutenase and CypCel programs are no longer part of our business. We also terminated our license agreement with Sanofi relating to Capeserod in February 2025, and we are no longer actively pursuing Niclosamide.
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Our Adrulipase program is focused on the development of an oral, non-systemic biologic therapy for the treatment of EPI in patients with cystic fibrosis, or CF, and chronic pancreatitis, or CP. Our goal is to provide CF and CP patients with a therapy to control EPI that is non-animal derived and offers the potential to dramatically reduce their daily pill burden. CP, the most common cause of EPI, is a long-standing inflammation of the pancreas that alters its normal structure and functions. In the U.S., its prevalence rate is 42 cases per 100,000 inhabitants, resulting in approximately 132,000 cases. Approximately 60% of patients affected with CP display EPI, resulting in approximately 90,000 patients requiring substitution therapy in the U.S. In Western societies, CP is caused by chronic alcoholic consumption in approximately 55-80% of cases. Other relatively frequent etiologies include the genetic form of the disease that is inherited as an autosomal dominant condition with variable penetrance, pancreatic trauma and idiopathic causes.
CF, another dominant etiology of EPI, is a severe genetic disease associated with chronic morbidity and life-span decrease of most affected individuals. In most Caucasian populations, CF prevalence is of 7-8 cases per 100,000 inhabitants, but is less common in other populations, resulting in more than 30,000 affected individuals in the U.S. and more than 70,000 affected individuals worldwide. CF is inherited as monogenic autosomal recessive disease due to the defect at a single gene locus that encodes the Cystic Fibrosis Transmembrane Regulator protein, or CFTR, a regulated chloride channel. Mutation of both alleles of this chloride channel gene results in the production of thick mucus, which causes a multisystem disease of the upper and lower respiratory tracts, digestive system, and the reproductive tract. The progressive destruction of the pancreas results in EPI that is responsible for malnutrition and contributes to significant morbidity and mortality. About 80-90% of patients with CF develop EPI, resulting in approximately 25,000-27,000 patients in the U.S. that require substitution therapy.
In July 2023, we announced topline results from our Phase 2b pilot monotherapy bridging study using a new enteric microgranule formulation of Adrulipase. Although the primary efficacy endpoint was not achieved, we believe that this may be on account of issues with quality control and clinical approach related to the study. Data from the study indicated that the enhanced Adrulipase formulation was well tolerated and demonstrated an improvement over prior formulations of Adrulipase, and there was an improvement in the CFA to therapeutic levels in cystic fibrosis patients with exocrine pancreatic insufficiency. We plan to have a meeting with the FDA to discuss the next steps in this regard. We are currently evaluating next steps for the Adrulipase program, including potential future clinical development, subject to available capital.
Adrulipase
Adrulipase is the active pharmaceutical ingredient derived from Yarrowia lipolytica, an aerobic yeast naturally found in various foods such as cheese and olive oil that is widely used as a biocatalyst in several industrial processes. Adrulipase is a secreted lipase naturally produced by Yarrowia lipolytica, known as LIP2, that we are developing through recombinant DNA technology for the treatment of EPI associated with CF and CP. Lipases are enzymes that help with the digestion of lipids and fats.
We previously held the exclusive right to commercialize Adrulipase in the United States, Canada, South America (excluding Brazil), Asia (excluding China, Hong Kong, and Japan), Australia, New Zealand and Israel pursuant to a sublicense from Laboratories Mayoly Spindler SAS, or Mayoly, under the Joint Research and Development Agreement, or JDLA, which also granted us joint commercialization rights for Brazil, Italy, China and Japan. In March 2019, we purchased all rights, title and interest in and to Adrulipase from Mayoly pursuant to the Mayoly Asset Purchase Agreement, or APA, although Mayoly retained exclusive commercial rights in France and Russia.
Background
The pancreas is both an endocrine gland that produces important hormones, including insulin, glucagon and pancreatic polypeptide, and a digestive organ that secretes pancreatic juice containing digestive enzymes that assist with nutrient absorption and digestion in the small intestine.
The targeted indication for Adrulipase is the treatment of EPI, which occurs when the exocrine functions of the pancreas are reduced to below approximately 10% of normal. The symptoms of EPI are driven primarily by pancreatic lipase deficiency, which results in impaired digestion of fats and other nutrients. Lipid maldigestion due to lipase deficiency can lead to weight loss, steatorrhea, greasy diarrhea and fat-soluble vitamin deficiencies.
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CP is one of the principal causes of EPI. CF is another major etiology of EPI and is a severe genetic disease associated with chronic morbidity and reduced life expectancy. A substantial percentage of CF patients develop EPI and require enzyme substitution therapy.
Current treatments for EPI in CP and CF rely primarily on porcine pancreatic enzyme replacement therapies, or PERTs. Although PERTs are a long-established standard of care, they have limitations, including high pill burden, formulation challenges, variability associated with animal-derived sourcing and limited effectiveness in certain patients. Adrulipase is intended to address EPI using a recombinant, non-porcine lipase approach. Management believes that this non-animal derived profile remains a meaningful differentiating feature of the program.
Pre-Clinical Program
The efficacy of Adrulipase has been investigated in normal minipigs, which are generally considered a relevant model for digestive drug development because of physiological similarities to humans and their omnivorous diet. Experimental pancreatitis was induced by pancreatic duct ligation, resulting in severe EPI with baseline coefficient of fat absorption, or CFA, around 60% post-ligature. CFA is a measurement obtained by quantifying the amount of fat ingested orally over a defined time period and subtracting the amount eliminated in stool to estimate the amount absorbed by the body.
At doses ranging from 10.5 mg to 211 mg, Adrulipase increased CFA by approximately 25% to 29% compared to baseline, while lower doses showed more limited activity. Similar efficacy was observed in pigs receiving enteric-coated porcine pancreatic extract. These findings demonstrated in vivo activity of Adrulipase in a relevant model.
Two non-clinical toxicology studies have been conducted to date. Based on those studies, Adrulipase appeared to be well tolerated at clinically relevant dose levels in both rodent and non-rodent species.
Clinical Program
We have historically evaluated Adrulipase for two principal therapeutic settings: (i) children and adults affected by CF and (ii) adult patients with CP. In recent periods, our primary focus has been on the CF-related EPI opportunity.
Chronic Pancreatitis
During 2010 and 2011, a Phase 1/2a clinical trial of Adrulipase was conducted in conjunction with Mayoly at a single center in France. The study was primarily designed to investigate safety in 12 patients with CP or pancreatectomy and severe EPI. Adrulipase was generally well tolerated, with no serious adverse events reported. Although efficacy findings were limited and not statistically significant, the study was not designed to demonstrate statistically significant changes in CFA or steatorrhea.
We later received regulatory approvals in Australia, New Zealand and France to conduct a Phase 2 multi-center dose escalation study of Adrulipase in CP and pancreatectomy patients. In September 2018, we announced that, in pre-planned analyses, both the study’s primary and secondary endpoints were achieved, including a statistically significant improvement in CFA in a per-protocol analysis at the highest evaluated dose.
Cystic Fibrosis Monotherapy
In October 2018, the FDA cleared our IND application for Adrulipase in patients with EPI due to CF. We then initiated the Phase 2 OPTION Bridging Dose Study to investigate the safety, tolerability and efficacy of Adrulipase in CF patients with EPI compared against standard PERT therapy.
In September 2019, we announced positive results from the OPTION Bridging Dose Study. Although the study was not powered for statistical significance, the data showed meaningful signs of activity, including CFAs in a portion of patients that approached levels required for non-inferiority with standard PERTs. The coefficient of nitrogen absorption, or CNA, was also comparable between Adrulipase and PERT arms, which management considered important because it suggested protease supplementation might not be required with Adrulipase treatment.
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The subsequent OPTION 2 Trial was designed to investigate the safety, tolerability and efficacy of Adrulipase in enteric capsules, at two dose levels, compared head-to-head against PERT. In March 2021, we announced topline OPTION 2 data. The trial demonstrated that Adrulipase was safe and well tolerated and that prior clinical work had shown evidence of drug activity. However, OPTION 2 did not consistently meet the primary efficacy endpoint. Some patients achieved CFA levels supportive of non-inferiority to PERT, but the overall efficacy results were uneven. Management believed that the enteric capsule formulation likely contributed to these results because the formulation appeared to dissolve too slowly in the small intestine to release the lipase in time to optimize digestion.
In response, we began development of a new enteric microgranule formulation of Adrulipase, designed to provide improved delivery characteristics. Following FDA review of the applicable IND amendment, we initiated a Phase 2b pilot monotherapy study during 2023 and received topline data in the third quarter of 2023. Although the primary efficacy endpoint was not achieved, the data indicated that the enhanced Adrulipase formulation was safe, well tolerated and improved over prior formulations. Management’s later internal assessment concluded that the program’s scientific rationale remained intact, although the path forward became narrower and more execution-dependent following these results.
As of December 31, 2025, Adrulipase remained our principal retained biopharmaceutical program. No clinical trials were conducted during 2025 as the Company focused on preserving liquidity and restructuring operations. Management has continued to evaluate potential next steps for the program, including future regulatory dialogue and clinical-development options. However, the timing and scope of any further development will depend on available capital, strategic priorities and additional assessment of the clinical and commercial path forward.
Combination Therapy
We also evaluated Adrulipase in combination with PERT in CF patients suffering from severe EPI who continued to experience fat malabsorption symptoms despite taking the maximum daily dose of PERTs. The Combination Trial was designed to investigate escalating doses of Adrulipase used together with a stable dose of PERTs in order to improve CFA and relieve abdominal symptoms.
We previously announced positive interim and topline data from this study indicating clinically meaningful improvements in CFA and other secondary measures, including stool characteristics and weight-related observations. Based on these results and later internal review, management believes that the most credible remaining value proposition for Adrulipase may include an adjunct-therapy or treatment-burden reduction thesis, rather than solely a full monotherapy replacement strategy. While no assurance can be given that this approach will ultimately succeed, management believes the available data support the conclusion that Adrulipase retained a plausible development pathway as of December 31, 2025.
Recent Developments
Nasdaq Listing and Compliance Matters
On April 22, 2026, the Company received a notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to timely file its Annual Report on Form 10-K for the period ended December 31, 2025. The Notice provides that the Company has 60 calendar days to submit a plan to regain compliance. If Nasdaq accepts the Company’s plan, Nasdaq may grant an exception of up to 180 calendar days from the filing’s due date, or until October 12, 2026, for the Company to regain compliance.
The Company intends to submit a plan to regain compliance within the required timeframe; however, there can be no assurance that Nasdaq will accept the Company’s plan or that the Company will be able to regain compliance within any extension period that may be granted.
During 2025, we were subject to multiple Nasdaq compliance matters.
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Annual Meeting Requirement
On January 7, 2025, we received notice from Nasdaq that we were not in compliance with Nasdaq Listing Rule 5620(a) because we had not held an annual meeting of stockholders in 2024 within the required time period. We submitted a compliance plan, and Nasdaq granted us an extension until June 30, 2025 to regain compliance. Following the filing of our proxy statement on June 4, 2025 and the holding of our annual meeting of stockholders on June 30, 2025, Nasdaq notified us on July 3, 2025 that this matter was closed.
Minimum Bid Price Requirement
On September 6, 2024, we received notice from Nasdaq that we were not in compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). On March 6, 2025, Nasdaq granted us an additional 180-day compliance period, or until September 1, 2025, to regain compliance. During 2025, we effected a 1-for-3 reverse stock split, which became effective on August 18, 2025. On September 3, 2025, Nasdaq notified us that, because the closing bid price of our Common Stock had been at least $1.00 per share for 10 consecutive business days from August 18, 2025 through September 2, 2025, we had regained compliance with Listing Rule 5550(a)(2), and this matter was closed.
Minimum Stockholders’ Equity Requirement
On April 11, 2025, Nasdaq notified us that we were not in compliance with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1), based on stockholders’ deficit of $(3,876,738) as reported in our Annual Report on Form 10-K for the year ended December 31, 2024. Nasdaq also noted that, as of April 10, 2025, we did not satisfy the alternative continued-listing standards based on market value of listed securities or net income from continuing operations. We submitted a compliance plan, and on June 25, 2025 Nasdaq granted us an extension until October 8, 2025 to regain compliance, subject to specified terms. On October 28, 2025, Nasdaq notified us that, based on our Form 8-K dated October 6, 2025, it had determined that we complied with Listing Rule 5550(b)(1). Nasdaq also stated that if we failed to evidence compliance upon filing our next periodic report, we could again be subject to delisting.
GridAI Transaction and Nasdaq Change of Control Determination
On November 5, 2025, Nasdaq notified us that our proposed transaction with GridAI Corp. constituted a business combination resulting in a “Change of Control” under Nasdaq Listing Rule 5110(a). Nasdaq stated that the post-transaction entity would be required to satisfy all of Nasdaq’s initial listing criteria and complete Nasdaq’s initial listing process, including payment of applicable fees, prior to shareholder approval for the second step of the transaction. Nasdaq further stated that if shareholder approval were obtained for the second step and the post-transaction company failed to qualify for listing or timely complete the initial listing process, Nasdaq would issue a Staff Delisting Determination and commence delisting proceedings. As of the date of this Annual Report, the Company has not received a Staff Delisting Determination from Nasdaq in connection with the transaction and continues to be listed on the Nasdaq Capital Market.
Acquisition of GridAI Corp. and Corporate Rebranding
On September 30, 2025, we completed a share exchange transaction pursuant to which we acquired 100% of the outstanding equity interests of Grid AI Corp. In the transaction, we issued 424,348 shares of our Common Stock and 38,801.546 shares of our Series H Non-Voting Convertible Preferred Stock to the sellers of Grid AI Corp. At the time of closing, Grid AI Corp. owned 75% of the outstanding equity interests of AMPX, which holds the operating subsidiary AMPX Limited. Following the acquisition, Grid AI Corp. and its subsidiaries became consolidated subsidiaries of the Company.
Effective December 1, 2025, we changed our corporate name from Entero Therapeutics, Inc. to GridAI Technologies Corp. and changed our Nasdaq trading symbol from “ENTO” to “GRDX.”
Management and Governance Changes
During the fourth quarter of 2025, we experienced significant management and board changes in connection with the transition of the Company following the Grid AI Corp. acquisition. Effective in December 2025, Jason Sawyer became our Chief Executive Officer.
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Also during December 2025, certain directors resigned, including one resignation accompanied by stated disagreements regarding governance, diligence and disclosure matters, as disclosed in our Current Report on Form 8-K filed with the SEC on December 4, 2025.
Corporate History
We were incorporated on January 30, 2014 in the State of Delaware under the name AzurRx BioPharma, Inc. In May 2014, we entered into a stock purchase agreement with Protea Biosciences Group, Inc. and its wholly owned subsidiary, Protea Biosciences, Inc., to acquire 100% of the outstanding capital stock of AzurRx SAS, formerly ProteaBio Europe SAS, a wholly owned subsidiary of Protea Biosciences, Inc. The acquisition was completed in June 2014. In October 2016, we completed our initial public offering and listed our Common Stock on the Nasdaq Capital Market.
On September 13, 2021, we completed the acquisition of First Wave Bio, Inc., which became our wholly owned subsidiary. In connection with that acquisition, AzurRx BioPharma, Inc. changed its name to First Wave BioPharma, Inc.
Effective October 26, 2022, our AzurRx SAS subsidiary was dissolved.
On March 13, 2024, we completed our merger with ImmunogenX, Inc. Following the merger, ImmunogenX became part of our corporate structure through ImmunogenX, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company. In May 2024, we changed our name from First Wave BioPharma, Inc. to Entero Therapeutics, Inc.
On March 24, 2025, we entered into a Rescission Agreement with ImmunogenX, LLC and the former shareholders of ImmunogenX, Inc. The rescission transaction was completed on December 31, 2025. Following the closing of that transaction, ImmunogenX, LLC ceased to be a subsidiary of the Company, and we no longer held any ownership interest in that business.
On September 30, 2025, we completed a share exchange transaction pursuant to which we acquired 100% of the outstanding equity interests of Grid AI Corp., a Nevada corporation. At the time of the acquisition, Grid AI Corp. owned 75% of the issued and outstanding equity interests of AMPX, which holds the operating subsidiary AMPX Limited. Following the transaction, GridAI Corp. and its subsidiaries became consolidated subsidiaries of the Company.
Effective December 1, 2025, we changed our corporate name from Entero Therapeutics, Inc. to GridAI Technologies Corp. In connection with this name change, our Nasdaq trading symbol changed from “ENTO” to “GRDX.”
Intellectual Property
Our goal is to obtain, maintain and enforce intellectual property protection for our technologies, product candidates, formulations, processes, methods, software, trade names and other proprietary assets, preserve our trade secrets, and operate without infringing the proprietary rights of third parties in the United States and foreign jurisdictions. Our policy is to seek, where appropriate, the broadest intellectual property protection reasonably available for our current and future technologies through a combination of patents, trade secrets, know-how protection, confidentiality and invention-assignment agreements, trademarks, copyrights and contractual arrangements. However, patent protection may not provide complete protection against competitors that seek to design around or otherwise circumvent our patents, and our proprietary rights may not always provide us with meaningful competitive advantages.
We also depend on the skills, knowledge, experience and know-how of our management, engineering, research and development personnel, as well as our advisors, consultants and contractors. To help protect proprietary know-how that may not be patentable, or for inventions that may be difficult to enforce through patents alone, we rely on trade secret protection and confidentiality arrangements. We require our employees, consultants, advisors and other contractors to enter into confidentiality agreements that prohibit the unauthorized disclosure of confidential information and, where applicable, require disclosure and assignment to us of ideas, developments, discoveries and inventions important to our business.
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As of December 31, 2025, our principal retained legacy life sciences intellectual property relates to Adrulipase. We are no longer actively developing the Latiglutenase, CypCel, Capeserod or Niclosamide programs, and following the completion of the rescission transaction involving ImmunogenX, LLC on December 31, 2025, the Latiglutenase and CypCel intellectual property is no longer part of our business. We also terminated the Sanofi license relating to Capeserod in 2025 and are no longer actively pursuing the Niclosamide program.
Adrulipase
The Adrulipase program is protected by a patent portfolio that we originally licensed under the Mayoly arrangements and subsequently acquired.
This portfolio includes the PCT/FR2006/001352 patent family, including European Patent EP2035556 and U.S. Patents 8,334,130 and 8,834,867, entitled “Method for producing lipase, transformed Yarrowia lipolytica cell capable of producing said lipase and their uses.” These patents describe a method for producing Yarrowia lipolytica acid-resistant recombinant lipase using a culture medium without products of animal origin or non-characterized mixtures such as tryptone, peptone or lactoserum, as well as related uses. The European patents expire on June 15, 2026, U.S. Patent 8,334,130 expires on September 11, 2028, and U.S. Patent 8,834,867 expires on July 17, 2026.
In addition, an international PCT application directed to our proprietary Adrulipase formulation was filed in 2021 and was subsequently filed in the United States and certain foreign jurisdictions. Any patents issuing from these filings are expected to expire in 2041.
Additional international PCT applications were filed in 2022 and nationalized in certain jurisdictions outside the United States relating to stable lipase formulations and methods of treatment. Any patents issuing from these filings are expected to expire in 2042. These applications are not pending in the United States.
An additional PCT international application directed to Adrulipase formulations was filed in 2023. Any patents issuing from this filing are expected to expire in 2043.
We also believe Adrulipase may be eligible, if approved and if the applicable statutory requirements are met, for regulatory exclusivity, including potential biologic exclusivity in the United States and data exclusivity in certain foreign jurisdictions. The availability, scope and duration of any such exclusivity would depend on the final regulatory pathway, product classification, approved indication and applicable law at the time of approval.
Grid AI and AMPX
Following our acquisition of Grid AI Corp. on September 30, 2025, our intellectual property portfolio also includes proprietary software, trade secrets, trademarks, and contractual protections associated with the Grid AI Corp. and AMPX energy orchestration platform. In our acquisition accounting, we recognized identifiable intangible assets that included developed technology and trade name rights associated with the acquired business. We believe the principal protectable value of this business resides in developed software, algorithms, platform architecture, implementation know-how, copyrights, trade secrets, brands and contractual rights.
We seek to protect the Grid AI Corp. and AMPX business through a combination of proprietary software ownership, trade secret protection, confidentiality and invention-assignment agreements, copyrights, trade names and contractual arrangements with employees, contractors, customers and partners.
Grid AI Corp. and AMPX offerings depend in part on integration with third-party systems, data feeds, devices, utilities, market operators and software interfaces. As a result, the practical protection and commercial utility of this part of our intellectual property portfolio depends not only on code ownership and trade secret protection, but also on maintaining contractual rights, technical interoperability and commercially reasonable access to relevant third-party ecosystems. If those relationships are disrupted, modified on unfavorable terms or replaced by proprietary ecosystems we cannot access, portions of our services, functionality or market position could be adversely affected.
We may also use open-source software components in portions of our technology stack. Use of open-source software can impose obligations that could require us to make source code available, limit certain licensing strategies, or expose us to cybersecurity
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and compliance risks. We maintain policies and procedures intended to manage such use, but we cannot assure compliance under all circumstances.
Discontinued and Divested Legacy Programs
Prior to the completion of the rescission transaction involving ImmunogenX, our business included the Latiglutenase and CypCel programs, and prior to 2025 we also held intellectual property relating to Niclosamide-based development programs and licensed rights relating to Capeserod. As of December 31, 2025, those programs are no longer part of our active development portfolio, and, in the case of ImmunogenX, are no longer part of our business. Accordingly, we do not view those intellectual property assets as part of our principal continuing operating platform.
Manufacturing
We do not currently operate our own manufacturing facilities. Instead, we rely on a combination of contract development and manufacturing organizations (“CDMOs”), third-party component suppliers and technology partners to support our product development and platform deployment activities. We expect to continue to rely on third-party manufacturers, software infrastructure providers and integration partners for the foreseeable future.
Adrulipase
Historically, the Adrulipase active pharmaceutical ingredient (“API”), including both drug substance and drug product, has been manufactured by Asymchem, Inc. at a contract manufacturing facility located in Tianjin, China. Charles River Laboratories, based in Malvern, Pennsylvania, has been responsible for maintaining our master and working cell banks used in the Adrulipase manufacturing process.
As of December 31, 2025, no active clinical trials of Adrulipase were being conducted. We believe that multiple contract manufacturers may be capable of producing Adrulipase drug substance and drug product for future clinical development if the program is advanced. We anticipate that, if the program is advanced, manufacturing activities would not commence until later in 2026. However, biopharmaceutical manufacturing processes can be complex, and there can be no assurance that manufacturing processes can be readily reproduced or transferred to alternative manufacturers without additional development work, validation activities or regulatory review.
Grid AI Corp. and AMPX Platform
Following our acquisition of Grid AI Corp., our manufacturing and deployment activities also include the production, integration and installation of energy orchestration systems associated with the AMPX platform.
The AMPX platform is primarily a software-driven energy orchestration and control system that integrates with third-party energy infrastructure, including distributed energy resources, electric vehicle charging systems, batteries, HVAC systems, water heaters, solar systems and other connected devices. As a result, our business model relies significantly on software deployment, system integration and third-party hardware ecosystems rather than traditional manufacturing.
Where hardware components are required for deployment, including control devices, gateways, communications modules or integration hardware, these components are generally sourced from third-party suppliers and integrated into our platform environment. Our operations depend on the availability, quality and performance of these third-party hardware and software components, as well as the reliability of communications networks and cloud infrastructure used to operate the platform.
Because our energy orchestration services depend on integration with devices, utilities, aggregators and market operators, we rely on a network of integration partners, installers, device manufacturers and software providers to support the deployment and operation of the AMPX platform. Disruptions in the supply of compatible devices, integration partners or cloud infrastructure could adversely affect the deployment, scalability or performance of our platform.
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Competition
Grid AI Corp. operates in a competitive and rapidly evolving market that includes energy management software providers, virtual power plant (“VPP”) platforms, battery system integrators, utilities, engineering firms, and in-house customer-developed solutions. Grid AI Corp. also competes with emerging technology providers focused on distributed energy resource optimization and artificial intelligence-driven grid management.
Competition is driven by several factors, including software functionality, scalability, interoperability with third-party hardware and market platforms, speed of deployment, regulatory expertise, customer relationships, and pricing. The Company’s solutions must integrate with a wide range of third-party systems, including batteries, control systems, and energy market infrastructure, which are often not standardized and may change over time.
The markets in which Grid AI Corp. operates are highly competitive and include both established industry participants with significant financial, technical, and commercial resources, as well as new entrants seeking to capitalize on the growth of distributed energy and AI-driven energy optimization. Some competitors offer vertically integrated solutions, including hardware, software, and energy services, while others provide point solutions that compete with specific components of Grid AI Corp.’s platform.
Grid AI Corp.’s ability to compete successfully depends on its ability to continue to innovate, expand its platform capabilities, maintain reliable system performance, and effectively execute its go-to-market strategy. Grid AI Corp. also competes based on its ability to convert pilot programs and non-binding arrangements into long-term commercial contracts, scale deployments across multiple jurisdictions, and adapt to evolving regulatory frameworks and market rules.
In addition, customers may elect to develop in-house energy management systems or partner with alternative providers, which may reduce demand for the Company’s solutions. As a result, Grid AI Corp. may face pricing pressure, longer sales cycles, and increased customer acquisition costs. If Grid AI Corp. is unable to compete effectively, it may lose market share, which could adversely affect its business, operating results, and financial condition.
Adrulipase
With respect to Adrulipase, if approved, we would compete with pancreatic enzyme replacement therapies (“PERTs”), which represent the current standard of care for the treatment of exocrine pancreatic insufficiency (“EPI”). The PERT market is dominated by a small number of established pharmaceutical products marketed by larger companies, including:
| ● | CREON® marketed by AbbVie Inc. |
| ● | ZENPEP® marketed by Nestlé Health Science |
| ● | PANCREAZE® marketed by VIVUS, Inc. |
| ● | PERTZYE® marketed by Chiesi Farmaceutici S.p.A. |
Several PERT products have been approved by the U.S. Food and Drug Administration for sale in the United States and have been used in clinical practice for many years.
If Adrulipase were successfully developed and approved, we believe competition in this market would depend on several factors, including the ability to demonstrate clinical efficacy and safety relative to existing therapies, regulatory approval, pricing and reimbursement considerations and acceptance by physicians, patients and healthcare payors.
Adrulipase differs from currently available PERT therapies in that it is designed as a recombinant, non-animal derived enzyme. As a result, the product may potentially address certain limitations associated with porcine-derived pancreatic enzyme therapies, including pill burden and sourcing considerations. However, we cannot assure that Adrulipase will ultimately demonstrate advantages over existing therapies or achieve regulatory approval or commercial adoption.
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Government Regulation and Product Approval
Our businesses are subject to extensive regulation in the United States and in foreign jurisdictions. Following our acquisition of Grid AI Corp. on September 30, 2025, our regulatory environment now includes both (i) pharmaceutical and biotechnology regulation applicable to our legacy Adrulipase program and related life sciences activities and (ii) regulatory, compliance, privacy, cybersecurity, contractual and market-participation requirements applicable to our Grid AI Corp. and AMPX energy orchestration platform. Failure to comply with applicable laws and regulations could result in delays, penalties, contractual claims, restrictions on operations, loss of market access or other adverse consequences.
Energy Technology, Software and Grid Services Regulation
Our GridAI business operates in a regulatory environment that includes federal, state and local energy market rules, data privacy and cybersecurity requirements, and contractual and interconnection standards applicable to distributed energy resources and grid-connected systems. Our legacy AmpX energy orchestration platform enables participation in wholesale and retail electricity markets and is subject to oversight by entities such as the Federal Energy Regulatory Commission, regional transmission organizations and independent system operators, as well as applicable state public utility commissions.
Participation in these markets requires compliance with market rules governing bidding, dispatch, settlement, telemetry, and performance obligations. In addition, our platform and operations are subject to interconnection requirements, utility tariffs, and, where applicable, certification or registration requirements for market participants or service providers.
Our business is also subject to evolving data privacy, cybersecurity and critical infrastructure protection standards, including requirements related to the protection of customer data and grid reliability. These may include compliance with applicable standards established by NERC (the North American Electric Reliability Corporation), as well as federal and state data protection laws.
Failure to comply with applicable regulatory, market or contractual requirements could result in financial penalties, limitations on market participation, termination of customer or utility agreements, or other adverse operational impacts. The regulatory framework governing distributed energy resources, virtual power plants and grid orchestration technologies is rapidly evolving, and changes in laws, regulations or market rules could impact our business model, costs and growth opportunities.
Biopharmaceutical Regulation
Government authorities in the United States, at the federal, state and local levels, and in other countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and import and export of pharmaceutical and biologic products such as Adrulipase. To date, our internal legacy research and development efforts have historically involved activities in Europe and North America, and we expect that any future clinical development of Adrulipase, if pursued, would likely involve the United States and potentially Europe, subject to available capital, strategic priorities and regulatory alignment.
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations, and regulates biologics under the FDCA, the Public Health Service Act, or PHSA, and their implementing regulations. FDA approval is required before any new unapproved drug or biologic may be marketed in the United States. Pharmaceutical and biologic products are also subject to other federal, state and local statutes and regulations. If we fail to comply with applicable FDA or other requirements at any point during development, testing, review, approval or after approval, we may become subject to administrative or judicial sanctions, including warning letters, license suspension or revocation, product recalls, seizures, injunctions, fines, civil penalties or criminal prosecution.
The process required by the FDA before a product candidate may be marketed in the United States generally involves:
| ● | completion of preclinical laboratory studies, animal studies and other supporting data, generally in accordance with good laboratory practice, or GLP, requirements |
| ● | submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin |
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| ● | approval by an independent institutional review board, or IRB, or ethics committee for each clinical site before a clinical trial may begin |
| ● | performance of adequate and well-controlled human clinical trials to establish safety and efficacy, or, in the case of a biologic, safety, purity and potency, for each proposed indication |
| ● | preparation and submission to the FDA of a marketing application, generally a new drug application, or NDA, or biologics license application, or BLA |
| ● | FDA acceptance of the NDA or BLA for filing and substantive review |
| ● | satisfactory completion of FDA inspections of manufacturing facilities and, where applicable, clinical sites |
| ● | FDA review and approval of the NDA or BLA prior to any commercial marketing or sale in the United States. |
An IND is a request for authorization from the FDA to administer an investigational product to humans. It includes, among other things, the proposed clinical protocol or protocols, toxicology and pharmacology data, chemistry, manufacturing and controls information and any available prior human data. Unless the FDA raises concerns within 30 days after receipt, the IND becomes effective and clinical trials may begin. However, the FDA may impose a clinical hold at any time if it identifies safety, scientific, manufacturing or other concerns.
Clinical Trials
Clinical trials involve the administration of an investigational product to human subjects under the supervision of qualified investigators in accordance with good clinical practice, or GCP, requirements. These include the requirement that all subjects provide informed consent before participating in a study. Clinical trials must be conducted under protocols that describe the study objectives, design, methodology, statistical considerations and other requirements. Protocols and protocol amendments are submitted to the FDA as part of the IND, and IRB approval must be obtained for each site before enrollment begins.
Clinical development generally proceeds through Phase 1, Phase 2 and Phase 3 studies, although these phases may overlap or be combined in some cases. The FDA may also require or request post-approval, or Phase 4, studies.
As of December 31, 2025, we were not conducting active clinical trials for Adrulipase. Any future advancement of Adrulipase would require additional funding, updated clinical and regulatory planning and continued compliance with applicable FDA and other regulatory requirements. There can be no assurance that we will resume development of Adrulipase on any particular timetable or at all.
Chemistry, Manufacturing and Controls
Companies seeking FDA approval must also provide information regarding the composition, manufacture, stability and quality controls of a product candidate. The manufacturing process must be capable of consistently producing product in accordance with current good manufacturing practice, or cGMP, requirements. Sponsors must develop and validate methods for testing identity, strength, quality, potency and purity and must demonstrate acceptable stability over the proposed shelf life.
Before approving an NDA or BLA, the FDA typically inspects the facility or facilities where the product is manufactured. FDA approval may be withheld if the manufacturing processes or facilities are not in compliance with cGMP or are otherwise deemed inadequate.
FDA Review of NDA or BLA
Once an NDA or BLA is submitted, the FDA conducts a preliminary review to determine whether the application is sufficiently complete for substantive review. The FDA may issue an approval letter or a complete response letter. A complete response letter indicates that the review is complete but the application is not ready for approval in its present form. Such a letter may require additional clinical data, manufacturing information, inspections, analyses or other information, and it can result in significant delays and added
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expense. Even if additional information is submitted, the FDA may still determine that the application does not satisfy the standards for approval.
The FDA may also require a risk evaluation and mitigation strategy, or REMS, post-marketing studies, labeling changes, additional controls or other conditions of approval. If compliance with regulatory requirements is not maintained after approval, the FDA may impose restrictions, require recalls, suspend or withdraw approval or pursue other enforcement action.
Expedited Programs and Exclusivity
The FDA maintains programs designed to facilitate or expedite the development and review of products intended to treat serious or life-threatening diseases or conditions and to address unmet medical needs. These include fast track designation, breakthrough therapy designation, accelerated approval, priority review and, for qualifying products, regenerative medicine advanced therapy, or RMAT, designation.
Even if a product is eligible for one or more expedited programs, the FDA may later determine that the product no longer qualifies for such program or that expedited review does not shorten the development or review process in practice.
Adrulipase may also, if approved and if applicable legal requirements are satisfied, potentially benefit from regulatory exclusivity, including orphan drug exclusivity or biologic exclusivity. However, the scope, availability and duration of any such exclusivity would depend on the approved product, indication, application pathway and applicable law at the time of approval.
Post-Approval Requirements
Any approved pharmaceutical or biologic product would remain subject to continuing FDA and other regulatory oversight, including requirements for adverse event reporting, manufacturing controls, labeling, advertising and promotion, recordkeeping, periodic reporting, sampling and distribution. Manufacturing establishments are also subject to periodic inspections. Later discovery of previously unknown problems, adverse events, manufacturing deficiencies or other regulatory noncompliance could result in restrictions on the product or the manufacturer, labeling changes, additional post-marketing requirements, recalls, fines, warning letters, withdrawal of approval or other enforcement action.
The FDA also strictly regulates promotion. Promotional claims may generally be made only for approved indications and in a manner consistent with approved labeling. Improper promotion of off-label uses may subject a company to significant liability.
Other Healthcare Laws and Compliance Requirements
Our legacy life sciences business is also subject to healthcare fraud and abuse laws, false claims laws, privacy and security laws, physician payment transparency laws and similar requirements in the United States and abroad. These may include, among others, the federal Anti-Kickback Statute, the federal False Claims Act, HIPAA, state data privacy laws and state or federal sunshine laws. Violations may result in civil or criminal penalties, damages, fines, exclusion from government healthcare programs, integrity obligations and reputational harm.
Coverage and Reimbursement
Sales of any pharmaceutical or biologic product, if approved, depend in part on the extent to which such product is covered by third-party payors, including federal and state healthcare programs, private insurers and managed care organizations, and the level of reimbursement available for the product. Coverage and reimbursement decisions are made on a payor-by-payor basis, and many payors are seeking to control costs by reducing reimbursement levels, narrowing formularies or imposing other utilization controls. Legislative and regulatory changes affecting pricing, rebates and reimbursement may also adversely affect the commercial opportunity for any approved product.
Healthcare Reform and Other Legislative Changes
The healthcare industry is subject to continuing legislative and regulatory change. U.S. federal and state governments and foreign governments continue to adopt and consider measures intended to reduce healthcare costs, increase pricing transparency, expand the use of generics and biosimilars and otherwise affect the pricing, reimbursement and commercialization of pharmaceuticals. Such
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changes could reduce the commercial potential of any pharmaceutical product we may successfully develop and obtain approval for in the future.
Foreign Corrupt Practices Act and Similar Laws
Our business activities may be subject to the U.S. Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery and anti-corruption laws in other jurisdictions. The FCPA generally prohibits offering, promising, giving or authorizing anything of value, directly or indirectly, to a foreign official for the purpose of obtaining or retaining business or securing an improper advantage. It also requires public companies to maintain accurate books and records and adequate internal accounting controls. Because our operations may involve interactions with foreign officials, public utilities, public healthcare systems, customs authorities and other governmental actors, any failure by us or our agents, contractors, suppliers, collaborators or business partners to comply with these laws could result in substantial penalties and other adverse consequences.
Energy Technology, Grid Services and Data Regulation
Following our acquisition of Grid AI Corp., our business is also subject to legal and regulatory requirements applicable to software-enabled energy orchestration, distributed energy resources, virtual power plant participation, demand response activity, data handling, cybersecurity and interactions with utilities, market operators, aggregators and device ecosystems.
Our Grid AI and AMPX operations may be affected by, among other things:
| ● | utility rules and tariffs |
| ● | grid interconnection and market participation requirements |
| ● | regulations applicable to aggregators, distributed energy resources, demand response and ancillary services participation |
| ● | electrical, communications, device integration and installation standards |
| ● | software, cloud, cybersecurity and critical infrastructure requirements |
| ● | data privacy, data security and consumer protection laws |
| ● | commercial contracting requirements with utilities, retailers, partners and customers |
| ● | export controls, sanctions and anti-corruption laws where international operations or counterparties are involved. |
In addition, because our platform may integrate with third-party devices, data feeds, utility systems, cloud infrastructure and market systems, our ability to deploy and scale offerings may depend on continued access to such systems and compliance with contractual and technical requirements imposed by third parties. Regulatory changes affecting demand response, virtual power plants, distributed energy resources, energy market participation, data access, interoperability or cybersecurity may materially affect our business model, implementation costs and growth prospects.
We may also be subject to laws and regulations relating to the collection, processing, use, storage, sharing and protection of customer, consumer, employee, device and operational data. These may include U.S. state privacy laws, international privacy laws and industry cybersecurity expectations. Any failure to comply with these requirements, or any data breach, cybersecurity incident or service disruption, could result in liability, contractual claims, reputational damage, loss of customers, increased compliance costs or regulatory scrutiny.
Because portions of the Grid AI and AMPX business may involve participation in regulated utility or grid-adjacent environments, future growth may depend on evolving regulatory frameworks, market rules, incentive programs and utility procurement models. We cannot predict the extent to which changes in these frameworks will create opportunities or impose burdens on our operations.
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European Union Drug Development
In the European Union and the wider European Economic Area, or EEA, medicinal products may be marketed only after obtaining a marketing authorisation from the competent authorities. The EEA currently consists of the 27 European Union Member States plus Iceland, Liechtenstein and Norway. A centralised marketing authorisation granted by the European Commission is valid throughout the European Union and the EEA.
As in the United States, the preclinical, clinical, manufacturing and post-approval phases of medicinal product development in Europe are subject to extensive regulation. Clinical trials in the European Union are governed by Regulation (EU) No 536/2014, commonly referred to as the Clinical Trials Regulation, or CTR, which entered into application on January 31, 2022. The CTR replaced the prior Clinical Trials Directive regime and was intended to harmonise and streamline the submission, review, supervision and transparency of clinical trials across the European Union through a common portal and database known as the Clinical Trials Information System, or CTIS.
Clinical trials in the European Union must be conducted in accordance with the CTR, applicable national requirements and international standards for good clinical practice, or GCP. Sponsors must submit clinical trial applications through CTIS, and the regulatory and ethics review process is coordinated under the CTR framework. Trial sponsors are also subject to obligations relating to safety reporting, protocol amendments, trial transparency and public disclosure of results.
European Union Drug Review and Approval
In the EEA, medicinal products may be authorised through either the centralised procedure or national and multi-country procedures, depending on the product and applicable eligibility rules. Under the centralised procedure, a single marketing authorisation application is submitted to the European Medicines Agency, or EMA, and, if approved, the European Commission grants a single marketing authorisation valid across the European Union and the EEA.
The centralised procedure is mandatory for certain categories of medicines, including orphan medicinal products and certain biotechnology-derived medicines, and is optional for certain other innovative products that satisfy the relevant eligibility criteria. Because Adrulipase is a recombinant biologic candidate and may also potentially qualify for orphan designation depending on indication and development strategy, any future European regulatory pathway for Adrulipase would likely require or strongly favor evaluation under the centralised procedure. However, the ultimate pathway would depend on the product profile, indication, legal classification and regulatory advice at the time of any application.
Before granting a marketing authorisation, the EMA and the competent authorities evaluate the quality, safety and efficacy of the medicinal product and assess whether the benefit-risk balance is favorable.
Paediatric Requirements
Under the EU Paediatric Regulation, applications for marketing authorisation for new medicines generally must include either the results of studies performed in accordance with an agreed paediatric investigation plan, or PIP, or a decision granting a waiver or deferral. The EMA reviews compliance with the agreed PIP as part of the validation and review process. For patented products, successful completion of an agreed PIP may make the product eligible for a six-month extension of the supplementary protection certificate, if any. For orphan medicinal products, compliance with the paediatric requirements may result in a two-year extension of orphan market exclusivity. The EU also provides for a paediatric-use marketing authorisation, or PUMA, for certain products developed exclusively for use in children.
Orphan Drugs
In the European Union, a product may be designated as an orphan medicinal product if it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition, the prevalence of the condition is not more than five in 10,000 persons in the European Union or the expected return would be insufficient to justify the investment, and no satisfactory method exists or the product would provide significant benefit over existing methods. Applications for orphan designation must be submitted before filing the marketing authorisation application.
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The European Union offers incentives to encourage the development of orphan medicines, including fee reductions, protocol assistance and market exclusivity. Once an orphan medicinal product is authorised, it is generally entitled to ten years of market exclusivity in the European Union for the approved orphan indication. This exclusivity may be extended by two additional years if the applicable paediatric requirements are satisfied. Under certain circumstances, however, a similar product may still be authorised, including with the consent of the original holder, if the original holder cannot supply sufficient quantities, or if the later product is shown to be clinically superior.
Post-Approval Controls
The holder of a European marketing authorisation must comply with ongoing requirements relating to manufacturing, pharmacovigilance, labeling, promotion, quality systems and post-authorisation commitments. The marketing authorisation holder must maintain an appropriate pharmacovigilance system and appoint a qualified person for pharmacovigilance, or QPPV, in the European Union. Marketing authorisations for new products generally must also include a risk management plan, or RMP, and regulators may impose post-authorisation safety studies, periodic safety reporting and other risk-minimisation measures.
Advertising and promotion of medicinal products in Europe must be consistent with the approved product information. Off-label promotion is prohibited, and direct-to-consumer advertising of prescription medicines is generally prohibited in the European Union. Specific advertising and promotional rules are also implemented at the Member State level and may differ by country.
Reimbursement
In the European Union, pricing and reimbursement are determined at the national level, not centrally by the EMA or the European Commission. Member States may restrict the products for which their healthcare systems provide reimbursement and may impose price controls or other cost-containment measures. As a result, even if a medicinal product receives a marketing authorisation, there can be no assurance that it will receive favorable pricing or reimbursement in any particular country. Historically, prices for medicinal products in Europe have often been lower than in the United States, and reimbursement negotiations can be lengthy and uncertain.
Other European Regulatory Matters
French Regulatory Framework for Clinical Development
In France, clinical development activities involving medicinal products are governed by the applicable provisions of Regulation (EU) No. 536/2014 on clinical trials on medicinal products for human use, together with the French Public Health Code and related national implementing measures. France also maintains national rules applicable to other categories of research involving human participants that fall outside the scope of Regulation (EU) No. 536/2014.
For clinical trials of medicinal products conducted in France under the European Union Clinical Trials Regulation, sponsors are generally required to submit applications through the Clinical Trials Information System, or CTIS, with regulatory review coordinated under the European framework and with French participation by the Agence nationale de sécurité du médicament et des produits de santé, or ANSM, and the applicable ethics committee, known as a Comité de protection des personnes, or CPP. Clinical trials must be conducted in accordance with applicable European Union law, French law and good clinical practice requirements.
Where a commercially sponsored interventional study is conducted at a French hospital, health center or similar site, the sponsor and the institution are generally required to enter into the applicable form of clinical trial agreement, commonly referred to as a convention unique, using the model required under French law. France has updated the model form over time, including more recent ministerial orders replacing earlier templates.
The processing of personal data in connection with clinical research in France is subject to the General Data Protection Regulation, or GDPR, together with French data protection law and guidance of the Commission Nationale de l’Informatique et des Libertés, or CNIL. Depending on the nature of the study and the data processing involved, sponsors and investigators may rely on CNIL reference methodologies, including MR-001 for certain health research involving consent, or may need to complete other formalities where the project falls outside the scope of an applicable reference methodology.
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France also imposes transparency, anti-benefit and anti-corruption requirements on companies operating in the health products sector. Companies manufacturing or marketing health products in France are subject to disclosure obligations regarding certain agreements, fees and benefits provided to healthcare professionals and certain other stakeholders, as well as restrictions on prohibited advantages and gifts. Violations may result in significant financial and other penalties under French law. These requirements are sometimes referred to as the French transparency or French sunshine rules and the anti-gift regime.
As a result, any future clinical development activities we may conduct in France, including any future development activity relating to Adrulipase, would be subject not only to European Union clinical trial regulation, but also to French requirements relating to site agreements, investigator and institution interactions, personal data protection, transparency reporting and anti-benefit restrictions.
Environmental Matters
Our operations, properties, technologies and services are subject to a variety of U.S. and foreign environmental, health and safety laws and regulations. These may include laws and regulations governing, among other things, air emissions, wastewater discharges, storage, handling, transport and disposal of hazardous and non-hazardous materials and waste, electronic equipment, batteries, workplace health and safety, site contamination and remediation of releases of hazardous substances.
Historically, our legacy life sciences activities have involved limited direct manufacturing operations, and we have relied on third-party manufacturers, laboratories and contractors for most research, development and manufacturing-related activities. Following our acquisition of Grid AI Corp., our business also includes software-enabled energy orchestration and related deployment activities involving distributed energy resource systems and integration with third-party energy infrastructure, including batteries, electric vehicle charging systems, HVAC systems, water heaters, solar systems and other connected devices. Although we generally do not own or operate large-scale industrial manufacturing facilities, our activities may involve environmental, permitting, storage, transportation, installation, e-waste and site-management considerations through our partners, contractors, suppliers, installers, customers and project environments.
We believe, based on information currently available to us, that we are in material compliance with environmental laws and regulations applicable to our business. However, our failure, or the failure of our contractors, suppliers, installation partners, manufacturers or site operators, to comply with existing or future environmental, health and safety requirements could result in substantial costs or liabilities. These may include cleanup costs, fines, penalties, property damage claims, personal injury claims, costs to redesign products or deployment configurations, costs to replace suppliers or contractors, business interruption, legal expenses or restrictions on operations. In addition, contamination, releases of hazardous materials, improper disposal of waste, battery-related incidents, electrical faults or other environmental events at third-party facilities, customer sites or project locations could adversely affect our business, financial condition and results of operations.
Employees
As of December 31, 2025, we had 2 full-time employees at the parent company level. In addition, we rely on consultants, contractors and employees of our subsidiaries and affiliated entities to support our operations, including software development, engineering, finance, regulatory, administrative and other functions. None of our employees are represented by a labor union, and we consider our employee relations to be good.
Available Information
As a public company, we are required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information, including amendments to those reports, with the Securities and Exchange Commission, or SEC. The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our SEC filings are available to the public at the SEC’s website at www.sec.gov.
Our Internet address is https://grid-ai.com. Information contained on our website is not incorporated by reference into and does not constitute part of this Annual Report. Our SEC filings, including any amendments, will be made available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
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ITEM 1A.RISK FACTORS
We are subject to numerous risks and uncertainties that could materially adversely affect our business, financial condition, results of operations and the value of our securities. The risks described below are not the only risks we face. Additional risks and uncertainties not presently known to us, or that we currently consider immaterial, may also materially adversely affect us. If any of the following risks occur, our business, financial condition, results of operations and prospects could be materially harmed, and the trading price of our Common Stock could decline, potentially causing investors to lose all or part of their investment.
Summary of Risk Factors
An investment in our securities involves a high degree of risk. The principal risks relating to our business and securities include the following:
| ● | Our current dependency on external funding for our operations raises a substantial doubt about our ability to continue as a going concern. |
| ● | Our level of indebtedness and our ability to make payments on or service our indebtedness could adversely affect our business, financial condition, results of operations, cash flow and liquidity. |
| ● | We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed and on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product candidate development programs, testing efforts or other operations. |
| ● | Additional offerings in the future may dilute then existing stockholders’ percentage ownership of our Company. |
| ● | We experienced significant board and management turnover during the fourth quarter of 2025, and instability in governance and leadership could adversely affect our business. |
| ● | We are a clinical stage biopharmaceutical company and have a limited operating history upon which to base an investment decision. |
| ● | We will face intense competition and may not be able to compete successfully. |
| ● | We may incur substantial product liability or indemnification claims relating to the use of our product candidates. |
| ● | We may use biological materials and may use hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time consuming or costly. |
| ● | We will need to grow the size of our organization, and we may experience difficulties in managing this growth. |
| ● | Disruptions in the global economy and supply chains may have a material adverse effect on our business, financial condition and results of operations. |
| ● | Adverse global conditions, including economic uncertainty, may negatively impact our financial results. |
| ● | Significant disruptions of information technology systems or breaches of data security could materially adversely affect our business, results of operations and financial condition. |
| ● | Requirements associated with being a public company will increase our costs significantly and will divert significant company resources and management attention. |
| ● | We operate as a clinical stage biopharmaceutical company with relation to our retained biopharmaceutical assets but have a limited operating history upon which to base an investment decision. |
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| ● | Our product candidates are at an early stage of development and may not be successfully developed or commercialized. |
| ● | Any product candidates we advance into and through clinical development are subject to extensive regulation, which can be costly and time consuming, cause unanticipated delays or prevent the receipt of the required approvals to commercialize our product candidates. |
| ● | If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. |
| ● | Because the results of preclinical studies and early clinical trials are not necessarily predictive of future results, any product candidate we advance into clinical trials may not have favorable results in later clinical trials, if any, or receive regulatory approval. |
| ● | Any product candidate we advance into and through clinical trials may cause unacceptable adverse events or have other properties that may delay or prevent their regulatory approval, limit the commercial profile of the approved labeling, or result in significant negative consequences following marketing approval, if any. |
| ● | Delays in the commencement or completion of our clinical trials could result in increased costs and delay our ability to pursue regulatory approval and commercialization of our product candidates. |
| ● | We may be required to suspend, repeat or terminate our clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the trials are not well designed. |
| ● | The approval processes of regulatory authorities are lengthy, time consuming, expensive and inherently unpredictable. |
| ● | If we are unable to execute our sales and marketing strategy for our products and are unable to gain market acceptance, we may be unable to generate sufficient revenue to sustain our business. |
| ● | We are an early-stage operating company in our GridAI business with a limited operating history, and our ability to execute our business plan depends on successful customer deployments, integration with third-party systems, and scaling of our platform and personnel. |
| ● | Our near-term revenue from our GridAI business may depend on a limited number of customers, projects, or counterparties, and the loss, delay, or failure to convert pilot programs or letters of intent into long-term commercial agreements could materially adversely affect our financial condition and results of operations. |
| ● | Our GridAI platform depends on interoperability with third-party hardware, software, and energy market systems, and disruptions or limitations in such third-party systems could impair our ability to deliver services. |
| ● | Our GridAI platform relies on data inputs, forecasting models, and optimization algorithms that may be subject to error or incomplete information, and actual performance may differ from expected results, which could adversely affect customer relationships and our reputation. |
| ● | The markets in which our GridAI business operates are highly competitive, and we face competition from established energy, software, and industrial companies with greater resources, which could adversely affect our ability to grow and maintain market share. |
| ● | Our GridAI business operates in complex and evolving regulatory environments, including energy markets and infrastructure regulations, and changes in such regulations could adversely affect our business and the value of our solutions. |
| ● | Our ability to successfully commercialize our GridAI platform depends on continued adoption of artificial intelligence and energy optimization technologies, which are rapidly evolving and inherently uncertain. |
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| ● | We may require additional capital to fund the development and growth of our GridAI business, and there can be no assurance that such capital will be available on acceptable terms, or at all. |
| ● | Any failure of our information technology systems or those of third parties, or any cybersecurity incident, could materially adversely affect our GridAI operations, customer relationships, and reputation. |
| ● | If we accept digital assets, including stablecoins, as consideration in our transactions, we may be subject to volatility, regulatory uncertainty and accounting complexity, which could adversely affect our financial results and operations. |
Risks Related to Our Business, Financial Position and Capital Requirements
Our current dependency on external funding for our operations raises a substantial doubt about our ability to continue as a going concern. If we do not continue as a going concern, investors could lose their entire investment.
The accompanying consolidated financial statements have been prepared as if we will continue as a going concern. We have incurred significant operating losses and negative cash flows from operations since inception. On December 31, 2025, we had cash and cash equivalents of approximately $0.9 million, and an accumulated deficit of approximately $208.8 million. We have incurred recurring losses, have experienced recurring negative operating cash flows, and require significant cash resources to execute our business plans. Based on cash on hand at December 31, 2025 and the available loan proceeds and assuming successful financing efforts, which we cannot guarantee, we anticipate having sufficient cash to fund planned operations for the next several months. Historically, our major sources of cash have been comprised of proceeds from various public and private offerings of its capital stock. Although our business changed significantly during 2025 through the acquisition of Grid AI Corp. and the completion of the ImmunogenX rescission transaction, we are dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute our development plans and continue operations.
We have been, and are expected to continue, exploring various potential strategies available including but not limited to raising capital, restructuring our indebtedness and identifying and evaluating potential strategic alternatives but there can be no assurance that these efforts will be successful, that the Company will be able to raise necessary capital on acceptable terms, reach agreement with lenders, or that the strategic review process will result in the Company pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. We are evaluating all potential strategic options, including a merger, reverse merger, sale, wind-down, liquidation and dissolution or other strategic transaction. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stakeholder value or that it will make any cash distributions to stockholders. Any failure in these efforts could force us to delay, limit or terminate operations, make reductions in our workforce, discontinue research and development programs, liquidate all or a portion of assets or pursue other strategic alternatives, and/or seek protection under the provisions of the U.S. Bankruptcy Code.
Without adequate working capital, we may not be able to meet our obligations and continue as a going concern. These conditions raise substantial doubt about our ability to continue as a going concern one year from the date these financial statements are issued. If the Company is not able to obtain necessary capital, we may be required to terminate operations, liquidate all or a portion of assets and/or seek bankruptcy protection. As a result, we have concluded that our plans at this stage do not alleviate substantial doubt about the ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our level of indebtedness and our ability to make payments on or service our indebtedness could adversely affect our business, financial condition, results of operations, cash flow and liquidity.
Effective January 31, 2025, we entered into the Revolving Loan Agreement. Pursuant to and under the terms of the Revolving Loan Agreement, we issued to the Lender a revolving note dated January 27, 2025 in the principal amount of $2,000,000. Out of the principal amount, the Lender disbursed an initial loan amount of $550,000 to the Company on January 31, 2025.
The Revolving Note bears interest at the rate of 18% per annum calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on January 31, 2025 until paid in full. The outstanding principal balance, all accrued and unpaid interest and all other amounts, costs, expenses and/or liquidated damages are due in full on January 31, 2026. The Revolving Loan Agreement contains customary events of default. As of April 1, 2026, the Company was in default under the
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Revolving Loan Agreement as a result of its failure to repay amounts due at maturity, and the lender has issued a demand for repayment of the outstanding amounts.
If we are not able to repay or refinance our debt as it becomes due, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional debt or equity on terms that may be onerous or highly dilutive, if we can obtain it at all. If we raise equity through the issuance of preferred stock, the terms of the preferred stock may give the holders rights, preferences and privileges senior to those of holders of our Common Stock, particularly in the event of liquidation. Our ability to arrange financing or refinancing will depend on, among other factors, our financial position and performance, as well as prevailing market conditions and other factors beyond our control. We cannot assure you that we will be able to obtain financing or refinancing on terms acceptable to us or at all.
If funds are not available when needed, or available on acceptable terms, we may be required to delay, scale back or eliminate some of our obligations. In addition, we may not be able to grow market share, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, which could negatively impact our business, operating results and financial condition.
We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed and on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product candidate development programs, testing efforts or other operations, including.
We expect our expenses to increase in connection with our ongoing activities, including with connection to the operating of Grid AI Corp. and AMPX. We also expect to incur significant expenses related to the development, testing, and manufacturing of our product candidates. We cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our products. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any potential future commercialization efforts.
We have based our estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our operating plans and other demands on our cash resources may change as a result of many factors, including costs required to advance Adrulipase, the pace of commercialization and development of the Grid AI Corp. and AMPX platform, as well as factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other capital sources, including potentially government funding, collaborations, licenses and other similar arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Attempting to secure additional financing may divert our management from its day-to-day activities, which may adversely affect our ability to develop our product candidates.
Our future capital requirements will depend on many factors, including:
| ● | the costs and timing of manufacturing for our product candidates; |
| ● | the costs associated with hiring additional personnel and consultants as our research and development activities increase; |
| ● | operating and integrating the Grid AI Corp. and AMPX business and |
| ● | the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements. |
Additional offerings in the future may dilute then existing stockholders’ percentage ownership of our Company.
Given our plans and expectations that we will need additional capital, in the near future we may need to issue additional Common Stock or securities convertible or exercisable for Common Stock, including convertible preferred shares, convertible notes, stock options or warrants.
In particular, the September 30, 2025 Grid AI Corp. transaction included the issuance of Series H Non-Voting Convertible Preferred Stock that is convertible, subject to conditions, into a substantial number of shares of Common Stock. We also have outstanding warrants and other equity-linked instruments, and we granted equity awards to management and directors in late 2025 and early 2026.
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These instruments may significantly dilute existing stockholders, both economically and voting-wise, if converted, exercised or settled in shares.
The issuance of additional securities in the future will dilute the percentage ownership of then existing stockholders. Additionally, sales by existing stockholders of a large number of our Common Stock in the public market could also affect the market price of our Common Stock.
We experienced significant board and management turnover during the fourth quarter of 2025, and instability in governance and leadership could adversely affect our business.
In late 2025, we underwent significant governance and leadership changes, including board resignations, changes in board composition, a new Chief Executive Officer arrangement, a new Interim Chief Financial Officer and new equity awards to management and directors. One director resignation was accompanied by stated disagreements regarding governance, diligence and disclosure matters.
These events could adversely affect us by:
| ● | disrupting strategic execution |
| ● | weakening internal controls or disclosure controls |
| ● | diverting management attention |
| ● | increasing legal, accounting and administrative burden |
| ● | impairing our ability to recruit, retain and motivate qualified personnel |
| ● | damaging confidence among investors, business partners, regulators, auditors and other stakeholders. |
If we are unable to maintain stable and effective leadership, our business and reporting quality may be adversely affected.
Disruptions in the global economy and supply chains may have a material adverse effect on our business, financial condition and results of operations.
Our operations are subject to risks arising from global economic conditions, supply chain disruptions and volatility in energy markets. These risks may affect the availability, cost and timing of components, infrastructure and third-party services required to support the development and deployment of our energy orchestration platform and related technologies.
Global supply chains have experienced significant disruption in recent years, and ongoing geopolitical conflicts, trade tensions, inflationary pressures and macroeconomic uncertainty continue to impact market conditions. In particular, disruptions affecting the energy sector, data center infrastructure and related equipment could adversely affect our ability to scale our platform, deliver services to customers and execute our business strategy.
In addition, inflationary pressures and volatility in labor, technology and infrastructure costs may increase our operating expenses and reduce our financial flexibility. Any such disruptions or adverse developments could materially and adversely affect our business, financial condition and results of operations.
Adverse global conditions, including economic uncertainty, may negatively impact our financial results.
Global conditions, dislocations in the financial markets, any negative financial impacts affecting United States as a result of tax reform or changes to existing trade agreements or tax conventions, may adversely impact our business.
In addition, the global macroeconomic environment could be negatively affected by, among other things, pandemics or epidemics, instability in global economic markets, increased U.S. trade tariffs and trade disputes with other countries, instability in the
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global credit markets, supply chain weaknesses, instability in the geopolitical environment as a result of the Russian invasion of Ukraine, conflicts in the Middle East, and foreign governmental debt concerns. Such challenges have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets.
Acceptance of digital assets, including stablecoins, as consideration in our transactions may expose us to volatility, regulatory uncertainty and accounting complexity, which could adversely affect our financial results.
We are evaluating the planned acceptance of stablecoins and other digital assets as a form of consideration in certain future transactions. The use of digital assets may expose us to risks, including potential fluctuations in value, even for assets intended to maintain a stable value, as well as risks related to cybersecurity, custody, and reliance on third-party platforms and infrastructure. In addition, the regulatory environment for digital assets continues to evolve, and changes in laws, regulations, or interpretations by regulatory authorities could affect our ability to accept or use such assets or impose additional compliance obligations.
The accounting treatment of digital assets under U.S. GAAP is complex and subject to interpretation. Certain digital assets may be required to be measured at fair value with changes recognized in earnings, which could introduce volatility into our financial results. Other digital assets may be accounted for as indefinite-lived intangible assets and subject to impairment testing, which could result in non-cash impairment charges. Although we did not hold any digital assets as of December 31, 2025, if we elect to accept or hold such assets in the future, these risks could adversely affect our financial condition and results of operations.
Geopolitical risks associated with Russia’s invasion of Ukraine and conflicts in the Middle East, including the U.S. and Israel war with Iran, could result in increased market volatility and uncertainty, which could negatively impact our business, financial condition, and results of operations.
The uncertain nature, scope, magnitude, and duration of hostilities stemming from Russia’s military invasion of Ukraine and conflicts in the Middle East, including the U.S. and Israel war with Iran, including the potential effects of such hostilities as well as sanctions, embargoes, asset freezes, cyber-attacks and other actions taken in response to such hostilities on the world economy and markets, have disrupted global markets and contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic and other factors that affect our business and supply chain. There can be no certainty regarding the impacts stemming from the invasion, including the imposition of additional sanctions, embargoes, asset freezes or other economic or military measures resulting from the invasion. The impact of these developments, and additional events that may occur as a result, is currently unknown and could adversely affect our business, supply chain, suppliers and customers and potential customers. It is not possible to predict the broader consequences of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, the availability and cost of materials, supplies, labor, currency exchange rates and financial markets, all of which could negatively impact our business, financial condition and results of operations.
Significant disruptions of information technology systems or breaches of data security could materially adversely affect our business, results of operations and financial condition.
We collect and maintain information in digital form that is necessary to conduct our business, and we are increasingly dependent on information technology systems and infrastructure to operate our business. In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information. It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. We have established physical, electronic and organizational measures to safeguard and secure our systems to prevent a data compromise, and rely on commercially available systems, software, tools, and monitoring to provide security for our information technology systems and the processing, transmission and storage of digital information. We have also outsourced elements of our information technology infrastructure, and as a result a number of third-party vendors may or could have access to our confidential information. Our internal information technology systems and infrastructure, and those of our current and any future collaborators, contractors and consultants and other third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments and cyber-terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. In addition, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information or other intellectual property. The
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costs to us to mitigate network security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security measures to protect our data security and information technology systems, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service and other harm to our business and our competitive position. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our product development programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Moreover, if a computer security breach affects our systems or results in the unauthorized release of personally identifiable information, our reputation could be materially damaged.
In addition, such a breach may require notification to governmental agencies, the media or individuals pursuant to various federal and state privacy and security laws, if applicable, including the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Clinical Health Act of 2009, and its implementing rules and regulations, as well as regulations promulgated by the Federal Trade Commission and state breach notification laws.
Under the EU regulation and notably the General Data Protection Regulation, or GDPR, No. 2016/679, which entered into force on May 25, 2018 and is applicable personal data that we process in relation to our presence in the EU, the offering of products or services to individuals in the EU or the monitoring of the behavior of individuals in the EU, we have also a legal responsibility to report personal data breaches to the competent supervisory authority. The EU data protection regulation includes a broad definition and a short deadline for the notification of personal data breaches, which may be difficult to implement in practice and requires that we implement robust internal processes. Under this regulation, we have to report personal data breaches to the competent supervisory authority within 72 hours of the time we become aware of a breach “unless the personal data breach is unlikely to result in a risk to the right and freedoms of natural persons” (Article 33 of the GDPR). In addition, the GDPR requires that we communicate the breach to the Data Subject if the breach is “likely to result in a high risk to the rights and freedoms of natural persons” (Article 34 of the GDPR). In order to fulfil these requirements, we have to implement specific internal processes to be followed in case of a personal data breach, which will allow us to (a) contain and recover the breach, (b) assess the risk to the data subjects, (c) notify, and possibly communicate the breach to the data subjects, (d) investigate and respond to the breach. The performance of these processes implies substantial costs in resources and time.
Moreover, as we may rely on third parties that will also process as processor the data for which we are a data controller—for example, in the context of the manufacturing of our product candidates or for the conduct of clinical trials, we must contractually ensure that strict security measures, as well as appropriate obligations including an obligation to report in due delay any security incident are implemented, in order to allow us fulfilling our own regulatory requirements.
We would also be exposed to a risk of loss or litigation and potential liability for any security breach on personal data for which we are data controller. The costs of above-mentioned processes together with legal penalties, possible compensation for damages and any resulting lawsuits arising from a breach may be extensive and may have a negative impact on reputation and materially adversely affect our business, results of operations and financial condition.
Requirements associated with being a public company will increase our costs significantly and will divert significant company resources and management attention.
Since we are no longer an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, we are no longer able to take advantage of certain exemptions from various reporting requirements that were previously available to us, but which were not available to other public companies that are not emerging growth companies. Accordingly, we will be required to comply with increased disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, we will incur greater expenses associated with such reporting requirements. These expenses would further increase if we ceased to be a “smaller reporting company.” In addition, if we are deemed an accelerated filer or large accelerated filer in the future, we expect to incur additional management time and cost to comply with the more stringent reporting requirements applicable to companies that are deemed accelerated filers or large accelerated filers, including complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We have not yet completed the process of compiling the system and processing documentation needed to comply with such requirements. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion when required to do so. In that regard, we currently do not have an internal audit function, and we will need to hire or contract additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.
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Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we may incur as a result of this.
Risks Related to our Biopharmaceutical Operation, Clinical Development, Regulatory Approval and Commercialization
We operate as a clinical stage biopharmaceutical company with relation to our retained biopharmaceutical assets but have a limited operating history upon which to base an investment decision.
We operate as a clinical stage biopharmaceutical company with relation to our retained biopharmaceutical assets. Following the completion of the ImmunogenX rescission transaction on December 31, 2025, our retained legacy biopharmaceutical focus is primarily Adrulipase. Adrulipase is in the early stages of clinical development. We have not generated any revenue from product sales and have incurred significant net losses. We have not demonstrated our ability to perform the functions necessary for the successful commercialization of any product candidates. The successful commercialization of any of our products will require us to perform a variety of functions, including:
| ● | continuing to undertake pre-clinical development and clinical trials; |
| ● | participating in regulatory approval processes; |
| ● | formulating and manufacturing products; and |
| ● | conducting sales and marketing activities. |
Our operations to date have been limited to organizing and staffing, acquiring, developing and securing the proprietary rights for, and undertaking pre-clinical development, manufacturing and clinical trials of Adrulipase. These operations provide a limited basis for our stockholders and prospective investors to assess our ability to complete development of or commercialize Adrulipase or any other product candidates and the advisability of investing in our securities.
We have incurred significant losses and negative cash flows from our operations since inception. As of December 31, 2025, we had accumulated deficit of approximately $208.8 million and negative working capital of approximately $12.6 million. Based on our historical and anticipated rate of cash expenditures, we do not anticipate our existing working capital will be sufficient to sustain our business through the commercialization of our product candidates. Therefore, we are dependent on obtaining, and are continuing to pursue, the necessary funding from outside sources, including obtaining additional funding from the sale of securities in order to continue our operations. We are actively working to obtain additional funding. We cannot make any assurances that additional financings will be available to us and, if available, completed on a timely basis, on acceptable terms or at all. If we are unable to complete an equity and/or debt offering, or otherwise obtain sufficient financing when and if needed, it would negatively impact our business and operations, which would likely cause the price of our Common Stock to decline or ultimately force us to cease our operations.
The development and regulatory approval process take several years, and it is not likely that any such products, even if successfully developed and approved by the FDA or any comparable foreign regulatory authority, would be commercially available for a significant period of time. Many promising drug candidates fail at some stage of their clinical development. Accordingly, even if we are able to obtain the requisite financing to fund our development programs, we cannot assure you that our product candidates will be successfully developed, receive required regulatory approvals and successfully commercialized. Our failure to develop, manufacture or receive regulatory approval for or successfully commercialize any of our product candidates, could result in the failure of our business and a loss of all of your investment in our company.
We will face intense competition and may not be able to compete successfully.
We operate in highly competitive segments of the biotechnology and biopharmaceutical markets. We face competition from many different sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies, and private and public research institutions. Adrulipase, if successfully developed and approved, will compete with established therapies, as well as new treatments that may be introduced by our competitors. Many of our competitors have significantly greater financial, product development, manufacturing and marketing resources than us. Large pharmaceutical companies have extensive experience in clinical testing and obtaining regulatory approval for drugs. We also may compete with these organizations to recruit
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management, scientists and clinical development personnel. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. New developments, including the development of other biological and pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and life sciences industries at a rapid pace. Developments by competitors may render our product candidates obsolete or noncompetitive. We will also face competition from these third parties in recruiting and retaining qualified personnel, establishing clinical trial sites and patient registration for clinical trials and in identifying and in-licensing new product candidates.
We may incur substantial product liability or indemnification claims relating to the use of our product candidates.
We face an inherent risk of product liability exposure based on the use of Adrulipase in human clinical trials, or, if obtained, following marketing approval and commercialization. Claims could be brought against us if use or misuse of one of our product candidates causes, or merely appears to have caused, personal injury or death. Although we have and intend to maintain product liability insurance relating to our clinical trials, our coverage may not be sufficient to cover claims that may be made against us and we may be unable to maintain such insurance. Any claims against us, regardless of their merit, could severely harm our financial condition, strain our management and other resources or destroy the prospects for commercialization of the product which is the subject of any such claim. We are unable to predict if we will be able to obtain or maintain product liability insurance for any products that may be approved for marketing. Additionally, we have entered into various agreements where we indemnify third parties for certain claims relating to the testing and use of our product candidates. These indemnification obligations may require us to pay significant sums of money for claims that are covered by these indemnifications.
We cannot predict all of the possible harms or side effects that may result from the use of our products and, therefore, the amount of insurance coverage we currently hold, or that we or our collaborators may obtain, may not be adequate to protect us from any claims arising from the use of our products that are beyond the limit of our insurance coverage. If we cannot protect against potential liability claims, we or our collaborators may find it difficult or impossible to commercialize our products, and we may not be able to renew or increase our insurance coverage on reasonable terms, if at all. The marketing, sale and use of our products and our planned future products could lead to the filing of product liability claims against us if someone alleges that our products failed to perform as designed. A product liability or professional liability claim could result in substantial damages and be costly and time-consuming for us to defend.
Any product liability or professional liability claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage. Additionally, any product liability lawsuit could damage our reputation, result in the recall of products, or cause current partners to terminate existing agreements and potential partners to seek other partners, any of which could impact our results of operations.
We may use biological materials and may use hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time consuming or costly.
We may use hazardous materials, including chemicals and biological agents and compounds, that could be dangerous to human health and safety or the environment. Our operations also produce hazardous waste products. Federal, state and local laws and regulations govern the use, generation, manufacture, storage, handling and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair our product development efforts. In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes. We do not carry specific biological or hazardous waste insurance coverage and our property and casualty, and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury, we could be held liable for damages or penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended.
Although we maintain workers’ compensation insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
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We will need to grow the size of our organization, and we may experience difficulties in managing this growth.
As of December 31, 2025, we had 18 full-time employees. As our development and commercialization plans and strategies develop, we expect to need additional managerial, operational, research and development, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:
| ● | identifying, recruiting, integrating, maintaining and motivating additional employees; |
| ● | managing our internal development efforts effectively, including the clinical, FDA and international regulatory review process for our product candidates, while complying with our contractual obligations to contractors and other third parties; and |
| ● | improving our operational, financial and management controls, reporting systems and procedures. |
Our future financial performance and our ability to commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including certain aspects of regulatory approval, clinical management and manufacturing. There can be no assurance that the services of independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of our product candidates or otherwise advance our business. There can be no assurance that we will be able to manage our existing consultants and contractors or find other competent outside contractors and consultants on economically reasonable terms, or at all.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals.
Any product candidates we advance into and through clinical development are subject to extensive regulation, which can be costly and time consuming, cause unanticipated delays or prevent the receipt of the required approvals to commercialize our product candidates.
The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of our product candidates are subject to extensive regulation by the FDA in the United States and by comparable health authorities in foreign markets, including Health Canada’s Therapeutic Products Directorate, or the TPD, and the European Medicines Agency, or the EMA. In the United States, we are not permitted to market our product candidates until we receive approval of an NDA (New Drug Application) or BLA (Biologic License Application) from the FDA. The process of obtaining such approval is expensive, often takes many years and can vary substantially based upon the type, complexity and novelty of the products involved. In addition to the significant clinical testing requirements, our ability to obtain marketing approval for these product candidates depends on obtaining the final results of required non-clinical testing, including characterization of the manufactured components of our product candidates and validation of our manufacturing processes. The FDA may determine that our product manufacturing processes, testing procedures or facilities are insufficient to justify approval. Approval policies or regulations may change, and the FDA has substantial discretion in the pharmaceutical approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.
The FDA, the TPD and/or the EMA can delay, limit or deny approval of a product candidate for many reasons, including, but not limited to:
| ● | disagreement with the design or implementation of our clinical trials; |
| ● | failure to demonstrate to their satisfaction that a product candidate is safe and effective for any indication; |
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| ● | failure to accept clinical data from trials which are conducted outside their jurisdiction; |
| ● | the results of clinical trials may not meet the level of statistical significance required for approval; |
| ● | we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; |
| ● | such agencies may disagree with our interpretation of data from preclinical studies or clinical trials; |
| ● | failure to approve the manufacturing processes or facilities of third-party manufacturers with which we or our collaborators contract for clinical and commercial supplies; or |
| ● | changes in the approval policies or regulations of such agencies may significantly change in a manner rendering our clinical data insufficient for approval. |
Any delay in obtaining, or inability to obtain, applicable regulatory approvals would prevent us from commercializing our product candidates.
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. The enrollment of patients depends on many factors, including:
| ● | the patient eligibility criteria defined in the protocol; |
| ● | the size of the patient population; |
| ● | the proximity and availability of clinical trial sites for prospective patients; |
| ● | the design of the trial; |
| ● | our ability to recruit clinical trial investigators with the appropriate competencies and experience; |
| ● | the availability of other clinical trials and competition for eligible patients; |
| ● | our ability to obtain and maintain patient consents; and |
| ● | the risk that patients enrolled in clinical trials will drop out of the trials before completion. |
Our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates. This competition will reduce the number and types of patients and qualified clinical investigators available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors or clinical trial sites may not allow us to conduct our clinical trial at such site if competing trials are already being conducted there. Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials in such clinical trial site. We may also encounter difficulties finding a clinical trial site at which to conduct our trials.
Delays in patient enrollment may result in increased costs or may affect the timing or outcome of our planned clinical trials, which could prevent completion of these clinical trials and adversely affect our ability to advance the development of our product candidates.
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Because the results of preclinical studies and early clinical trials are not necessarily predictive of future results, any product candidate we advance into clinical trials may not have favorable results in later clinical trials, if any, or receive regulatory approval.
Pharmaceutical development has inherent risk. We will be required to demonstrate through well-controlled clinical trials that our product candidates are safe and effective with a favorable benefit-risk profile for use in their target indications before we can seek regulatory approvals for their commercial sale. Adrulipase has completed four Phase 2 clinical trials in two separate indications (three Phase 2 in CF patients and one Phase 2 in CP patients). Success in pre-clinical studies or early clinical trials does not mean that later clinical trials will be successful, as product candidates in later-stage clinical trials may fail to demonstrate sufficient safety or efficacy despite having progressed through initial clinical testing. We also may need to conduct additional clinical trials that are not currently anticipated. Drug developers frequently suffer significant setbacks in advanced clinical trials, even after earlier clinical trials have shown promising results.
Any product candidate we advance into and through clinical trials may cause unacceptable adverse events or have other properties that may delay or prevent their regulatory approval or commercialization or limit their commercial potential.
Unacceptable adverse events caused by Adrulipase in clinical trials could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications and markets. This, in turn, could prevent us from commercializing the affected product candidate and generating revenues from its sale. We have not yet completed testing of any of our product candidates for the treatment of the indications for which we intend to seek product approval in humans, and we currently do not know the extent of adverse events, if any, that will be observed in patients who receive any of our product candidates. If any of our product candidates cause unacceptable adverse events in clinical trials, we may not be able to obtain regulatory approval or commercialize such product or, if such product candidate is approved for marketing, future adverse events could cause us to withdraw such product from the market.
Delays in the commencement or completion of our clinical trials could result in increased costs and delay our ability to pursue regulatory approval and commercialization of our product candidates.
The commencement and completion of clinical trials can be delayed for a variety of reasons, including delays in:
| ● | obtaining regulatory clearance to commence a clinical trial; |
| ● | identifying, recruiting and training suitable clinical investigators; |
| ● | reaching agreement on acceptable terms with prospective clinical research organizations (“CROs”) and trial sites, the terms of which can be subject to extensive negotiation, may be subject to modification from time to time and may vary significantly among different CROs and trial sites; |
| ● | obtaining sufficient quantities of investigational product (“IP”) for our product candidates for use in clinical trials; |
| ● | obtaining Institutional Review Board (“IRB”) or ethics committee approval to conduct a clinical trial at a prospective site; |
| ● | identifying, recruiting and enrolling patients to participate in a clinical trial, including delays and/or interruptions resulting from geo-political actions, such as the war in Ukraine, disease or public health epidemics, such as the coronavirus, or natural disasters; |
| ● | retaining patients who have initiated a clinical trial but may withdraw due to adverse events from the therapy, insufficient efficacy, changing clinical protocols, fatigue with the clinical trial process, or personal issues; |
| ● | retaining patients who may not follow the clinical trial protocols due to factors including the coronavirus epidemic; and |
| ● | availability of funds. |
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Any delays in the commencement of our clinical trials will delay our ability to pursue regulatory approval for our product candidates. In addition, many of the factors that cause, or lead to, a delay in the commencement of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate.
We may be required to suspend, repeat or terminate our clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the trials are not well designed.
Regulatory agencies, IRBs or data safety monitoring boards may at any time recommend the temporary or permanent discontinuation of our clinical trials or request that we cease using investigators in the clinical trials if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, or that they present an unacceptable safety risk to participants. Clinical trials must be conducted in accordance with current cGCPs or other applicable foreign government guidelines governing the design, safety monitoring, quality assurance and ethical considerations associated with clinical studies. Clinical trials are subject to oversight by the FDA, other foreign governmental agencies and IRBs at the study sites where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates produced in accordance with applicable cGMPs, which are the FDA’s regulations governing the design, monitoring and control of manufacturing processes and facilities. Clinical trials may be suspended by the FDA, other foreign governmental agencies, or us for various reasons, including:
| ● | deficiencies in the conduct of the clinical trials, including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols; |
| ● | deficiencies in the clinical trial operations or trial sites; |
| ● | the product candidate may have unforeseen adverse side effects; |
| ● | deficiencies in the trial design necessary to demonstrate efficacy; |
| ● | fatalities or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial treatments; |
| ● | the product candidate may not appear to be more effective than current therapies; or |
| ● | the quality or stability of the product candidate may fall below acceptable standards. |
If we elect or are forced to suspend or terminate a clinical trial for Adrulipase, the commercial prospects for that product candidate will be harmed and our ability to generate product revenue from that product candidate may be delayed or eliminated. Furthermore, any of these events could prevent us or our partners from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing our product candidates and impair our ability to generate revenue from the commercialization of these product candidates either by us or by our collaboration partners.
The approval processes of regulatory authorities are lengthy, time consuming, expensive and inherently unpredictable. If we are unable to obtain approval for our product candidates from applicable regulatory authorities, we will not be able to market and sell those product candidates in those countries or regions and our business will be substantially harmed.
The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. We have not submitted an NDA or similar filing or obtained regulatory approval for any drug candidate in any jurisdiction and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.
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Adrulipase could fail to receive regulatory approval for many reasons, including any one or more of the following:
| ● | the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; |
| ● | we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; |
| ● | the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; |
| ● | we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; |
| ● | the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; |
| ● | the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA, BLA or other submission or to obtain regulatory approval in the United States or elsewhere; |
| ● | the FDA or comparable foreign regulatory authorities may fail to hold to previous agreements or commitments; |
| ● | the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; |
| ● | the FDA or comparable foreign regulatory authorities may fail to approve our product candidates; |
| ● | invest significant additional cash in each of the above activities; and |
| ● | the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval. |
The time and expense of the approval process, as well as the unpredictability of clinical trial results and other contributing factors, may result in our failure to obtain regulatory approval to market, in one or more jurisdictions, Adrulipase, or future product candidates, which would significantly harm our business, results of operations and prospects.
In addition, even if we were to obtain regulatory approval in one or more jurisdictions, regulatory authorities may approve Adrulipase for fewer or more limited indications than we request, may not approve the prices we may propose to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with labeling that does not include the claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing circumstances could materially harm the commercial prospects for Adrulipase.
Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of the approved labeling, or result in significant negative consequences following marketing approval, if any.
Results of current and future clinical trials of Adrulipase could reveal a high and/or unacceptable severity and frequency of these or other side effects. In such an event, our trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications. Further, any observed drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences could materially harm our business, financial condition and prospects.
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Additionally, if Adrulipase receive marketing approval, and we or others later identify undesirable side effects caused by our products, a number of potentially significant negative consequences could result, including:
| ● | regulatory authorities may withdraw approvals of such product; |
| ● | regulatory authorities may require additional warnings in the product’s labeling; |
| ● | we may be required to create a medication guide for distribution to patients that outlines the risks of such side effects; |
| ● | we could be sued and held liable for harm caused to patients; and |
| ● | our reputation may suffer. |
Any of these events could prevent us from achieving or maintaining market acceptance of the particular product, if approved, and could significantly harm our business, results of operations and prospects.
If we are unable to execute our sales and marketing strategy for our products and are unable to gain market acceptance, we may be unable to generate sufficient revenue to sustain our business.
We operate as a clinical-stage biopharmaceutical company with relation to our Biopharmaceutical assets and have yet to begin to generate revenue from Adrulipase. Our product candidate is in an early stage of clinical development, and, if we obtain marketing approval for any of products in the future, which we anticipate would not occur for several years, if at all.
We may never gain significant market acceptance for our product candidates and therefore may never generate substantial revenue or profits for us. We will need to establish a market for any of our product candidates that receive regulatory approval through physician education, sales and marketing efforts, awareness programs and the publication of clinical data. Gaining acceptance in medical communities requires, among other things, publication in leading peer-reviewed journals of results from our studies. The process of publication in leading medical journals is subject to a peer review process and peer reviewers may not consider the results of our studies sufficiently novel or worthy of publication. Failure to have our studies published in peer-reviewed journals could limit the adoption of Adrulipase. Our ability to successfully market our product candidates that we may develop will depend on numerous factors, including:
| ● | the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; |
| ● | the efficacy and safety as demonstrated in clinical trials; |
| ● | the clinical indications for which the product is approved; |
| ● | the inability to demonstrate effectively that the clinical and other benefits of a product candidate outweigh any safety or other perceived risks; |
| ● | the inability to demonstrate effectively that the efficacy of a product candidate is superior to a competing treatment; |
| ● | conducting clinical utility studies of our product candidates to demonstrate economic usefulness to providers and payers; |
| ● | relative convenience and ease of administration; |
| ● | whether our current or future partners, support our offerings; |
| ● | the success of the sales force and marketing effort; |
| ● | unfavorable publicity relating to the product; |
| ● | whether healthcare providers believe our product candidates provide clinical utility relative to their cost; and |
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| ● | whether private health insurers, government health programs and other third-party payers will cover our product candidates. |
We currently have no commercial organization. If we are unable to establish satisfactory sales and marketing capabilities or secure a sales and marketing partner, we may not successfully commercialize any of our product candidates.
We have no commercial infrastructure. In order to commercialize products that are approved for marketing, we must either establish our own sales and marketing infrastructure or collaborate with third parties that have such commercial infrastructure.
We may not be able to enter into collaboration agreements on terms acceptable to us or at all. In addition, even if we enter into such relationships, we may have limited or no control over the sales, marketing and distribution activities of these third parties. Our future revenues may depend heavily on the success of the efforts of these third parties. If we elect to establish a sales and marketing infrastructure, we may not realize a positive return on this investment. In addition, we will have to compete with established and well-funded pharmaceutical and biotechnology companies to recruit, hire, train and retain sales and marketing personnel. Factors that may inhibit our efforts to commercialize our product candidates without strategic partners or licensees include:
| ● | our inability to recruit and retain adequate numbers of effective sales and marketing personnel; |
| ● | the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our future products; |
| ● | the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and |
| ● | unforeseen costs and expenses associated with creating an independent sales and marketing organization. |
If we are not successful in recruiting sales and marketing personnel or in building a sales and marketing infrastructure, or if we do not successfully enter into appropriate collaboration arrangements, we will have difficulty successfully commercializing our product candidates and any we may develop or acquire, which would adversely affect our business, operating results and financial condition. Outside the United States, we may commercialize our product candidates by entering into collaboration agreements with pharmaceutical partners. We may not be able to enter into such agreements on terms acceptable to us or at all. In addition, even if we enter into such relationships, we may have limited or no control over the sales, marketing and distribution activities of these third parties. Our future revenues may depend heavily on the success of the efforts of these third parties.
We may form or seek strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefits of such alliances or licensing arrangements.
From time to time, we may form or seek strategic alliances, create joint ventures or collaborations or enter into additional licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to Adrulipase and any future product candidates that we may develop. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. These relationships also may result in a delay in the development of Adrulipase if we become dependent upon the other party and such other party does not prioritize the development of our product candidates relative to its other development activities. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy. If we license products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture. We cannot be certain that, following a strategic transaction or license, we will achieve the revenue or specific net income that justifies such transaction. We rely completely on third parties to manufacture our preclinical and clinical pharmaceutical supplies and expect to continue to rely on third parties to produce commercial supplies of our product candidates, and our dependence on third party suppliers could adversely impact our business.
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We rely completely on third parties to manufacture our preclinical and clinical pharmaceutical supplies and expect to continue to rely on third parties to produce commercial supplies of any approved product candidate, and our dependence on third party suppliers could adversely impact our business.
We do not currently manufacture our product candidates and expect to rely on third parties to do so, if and when required. The proprietary yeast cell line from which the Adrulipase API is derived is kept at a storage facility maintained by Charles River Laboratories Inc. Adrulipase drug substance and drug product are currently manufactured at a contract facility located in Tianjin, China owned by Asymchem Life Science Co., Ltd. We believe there are multiple alternative contract manufacturers capable of producing the Adrulipase product we need for clinical trials. There is no guarantee that the processes are easily reproducible and transferrable.
We are completely dependent on these third parties for product supply and our Adrulipase development program would be adversely affected by a significant interruption in our ability to receive such materials. We have not yet entered into long-term manufacturing or supply agreements with any third parties. Furthermore, our third-party suppliers will be required to obtain and maintain compliance with cGMPs and will be subject to inspections by the FDA or comparable regulatory authorities in other jurisdictions to confirm such compliance. In the event that the FDA or such other authorities determine that our third-party suppliers have not complied with cGMP, our clinical trials could be terminated or subjected to a clinical hold until such time as we are able to obtain appropriate replacement material. Any delay, interruption or other issues that arise in the manufacture, packaging, or storage of our products as a result of a failure of the facilities or operations of our third-party suppliers to pass any regulatory agency inspection could significantly impair our ability to develop and commercialize our products.
We do not expect to have the resources or capacity to commercially manufacture any of our proposed products, if approved, and will likely continue to be dependent upon third party manufacturers. Our dependence on third parties to manufacture and supply us with clinical trial materials and any approved products may adversely affect our ability to develop and commercialize our products on a timely basis or at all.
We rely on third parties to conduct our clinical trials. If these third parties do not meet our deadlines or otherwise conduct the trials as required, our clinical development programs could be delayed or unsuccessful and we may not be able to obtain regulatory approval for or commercialize our product candidates when expected or at all.
We do not have the ability to conduct all aspects of our preclinical testing or clinical trials ourselves. We use contract research organizations (CROs) to conduct our clinical trials and will rely upon such CROs, as well as medical institutions, clinical investigators and consultants, to conduct our trials in accordance with our clinical protocols. Our CROs, investigators and other third parties will play a significant role in the conduct of these trials and the subsequent collection and analysis of data from the clinical trials.
There is no guarantee that any CROs, investigators and other third parties upon which we rely for administration and conduct of our clinical trials will devote adequate time and resources to such trials or perform as contractually required. If any of these third parties fail to meet expected deadlines, fail to adhere to our clinical protocols or otherwise perform in a substandard manner, our clinical trials may be extended, delayed or terminated. If any of our clinical trial sites terminate for any reason, we may experience the loss of follow-up information on patients enrolled in our ongoing clinical trials unless we are able to transfer the care of those patients to another qualified clinical trial site. In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be jeopardized.
We intend to rely on market exclusivity periods that may not be or remain available to us.
We intend to rely on our ability to obtain and maintain a regulatory period of market exclusivity for any of our product candidates, including Adrulipase, that are successfully developed and approved for commercialization. Although this period in the United States is currently 12 years from the date of marketing approval, reductions to this period have been proposed. This exclusivity period in Europe is currently 10 years from the date of marketing approval by the EMA. Once any regulatory period of exclusivity expires, depending on the status of our patent coverage and the nature of the product, we may not be able to prevent others from marketing products that are biosimilar to or interchangeable with our products, which would materially adversely affect us.
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Due to the significant resources required for the development of our product candidates, we must prioritize development of certain product candidates and/or certain disease indications. We may expend our limited resources on candidates or indications that do not yield a successful product and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Due to the significant resources required for the development of product candidates, we must focus our attention and resources on specific diseases and/or indications and decide which product candidates to pursue and the amount of resources to allocate to each. We are currently focusing our resources on the development of our product candidate, Adrulipase.
Our decisions concerning the allocation of research, development, collaboration, management and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial product and may divert resources away from better opportunities. Similarly, any decision to delay, terminate or collaborate with third parties in respect of certain programs or product candidates may subsequently prove to be suboptimal and could cause us to miss valuable opportunities. If we make incorrect determinations regarding the viability or market potential of any of our programs or product candidates or misread trends in the GI, CF, CP, or biotechnology industry, our business, financial condition and results of operations could be materially adversely affected. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other diseases and indications that may later prove to have greater commercial potential than those we choose to pursue, or relinquish valuable rights to such product candidates through collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain development and commercialization rights.
Healthcare reform and restrictions on reimbursements may limit our financial returns.
Our ability or the ability of our collaborators to commercialize any of our product candidates that we successfully develop may depend, in part, on the extent to which government health administration authorities, private health insurers and other organizations will reimburse consumers for the cost of these products. These third parties are increasingly challenging both the need for and the price of new drug products. Significant uncertainty exists as to the reimbursement status of newly approved therapeutics. Adequate third-party reimbursement may not be available for our product candidates to enable us or our collaborators to maintain price levels sufficient to realize an appropriate return on their and our investments in research and product development.
Changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor cost-containment initiatives, may negatively impact our ability to generate revenues.
The potential pricing and reimbursement environment for Adrulipase, and any future drug products may change in the future and become more challenging due to, among other reasons, policies advanced by the current or any new presidential administration, federal agencies, healthcare legislation passed by Congress, or fiscal challenges faced by all levels of government health administration authorities. Members of the government have made public statements in favor of, and may take steps to implement, various regulatory changes that could negatively impact the pharmaceutical industry, including the Company. Those potential changes include some related to personnel and policy changes at the FDA and other government agencies and programs. For example, HHS could undergo changes that could make it more difficult for the FDA to grant regulatory approvals for drugs. Additionally, if the FDA drug user fee programs were eliminated, that could cause significant delays to facility inspections and approvals of new products. It is too early for us to assess which, if any, of the policy changes that have been publicly referenced would be implemented, and we cannot predict what additional future changes in the health care industry in general, or the pharmaceutical industry in particular, will occur; however, any changes could have a material adverse effect on our business, cash flows, results of operations, financial condition and prospects.
If we or any of our independent contractors, consultants, collaborators, manufacturers, vendors or service providers fail to comply with healthcare laws and regulations, we or they could be subject to enforcement actions, which could result in penalties and affect our ability to develop, market and sell our product candidates and may harm our reputation.
We are subject to federal, state, and foreign healthcare laws and regulations pertaining to fraud and abuse and patients’ rights. These laws and regulations include:
| ● | the U.S. federal healthcare program anti-kickback law, which prohibits, among other things, persons and entities from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for a |
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| healthcare item or service, or the purchasing or ordering of an item or service, for which payment may be made under a federal healthcare program such as Medicare or Medicaid; |
| ● | the U.S. federal false claims and civil monetary penalties laws, which prohibit, among other things, individuals or entities from knowingly presenting or causing to be presented, claims for payment by government funded programs such as Medicare or Medicaid that are false or fraudulent, and which may apply to us by virtue of statements and representations made to customers or third parties; |
| ● | the U.S. federal Health Insurance Portability and Accountability Act (“HIPAA”), which prohibits, among other things, executing a scheme to defraud healthcare programs; |
| ● | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, imposes requirements relating to the privacy, security, and transmission of individually identifiable health information, and requires notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; |
| ● | the federal Physician Payment Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members, which is published in a searchable form on an annual basis; and |
| ● | state laws comparable to each of the above federal laws, such as, for example, anti-kickback and false claims laws that may be broader in scope and also apply to commercial insurers and other non-federal payors, requirements for mandatory corporate regulatory compliance programs, and laws relating to patient data privacy and security. |
If our operations are found to be in violation of any such health care laws and regulations, we may be subject to penalties, including administrative, civil and criminal penalties, monetary damages, disgorgement, imprisonment, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA, or exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, any of which could adversely affect our financial results. Although effective compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated. Any action against us for an alleged or suspected violation could cause us to incur significant legal expenses and could divert our management’s attention from the operation of our business, even if our defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to us in terms of money, time and resources.
Our employees and independent contractors, including principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have an adverse effect on our results of operations.
We are exposed to the risk that our employees and independent contractors, including principal investigators, consultants, any future commercial collaborators, service providers and other vendors may engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate the laws and regulations of the FDA, EMA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies; manufacturing standards; healthcare fraud and abuse, data privacy laws and other similar laws; or laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, the creation of fraudulent data in our preclinical studies or clinical trials, or illegal misappropriation of product, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation
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in governmental healthcare programs, individual imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Risks Related to our Intellectual Property in the Biopharmaceutical Industry
Our success will depend upon intellectual property, proprietary technologies and regulatory market exclusivity periods, and we may be unable to protect our intellectual property.
Our success will depend, in large part, on obtaining and maintaining patent protection and trade secret protection for Adrulipase, and its formulations and uses, as well as successfully defending these patents against third-party challenges. If we or our licensors fail to appropriately prosecute and maintain patent protection for our product candidates, our ability to develop and commercialize these product candidates may be adversely affected and we may not be able to prevent competitors from making, using and selling competing products. This failure to properly protect the intellectual property rights relating to these product candidates could have a material adverse effect on our financial condition and results of operations.
The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or our partners will be successful in protecting our product candidates by obtaining and defending patents. These risks and uncertainties include the following:
| ● | patent applications may not result in any patents being issued or any issued patents may not be of sufficient scope to cover our products; |
| ● | patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable, or otherwise may not provide any competitive advantage; |
| ● | our competitors, many of which have substantially greater resources than we or our partners and many of which have made significant investments in competing technologies, may seek, or may already have obtained, patents that will limit, interfere with, or eliminate our ability to make, use, and sell our potential products; |
| ● | there may be significant pressure on the United States government and other international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful as a matter of public policy regarding worldwide health concerns; |
| ● | countries other than the United States may have patent laws less favorable to patentees than those upheld by United States courts, allowing foreign competitors a better opportunity to create, develop, and market competing products; |
| ● | others may allege ownership of our patents or patent applications or those of our licensors, and defense of such allegation or potential proceeding could be expensive, time consuming and unsuccessful; and |
| ● | we may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming and unsuccessful. |
In addition to patents, we and our partners also rely on trade secrets and proprietary know-how. Although we have taken steps to protect our trade secrets and unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and inventions agreements with employees, consultants and advisors, third parties may still obtain this information or come upon this same or similar information independently. We may become subject to claims that we or consultants, advisors or independent contractors that we may engage or have engaged to assist us in developing Adrulipase, Niclosamide, Capeserod and Latiglutenase have wrongfully or inadvertently disclosed to us or used trade secrets or other proprietary information of their former employers or their other clients.
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If we or our partners are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation would have a material adverse effect on our business.
Our success also depends upon our ability and the ability of any of our future collaborators to develop, manufacture, market and sell our product candidates without infringing the proprietary rights of third parties. Numerous United States and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing products, some of which may be directed at claims that overlap with the subject matter of our intellectual property. Because patent applications do not publish for 18 months from their priority date, can be filed with a non-publication request in the United States, and can take many years to issue, there may be currently pending applications, unknown to us, which may later result in issued patents that our product candidates or proprietary technologies may infringe. Similarly, there may be issued patents relevant to our product candidates of which we are not aware.
There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and biopharmaceutical industries generally. If a third-party claims that we or any of our licensors, suppliers or collaborators infringe the third party’s intellectual property rights, we may have to:
| ● | obtain licenses, which may not be available on commercially reasonable terms, if at all; |
| ● | abandon an infringing product candidate or redesign our products or processes to avoid infringement; |
| ● | pay substantial damages, including the possibility of treble damages and attorneys’ fees, if a court decides that the product or proprietary technology at issue infringes on or violates the third party’s rights; |
| ● | pay substantial royalties, fees and/or grant cross licenses to our technology; and/or |
| ● | defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources. |
Our ability to compete may decline if we do not adequately protect our proprietary rights.
Our success depends on obtaining and maintaining proprietary rights to our product candidates for the treatment of age-related diseases, as well as successfully defending these rights against third-party challenges. We will only be able to protect our product candidates, and their uses from unauthorized use by third parties to the extent that valid and enforceable patents, or effectively protected trade secrets, cover them. Our ability to obtain patent protection for our product candidates is uncertain due to a number of factors, including:
| ● | we may not have been the first to make the inventions covered by pending patent applications or issued patent; |
| ● | we may not have been the first to file patent applications for our product candidates or the compositions we developed or for their uses; |
| ● | others may independently develop identical, similar or alternative products or compositions and uses thereof; |
| ● | our disclosures in patent applications may not be sufficient to meet the statutory requirements for patentability; |
| ● | any or all of our pending patent applications may not result in issued patents; |
| ● | we may not seek or obtain patent protection in countries that may eventually provide us a significant business opportunity; |
| ● | any patents issued to us may not provide a basis for commercially viable products, may not provide any competitive advantages, or may be successfully challenged by third parties; |
| ● | our compositions and methods may not be patentable; |
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| ● | others may design around our patent claims to produce competitive products which fall outside of the scope of our patents; |
| ● | others may identify prior art or other bases which could invalidate our patents. |
Even if we have or obtain patents covering our product candidates or compositions, we may still be barred from making, using and selling our product candidates or technologies because of the patent rights of others. Others may have filed, and in the future may file, patent applications covering compositions or products that are similar or identical to ours. There are many issued U.S. and foreign patents relating to chemical compounds and therapeutic products, and some of these relate to compounds we intend to commercialize. These could materially affect our ability to develop our product candidates or sell our products if approved. Because patent applications do not publish for 18 months from their priority date, can be filed with a non-publication request in the United States, and can take many years to issue, there may be currently pending applications unknown to us that may later result in issued patents that our product candidates or compositions may infringe. These patent applications may have priority over patent applications filed by us.
Obtaining and maintaining a patent portfolio entails significant expense and resources. Part of the expense includes periodic maintenance fees, renewal fees, annuity fees, various other governmental fees on patents and/or applications due in several stages over the lifetime of patents and/or applications, as well as the cost associated with complying with numerous procedural provisions during the patent application process. We may or may not choose to pursue or maintain protection for particular inventions. In addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we choose to forgo patent protection or allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer.
Legal actions to enforce our proprietary rights (including patents and trademarks) can be expensive and may involve the diversion of significant management time. In addition, these legal actions could be unsuccessful and could also result in the invalidation of our patents or trademarks or a finding that they are unenforceable. We may or may not choose to pursue litigation or other actions against those that have infringed on our patents or trademarks, or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our results of operations.
Risks Related to Grid Ai Corp.’s Business and Industry
Our 2025 business transformation through the acquisition of Grid AI Corp. may not succeed, and we may fail to realize the anticipated benefits of that transaction.
On September 30, 2025, we acquired Grid AI Corp., which indirectly brought into our consolidated business a 75% interest in AMPX. This transaction fundamentally changed the nature of our business. Historically, we operated as a small clinical-stage biopharmaceutical company. Following the transaction, we also operate an energy technology and software-enabled grid orchestration business.
This acquisition creates substantial risks, including:
| ● | failure to integrate operations, systems, controls and reporting |
| ● | inability to retain or motivate key employees, consultants or management personnel |
| ● | failure to realize expected commercial opportunities |
| ● | inaccurate assumptions regarding the acquired business, including its technology, market position, margins, scalability or customer traction |
| ● | challenges in overseeing a business outside our historical expertise |
| ● | operational complexity arising from international subsidiaries and minority ownership interests |
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| ● | impairment or write-down risk related to goodwill and intangible assets recorded in connection with the transaction. |
If the acquired business underperforms expectations, or if integration is not successful, our business, financial condition and results of operations could be materially adversely affected.
There can be no assurance that we will be able to obtain stockholder approval to issue shares of our Common Stock issuable upon conversion of our Series H Preferred Stock, and our inability to obtain such approval could materially and adversely affect our business, results of operations and the value of our securities; and that if such stockholder approval is obtained, there is no assurance that we will be able to obtain Nasdaq approval of any initial listing filing application that may be required in connection with the acquisition of Grid AI Corp.
As part of the share exchange transaction with Grid AI Corp. and the stockholders of all of the issued and outstanding shares of Grid AI Corp., we issued to such stockholders of Grid AI Corp. (i) 424,348 shares of our Common Stock, which represented 19.99% of the issued and outstanding shares of Common Stock as of the date of entry into the share exchange agreement, and (ii) 38,801.546 shares of our Series H Preferred Stock. The Series H Preferred Stock is convertible into an aggregate of 38,801,546 shares of Common Stock (the “Conversion Shares”), subject to shareholder approval and certain conditions and adjustments as set forth in the Series H Preferred Stock Certificate of Designation. The shares of Common Stock that we issued at the closing together with the maximum number of Conversion Shares represented 82.5% of the issued and outstanding shares of our Common Stock as of the date of entry into the share exchange agreement on an as-converted and fully-diluted basis. Pursuant to the share exchange agreement with Grid AI Corp. and its stockholders, we are obliged to hold a stockholder meeting as promptly as practicable following the closing of the transaction to consider and obtain approval for the conversion of the shares of Series H Preferred Stock into Common Stock. There can be no assurance that we will be able to obtain the required stockholder approval on a timely basis or at all.
If we do not obtain the required stockholder approval, we may be unable to issue the Conversion Shares and, as a result, may not be able to satisfy our obligations under the share exchange agreement. In addition, the share exchange agreement contains recission and unwinding provisions tied to our ability to seek and obtain the required stockholder approval. If we fail to timely file and pursue the proxy statement process and related stockholder meeting(s), or if the required stockholder approval is not obtained after multiple stockholder meetings, the share exchange agreement, and the transaction contemplated therein, could be rescind and unwind. In addition, we may be required to pay the stockholders of Grid AI Corp. an aggregate fee of $1,000,000 upon any rescission or unwinding. If the share exchange agreement is rescinded or unwound, we could be also subject to disputes, litigation, significant costs, and diversion of management attention. In addition, the anticipated benefits of the acquisition of Grid AI Corp., including expected strategic and operational benefits, could be delayed, reduced, or not realized.
Further, even if we do obtain stockholder approval, there is no assurance that Nasdaq will approve any initial listing application filed in connection with the acquisition of Grid AI Corp., and failure to secure such approval may impair our market access and liquidity.
Any of the foregoing could materially and adversely affect our business, financial condition, results of operations, liquidity, and prospects, and could cause the price of our Common Stock to decline.
Our energy technology business exposes us to risks that are different from our historical biopharmaceutical business.
The GridAI and AMPX business operates in a field that differs substantially from our legacy life sciences operations. This business depends on software development, systems integration, device interoperability, market participation, utility and partner relationships, communications infrastructure, customer adoption and evolving regulatory frameworks related to distributed energy resources and grid services.
This business may be affected by:
| ● | technical failure or underperformance of software and orchestration systems |
| ● | inability to integrate with third-party hardware, devices, utilities, market operators or cloud providers |
| ● | cybersecurity breaches, service interruptions or data loss |
| ● | changes in utility rules, market structures or incentive regimes |
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| ● | longer-than-expected sales cycles or customer concentration |
| ● | inability to scale deployments profitably |
| ● | dependence on third-party installers, hardware providers and integration partners. |
Because this business is relatively new within our corporate structure and materially different from our historic operating profile, our management, internal controls and investor disclosures may be subject to heightened execution risk.
Grid AI Corp.’s limited operating history makes evaluating its business and prospects difficult.
Prior to Grid AI Corp.’s acquisition of AMPX in February 2025, AMPX had developed and operated two principal technology platforms focused on residential and distributed energy management: DLS developed technology and ALICE Home Energy Management Systems (HEMS). While Grid AI Corp. currently supports these technologies, there is very minimal revenue and Grid AI Corp.’s current focus is on data centers. While Grid AI Corp. is looking to develop a data center platform, they have a limited history operating our business at its current scale and under our current strategy, and therefore a limited history upon which you can base an investment decision.
Further, Grid AI Corp.’s ability to execute its business plan depends on successfully completing customer deployments, integrating with third-party hardware and software systems, and scaling its platform and personnel. Delays in implementation, customer adoption, or integration with external systems could adversely affect operating results. Our and Grid AI Corp.’s operating results may fluctuate significantly, which could make our and Grid AI Corp. future results difficult to predict and could cause our and Grid AI Corp. operating results to fall below expectations.
The distributed generation industry is emerging and our distributed generation offerings may not receive widespread market acceptance.
The implementation and use of distributed generation at scale is still not widespread, and we cannot be sure that any potential customers will accept our services and solutions broadly. Enterprises may be unwilling to adopt Grid AI Corp.’s offerings over traditional or competing power sources for any number of reasons, including the perception that our technology is unproven, lack of confidence in our business model, unavailability of back-up service providers to operate and maintain the energy storage systems, and lack of awareness of our related products and services. Because this is an emerging industry, broad acceptance of Grid AI Corp.’s products and services is subject to a high level of uncertainty and risk. If the market develops more slowly than we and Grid AI Corp. anticipate, our and Grid AI Corp. business may be adversely affected.
If renewable energy technologies are not suitable for widespread adoption, or if sufficient demand for our software-enabled services does not develop or takes longer to develop than we anticipate, Grid AI Corp. may not be able to generate sufficient revenue or revenue at all to be financially successful.
The market for renewable, distributed energy generation is emerging and rapidly evolving, and its future success is uncertain. If renewable energy generation proves unsuitable for widespread commercial deployment or if demand for our renewable energy products and services fails to develop sufficiently, our and Grid AI Corp. revenue, market share and profitability would be adversely impacted.
Many factors may influence the widespread adoption of renewable energy generation and demand for Grid AI Corp. products and services, including, but not limited to the cost-effectiveness of renewable energy technologies as compared with conventional and competitive technologies, the performance and reliability of renewable energy products as compared with conventional and non-renewable products, fluctuations in economic and market conditions that impact the viability of conventional and competitive alternative energy sources, increases or decreases in the prices of oil, coal and natural gas, continued deregulation of the electric power industry and broader energy industry, and the availability or effectiveness of government subsidies and incentives. You should consider our and Grid AI Corp. prospects in light of the risks and uncertainties emerging companies encounter when introducing new products and services into a nascent industry.
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Our market estimates and assumptions may prove inaccurate.
While we and Grid AI Corp. anticipate being able to generate revenue and garnering customers, market estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate. Even if the markets in which we compete meet our size estimates and forecasted growth, Grid AI Corp. business could fail to grow at similar rates, if at all. The assumptions relating to Grid AI Corp.’s market opportunities include, but are not limited to (i) general declines in the cost of renewable energy generation assets; (ii) growing deployment of renewable energy assets and energy storage systems; and (iii) continued complexity of the electrical grid and resulting demand for stability and resiliency. Grid AI Corp.’s expected market opportunities are also based on the assumption that Grid AI Corp.’s existing and future offerings will be more attractive to its customers and potential customers than competing products and services. If these assumptions prove inaccurate, our and Grid AI Corp.’s business, financial condition and results of operations could be adversely affected.
We expect to face significant competition in the Grid AI Corp.’s industry.
We expect to face significant competition in the Grid AI Corp.’s industry and market. Grid AI Corp. operates in a competitive and rapidly evolving market that includes energy management software providers, virtual power plant (“VPP”) platforms, battery system integrators, utilities, engineering firms, and in-house customer-developed solutions. Grid AI Corp. also competes with emerging technology providers focused on distributed energy resource optimization and artificial intelligence-driven grid management.
Competition is driven by several factors, including software functionality, scalability, interoperability with third-party hardware and market platforms, speed of deployment, regulatory expertise, customer relationships, and pricing. Grid AI Corp.’s solutions must integrate with a wide range of third-party systems, including batteries, control systems, and energy market infrastructure, which are often not standardized and may change over time.
The markets in which Grid AI Corp. operates are highly competitive and include both established industry participants with significant financial, technical, and commercial resources, as well as new entrants seeking to capitalize on the growth of distributed energy and AI-driven energy optimization. Some competitors offer vertically integrated solutions, including hardware, software, and energy services, while others provide point solutions that compete with specific components of Grid AI Corp.’s platform.
Grid AI Corp.’s ability to compete successfully depends on its ability to continue to innovate, expand its platform capabilities, maintain reliable system performance, and effectively execute its go-to-market strategy. Grid AI Corp. also competes based on its ability to convert pilot programs and non-binding arrangements into long-term commercial contracts, scale deployments across multiple jurisdictions, and adapt to evolving regulatory frameworks and market rules.
We cannot assure that Grid AI Corp. will be able to compete successfully with other players in the market. In such event, our and Grid AI Corp. business may be negatively impacted.
Grid AI Corp. plans to use artificial intelligence in its business, and challenges with properly managing its use could result in harm to our brand, reputation, business or customers, and adversely affect our results of operations.
Grid AI Corp. plans to use AI-enabled software and services offerings and incorporating AI in internal tools that support its business. This emerging technology presents a number of risks inherent in its use. AI algorithms are based on machine learning and predictive analytics, which can create accuracy issues, unintended biases, and discriminatory outcomes that could harm our brand, reputation, business, or customers. Additionally, no assurance can be made that the usage of AI will assist Grid AI Corp. in being more efficient or offset the costs of its implementation. Further, dependence on AI to make certain business decisions may introduce additional operational vulnerabilities by producing inaccurate outcomes, recommendations, or other suggestions based on flaws in the underlying data or other unintended results. Grid AI Corp. competitors or other third parties may incorporate AI into their business, services, and products more rapidly or more successfully than us, which could hinder our ability to compete effectively and adversely affect our results of operations. Implementing the use of AI successfully, ethically and as intended, will require significant resources. In addition, the use of AI may increase regulatory, cybersecurity, and data privacy risks, such as intended, unintended, or inadvertent transmission of proprietary or sensitive information. The technologies underlying AI and their use cases are rapidly developing, and it is not possible to predict all of the legal, operational or technological risks related to the use of AI. Our and Grid AI Corp. obligation to comply with emerging AI initiatives, laws, and regulations, including under proposed or enacted legislation regulating AI in jurisdictions such as the U.S. and European Union, could entail significant costs, negatively affect our and Grid AI Corp. business, or limit our and Grid AI Corp.’s ability to incorporate certain AI capabilities into our business.
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Grid Ai Corp.’s future growth will depend on developing and commercializing our AI data center platform.
Following Grid AI Corp’s acquisition of AMPX in February 2025, Grid AI Corp. commenced development of a new technology platform focused on AI-optimized energy orchestration for large-scale data center campuses. However, as of today, this platform is still in an early stage of commercialization and has not been deployed. We cannot assure that this platform will ever be successfully deployed. In such event, our and Grid AI Corp.’s business may be unable to achieve anticipated financial growth.
Furthermore, Grid AI Corp. may also introduce new technologies or products that do not work in the future, are not delivered on a timely basis, are not developed according to product and/or cost specifications, or are not well received by customers. There may be fewer opportunities than we expect due to a decline in business or economic conditions or a decreased demand in these markets or for Grid AI Corp.’s new products from our expectations, Grid AI Corp.’s inability to successfully execute its sales and marketing plans, or for other reasons. In addition to Grid AI Corp.’s current growth opportunities, its future growth may be reliant on its ability to identify and develop potential new growth opportunities. This process is inherently risky and may result in investments in time and resources for which we do not achieve any return or value. These risks are enhanced by attempting to introduce multiple breakthrough technologies and products simultaneously.
Grid AI Corp.’s growth opportunities and those opportunities it may pursue are subject to rapidly changing and evolving technologies and industry standards, and may be replaced by new technology concepts or platforms. If Grid AI Corp. does not develop innovative and reliable product offerings and enhancements in a cost-effective and timely manner that are attractive to customers in these markets; if Grid AI Corp. is otherwise unsuccessful in competing in these new product categories; if the new product categories in which we and Grid AI Corp. invest our limited resources do not emerge as expected or do not produce the growth or profitability we expect, or when we expect it, or if we do not correctly anticipate changes and evolutions in technology and platforms, our and Grid AI Corp. business and results of operations may be adversely affected.
Grid AI Corp.’s business strategy may not achieve anticipated benefits. Grid AI Corp’s failure to do so could adversely affect our business, financial condition, and results of operations.
Grid AI Corp. plans to generate revenue from its AI data center platform through base platform fees for operational visibility and orchestration and performance-based fees tied to power cost optimization. Target customers include enterprise and government entities operating large data center campuses.
Grid AI Corp. has initiated development of its data center orchestration platform in connection with a potential future deployment at a customer site. Initial development and integration activities are underway. As of the date of this report, the platform has not yet been commercially deployed.
Any future commercial deployment is expected to occur as customer projects progress through construction and operational readiness milestones. The timing and extent of such deployment will depend on a number of factors, including project development timelines and the availability of customer funding. There can be no assurance that the platform will be successfully commercialized. Customer acceptance of our software and service offerings is critical to our future success. We cannot assure that customers will be attracted to Grid AI Corp.’s platform and software solutions. If market demand for the types of AI-driven energy software and services Grid AI Corp. is developing and will seek to develop in the future does not grow as anticipated, or if competitors offer more attractive products, our and Grid AI Corp.’s revenue growth and market position could be adversely affected. As with all software offerings, there is also a risk that our solutions could be vulnerable to cybersecurity threats or contain errors, bugs, or other issues affecting their functionality, which could negatively affect customer satisfaction and adoption.
In addition, continuing to execute on the new strategy requires investment in new capabilities and resources, particularly in software development, data management, and AI. Grid AI Corp. may face challenges in recruiting, retaining, and training employees who have the necessary skill sets to support our new business model. A failure to build or acquire these capabilities in a timely manner could delay the successful execution of the strategy and weaken Grid AI Corp.’s competitive position.
Grid AI Corp. currently has no major customers.
Grid AI Corp. has no major customers. Even if Grid AI Corp. acquires customers in the future, the loss of any one of its significant customers, their inability to perform under their contracts, their termination or failure to renew their contracts with Grid AI Corp., or their default in payment could cause Grid AI Corp. revenue and its working capital to decline materially. We cannot assure
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that Grid AI Corp. will be successful in acquiring or retaining customers in the future. In such event, we and Grid AI Corp. may be unable to generate revenue, and our and Grid AI Corp.’s business, results of operations and financial condition could be materially and adversely affected.
If Grid AI Corp. is unable to attract and retain key employees and hire qualified management, technical, engineering and sales personnel, its ability to compete and successfully grow its business could be adversely affected.
We believe that Grid AI Corp’s success and its ability to reach its strategic objectives are highly dependent on the contributions of its key management, technical, engineering, and finance personnel. Key leaders include Marshall Chapin, Mike Krastev and Vaclav Moulis. Executive leadership and senior management transitions, reductions in workforce and employee turnover can be time-consuming, difficult to manage, create instability, cause disruption to our business and result in the loss of institutional knowledge. Any of these outcomes could impede the execution of Grid Ai Corp’s day-to-day operations and its ability to fully implement its business strategy. These effects could also make it more difficult to attract and retain talent. The failure to successfully hire and retain key executives and employees or the further loss of any key executives, senior management or employees could have a significant impact on Grid Ai Corp’s operations, including declining product identity and competitive differentiation, eroding employee morale and productivity or an inability to maintain internal controls, regulatory or other compliance related requirements, any and all of which could in turn adversely impact our business, financial condition, and results of operations.
In addition, Grid AI Corp’s ability to manage its growth effectively, including its ability to expand its market presence, is impacted by its ability to successfully retain its management team, and hire and train new personnel. Grid AI Corp’s success in hiring, attracting and retaining senior management and other experienced and highly skilled employees will depend in part on its ability to provide competitive compensation packages and a high-quality work environment and maintain a desirable corporate culture. To help attract, retain, and motivate qualified employees, Grid AI Corp’s uses stock-based awards, such as restricted stock units and performance-based cash incentive awards, and in the case of its executive officers, it also uses performance stock units. Further sustained declines in Grid AI Corp’s stock price, or lower stock price performance relative to our competitors, can further reduce the retention value of our stock-based awards. We may not be able to attract, integrate, train, motivate or retain current or additional highly qualified personnel, and our failure to do so could adversely affect our business, financial condition and operating results.
Furthermore, there is continued and increasing competition for talented individuals in our field. In addition to longstanding competition for highly skilled and technical personnel, we face increased competitive pressures and employee cost inflation in tighter labor markets. Industry competition and cross-industry labor market pressures may negatively affect Grid AI Corp’s ability to attract and retain its executive officers and other key technology, sales, marketing and support personnel and drive increases in our employee costs, both of which could adversely affect Grid AI Corp’s business, financial condition and results of operations.
Any failure to offer high-quality technical support services may adversely affect Grid AI Corp’s relationships with its customers and adversely affect our financial results.
Grid AI Corp’s customers depend on its support organization to resolve any technical issues relating to our hardware and software-enabled services. In addition, Grid AI Corp’s sales process is highly dependent on the quality of our software and service offerings, on our business reputation and on strong recommendations from our existing customers. Any failure to maintain high-quality and highly-responsive technical support, or a market perception that Grid AI Corp does not maintain high-quality and highly-responsive support, could adversely affect Grid AI Corp’s and our reputation, Grid AI Corp’s ability to sell our products to existing and prospective customers, and our and Grid AI Corp’s business, financial condition and results of operations.
Grid AI Corp offers technical support services with its software and service offerings and may be unable to respond quickly enough to accommodate short-term increases in demand for support services, particularly as it increases the size of its customer base. Grid AI Corp also may be unable to modify the format of its support services to compete with changes in support services provided by competitors. It is difficult to predict demand for technical support services and if demand increases significantly, Grid AI Corp. may be unable to provide satisfactory support services to its customers. Additionally, increased demand for these services, without corresponding revenue, could increase costs and adversely affect our and Grid AI Corp’s business, financial condition and results of operations.
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Severe weather events, including the effects of climate change, are inherently unpredictable and may have a material adverse effect on our financial results and financial condition.
Grid AI Corp’s business, including its customers and suppliers, may be exposed to severe weather events and natural disasters, such as tornadoes, tsunamis, tropical storms (including hurricanes), earthquakes, windstorms, hailstorms, severe thunderstorms, flooding, wildfires and other fires, extreme heatwaves, drought and power shut-offs causing, among other things, disruptions to our supply chain or utility interconnections and/or damage to energy storage systems installed at its customers’ sites. Such damage or disruptions may prevent Grid AI Corp from being able to satisfy its contractual obligations or may reduce demand from its customers for its energy storage systems causing our operating results to vary significantly from one period to the next. Grid AI Corp. may incur losses in its business in excess of: (1) those experienced in prior years, (2) the average expected level used in pricing, or (3) current insurance coverage limits.
The incidence and severity of severe weather conditions and other natural disasters are inherently unpredictable. Climate change is projected to affect the occurrence of certain natural events, such as an increase in the frequency or severity of wind and thunderstorm events, and tornado or hailstorm events due to increased convection in the atmosphere; more frequent wildfires and subsequent landslides in certain geographies; higher incidence of deluge flooding; and the potential for an increase in severity of the hurricane events due to higher sea surface temperatures. Changing market dynamics, global policy developments and the increasing frequency and impact of extreme weather events on critical infrastructure in the U.S. and elsewhere as a result of climate change have the potential to disrupt Grid AI Corp’s business, the business of its suppliers and the business of its customers, and may cause Grid AI Corp to experience higher attrition, losses and additional costs to maintain or resume operations. Additionally, climate change and the occurrence of severe weather events may adversely impact the demand, price, and availability of insurance. Due to significant variability associated with future changing climate conditions, we are unable to predict the impact climate change will have on our and Grid AI Corp’s business.
Increased scrutiny from stakeholders and regulators regarding sustainability practices and disclosures, including those related to sustainability, and disclosure could result in additional costs and adversely impact our business and reputation.
Companies across all industries are facing increased scrutiny regarding their sustainability practices and disclosures and some institutional and individual investors are using sustainability screening criteria in making investment decisions. Our disclosures on these matters or a failure to satisfy evolving stakeholder expectations for sustainability practices and reporting, which may conflict with one another, may potentially harm our reputation and impact employee retention, customer relationships and access to capital. For example, certain market participants use third-party benchmarks or scores to measure a company’s sustainability practices in making investment decisions and customers and supplies may evaluate our sustainability practices or require that we adopt certain sustainability policies as a condition of awarding contracts. In addition, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could expose us to government enforcement actions and private litigation. Furthermore, complying or failing to comply with existing or future federal, state, local, and foreign legislation and regulations applicable to our sustainability efforts, which may conflict with one another, could cause us to incur additional compliance and operational costs, suffer reputational harm or to become the target of litigation, investigations or other proceedings initiated by government authorities or private actors, which could materially and adversely affect our business, financial condition and results of operations.
Our ability to achieve any goal or objective, including with respect to environmental and diversity initiatives and compliance with sustainability reporting standards, is subject to numerous risks, many of which are outside of our control. Examples of such risks include the availability and cost of technologies and products that meet sustainability and ethical supply chain standards, evolving regulatory requirements affecting sustainability standards or disclosures, our ability to recruit, develop and retain diverse talent in our labor markets, and our ability to develop reporting processes and controls that comply with evolving standards for identifying, measuring and reporting sustainability metrics. Methodologies for reporting sustainability data may be updated and previously reported sustainability data may be adjusted to reflect improvement in availability and quality of third-party data, changes in assumptions, changes in the nature and scope of our operations and other changes in circumstances. Our processes and controls for reporting sustainability matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting sustainability metrics, including sustainability-related disclosures that may be required by the SEC, European and other regulators, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future. As sustainability best-practices, reporting standards and disclosure requirements continue to develop, we may incur increasing costs related to sustainability monitoring and reporting.
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A failure of our information technology (“IT”) and data security infrastructure could adversely affect our business and operations.
The efficient operation of Grid AI Corp’s business depends on our IT systems. We rely upon the capacity, reliability and security of our IT and data security infrastructure and our ability to effectively manage our business data, accounting, financial, legal and compliance functions, communications, supply chain, order entry and fulfillment, and expand and routinely update this infrastructure in response to the changing needs of our business. Our existing IT systems and any new IT systems we utilize may not perform as expected. If we experience a problem with the functioning of an important IT system or a security breach of our IT systems, including during system upgrades or new system implementations, the resulting disruptions could adversely affect our business.
Despite our implementation of reasonable security measures, our IT systems, like those of other companies, are vulnerable to damages from computer viruses, natural disasters, fire, power loss, telecommunications failures, personnel misconduct, human error, unauthorized access, physical or electronic security breaches, cyber-attacks (including malicious and destructive code, phishing attacks, ransomware, and denial of service attacks), and other similar disruptions. Such attacks or security breaches may be perpetrated by bad actors internally or externally (including computer hackers, persons involved with organized crime, or foreign state or foreign state-supported actors). Cybersecurity threat actors employ a wide variety of methods and techniques that are constantly evolving, increasingly sophisticated, and difficult to detect and successfully defend against. Moreover, we may not have the current capability to detect certain vulnerabilities, which may allow those vulnerabilities to persist in our systems over long periods of time. Additionally, it may take considerable time for us to investigate and evaluate the full impact of incidents, particularly for sophisticated attacks. These factors may inhibit our ability to provide prompt, full and reliable information about the incident to our customers, partners, regulators, and the public. Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, may further heighten the risk of cyber-attacks. The emergence and maturation of AI capabilities may also lead to new and/or more sophisticated methods of attack, including fraud that relies upon “deep fake” impersonation technology or other forms of generative automation that may scale up the efficiency or effectiveness of cyber-attacks. We have experienced such incidents in the past, and any future incidents could expose us to claims, litigation, regulatory or other governmental investigations, administrative fines and potential liability. Any system failure, accident or security breach could result in disruptions to our operations. A material network breach in the security of our or our service providers’ IT systems could include the theft of our trade secrets, customer information, human resources information or other confidential data, including but not limited to personally identifiable information. Although past incidents have not had a material adverse effect on our business operations or financial performance, to the extent that any disruptions or security breach results in a loss or damage to our data, or an inappropriate disclosure of confidential, proprietary or customer information, it could cause significant damage to our reputation, affect our relationships with our customers and strategic partners, lead to claims against us from governments and private plaintiffs, and otherwise adversely affect our business. We cannot guarantee that future cyberattacks, if successful, will not have a material effect on our business or financial results.
Many governments have enacted laws requiring companies to provide notice of cyber incidents involving certain types of data, including personal data. If an actual or perceived cybersecurity breach of security measures, unauthorized access to our system or the systems of the third-party vendors that we rely upon, or any other cybersecurity threat occurs, we may incur liability, costs, or damages, contract termination, our reputation may be compromised, our ability to attract new customers could be negatively affected, and our business, financial condition, and results of operations could be materially and adversely affected. Any compromise of our security could also result in a violation of applicable domestic and foreign security, privacy or data protection, consumer and other laws, regulatory or other governmental investigations, enforcement actions, and legal and financial exposure, including potential contractual liability. In addition, we may be required to incur significant costs to protect against and remediate damage caused by these disruptions or security breaches in the future. Further, our contracts may not fully protect us from liabilities, damages, or claims and, although we carry cyber insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. In addition, any data breach, security incident, or compromise of protected personal information may also result in notification requirements or other disclosure obligations and may subject us to civil fines and penalties, litigation, regulatory investigations or enforcement actions or claims for damages under applicable privacy laws.
Our and Grid AI Corp’s failure to adequately secure, protect and enforce our intellectual property rights may undermine our competitive position, and litigation to protect our intellectual property rights may be costly.
Grid AI Corp’s intellectual property is primarily software-based and may be inherently difficult to protect, as patents and formal protections in this area can be limited and enforcement may be uncertain. Grid AI Corp relies in part on trade secrets, proprietary know-how, and contractual protections, which may be vulnerable to unauthorized use, employee misappropriation, or other forms of
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intellectual property theft. In addition, litigation to enforce intellectual property rights is often complex, time-consuming, and costly, and there can be no assurance that the Company will be successful in protecting its intellectual property.
Monitoring unauthorized use of proprietary technology can be difficult and expensive. For example, many of our software developers reside in California and we cannot legally prevent them from working for a competitor.
Also, litigation may be necessary to enforce our intellectual property rights, protect our trade secrets, or determine the validity and scope of the proprietary rights of others. Such litigation may result in Grid AI Corp’s intellectual property rights being challenged, limited in scope or declared invalid or unenforceable. We cannot be certain that the outcome of any litigation will be in our or Grid AI Corp’s favor, and an adverse determination in any such litigation could impair our or Grid AI Corp’s intellectual property rights and may adversely affect our business, prospects and reputation.
We and Grid AI Corp’s rely primarily on patent, trade secret and trademark laws, and non-disclosure, confidentiality, and other types of contractual restrictions to establish, maintain, and enforce our intellectual property and proprietary rights. However, our or Grid AI Corp’s rights under these laws and agreements afford us and Grid AI Corp. only limited protection and the actions we take to establish, maintain, and enforce our intellectual property rights may not be adequate. For example, Grid AI Corp’s trade secrets and other confidential information could be disclosed in an unauthorized manner to third parties, our owned or licensed intellectual property rights could be challenged, invalidated, circumvented, infringed, or misappropriated or our intellectual property rights may not be sufficient to provide us with a competitive advantage, any of which could have a material adverse effect on our business, financial condition and results of operations. Additionally, we and Grid AI Corp’s rely on our brand names, trade names and trademarks to distinguish our products and services. In the event that our trademarks are successfully challenged and we lose rights to use those trademarks, we could be forced to rebrand our products and services, which could result in the loss of goodwill and brand recognition. In addition, the laws of some countries do not protect proprietary rights as fully as do the laws of the U.S. As a result, we may not be able to protect our proprietary rights adequately abroad.
We may face claims that our use of such technology or components infringes or otherwise violates the rights of others, which would subject us to the risks described above. We may seek indemnification from our licensors or suppliers under our contracts with them, but our rights to indemnification or our suppliers’ resources may be unavailable or insufficient to cover our costs and losses.
Negative attitudes toward renewable energy projects from the U.S. government, other lawmakers and regulators, and activists could adversely affect our business, financial condition and results of operations.
Parties with an interest in other energy sources, including lawmakers, regulators, policymakers, environmental and advocacy organizations or other activists may invest significant time and money in efforts to delay, repeal or otherwise negatively influence laws, regulations and programs that promote renewable energy. Many of these parties have substantially greater resources and influence than we and Grid AI Corp. have. Further, changes in U.S. federal, state or local political, social or economic conditions, including changes in U.S. Presidential administrations or deprioritization of these laws, programs and regulations, could result in their modification, delayed adoption or repeal. Any failure to adopt, delay in implementing, expiration, repeal or modification of these programs and regulations, or the adoption of any programs or regulations that encourage the use of other energy sources over renewable energy, could adversely affect our and Grid AI Corp’s business, financial condition and results of operations.
The installation and operation of Grid AI Corp.’s energy storage systems are subject to environmental laws and regulations in various jurisdictions, and there is uncertainty with respect to the interpretation of certain environmental laws and regulations to Grid AI Corp.’s energy storage systems, especially as these regulations evolve over time.
Grid AI Corp. is subject to national, state and local environmental laws and regulations, as well as environmental laws in those foreign jurisdictions in which it operates. Environmental laws and regulations can be complex and are evolving. These laws can give rise to liability for administrative oversight costs, cleanup costs, property damage, bodily injury, fines and penalties. Grid AI Corp. is committed to compliance with applicable environmental laws and regulations, including health and safety standards, and it routinely reviews the operation of its energy storage systems for health, safety and compliance. Grid AI Corp.’s energy storage systems, like other battery technology-based products of which it is aware, produce small amounts of hazardous wastes and air pollutants, and it seeks to handle these materials in accordance with applicable regulatory standards.
Maintaining compliance with laws and regulations can be challenging given the changing patchwork of environmental laws and regulations that prevail at the U.S. federal, state, regional and local levels and in foreign countries in which we operate. Most existing
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environmental laws and regulations preceded the introduction of battery technology and were adopted to apply to technologies existing at the time, namely large, coal, oil or gas-fired power plants. Currently, there is generally little guidance from these agencies on how certain environmental laws and regulations may, or may not, be applied to our technology.
In many instances, Grid AI Corp.’s technology is moving faster than the development of applicable regulatory frameworks. It is possible that regulators could delay or prevent Grid AI Corp. from conducting its business in some way pending agreement on, and compliance with, shifting regulatory requirements. Such actions could delay the sale to and installation by customers of energy storage systems, require their modification or replacement, result in fines, or trigger claims of performance warranties and defaults under customer contracts that could require Grid AI Corp. to refund hardware or service contract payments, any of which could adversely affect our and Grid AI Corp. business, financial performance and reputation.
Changes in the U.S. trade environment, including the imposition of import tariffs, could adversely affect the amount or timing of our revenues, results of operations or cash flows.
The United States has imposed significant new tariffs on nearly all products and components imported into the United States and could propose additional tariffs or increases to those already in place. Escalating trade tensions, particularly between the United States and China, have led to increased tariffs and trade restrictions, including tariffs applicable to certain materials and components for products used in storage or solar energy projects and the renewable energy market more broadly, such as module supply and availability. More specifically, in March 2018, the United States imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports pursuant to Section 232 of the Trade Expansion Act of 1962 and has imposed additional tariffs on steel and aluminum imports pursuant to Section 301 of the Trade Act of 1974. In February 2025, the United States expanded the Section 232 tariffs on steel and aluminum, raising them to 25% on both metals and eliminating previously available country-level and importer-specific exclusions and exemptions. In June 2025, Section 232 tariffs on steel and aluminum were further increased to 50%, and the scope was broadened to cover the steel and aluminum content of a wider range of derivative products. To the extent Grid AI Corp. sources products that contain overseas supplies of steel and aluminum, these tariffs and any additional or increased tariffs could result in interruptions in the supply chain and negatively affect costs and Grid AI Corp.‘s gross margins.
Additionally, in January 2018, the United States adopted a tariff on imported solar modules and cells pursuant to Section 201 of the Trade Act of 1974. The tariff was initially set at 30%, with a gradual reduction over four years to 15%. In 2022, the United States extended the Section 201 solar tariffs for an additional four years, which declined to a rate of 14% in 2025. The Section 201 solar tariffs expired on February 7, 2026. While this tariff did not apply directly to the components we import, it may have indirectly affected Grid AI Corp. by affecting the financial viability of solar energy projects, which could in turn reduce demand for our products. Furthermore, in July 2018, the United States adopted a 10% tariff on a long list of products imported from China under Section 301 of the Trade Act of 1974, including, inverters and power optimizers, which became effective on September 24, 2018 and has been increased several times since then. In June 2019, the Office of the U.S. Trade Representative increased the rate of such tariffs from 10% to 25%. In September 2024, Section 301 tariffs on Chinese solar cells and modules were increased from 25% to 50%, and in January 2025, new 50% Section 301 tariffs took effect on Chinese polysilicon and solar wafers. The Section 301 tariff on lithium-ion non-electric vehicle batteries from China, including those used in energy storage systems, increased from 7.5% to 25% effective January 1, 2026. While these tariffs are not directly applicable to Grid AI Corp.’s products, they could negatively affect the solar energy projects in which its products are used, which could lead to decreased demand for its products. In 2025, the United States broadly imposed additional 10% tariffs on Chinese goods under the International Emergency Economic Powers Act of 1977.
In addition, the United States currently imposes antidumping and countervailing duties on certain imported crystalline silicon photovoltaic (“PV”) cells and modules from China and Taiwan. Such antidumping and countervailing duties can change over time pursuant to annual reviews conducted by the U.S. Department of Commerce (“USDOC”), and an increase in duty rates could have an adverse impact on our operating results.
In February 2022, Auxin Solar Inc., a U.S. producer of crystalline silicon PV products, petitioned the USDOC to investigate alleged circumvention of antidumping and countervailing duties on crystalline silicon PV cell and module imports assembled and completed in Cambodia, Malaysia, Thailand, and Vietnam. In August 2023, USDOC issued a final determination that certain Chinese producers are circumventing antidumping and countervailing duties by shipping crystalline silicon PV cells and modules through Cambodia, Malaysia, Thailand, and Vietnam for minor processing. However, that two-year moratorium has since expired. In 2024, USDOC initiated a second solar antidumping and countervailing duties case involving these same four countries, and final antidumping and countervailing duties orders were issued in June 2025. Also in 2025, the United States also initiated an antidumping and countervailing duties case for Chinese anode material, which could affect battery prices, and USDOC initiated antidumping and
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countervailing duties investigations into imports of solar cell and modules from India, Indonesia, and Laos. The timing and progress of many of Grid AI Corp.’s customers’ projects depend upon the supply of batteries, PV cells and modules. As a result, the imposition and collection of antidumping and countervailing duties, the expanded scope of antidumping and countervailing duties investigations to additional countries and battery materials, and the stacking of multiple tariff authorities on such products, it could adversely affect Grid AI Corp.’s our business, financial condition and results of operations.
Tariffs, and the possibility of additional or increased tariffs in the future, have created uncertainty in the industry, particularly in light of the recent change in U.S. Presidential administration. This has resulted in, and may continue to result in, some project delays. If the price of solar systems or energy storage systems in the United States increases, the use of these products could become less economically feasible and could reduce Grid AI Corp.’s gross margins or reduce the demand of such systems manufactured and sold, which in turn may decrease demand for our products. Additionally, existing or future tariffs may negatively affect key customers, suppliers, and manufacturing partners. Such outcomes could adversely affect the amount or timing of Grid AI Corp.’s revenues, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages, or cause our customers to advance or delay their purchase of Grid AI Corp.’s products. It is difficult to predict what further trade-related actions governments may take, which may include additional or increased tariffs and trade restrictions, and we and Grid AI Corp. may be unable to quickly and effectively react to such actions.
Risks Related to our Securities
Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our Common Stock.
Our Common Stock is currently listed for trading on The Nasdaq Stock Market LLC. We must satisfy the continued listing requirements of Nasdaq, to maintain the listing of our Common Stock on The Nasdaq Stock Market LLC.
On September 6, 2024, we received a letter from the Listing Qualifications Staff of Nasdaq indicating that, based upon the closing bid price of our Common Stock for the last 30 consecutive business days, the Company was not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided 180 days, or until March 5, 2025, to regain compliance with the minimum bid price requirement. On March 6, 2025, we received a letter from Nasdaq advising that we had been granted a 180-day extension, or until September 1, 2025, to regain compliance with the minimum bid price requirement, in accordance with Nasdaq Listing Rule 5810(c)(3)(A). On September 3, 2025, we received a letter from Nasdaq that, Nasdaq has determined that for the last 10 consecutive business days, from August 18 to September 2, 2025, the closing bid price of the Company’s common stock has been at $1.00 per share or greater. Accordingly, the Company has regained compliance with Listing Rule 5550(a)(2), and this matter is now closed.
On January 7, 2025, we received a written notice from the Listing Qualifications department of Nasdaq indicating that were not in compliance with Nasdaq Listing Rule 5620(a), due to us not holding an annual meeting of stockholders in 2024 within one year of our 2023 fiscal year end. On February 21, 2025, we submitted a plan to regain compliance. On March 3, 2025, Nasdaq informed us that it has determined to grant us an extension until June 30, 2025 to regain compliance for continued listing. On July 3, 2025, the “Company received a letter from Nasdaq notifying the Company that, as the Company held its Annual Meeting on June 30, 2025, Nasdaq had determined that the Company has regained compliance with Nasdaq Listing Rule 5620(a) and that the matter is now closed.
On April 11, 2025, the Company received a letter from Nasdaq indicating that the Company was not in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market under Listing Rule 5550(b)(1), because the Company’s stockholders’ equity of ($3,876,738) as reported in the Company’s Annual Report on Form 10-K for the period ended December 31, 2024 was below the required minimum of $2.5 million, and because, as of April 10, 2025, the Company did not meet the alternative compliance standards, relating to the market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. On June 25, 2025, based on the timely submission by the Company of a compliance plan, the Company received a letter from Nasdaq granting an extension to the Company until October 8, 2025 to regain compliance with the minimum stockholders’ equity requirement. In the Form 8-K filed by the Company on October 6, 2025, the Company disclosed that that it believed that it had stockholders’ equity of at least $2.5 million in compliance with the Equity Rule as a result of the share exchange agreement dated September 30, 2025, between the Company, Grid AI Corp., and the stockholders of all of the issued and outstanding shares of Grid AI Corp. On October 8, 2025, the Company also submitted a letter to Nasdaq stating that the Company was compliant with the minimum stockholders’ equity requirement as a result of the share exchange transaction. On October 28, 2025, the Company received a letter from Nasdaq confirming that based on the Form 8-
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K filed by the Company on October 6, 2025, the Company is in compliance with the Equity Rule. The Letter also noted that if the Company fails to evidence compliance upon filing its next periodic report, it may be subject to delisting. At that time, Nasdaq will provide written notification to the Company, which may then appeal Nasdaq’s determination to a Hearings Panel.
On April 22 2026, we received notice from Nasdaq that we were not in compliance with SEC filings requirements indicating that it is not in compliance with Nasdaq Listing Rule 5250(c)(1) due to its failure to timely file its Annual Report on Form 10-K for the year ended December 31, 2025. The notice provides the Company with 60 calendar days, or until June 22, 2026, to submit a plan to regain compliance. If the plan is accepted, Nasdaq may grant an exception of up to 180 calendar days from the original filing due date, or until October 12, 2026, for the Company to regain compliance.
There can be no assurance that we will be able to sustain compliance with all applicable requirements for continued listing on The Nasdaq Stock Market LLC. In 2020, the SEC approved a previously proposed Nasdaq rule change to expedite delisting of securities with a closing bid price at or below $0.10 for 10 consecutive trading days during any bid price compliance period and that have had one or more reverse stock splits with a cumulative ratio of one for 250 or more shares over the prior two-year period. In addition, if a company falls out of compliance with the $1.00 minimum bid price after completing reverse stock splits over the immediately preceding two years that cumulatively result in a ratio one for 250 shares, the company will not be able to avail itself of any bid price compliance periods under Rule 5810(c)(3)(A), and Nasdaq will instead require the issuance of a Staff delisting determination. We could appeal the determination to a hearings panel, which could grant us a 180-day exception to remain listed if it believes we would be able to achieve and maintain compliance with the bid price requirement. Following the exception, the company would be subject to the procedures applicable to a company with recurring deficiencies (Nasdaq Rule 5815(d)(4)(B)).
In addition, Nasdaq advised that the Grid AI Corp. transaction constituted a business combination resulting in a change of control under Nasdaq rules and that the post-transaction entity would be required to satisfy Nasdaq initial listing standards and complete the applicable Nasdaq review process in connection with the second step of the transaction. Failure to satisfy Nasdaq’s requirements, whether relating to stockholders’ equity, bid price, corporate governance, shareholder approval, initial listing criteria or otherwise, could result in delisted our Common Stock from Nasdaq.
In the event that we are unable to regain and sustain compliance with all applicable requirements for continued listing on the Nasdaq, our Common Stock may be delisted from Nasdaq. If our Common Stock were delisted from Nasdaq, trading of our Common Stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or the Pink Market maintained by OTC Markets Group Inc. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our Common Stock on an over-the-counter market, and many investors would likely not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons. In addition, as a delisted security, our Common Stock would be subject to SEC rules as a “penny stock,” which impose additional disclosure requirements on broker-dealers. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our Common Stock. In addition, delisting would materially and adversely affect our ability to raise capital on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our Common Stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.
The limited public market for our securities may adversely affect an investor’s ability to liquidate an investment in us.
Although our Common Stock is currently listed on the Nasdaq Capital Market, there is limited trading activity. We can give no assurance that an active market will develop, or if developed, that it will be sustained. If an investor acquires shares of our Common Stock, the investor may not be able to liquidate our shares should there be a need or desire to do so.
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The market price of our Common Stock may be volatile which could subject us to securities class action litigation and prevent you from being able to sell your shares at or above the offering price.
The market price for our Common Stock has been and may continue to be volatile and subject to wide fluctuations in response to factors including the following:
| ● | sales or potential sales of substantial amounts of our Common Stock, including sales required for us to regain and maintain compliance with Nasdaq’s continued listing requirements; |
| ● | the Grid AI Corp. transaction, related shareholder approvals, Series H conversion issues or other capital structure developments |
| ● | delay or failure in initiating or completing pre-clinical or clinical trials or unsatisfactory results of these trials; |
| ● | announcements about us or about our competitors, including clinical trial results, regulatory approvals or new product introductions; |
| ● | developments relating to the Grid AI and AMPX business |
| ● | developments concerning our licensors or product manufacturers; |
| ● | litigation and other developments relating to our patents or other proprietary rights or those of our competitors; |
| ● | conditions in the pharmaceutical or biotechnology industries; |
| ● | governmental regulation and legislation; |
| ● | variations in our anticipated or actual operating results; |
| ● | change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations; foreign currency values and fluctuations; and |
| ● | overall economic, geopolitical or capital markets conditions. |
Many of these factors are beyond our control. The stock markets in general, and the market for pharmaceutical and biotechnological companies in particular, have historically experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market and industry factors could reduce the market price of our Common Stock, regardless of our actual operating performance.
We have never paid and do not intend to pay cash dividends on our Common Stock. As a result, capital appreciation, if any, will be your sole source of gain.
We have never paid cash dividends on any of our capital stock and we currently intend to retain future earnings, if any, to fund the development and growth of our business. Our Series B Preferred Stock carries a dividend rate of 9.0% per year, which is cumulative and continues to accrue on a daily basis whether or not declared and whether or not we have assets legally available therefor. We may pay such dividends at our option either in cash or in kind in additional shares of preferred stock. We do not expect to pay any dividends in cash and have paid accrued dividends in kind in additional shares of preferred stock to date. In addition, the terms of future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.
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Provisions in our Charter, our amended and restated by-laws and Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our Common Stock.
Provisions of our Charter, our amended and restated by-laws and Delaware law may have the effect of deterring unsolicited takeovers or delaying or preventing a change in control of our company or changes in our management, including transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices. In addition, these provisions may limit the ability of stockholders to approve transactions that they may deem to be in their best interests. These provisions include:
| ● | the inability of stockholders to call special meetings; |
| ● | the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could include the right to approve an acquisition or other change in our control or could be used to institute a rights plan, also known as a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors; |
| ● | advance notice required for any nomination or other business to be properly brought before an annual meeting of stockholders which requires notice to be delivered to our secretary not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting, subject to certain exceptions; |
| ● | any vacancies on our board of directors that results from the death, disability, resignation, disqualification or removal of any director or from any other cause shall be filled solely by the affirmative vote of a majority of the total number of directors then in office, even if less than a quorum, or by a sole remaining director and shall not be filled by the stockholders; provided that a vacancy created by the removal of a director by the stockholders may be filled by the stockholders; and |
| ● | forum selection provisions that state that unless we consent in writing to the selection of an alternative forum, (A) (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware (“DGCL”), the Charter or the by-laws as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. |
In addition, Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years, has owned 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our Common Stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your Common Stock in an acquisition.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, our share price and trading volume could decline.
The trading market for our shares is influenced by the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, our share price could decline.
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We currently have Series B Preferred Stock, Series G Preferred Stock and Series H preferred Stock outstanding. Our certificate of incorporation authorizes our Board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our Common Stock.
Our Board has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board also has the authority to issue preferred stock without further stockholder approval.
As of May 1, 2026, we have approximately 475.56 shares of Series B Preferred Stock outstanding with a stated value of $7,700 per share, which are currently convertible at the holder’s option at any time, together with any accrued but unpaid dividends thereon, into shares of Common Stock at a conversion price of $97,020, subject to certain adjustments.
Our Series B Preferred Stock gives its holders the preferred right to our assets upon liquidation and the right to receive dividend payments at 9.00% per annum before dividends are distributed to the holders of Common Stock, among other things. The holders of the Series B Preferred Stock, voting as a separate class, also have customary consent rights with respect to certain corporate actions, including the issuance of an increased number of shares of Series B Preferred Stock, the establishment of any capital stock ranking senior to or on parity the Series B Preferred Stock as to dividends or upon liquidation, the incurrence of indebtedness, and certain changes to our Charter or Bylaws including other actions.
Our Board also created the following series of preferred stock: (i) Series C Preferred Stock (“Series C Preferred Stock”), of which 75,000 shares are authorized for issuance, none of which are currently outstanding; (ii) Series D Preferred Stock (“Series D Preferred Stock”), of which 150 shares are authorized for issuance, none of which are currently outstanding; (iii) Series E Preferred Stock (“Series E Preferred Stock”), of which 150 shares are authorized for issuance, none of which are currently outstanding; and (iv) Series F Preferred Stock (“Series F Preferred Stock”), of which 7,000 shares are authorized for issuance, none of which are currently outstanding.
As of May 1, 2026, we have 595.808 shares of Series G Preferred Stock outstanding, each share of which is convertible into 1,000 shares of Common Stock, upon shareholder approval. As result of the ImmunogenX rescission agreement 11,777.418 shares of Series G Preferred Stock that we previously issued to the shareholders of IMGX were cancelled.
As to our Series G Preferred Shares, following shareholder approval of the conversion of the Series G Preferred Stock into Common Stock, if any, in accordance with the listing rules of the Nasdaq Stock Market, each share of Series G Preferred Stock will automatically convert into 1,000 shares of Common Stock, subject to certain limitations, including that a holder of Series G Preferred Stock is prohibited from converting shares of Series G Preferred Stock into shares of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 4.9% and 19.9%) of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion. Except as otherwise required by law, the Series G Preferred Stock does not have voting rights. We do not plan to seek such shareholder approval. However, as long as any shares of Series G Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series G Preferred Stock, make certain corporate actions. The Series G Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.
As of May 1, 2026, we also have 38,801.546 shares of Series H Preferred Stock outstanding, each share of which is automatically convertible into 1,000 shares of Common Stock into 1,000 shares of Common Stock, upon shareholder approval.
As to our Series H Preferred Stock shares, following shareholder approval of the conversion of the Series H Preferred Stock into Common Stock, if any, in accordance with the listing rules of the Nasdaq Stock Market, each share of Series H Preferred Stock will automatically convert into 1,000 shares of Common Stock, subject to certain limitations, including that a holder of Series H Preferred Stock is prohibited from converting shares of Series H Preferred Stock into shares of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 4.9% and 19.9%) of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion) in six equal installments, with each installment representing one-sixth of the aggregate number of Conversion Shares issuable upon conversion of all of the Series H Preferred Stock held by a holder if converted in full automatically and without an action required on the part of the holder thereof within five business days of the achievement of each of six different milestone events relating to the business of AMPX as set forth in the Certificate of Designation of Preferences, Rights and Limitations of Series H Non-Voting Convertible Preferred Stock. Except as otherwise required by law, the Series H Preferred Stock does not have voting rights. However, as long as any shares of Series H Preferred Stock are outstanding, the Company will not, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of the Series H Preferred Stock, make certain corporate actions. With respect to distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, all shares of Series H Preferred Stock shall rank: (i) senior to all junior securities; (ii) on parity with the Common Stock any other class or series
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of preferred stock of the Company hereafter created specifically ranking, by its terms, on parity with the Series H Preferred Stock; and (iii) junior to the Series B Convertible Preferred Stock any other class or series of Preferred Stock or other capital stock of the Company hereafter created specifically ranking, by its terms, senior to the Series H Preferred Stock.
Our obligations to our existing holders of the preferred stock and any future holders of any additional series of preferred stock we may issue could limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition and hinder the accomplishment of our corporate goals.
In addition to the above-referenced preferred stock, our Board could authorize the issuance of additional series of preferred stock with such rights preferential to the rights of our Common Stock, including the issuance of a series of preferred stock that has greater voting power than our Common Stock or that is convertible into our Common Stock, which could decrease the relative voting power of our Common Stock or result in dilution to our existing stockholders.
ITEM 1B.UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C.CYBERSECURITY
Cybersecurity Risk Management and Strategy
We maintain a cybersecurity risk management program designed to support the confidentiality, integrity and availability of our information systems and data. Our cybersecurity program is intended to identify, assess, manage and respond to cybersecurity risks affecting our corporate systems, legacy life sciences activities and, following the acquisition of Grid AI Corp., the software-enabled energy orchestration and related digital infrastructure associated with the Grid AI and AMPX businesses.
In designing and evaluating our cybersecurity initiatives, we use the National Institute of Standards and Technology Cybersecurity Framework, or NIST CSF, as a reference point for structuring aspects of our cybersecurity risk identification, assessment and response processes. Our use of that framework is intended as a guiding tool and does not mean that we certify compliance with any particular technical standard or framework requirement.
Our cybersecurity processes are
Key elements of our cybersecurity risk management program include:
| ● | periodic assessment of material cybersecurity risks affecting our systems, data, software environments, third-party integrations and related operations |
| ● | use of internal and external resources to support cybersecurity monitoring, assessment and response activities |
| ● | incident response planning intended to facilitate the identification, escalation, containment, investigation and remediation of cybersecurity incidents |
| ● | use of employee awareness measures and security-related processes designed to reduce human-factor risk |
| ● |
| ● | coordination among management, outside advisers and, where appropriate, the Audit Committee and Board regarding significant cybersecurity matters. |
Our business relies on third-party systems and services, including cloud infrastructure, software tools, communications systems, external consultants, data providers and other vendors. In addition, the Grid AI and AMPX business depends in part on integrations with third-party devices, platforms, utilities, market operators and other external systems. As a result, our cybersecurity and operational
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resilience may also depend on the cybersecurity practices and controls of third parties. Although we seek to evaluate and manage these risks, third-party systems and services remain a source of potential exposure.
As of the date of this Annual Report,
Cybersecurity Governance
Our Board of Directors has oversight responsibility for risk management generally, including cybersecurity risk.
Management is responsible for the day-to-day assessment and management of cybersecurity risks. Management uses internal personnel and external advisers, as appropriate, to support cybersecurity risk identification, security-related processes, incident response planning and evaluation of significant cyber-related issues. Management is also responsible for escalating significant cybersecurity matters to the Audit Committee and Board, as appropriate.
The Audit Committee receives updates from management regarding material cybersecurity risks and cybersecurity-related developments as management determines appropriate, including updates regarding significant incidents, if any, and material aspects of the Company’s cybersecurity risk management efforts. The Audit Committee then reports to the Board, as appropriate, on cybersecurity matters relevant to the Board’s oversight responsibilities.
Because our business includes software-enabled energy orchestration activities and associated digital infrastructure, our cybersecurity governance processes are intended to consider risks not only to traditional corporate information systems, but also to operational software platforms, third-party-connected environments, data handling practices and other digital elements of the Grid AI Corp. and AMPX business.
ITEM 2.PROPERTIES
Facilities
The Company no longer maintains a dedicated leased office space and operates using a remote and flexible office model. The Company believes its current arrangements are adequate to meet its operational needs.
ITEM 3.LEGAL PROCEEDINGS
On March 17, 2025, Ellenoff Grossman & Schole LLP (“EGS”) filed a lawsuit against the Company in the Supreme Court of the State of New York, County of New York, seeking to recover unpaid legal fees, costs, and disbursements. EGS alleges that the Company failed to pay for legal services rendered from September 2023 through January 2025 and asserts claims for breach of contract, account stated, and quantum meruit. EGS is seeking monetary damages of approximately $749,301, plus applicable interest, costs, and disbursements. The parties have entered into multiple stipulations extending the Company’s deadline to respond to the complaint. Most recently, on July 28, 2025, the deadline to answer, move, or otherwise respond was extended to January 13, 2026.
On January 12, 2026, EGS made a settlement proposal to resolve the matter for $450,000, consisting of an initial payment of $150,000 upon execution of a settlement agreement and the remaining $300,000 payable in equal monthly installments over a period of 12 to 16 months. EGS indicated that it would not accept payment contingent on financing or consideration in the form of equity.
The Company declined this proposal and has since continued to engage in discussions with EGS regarding a potential resolution. As of the date of this Annual Report, the parties are actively negotiating a settlement, and EGS has proposed a resolution in the range of approximately $400,000. There can be no assurance that the parties will reach a settlement on acceptable terms or at all, or as to the timing of any such resolution. See Note 17 in financial statements.
ITEM 4.MINE SAFETY DISCLOSURES
None.
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PART II
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market Information
Our Common Stock is listed on The Nasdaq Capital Market under the symbol “GRDX.”
Holders of Record
As of May 1, 2026, there were 6,200,051 shares of our Common Stock issued and outstanding and approximately 57 holders of record.
Dividends
We did not declare or pay any dividends on our Common Stock during the years ended December 31, 2025 and 2024. We currently intend to retain any future earnings, if any, to fund operations, working capital needs, strategic initiatives and the development of our business. Accordingly, we do not currently anticipate paying cash dividends on our Common Stock in the foreseeable future.
Any future determination to declare and pay dividends will be at the discretion of our board of directors and will depend on our results of operations, financial condition, cash requirements, capital requirements, contractual restrictions, available surplus and other factors that our board of directors may deem relevant.
Cumulative dividends on the shares of our Series B Preferred Stock accrue at the rate of 9% of the stated value per annum, payable semi-annually on June 30 and December 31 of each year, commencing on December 31, 2020. Such dividends are payable in additional shares of Series B Preferred Stock, valued at the stated value, or in cash at our sole option.
Securities Authorized for Issuance Under Equity Compensation Plans
See Item 12. – Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
Unregistered Sales of Equity Securities
During the year ended December 31, 2025, we issued securities in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, as described below
During the year ended December 31, 2025, the Company issued certain securities in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, that were not previously disclosed in a Current Report on Form 8-K or Quarterly Report on Form 10-Q, as described below:
During the year ended December 31, 2025, the Company issued an aggregate of 155,000 shares of its common stock upon the vesting of restricted stock units (“RSUs”) granted to certain employees, officers and directors outside of a registered equity compensation plan. Such issuances were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
In addition, following the initial closing under the Securities Purchase Agreement dated October 17, 2025, the Company issued additional warrants to purchase shares of its common stock to an investor in subsequent closings under such agreement, which were not previously disclosed in a Current Report on Form 8-K or Quarterly Report on Form 10-Q. These securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Except as described above, there were no other sales of unregistered securities during the year ended December 31, 2025 that were not previously disclosed in a Current Report on Form 8-K or Quarterly Report on Form 10-Q.
In addition, during the year ended December 31, 2025, the Company issued 155,000 shares of common stock upon the vesting of restricted stock units (“RSUs”) granted to certain employees, officers and directors outside of a registered equity compensation plan. Such issuances were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
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During the year ended December 31, 2025, except as otherwise described above, there were no other sales of unregistered securities required to be disclosed under this item that were not previously reported in a Current Report on Form 8-K or Quarterly Report on Form 10-Q.
ITEM 6.[RESERVED]
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
You should read the following discussion and analysis together with our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described under Part I, Item 1A, “Risk Factors,” and elsewhere in this Annual Report.
Overview
GridAI Technologies Corp. is a diversified technology company with operations that, as of December 31, 2025, consisted of (i) energy orchestration and grid optimization software solutions through our subsidiaries Grid AI Corp. and AMPX, and (ii) legacy biopharmaceutical development activities centered on Adrulipase for the treatment of exocrine pancreatic insufficiency.
Historically, the Company operated primarily as a clinical-stage biopharmaceutical company focused on the development of targeted, non-systemic therapies for gastrointestinal diseases. During 2025, the Company underwent a significant strategic transformation. On September 30, 2025, the Company completed a share exchange transaction pursuant to which it acquired 100% of the outstanding equity interests of Grid AI Corp. At the time of the acquisition, Grid AI Corp. owned 75% of the issued and outstanding equity interests of AMPX, which holds the operating subsidiary AMPX Limited. Following the transaction, Grid AI Corp. and its subsidiaries, including AMPX, became consolidated subsidiaries of the Company. As a result, the Company’s business profile changed materially, and its primary strategic focus shifted toward AI-driven energy technology operations.
In March 2025, the Company entered into a rescission agreement with ImmunogenX, LLC, formerly a wholly owned subsidiary of the Company, and the former shareholders of ImmunogenX. Under the rescission transaction, the parties agreed to unwind the Company’s prior acquisition of ImmunogenX by rescinding the previously issued Common Stock and Series G Preferred Stock issued in the transaction, conveying the equity interests of ImmunogenX back to the former ImmunogenX shareholders, and canceling the assumed ImmunogenX options and warrants. The Company retained $695,814 of ImmunogenX accounts payable, while ImmunogenX remained responsible for approximately $9.3 million of secured debt and certain other obligations. The rescission transaction closed on December 31, 2025. Following the closing, ImmunogenX ceased to be a subsidiary of the Company, and the Company no longer held any ownership interest in that business.
As a result, as of December 31, 2025, the Company’s business consists of its newly acquired subsidiaries (Grid AI Corp. and AMPX) together with its continuing Adrulipase development program and related corporate activities
Grid AI Corp. develops software and services designed to accelerate power availability and optimize energy infrastructure for artificial intelligence (AI) data centers and other large energy users. Grid Ai Corp. is currently in the development stage of an AI data center platform. This platform aims to use and optimize distributed energy resources, including battery energy storage systems, on-site generation, and grid interconnections. Currently, there is no revenue generated from this AI data center platform. Grid Ai Corp.’s commercial pipeline has recently been re-established and is continuing to develop through consulting-led engagements and targeted business development initiatives.
For the year ended December 31, 2025, the Company’s consolidated financial statements include the post-acquisition results of Grid AI Corp. and AMPX beginning on September 30, 2025. Prior to the Grid AI Corp. acquisition, the Company operated primarily as a clinical-stage biopharmaceutical company focused on targeted, non-systemic therapies for gastrointestinal diseases. Non-systemic therapies are non-absorbable drugs that act locally, such as in the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation. In May 2024, the Company changed its name from First Wave BioPharma, Inc. to Entero Therapeutics, Inc.
The Company’s continuing legacy biopharmaceutical focus is Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in patients with exocrine pancreatic insufficiency, including patients with cystic fibrosis and chronic
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pancreatitis. The Company plans to continue development activities relating to Adrulipase. The Company’s former Latiglutenase and CypCel programs were part of the ImmunogenX business, which was disposed of on December 31, 2025 in connection with the rescission transaction described below. The Company has also discontinued its Capeserod and Niclosamide programs. The Company terminated its license agreement with Sanofi relating to Capeserod on February 26, 2025 and no further payments were due thereunder.
In March 2024, the Company acquired ImmunogenX, Inc., whose operations were subsequently carried through ImmunogenX, LLC. During 2025, the Company determined to unwind that transaction. In March 2025, the Company entered into a rescission agreement with ImmunogenX and the former ImmunogenX shareholders, which was subsequently amended in July 2025. On December 31, 2025, the Company completed the rescission transaction. In connection with the closing, the Company transferred its ownership interests in ImmunogenX, rescinded the shares previously issued in the acquisition, cancelled the related assumed options and warrants and retained approximately $695,000 of ImmunogenX accounts payable, while ImmunogenX remained responsible for approximately $9.3 million of its secured debt. As a result, ImmunogenX is no longer a subsidiary of the Company.
On February 26, 2025, the Company provided notice of termination of its license agreement with Sanofi relating to Capeserod. That termination became effective in April 2025. The Company also determined not to continue pursuing previously announced strategic transactions involving Journey Therapeutics and Data Vault.
As a result of the acquisition of Grid AI Corp., the completion of the ImmunogenX rescission transaction and the discontinuation of several legacy biotechnology programs, comparability between periods is affected. The Company’s 2025 results reflect a materially different business profile than its 2024 results.
Nasdaq Listing Matters
During 2025, the Company received multiple notices from The Nasdaq Stock Market LLC relating to listing compliance matters.
On September 6, 2024, the Company received notice that it was not in compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). On March 6, 2025, the Company received notice that Nasdaq had granted an additional 180-day extension, through September 1, 2025, to regain compliance. On September 3, 2025, Nasdaq notified the Company that it had regained compliance with the minimum bid price requirement because the closing bid price of the Company’s common stock had been at least $1.00 per share for the required period, and the matter was closed.
On January 7, 2025, the Company received notice that it was not in compliance with Nasdaq Listing Rule 5620(a) because it had not held an annual meeting of stockholders in 2024 within the required time period. The Company held its Annual Meeting on June 30, 2025, and on July 3, 2025, Nasdaq notified the Company that it had regained compliance and that the matter was closed.
On October 28, 2025, the Company received a letter from Nasdaq confirming that, based on the Company’s Form 8-K filed on October 6, 2025, the Company was in compliance with the minimum stockholders’ equity requirement under Listing Rule 5550(b)(1). Nasdaq also noted that if the Company failed to evidence compliance upon filing its next periodic report, it could again become subject to delisting proceedings.
On November 5, 2025, the Company received a letter from Nasdaq stating that the Company’s proposed transaction with GridAI Corp. constituted a business combination resulting in a change of control under Nasdaq Listing Rule 5110(a). Nasdaq indicated that the post-transaction company would be required to satisfy Nasdaq’s initial listing criteria and complete the applicable Nasdaq initial listing review process in connection with the second step of the transaction.
On April 22, 2026, the Company received a notice from Nasdaq Listing Qualifications indicating that it is not in compliance with Nasdaq Listing Rule 5250(c)(1) due to its failure to timely file its Annual Report on Form 10-K for the year ended December 31, 2025. The notice provides the Company with 60 calendar days, or until June 22, 2026, to submit a plan to regain compliance. If the plan is accepted, Nasdaq may grant an exception of up to 180 calendar days from the original filing due date, or until October 12, 2026, for the Company to regain compliance.
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Revolving Loan Agreement
Effective January 31, 2025, the Company entered into a Revolving Loan Agreement providing for borrowings of up to $2.0 million. The revolving note bears interest at 18% per annum and matured on January 31, 2026. The agreement includes customary conditions, covenants and events of default, as well as provisions relating to board composition and the Company’s reasonable best efforts to pursue a qualified public equity offering.
Under the Revolving Loan Agreement, the outstanding principal balance of all outstanding loans, all accrued and unpaid interest and all other amounts, costs, expenses and/or liquidated damages were due in full the “Maturity Date”. On April 1, 2026, the Company received a demand letter from the Lender’s counsel, asserting that the Company is in default of the Revolving Loan Agreement as the Maturity Date has passed and the amounts due under the Revolving Loan Agreement have not been repaid, and demanding the Company to pay a total sum of $1,014,675, which includes the principal amounts received by the Company ($700,000), interest and a 20% increase of these amounts due to the default pursuant to the terms of Revolving Loan Agreement. The Company is evaluating the effects of this event and as of the date of this report is in active discussions with the Lender. Our ability to repay, refinance or otherwise address this indebtedness on acceptable terms will affect our liquidity and financial flexibility. There can be no assurance that we will be able to refinance or satisfy this indebtedness on favorable terms or at all.
Financial Operations Overview
The Company operates through two reportable segments: (i) its artificial intelligence-driven energy technology business (“AI Segment”) and (ii) its legacy biotechnology operations focused on gastrointestinal therapies (“GI Segment”). The AI Segment consists of operations conducted through Grid AI Corp. and its subsidiaries, including AMPX, while the GI Segment reflects the Company’s retained biopharmaceutical development activities, including Adrulipase. Management evaluates performance and allocates resources across these segments based on strategic priorities and expected returns.
Revenue
Historically, the GI Segment did not generate revenue from the sale of approved biopharmaceutical products. Following the acquisition of Grid AI Corp. on September 30, 2025, the Company began generating revenue within its AI Segment from its energy technology operations conducted through Grid AI Corp. and AMPX.
Accordingly, beginning in the fourth quarter of 2025, our consolidated results include revenue associated with the Grid AI Corp. and AMPX business. This revenue has been generated primarily from software-enabled energy orchestration, optimization, dispatch, monitoring and related service offerings. Prior to the Grid AI Corp. acquisition, our legacy operations did not generate product revenue.
Looking forward, we expect our revenue profile to differ materially from prior periods as a result of the inclusion of the Grid AI Corp. and AMPX business. With respect to our retained legacy biopharmaceutical operations, we have not generated revenue from product sales and do not expect to do so unless and until a product candidate receives regulatory approval and is successfully commercialized. We may also seek to generate revenue in the future from strategic relationships, licensing arrangements, milestone payments, service arrangements, grants or other sources, although there can be no assurance that any such revenue will be realized. All revenue recognized during 2025 relates to the AI Segment, as the GI Segment has not generated product revenue.
Research and Development Expense
Research and development expenses relate primarily to the Company’s GI Segment. Prior to 2025, a significant portion of our research and development expenses related to the development of Adrulipase, Niclosamide, Capeserod and Latiglutenase. Following the discontinuation of certain legacy biotechnology programs, the completion of the rescission transaction involving ImmunogenX, LLC on December 31, 2025 and the acquisition of Grid AI Corp. on September 30, 2025, our retained biopharmaceutical research and development activities are primarily focused on Adrulipase.
Research and development expenses generally consist of internal and external costs incurred in connection with our legacy product development activities, including, among other things:
| ● | personnel-related costs, including salaries, benefits and stock-based compensation expense |
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| ● | fees paid to third parties in connection with product development, regulatory and related activities |
| ● | expenses incurred under agreements with contract research organizations, investigative sites, consultants and contractors |
| ● | costs of drug substance, drug product, clinical materials and related manufacturing support from contract development and manufacturing organizations and other third parties |
| ● | costs associated with preclinical, non-clinical and regulatory-support activities |
| ● | costs associated with evaluating and maintaining retained development assets and capabilities. |
Following the strategic shift in the Company’s business, research and development expense is expected to reflect a narrower retained life sciences portfolio than in prior periods. Adrulipase is the Company’s only remaining active biotechnology development program.
Because the Company now also operates an AI-driven energy technology business through Grid AI Corp. and AMPX, operating expenses may include technology, engineering, implementation, systems, data and platform-related costs that are distinct from legacy biopharmaceutical research and development activities. The classification of such costs depends on their nature and the applicable accounting treatment in the relevant period.
We expect the composition of our operating expenses to continue to evolve over time as management allocates resources among:
| ● | the continued evaluation and potential advancement of Adrulipase |
| ● | the operation, enhancement and expansion of the Grid AI Corp. and AMPX business |
| ● | corporate, compliance, integration and public-company requirements. |
The process of conducting clinical development activities and expanding a software-enabled energy technology business is costly and time-consuming. It is difficult to predict with certainty the timing and level of future expenditures, the duration of development activities, the pace of commercial growth or the timing of future revenues.
The success of our activities depends on numerous factors, including clinical outcomes, access to capital, technological performance, customer adoption, regulatory considerations, competitive conditions and commercial viability. Management expects to continue evaluating the allocation of capital and operating resources across the Company’s retained life sciences activities and its energy technology operations based on strategic priorities, liquidity and expected returns.
We do not believe that historical program-by-program comparisons are necessarily meaningful for all periods presented, particularly in light of the Company’s significant business transformation during 2025. The AI Segment does not incur research and development expenses of the nature associated with biopharmaceutical development.
General and Administrative Expense
General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation, related to executive, finance, business development, legal, compliance and other administrative functions. General and administrative expenses also include legal fees relating to corporate, transactional, governance and intellectual property matters, insurance, information technology costs, professional fees for accounting, auditing, tax and other advisory services, public company costs, including corporate communications and investor relations expenses, and facility-related costs.
General and administrative expenses increased in importance during 2025 as a result of the Company’s acquisition of Grid AI Corp., the integration of the Grid AI Corp. and AMPX business, changes in management and board composition and the continued requirements of operating as a public company.
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We expect general and administrative expenses to remain significant and they may increase in future periods as we continue to support the operation and integration of the Grid AI Corp. and AMPX business, satisfy public company reporting and compliance obligations and incur costs associated with corporate governance, legal, accounting, finance, investor relations and information technology infrastructure.
General and administrative expenses may also increase in connection with business development initiatives, financing activities, strategic transactions, integration efforts and the expansion of our administrative and operational infrastructure, including the engagement of additional personnel, consultants and outside service providers. General and administrative expenses support both the AI Segment and the GI Segment and are managed on a consolidated basis.
Liquidity and Capital Resources
To date, we have not generated revenue from product sales and have experienced net losses and negative cash flows from operations. Our historical operations were funded primarily through sales of equity securities, equity-linked securities and debt financings. In 2025, our business changed significantly as a result of the acquisition of Grid AI Corp. and the completion of the rescission transaction involving ImmunogenX, LLC. Notwithstanding those transactions, as of December 31, 2025, we remained dependent on external sources of capital to fund our operations, satisfy our obligations and execute our business plan. Our capital requirements reflect the combined needs of both the AI Segment and the GI Segment, including funding for platform development, operations and integration activities within the AI Segment and potential future development activities within the GI Segment.
As of December 31, 2025, we had cash and cash equivalents of approximately $899,000, working capital deficit of approximately $12,563,000, and an accumulated deficit of approximately $208,780,000. We have not yet achieved profitability and expect to continue to incur losses for the foreseeable future. Our future capital needs will depend on a number of factors, including the operating requirements of the GridAI and AMPX business, our corporate overhead, debt service obligations, public company costs and the extent to which we seek to preserve, resume or advance development activities relating to Adrulipase.
Our liquidity has been, and we expect will continue to be, dependent on access to outside capital. We may seek additional funds through public or private offerings of equity or debt securities, exercises of outstanding warrants, strategic transactions, commercial partnerships, licensing arrangements, asset sales or other financing alternatives. The availability and terms of financing will depend on many factors, including market conditions, our operating performance, investor sentiment, Nasdaq listing status, the trading price of our Common Stock, our capital structure and broader macroeconomic and geopolitical conditions.
In January 2025, we entered into a revolving loan arrangement that provided for borrowings of up to $2.0 million. The facility bears interest at a high rate and matures on January 31, 2026. As of April 1, 2026, the Company was in default under the revolving loan arrangement as a result of its failure to repay amounts due at maturity, and the lender has issued a demand for repayment of the outstanding amounts. As a result of this default, the lender may accelerate the indebtedness, and amounts in excess of the outstanding principal, including accrued interest, fees and other costs, may become immediately due and payable. Our ability to repay, refinance or otherwise address this indebtedness on acceptable terms will affect our liquidity and financial flexibility. There can be no assurance that we will be able to refinance or satisfy this indebtedness on favorable terms or at all.
During 2025, we also completed the acquisition of Grid AI Corp., which expanded our operations beyond our legacy life sciences activities to include software-enabled energy orchestration and grid-edge platform activities through Grid AI Corp. and AMPX. In addition, on December 31, 2025, we completed the rescission transaction involving ImmunogenX, LLC, pursuant to which that business ceased to be our subsidiary. Following the rescission, we no longer held any ownership interest in ImmunogenX, although we retained certain liabilities as set forth in the related transaction documents. As a result of these transactions, our liquidity and capital resource profile at year-end 2025 differed materially from prior periods.
We expect to continue to incur substantial expenditures in the foreseeable future, including expenditures relating to operation and integration of the Grid AI Corp. and AMPX business, maintenance of our public company infrastructure, professional fees, debt service and evaluation of strategic and financing alternatives. In addition, although Adrulipase remains our principal retained legacy biopharmaceutical asset, any meaningful advancement of that program would require substantial additional capital for manufacturing, clinical development, regulatory activities and related support functions.
Because we do not currently generate revenue from approved pharmaceutical product sales and because the Grid AI Corp. and AMPX business remains in an early stage within our consolidated structure, we expect to continue to rely on external capital resources.
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If we are unable to obtain additional financing when needed, on acceptable terms or at all, we may be required to delay, reduce or terminate operating activities, defer strategic initiatives, reduce headcount, dispose of assets, restructure obligations or pursue other alternatives that may materially adversely affect our business, financial condition and results of operations.
Our access to capital may also be adversely affected by factors beyond our control, including inflation, interest rates, capital markets volatility, geopolitical conflicts, supply chain disruption and changing investor sentiment toward small-cap public companies, biotechnology issuers, emerging energy technology companies or issuers with complex capital structures.
Based on our cash position, operating plans, debt obligations and expected cash requirements, management concluded that substantial doubt existed regarding our ability to continue as a going concern for a period of one year from the date of issuance of the financial statements, unless we are able to obtain additional capital or otherwise improve liquidity. The accompanying financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
Our ability to issue additional securities will depend on market conditions, the availability of effective registration statements or applicable exemptions from registration, stockholder approval requirements, Nasdaq rules and the terms of our existing securities and financing arrangements. Future equity or equity-linked financings may be dilutive to existing stockholders and may include rights, preferences or privileges senior to those of our Common Stock.
Consolidated Results of Operations for the Years Ended December 31, 2025 and 2024
The following table summarizes our consolidated results of operations for the periods indicated:
| | | | | | | | | |
| | Years Ended December 31, | | Increase | |||||
| | 2025 | | 2024 | | (decrease) | |||
Revenue | | $ | 36,251 | | | — | | | 36,251 |
Cost of Services | | | 693,683 | | | — | | | 693,683 |
Gross loss | | | (657,432) | | | — | | | (657,432) |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Research and development expenses | | $ | 925,482 | | $ | 903,941 | | $ | 21,541 |
General and administrative expenses | |
| 5,500,524 | |
| 14,717,333 | |
| (9,216,809) |
Total operating expenses | |
| 6,426,006 | |
| 15,621,274 | |
| (9,195,268) |
Loss from operations | |
| (7,083,438) | |
| (15,621,274) | |
| 8,537,836 |
| |
| | |
| | |
| |
Other expenses: | |
| | |
| | |
| |
Interest Income (expense), net | | | (490,835) | | | 875 | | | (491,710) |
Other income (expense), net | | | 934,257 | | | 1,378 | | | 932,879 |
Total other income (expense) | | | 443,422 | | | 2,253 | | | 441,169 |
Loss from continuing operations before income taxes | | | (6,640,016) | | | (15,619,021) | | | 8,979,005 |
Income tax benefit | | | 398,736 | | | — | | | 398,736 |
Loss from continued operations | | | (6,241,280) | | | (15,619,021) | | | 9,377,741 |
Loss from discontinued operations | | | (312,298) | | | (2,440,315) | | | 2,128,017 |
Net loss | | $ | (6,553,578) | | $ | (18,059,336) | | $ | 11,505,758 |
Revenues
Revenue for the year ended December 31, 2025 was approximately $36,000, compared to no revenue for the year ended December 31, 2024.
Our consolidated revenue in 2025 entirely reflects the inclusion of the Grid AI and AMPX business following the acquisition of Grid AI Corp. on September 30, 2025. Prior to that acquisition, our historical operations did not generate revenue from approved pharmaceutical product sales. Accordingly, comparability between 2025 and 2024 is affected by the fact that 2025 includes the post-acquisition results of the Grid AI and AMPX business, while 2024 reflects our pre-acquisition legacy business profile.
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Cost of Services
Cost of Services for the year ended December 31, 2025 was approximately $694,000, compared to no cost of services for the year ended December 31, 2024.
Cost of services in 2025 primarily relates to expenses associated with the delivery of services by the Grid AI and AMPX business following the acquisition of Grid AI Corp. on September 30, 2025, including personnel, platform and operational costs. Prior to the acquisition, the Company’s legacy pharmaceutical operations did not incur cost of services, as no revenue-generating service activities were conducted. Accordingly, comparability between 2025 and 2024 is limited, as 2025 includes post-acquisition operating costs associated with the Grid AI and AMPX business, while 2024 reflects the Company’s pre-acquisition legacy operations. Cost of services relates entirely to the AI Segment.
Research and Development Expenses
Research and development expenses for the year ended December 31, 2025 were approximately $925,000, compared to approximately $904,000 for the year ended December 31, 2024, representing a decrease of approximately $21,000, or 2.4%.
Research and development expenses in 2025 primarily reflect development activities associated with the Company’s Grid AI Corp. and AMPX business, together with limited retained legacy biopharmaceutical activities, including Adrulipase, and transition, evaluation or wind-down activity associated with the Company’s prior product portfolio. Following the completion of the rescission transaction involving ImmunogenX, LLC on December 31, 2025, the Latiglutenase and CypCel programs were no longer part of the Company’s business. In addition, the Company terminated the Sanofi license relating to Capeserod during 2025 and is no longer actively pursuing the Niclosamide program. As a result, research and development expense in 2025 reflects a shift from legacy life sciences development activities to technology and platform development within the Company’s Grid AI Corp. and AMPX business. Additionally, during 2025, approximately $890,000 of costs incurred by Grid AI Corp., primarily related to professional fees and labor, were classified outside of research and development expenses, further contributing to the decrease in reported research and development expenses compared to the prior year.
General and Administrative Expense
General and administrative expenses for the year ended December 31, 2025 were approximately $5,500,000, compared to approximately $14,717,000 for the year ended December 31, 2024, representing a decrease of approximately $9,217,000, or 62.6%.
General and administrative expenses in 2025 primarily related to corporate overhead, public company costs, legal and professional fees, finance and administrative functions, insurance, investor and compliance costs, stock-based compensation and costs associated with operating and integrating the GridAI and AMPX business following the September 30, 2025 acquisition. Comparability to 2024 is affected by the expansion of our business and corporate infrastructure during 2025, including transaction-related, integration-related and governance-related costs.
The year-over-year decrease in general and administrative expense primarily reflected the absence in 2025 of the significant transaction-related, advisory, legal and non-cash costs recorded in 2024 in connection with the IMGX transaction and related activities.
Other Income (Expense), Net
Other income (expense), net for the year ended December 31, 2025 was approximately $443,000 all related to the revolver in the GI segment, compared to $2,253 for the year ended December 31, 2024.
Other income (expense), net in 2025 primarily reflected other income, net of approximately $934,000, partially offset by interest expense, net of approximately $491,000 this reflects government grants recognized by the Company’s AI Segment through the AMPX business. Other income (expense), net for 2024 was not significant.
Loss from Continuing Operations
Loss from continuing operations for the year ended December 31, 2025 was approximately $6,640,000, compared to approximately $15,619,000 for the year ended December 31, 2024.
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The loss from continuing operations in 2025 reflected the combined operating results of the AI Segment and the GI Segment, including corporate overhead, retained biopharmaceutical activities and the operating profile of the GridAI and AMPX business following the September 30, 2025 acquisition.
Income tax benefit as of year ended December 31, 2025 was approximately $399,000, compared to $0 for the year ended December 31, 2024
Loss from Discontinued Operations
Loss from discontinued operations for the year ended December 31, 2025 was approximately $312,000, compared to approximately $2,440,000 for the year ended December 31, 2024.
Discontinued operations for 2025 and 2024 related primarily to the ImmunogenX business, which had previously been classified as held for sale and was ultimately disposed of through the rescission transaction completed on December 31, 2025. As a result, this line item reflects the operating results and other effects of that disposal group for the applicable periods.
Net Loss
As a result of the factors described above, net loss for the year ended December 31, 2025 was approximately $6,554,000, compared to approximately $18,059,000 for the year ended December 31, 2024, representing an improvement of approximately $11,506,000, or 63.8%.
Cash Flows for the Years Ended December 31, 2025 and 2024
The following table summarizes our cash flows for the periods indicated:
| | | | | | |
| | Years Ended December 31, | ||||
| | 2025 | | 2024 | ||
Net cash provided by (used in): |
| | |
| | |
Operating activities | | $ | (5,702,824) | | $ | (9,217,823) |
Investing activities | |
| 323,482 | |
| 88,169 |
Financing activities | |
| 5,889,383 | |
| 5,581,354 |
Effect on Foreign Exchange Rate on Changes on Cash | | | 204,751 | | | — |
Net (decrease) increase in cash and cash equivalents | | $ | 714,792 | | $ | (3,548,300) |
Operating Activities
Operating Activities
Net cash used in operating activities during the year ended December 31, 2025 was approximately $5,703,000, compared to net cash used in operating activities of approximately $9,218,000 during the year ended December 31, 2024.
Cash used in operating activities during 2025 was primarily attributable to our net loss, adjusted for non-cash items and changes in working capital. Significant non-cash items during 2025 included, depreciation and amortization of approximately $575,000, stock-based compensation of approximately $734,000, debt discount amortization of approximately $366,000, IMGX recission of approximately $(607,000) and a loss on termination of lease of approximately $109,000. Operating cash flows in 2025 were also impacted by changes in working capital, including increases in other current assets of approximately $45,000, deposits of approximately $98,000, accounts payable of approximately $464,200, trade receivables of approximately $7,000, and other current liabilities of approximately $758,000, as well as decreases in accounts receivable of approximately $1,201,000, deferred tax liabilities of approximately $419,000, accrued expenses of approximately $93,000, and lease liabilities of approximately $5,000.
Comparability between 2025 and 2024 is affected by the acquisition of GridAI Corp. on September 30, 2025, the inclusion of the GridAI and AMPX business for the post-acquisition period and the completion of the rescission transaction involving ImmunogenX, LLC on December 31, 2025. As a result, operating cash flows in 2025 reflect a materially different business profile than in 2024.
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Net cash used in operating activities during the year ended December 31, 2024 of approximately $9.2 million was primarily attributable to the net loss of approximately $18 million. Other non-cash expenses totaling approximately $6.3 million include Series G convertible preferred stock issued to financial advisors at acquisition of approximately $4 million, Common Stock granted to consultants of approximately $1.5 million, stock-based compensation of approximately $0.6 million, and Common Stock issued to financial advisors in connection with the IMGX acquisition of approximately $121,000. Additionally, changes in working capital contributed to cash flow usage, including a decrease in prepaid expenses of $1.1 million and a net increase in accounts payable and accrued expenses of $1.5 million.
Investing Activities
Net cash provided by investing activities during the year ended December 31, 2025 was approximately $323,000, compared to net cash provided by investing activities of approximately $88,000 during the year ended December 31, 2024.
Investing cash flows in 2025 primarily reflected cash acquired in connection with the acquisition of GridAI Corp.
Net cash provided by investing activities during the year ended December 31, 2024 was approximately $88,000 of cash acquired in the IMGX acquisition.
Financing Activities
Net cash provided by financing activities during the year ended December 31, 2025 was approximately $5,899,000, compared to approximately $5,581,000 during the year ended December 31, 2024.
Financing cash flows in 2025 primarily reflected proceeds from the issuance of common stock, pre-funded warrants and warrants, net of offering costs, of approximately $3,025,000, proceeds from promissory notes of approximately $2,300,000 and proceeds from notes payable of approximately $700,000, partially offset by repayments of acquisition consideration of $(750,000).
Net cash provided by financing activities of approximately $5.6 million for the year ended December 31, 2024 was primarily due to net proceeds of approximately $1.7 million from the exercise of warrants in the July 2024 Inducement Offering, as well as net proceeds of approximately $4.5 million from the issuance of Common Stock, pre-funded warrants, and warrants. These inflows were partially offset by approximately $645,000 related to the repayment of a note payable.
Net Increase (Decrease) in Cash and Cash Equivalents
As a result of the factors described above, cash and cash equivalents increased by approximately $715,000 during the year ended December 31, 2025, compared to a decrease of approximately $(3,548,300) during the year ended December 31, 2024.
Critical Accounting Policies and Significant Judgements and Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue, expenses and related disclosures during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described below. We base our estimates on historical experience, current conditions and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described more fully in Note 2 to our consolidated financial statements, management believes that the following accounting policies and estimates involve the most significant judgments and estimates used in the preparation of our financial statements: stock-based compensation, business combinations, goodwill and intangible assets, and the accounting for discontinued operations and assets held for sale. Because of the significance of the judgments involved, changes in assumptions or conditions could materially affect our reported results.
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Stock-Based Compensation
We account for stock-based compensation awards issued to employees, directors and certain non-employees by measuring the fair value of the award on the grant date and recognizing that fair value as compensation expense over the requisite service period, which is generally the vesting period. For certain awards with performance-based or transaction-based vesting conditions, expense is recognized when achievement of the applicable condition becomes probable.
The determination of the fair value of stock options and certain other equity awards requires the use of judgment and estimates, including expected term, expected volatility, risk-free interest rate and, where applicable, the probability and timing of performance conditions. Changes in these assumptions can materially affect the amount of stock-based compensation expense recognized in a given period.
Stock-based compensation became a more significant area of judgment during 2025 due to changes in management and board composition, transaction-related equity arrangements and additional equity awards granted in connection with the Company’s transition following the GridAI transaction.
Business Combinations
We account for acquired businesses using the acquisition method of accounting, which requires us to allocate the purchase consideration to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Any excess of the purchase consideration over the estimated fair value of the net assets acquired is recorded as goodwill.
In 2025, our acquisition of GridAI Corp. required significant management judgment in determining the fair value of the acquired assets and assumed liabilities, including developed technology, customer relationships, trade names, deferred consideration, other assumed obligations and non-controlling interests. These estimates required the use of assumptions regarding future cash flows, discount rates, useful lives, market participant assumptions and other valuation inputs. Because these valuations are inherently judgmental, actual results may differ from the assumptions used, and such differences could be material.
Goodwill and Intangible Assets
Goodwill represents the excess of purchase consideration over the fair value of net identifiable assets acquired in a business combination. As of December 31, 2025, our goodwill balance reflects historical goodwill as well as goodwill recorded in connection with the GridAI acquisition, while goodwill previously associated with the ImmunogenX transaction was affected by the accounting for assets held for sale, discontinued operations and the subsequent rescission transaction.
Goodwill is not amortized, but is tested for impairment at least annually and more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. Identifiable intangible assets with finite useful lives are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets determined to have indefinite useful lives are not amortized but are tested for impairment at least annually.
The accounting for goodwill and intangible assets requires significant judgment, including in determining whether impairment indicators exist, identifying reporting units, estimating fair value, determining useful lives and assessing whether acquired assets should be classified as finite-lived, indefinite-lived or held for sale. In particular, following the GridAI acquisition and the rescission of ImmunogenX, the Company was required to make significant judgments regarding the carrying value, classification and presentation of goodwill and intangible assets. If actual results differ from these estimates or if market, operational or strategic conditions change, we may be required to record impairment charges that could be material. [update for final 2025 numbers]
Discontinued Operations and Assets Held for Sale
The determination of whether a business, disposal group or related assets and liabilities should be classified as held for sale or presented as discontinued operations requires significant judgment. These judgments include whether the criteria for held-for-sale classification have been met, whether a disposal represents a strategic shift that has or will have a major effect on the Company’s operations and financial results and how the related assets, liabilities and operating results should be measured and presented.
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During 2025, these judgments were particularly significant in connection with the ImmunogenX business and the related rescission transaction completed on December 31, 2025. The Company was required to assess whether the relevant disposal group met the criteria for held-for-sale classification, whether the business qualified for discontinued operations presentation and how the related assets, liabilities and results of operations should be measured and disclosed. These determinations involved judgment and had a material effect on the presentation of our consolidated financial statements.
Going Concern Assessment
The preparation of our financial statements also requires management to assess the Company’s ability to continue as a going concern for a period of one year from the date the financial statements are issued. This assessment requires management to evaluate current liquidity, forecasted cash requirements, debt obligations, expected operating losses, access to capital and management’s plans to mitigate conditions that raise substantial doubt.
Because this analysis depends on assumptions regarding future financing, operating performance and other factors, it involves significant judgment. If actual conditions differ from management’s estimates, our liquidity outlook and going concern conclusions could change materially.
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 8. | FINANCIAL STATEMENTS |
The audited consolidated financial statements of GridAI Technologies Corp., including the notes thereto, together with the report thereon of Macias Gini & O’Connell LLP, our independent registered public accounting firm, are included in this Annual Report as a separate section beginning on page F-1.
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Appointment of Forvis Mazars, LLP
In 2024, the Company was notified that Mazars USA LLP (“Mazars”), the Company’s independent registered public accounting firm, entered into a transaction with FORVIS, LLP (“FORVIS”) whereby changed its name to Forvis Mazars, LLP (“Forvis Mazars”) and Mazars resigned as the Company’s independent public accounting firm. The Audit Committee of the Company’s Board of Directors appointed Forvis Mazars to serve as the Company’s independent registered public accounting firm effective June 1, 2024, subject to ratification by the Company’s stockholders at the Company’s annual meeting of stockholders.
The audit reports of Mazars on the financial statements of the Company for the fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
During the Company’s fiscal years ended December 31, 2023 and 2022, and the subsequent interim period preceding the engagement of Forvis Mazars, there were no disagreements between the Company and Mazars on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Mazars, would have cause Mazars to make reference to any subject matter of the disagreements in connection with its audit reports on the Company’s financial statements. During the Company’s previous fiscal years ended December 31, 2023 and 2022, and the interim period through the engagement of Forvis Mazars, Mazars did not advise the Company of any matters specified in Item 304(a)(1)(v) of Regulation S-K.
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During the Company’s two most recently completed fiscal years and through the date of engagement of Forvis Mazars, neither the Company nor anyone on behalf of the Company consulted with Mazars regarding (a) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements as to which the Company received a written report or oral advice that was an important factor in reaching a decision on any accounting, auditing or financial reporting issue; or (b) any matter that was the subject of a disagreement or a reportable event as defined in Items 304(a)(1)(iv) and (v), respectively, of Regulation S-K. During the Company’s fiscal years ended December 31, 2023 and 2022, and the subsequent period through the date heroef, the Company did not consult with Forvis Mazars regarding any of the matters set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
Resignation of Forvis Mazars, LLP
On August 9, 2024, Forvis Mazars notified the Company that it had decided to resign as the independent registered public accounting firm of the Company, effective immediately. As mentioned, the Audit Committee of the Company appointed Forvis Mazars to serve as the Company’s independent registered public accounting firm on June 1, 2024, and as such, Forvis Mazars did not provide any audit reports on the financial statements of the Company for the fiscal years ended December 31, 2023 and 2022.
Forvis Mazars resigned due to a belief that the Company could no longer generate reliable information to prepare its financial statements as a result of the cost reduction measures and other corporate developments.
The Company disagreed with Forvis Mazars’ belief (the “Disagreement”). Notwithstanding Forvis Mazars’ resignation, the Company believed it had sufficient management and governance in place, including a full-time Chief Financial Officer and corporate controller, and an Audit Committee of the Company’s Board that fully satisfied the corporate governance requirements of the Nasdaq Stock Market LLC and Securities Exchange Act Rule 10A-3. Members of the Audit Committee, upon being notified by Forvis Mazars of the resignation, discussed the Disagreement with Forvis Mazars. The Company authorized Forvis Mazars to respond fully to the inquiries of any successor accountant concerning the subject matter of the Disagreement.
From the appointment of Forvis Mazars to the date of Forvis Mazars’ resignation (the “Interim Period”), there were no disagreements between the Company and Forvis Mazars on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Forvis Mazars, would have caused Forvis Mazars to make reference to any subject matter of the disagreements in connection with its audit reports on the Company’s financial statements. During the Interim Period, Forvis Mazars did not advise the Company of any matters specified in Item 304(a)(1)(v) of Regulation S-K other than the subject matter of the Disagreement discussed above.
Appointment of Machias, Gini & O’Connell LLP
On August 28, 2024, the Audit Committee appointed MGO to serve as the Company’s independent registered public accounting firm effective August 27, 2024, subject to ratification by the Company’s stockholders at the Company’s annual meeting of stockholders.
During the fiscal years ended December 31, 2023 and 2022, and the subsequent interim period from January 1, 2024 through the engagement of MGO, neither the Company nor anyone on behalf of the Company consulted with MGO regarding (a) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements as to which the Company received a written report or oral advice that was an important factor in reaching a decision on any accounting, auditing or financial reporting issue; or (b) any matter that was the subject of a disagreement or a reportable event as defined in Items 304(a)(1)(iv) and (v), respectively, of Regulation S-K. During the fiscal years ended December 31, 2023 and 2022, and the subsequent interim period from January 1, 2024 through the engagement of MGO, the Company did not consult with MGO regarding any of the matters set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
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ITEM 9A. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
As of December 31, 2025, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and that management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level due to the existence of a material weakness in internal control over financial reporting related to the integration of Grid AI Corp., including insufficient accounting resources and processes to ensure the timely and accurate preparation and review of financial information.
Management’s Annual Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed under the supervision of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can provide only reasonable, not absolute, assurance with respect to financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or deterioration in the degree of compliance.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025 based on the criteria set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.
Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2025 due to the existence of a material weakness in internal control over financial reporting related to the integration of Grid AI Corp., including insufficient accounting resources and processes to ensure the timely and accurate preparation, review, and consolidation of financial information in accordance with U.S. GAAP.
Management is in the process of implementing remediation measures to address this material weakness, including enhancing the Company’s accounting function, strengthening review and reconciliation processes, and implementing additional controls over financial reporting. However, these remediation efforts were not fully implemented or tested as of December 31, 2025.
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This report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting, as we are a smaller reporting company.
Changes in Internal Controls over Financial Reporting.
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
During 2025, we completed the acquisition of GridAI Corp. and underwent related changes in our business and organizational structure. While management continues to evaluate and integrate internal controls associated with these changes, no material changes in internal control over financial reporting were identified during the period covered by this report.
ITEM 9B. | OTHER INFORMATION |
ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Not applicable.
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PART III
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Directors
The following section sets forth certain information regarding our directors. There are no family relationships between any of the directors and our Named Executive Officers.
| | |
Director, Title | | Age |
Edward J. Borkowski | | 66 |
Jason Sawyer | | 54 |
Geordan Pursglove | | 37 |
Manpreet Uppal | | 39 |
Jack Syage, Ph.D. | | 71 |
Jason D. Sawyer was appointed Interim Chief Executive Officer of the Company effective September 4, 2025, and Chief Executive Officer of the Company effective December 19, 2025, and has served as a member of the Company’s Board of Directors since August 11, 2025. Mr. Sawyer is a 33-year veteran of the alternative investment industry and a Principal at Access Alternative Group S.A., a Nassau, Bahamas-based venture investment and advisory firm. Over his career, Mr. Sawyer and the firms in which he was a principal have raised more than $5 billion in alternative assets and deployed more than US$300 million in early and growth-stage investments across software, fintech, blockchain, biotech, clean tech, natural resources, health & fitness, energy, and consumer products. His prior roles include Principal at Crane Capital Associates and Head of its Absolute Return Strategies Group and Founding Partner of Candlebrook Capital, which was an early sponsor of best-in-class ABL funds such as Brevet Capital and Third Eye Capital, as well as representing and advising numerous other brandname private equity and hedge funds. Mr. Sawyer currently has an advisory role to Quantum BioPharma as Head of Finance and M&A (Nasdaq: QNTM), and serves on various boards, including GridAI Technologies Corp. (Nasdaq: GRDX), The FUTR Corp. (TSX.V: FTRC), Perpetuals.com Ltd. (Nasdaq: PDC), and Lixte Biotechnology Holdings, Inc. (Nasdaq: LIXT), where he chairs the compensation committee and is a member of the audit committee.
Mr. Sawyer is well-qualified to serve on the Board due to his corporate experience in mergers and acquisition and private and public offerings of debt and equity securities.
Edward J. Borkowski was appointed to the Board in May 2015 and currently serves as our Lead Independent Director. Mr. Borkowski served as Chair of the Board from 2015 through his resignation effective as of February 19, 2021. Mr. Borkowski is a healthcare executive who currently serves as Executive Vice President for Therapeutics MD. He served as Executive Vice President of MiMedx Group, Inc. (Nasdaq: MDGX) from April 2018 until December 2019. Mr. Borkowski also served as a director for Co-Diagnostics, Inc. (Nasdaq: CODX), from May 2017 until June 2019. Previously, he served as the Chief Financial Officer of Aceto Corporation (Nasdaq: ACET) from February 2018 to April 2018, and has held several executive positions with Concordia International, an international specialty pharmaceutical company, between May 2015 to February 2018. Mr. Borkowski has also served as Chief Financial Officer of Amerigen Pharmaceuticals, a generic pharmaceutical company with a focus on oral, controlled release products and as the Chief Financial Officer and Executive Vice President of Mylan N.V. In addition, Mr. Borkowski previously held the position of Chief Financial Officer with Convatec, a global medical device company focused on wound care and ostomy, and Carefusion, a global medical device company for which he helped lead its spin-out from Cardinal Health into an independent public company. Mr. Borkowski has also served in senior financial positions at Pharmacia and American Home Products (Wyeth). He started his career with Arthur Andersen & Co. after receiving his MBA in accounting from Rutgers University subsequent to having earned his degree in Economics and Political Science from Allegheny College. Mr. Borkowski is currently a Trustee and a member of the Executive Committee of Allegheny College.
Mr. Borkowski’s extensive healthcare and financial expertise, together with his public company experience provides the Board and management with valuable insight in the growth of our business plan.
Geordan Pursglove was appointed to our Board of Directors effective August 11, 2025 and currently serves as a member of the Board. Mr. Pursglove is the Chief Executive Officer and Chairman of Lixte Biotechnology Holdings, Inc. (NASDAQ: LIXT), a clinical-stage biopharmaceutical company focused on advancing innovative oncology and immunotherapy solutions. Under his leadership, Lixte has successfully raised significant capital, maintained Nasdaq compliance, and executed key strategic initiatives,
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including the 2025 acquisition of Liora Technologies, which expanded the company’s footprint in global oncology and advanced radiation therapy markets. Geordan also serves as Chief Executive Officer and Chairman of Powell Max Limited (NASDAQ: PMAX), where he leads the company’s strategic direction, capital markets initiatives, and growth strategy as it expands its presence across emerging sectors and global markets. In addition to his leadership roles at Lixte and Powell Max Limited, Geordan serves on the boards of GridAI (NASDAQ: GRDX) and CyberScope Web3 Security Inc. He is also the Managing Director of The 2GP Group LLC, an industry-agnostic investment and advisory firm. Previously, Geordan played a pivotal role at SemiCab Holdings, the primary subsidiary of Algorhythm Holdings, Inc. (NASDAQ: RIME), where he helped drive its strategic merger, led capital-raising efforts, and supported international expansion initiatives. He brings extensive expertise in capital markets, mergers and acquisitions, corporate governance, and scaling public companies. Geordan has a proven track record of creating long-term value at the intersection of innovation, finance, and execution.
Mr. Pursglove is well qualified to serve on the board due to his specialization in capital allocation and corporate finance.
Manpreet Uppal was appointed to the Board in February 2025. Mr. Uppal is a seasoned professional with over 10 years of experience in capital markets and over 15 years of experience in real estate as a licensed realtor. He received his service license in 2009 and has been with the Fraser Valley Real Estate Board as a licensed real estate agent since 2009. Mr. Uppal graduated from the UBC Sauder School of Business with a major in Real Estate Trading in 2009.
Mr. Uppal is well qualified to serve on the Board due to his expertise in deal structuring and investments and his focus on capital markets and the financial sector.
Jack Syage was appointed to the Board in March 2024. Dr. Syage served as the Chief Executive Officer of ImmunogenX from July 2013 until the Closing of the Merger and as a member of the board of directors of ImmunogenX from January 2021 until the Closing of the Merger. Dr. Syage has over 30 years of experience in creating and leading the development of innovative technologies in the analytical instrumentation field. He is regarded as a leading expert in mass spectrometry and trace chemical detection. Dr. Syage served as CEO and Co - Founder of ImmunogenX, a global leader in the development of treatments for celiac disease, which developed latiglutenase before its combination with First Wave BioPharma. Previously he founded Syagen Technology, Inc. and led its growth culminating in its successful acquisition by French multinational Safran S.A. in 2011. Dr. Syage sits on the Board of Directors of Advanced Telesensors, PhageTech, Analytical Detection, and Appellation Ventures. He has published over 130 papers, delivered about 100 invited talks, has over 30 U.S. patents issued or pending, and appears on the list of the Most Highly Cited Chemists. His honorary positions include Fellow of the American Physical Society, Visiting Professor at UC Irvine, Visiting Professor at the Université de Paris - Sud, Editorial Board member of the Journal of Physical Chemistry, and invitee to the Nobel Symposium in Chemistry. He has received a Tibbets Award (SBIR) and was recently inducted into the Orange County OC 500 Directory of Influence. He received BA and PhD degrees from Hamilton College and Brown University, respectively, where he won several academic awards including Best Thesis. He was a postdoctoral fellow at Caltech under Nobel Laureate Ahmed Zewail.
Executive Officers
The following table sets forth information regarding our current executive officers as appointed by the Board, each to serve in such position until their respective successors have been duly appointed and qualified or until their earlier death, resignation or removal from office. Our executive officers are appointed by and serve at the discretion of the Board, subject to the terms of any employment agreements they may have with us. The following is a brief description of the qualifications and business experience of each of our current executive officers.
Executive Officer | | Age | | Title |
Jason Sawyer | | 54 | | Chief Executive Officer |
Anna Skowron | | 39 | | Interim Chief Financial Officer |
Our executive officers are appointed by and serve at the discretion of the Board, subject to the terms of any employment agreements they may have with us. The following is a brief description of the qualifications and business experience of each of our current executive officers.
Jason Sawyer. Please see Mr. Sawyer’s biography under the “Directors” section of this Annual Report.
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Anna Skowron was appointed to serve as our Interim Chief Financial Officer on March 7, 2025. She has served as principal of Skowron Accounting Professional Corporation since 2015. With over 14 years of accounting related experience, Ms. Skowron specializes in financial reporting, compliance, corporate governance, and business strategy. She previously managed consolidated reporting across North America for a global steel corporation. Ms. Skowron has played a key role in various business acquisitions and capital raising initiatives across multiple industries. Ms. Skowron holds a Bachelor of Commerce and Finance with specialization in Accounting and Economics from the University of Toronto and became a member of the Institute of Chartered Accounts of Ontario in 2014. She is a licensed CPA in Ontario, Canada.
Section 16(a) Beneficial Ownership Reporting Compliance
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act, requires our officers, directors, and persons who beneficially own more than 10% of our Common Stock to file reports of ownership and changes in ownership with the SEC. Officers, directors, and greater-than-ten-percent stockholders are also required by the SEC to furnish us with copies of all Section 16(a) forms that they file.
Based solely upon a review of these forms that were furnished to us, we believe that all reports required to be filed by these individuals and persons under Section 16(a) were filed during the year ended December 31, 2025 and that such filings were timely, except for one Form 3 (which included no securities beneficially owned by the reporting person) that was filed late on December 29, 2025, by Anna Skowron due to administrative oversight.
Code of Business Conduct and Ethics
The Board adopted a code of business conduct and ethics (the “Code”) that applies to our directors, officers and employees. A copy of this Code is available on our website at www.firstwavebio.com/investors. We intend to disclose on our website any amendments to and waivers of the Code that apply to our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions.
Insider Trading Policy
Director Nomination Process
Following the dissolution of the Nominating and Corporate Governance Committee on November 13, 2025, the full Board is responsible for identifying and evaluating potential nominees for election to the Board. In considering director candidates, the Board first considers those current members of the Board who are willing to continue in service. Current members of the Board with skills and experience relevant to our business and who are willing to continue their service as directors are considered for re-election, balancing the value of continuity of service by existing Board members with the benefit of obtaining new perspectives. Nominees for director are selected by a majority of the members of the Board.
Although we do not maintain a formal diversity policy, in considering the suitability of director nominees, the Board considers such factors as it deems appropriate to develop a Board and committees that are diverse in background and experience and comprised of qualified and experienced individuals. These factors may include sound judgment, knowledge, skill, diversity, integrity, business and financial experience, experience with public companies, corporate governance, capital markets, accounting and financial reporting, regulatory and legal compliance, strategic transactions, technology, operations, and the relevance of a candidate’s experience to the needs of the Company and the experience of other Board members. The Board also considers the benefit of continuity together with the periodic addition of new perspectives.
Nominations of persons for election to the Board may be made at an annual meeting of stockholders only (a) pursuant to the Company’s notice of meeting, (b) by or at the direction of the Board or any committee thereof, or (c) by any stockholder of the Company who was a stockholder of record of the Company at the time the notice is delivered by such stockholder to the Secretary of the Company, who is entitled to vote at the meeting upon such election of directors or upon such other business, as the case may be, and who complies with the notice procedures set forth in the Company’s bylaws.
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For any nominations to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice, which must be delivered to the Secretary of the Company at the Company’s principal executive offices not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. In no event shall the public announcement of an adjournment, postponement or recess of an annual meeting commence a new time period or extend any time period for the giving of a stockholder’s notice as described above. The number of nominees a stockholder may nominate for election at the annual meeting, or in the case of a stockholder giving notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the annual meeting on behalf of such beneficial owner, shall not exceed the number of directors to be elected at such annual meeting.
To be in proper form, such stockholder’s notice shall set forth: (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) the name, age, business and residence address, and principal occupation or employment of the nominee, (ii) all other information relating to such nominee that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder, (iii) a reasonably detailed description of any compensatory, payment or other financial agreement, arrangement or understanding that such nominee has with any other person or entity other than the Company, including the amount of any payment or payments received or receivable thereunder, in each case in connection with candidacy or service as a director of the Company, (iv) such person’s written consent to being named in the Company’s proxy statement and associated proxy card as a nominee of the stockholder and to serving as a director if elected, and (v) all information with respect to such nominee that would be required to be set forth in a stockholder’s notice if such nominee were the stockholder giving notice hereunder, and (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner, (ii) the class or series and number of shares of capital stock of the Company which are, directly or indirectly, owned beneficially, within the meaning of Rule 13d-3 under the Exchange Act, or of record by such stockholder and such beneficial owner, (iii) a description of any agreement, arrangement or understanding with respect to the nomination between or among such stockholder and or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, including the nominee, (iv) a description of any agreement, arrangement or understanding, including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares, that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder and such beneficial owner, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the Company, the effect or intent of which is to mitigate loss to, manage risk or benefit from share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner with respect to securities of the Company, (v) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting upon such business or nomination, as the case may be, and intends to appear in person or by proxy at the meeting to propose such business or nomination, (vi) a representation as to whether the stockholder or beneficial owner, if any, intends or is part of a group which intends to deliver a proxy statement and or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee and or otherwise to solicit proxies or votes from stockholders in support of such nomination, and (vii) any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in an election contest pursuant to Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. The Company may require any proposed nominee to furnish such other information as the Company may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Company. If requested by the Company, the information required on such nominee shall be supplemented by such stockholder and any such beneficial owner not later than 10 days after the record date for the meeting to disclose such information as of the record date. In addition, a stockholder seeking to nominate a director candidate shall promptly provide any other information reasonably requested by the Company.
Provided that stockholders provide the information required above for candidates recommended by stockholders, the Board will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as it uses for candidates identified by the Board or other persons.
Board Committees
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The standing committees of the Board consist of the Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee. Our Board has adopted written charters for each of these committees, copies of which are available on our website at www.firstwavebio.com/investors. Our Board may establish other committees as it deems necessary or appropriate from time to time.
Audit Committee
The duties and responsibilities of the Audit Committee include, but are not limited to:
| ● | appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm |
| ● | discussing with our independent registered public accounting firm the independence of such firm from management |
| ● | reviewing with our independent registered public accounting firm the scope and results of the audit |
| ● | approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm |
| ● | overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements filed with the SEC |
| ● | reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements |
| ● | coordinating oversight of the Code and our disclosure controls and procedures on behalf of the Board |
| ● | establishing procedures for the confidential and/or anonymous submission of concerns regarding accounting, internal controls or auditing matters |
| ● | reviewing and approving related-person transactions |
The rules of Nasdaq require our Audit Committee to consist of at least three directors, all of whom must be deemed independent under applicable Nasdaq rules. As of December 31, 2025, the Audit Committee consisted of Edward J. Borkowski (Chair and Audit Committee Financial Expert), Manpreet Uppal and Geordan G. Pursglove. The Board has determined that Messrs. Borkowski, Uppal and Pursglove are independent within the meaning of the Nasdaq listing standards applicable to audit committee service. Additionally, the Board has determined that Messrs. Borkowski, Uppal and Pursglove each qualify as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.
Compensation Committee
The duties and responsibilities of the Compensation Committee include, but are not limited to:
| ● | reviewing key employee compensation goals, policies, plans and programs |
| ● | reviewing and approving the compensation of our directors and executive officers |
| ● | reviewing and approving employment agreements and other similar arrangements between us and our executive officers |
| ● | appointing and overseeing any compensation consultants or advisors to the Company |
The rules of Nasdaq require our Compensation Committee to consist entirely of independent directors. As of December 31, 2025, the Compensation Committee consisted of Edward J. Borkowski, Manpreet Uppal and Geordan G. Pursglove. The Board has determined that Messrs. Borkowski, Uppal and Pursglove are independent within the meaning of the Nasdaq listing standards applicable to compensation committee service.
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Corporate Governance and Nominating Committee
On November 13, 2025, the Board of Directors dissolved the Nominating and Corporate Governance Committee. Following the dissolution of that committee, the full Board assumed responsibility for identifying qualified individuals to become members of the Board, determining the composition of the Board, monitoring the effectiveness of the Board, and overseeing corporate governance matters.
ITEM 11. | EXECUTIVE COMPENSATION |
Summary Compensation
The table set forth below reflects certain information regarding the compensation paid or accrued during the years ended December 31, 2025 and 2024 to our Chief Executive Officer and our executive officers, other than our Chief Executive Officer, who were serving as an executive officer as of December 31, 2024, and whose annual compensation exceeded $100,000 during such year (collectively the “Named Executive Officers”).
Executive Compensation
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Stock | | All Other | | | | ||
Named Executive Officers | | Year | | Salary | | Bonus | | Award | | Compensation | | Total | |||||
Jason Sawyer (CEO) | | 2025 | | $ | — | | $ | — | | $ | 93,200 | (1) | $ | 87,500 | (2) | $ | 180,700 |
Richard Paolone (Former CEO) (6) |
| 2025 | | | 87,500 | | | — | | | | | | 15,228 | (3) | | 102,728 |
James Sapirstein (Former CEO) |
| 2024 | | | 416,300 | | | — | | | 76,400 | (4) | | 17,608 | (5) | | 510,308 |
Anna Skowron | | 2025 | | | 103,387 | | | — | | | 151,450 | (1) | | — | | | 254,837 |
Sarah Romano (Former CFO) |
| 2024 | | | 390,550 | | | 117,165 | (1) | | 185,676 | (4) | | 117,165 | | | 810,556 |
| (1) | Represents the grant date fair value of restricted stock units issued during the year ended December 31, 2025, calculated in accordance with ASC Topic 718. The assumptions used in the calculation of these amounts are included in Note 11 of the consolidated financial statements contained in this Annual Report. |
| (2) | Jason Sawyer served as Chief Executive Officer pursuant to a consulting agreement and was not an employee of the Company during 2025. Accordingly, amounts paid to Mr. Sawyer, including consulting fees of $75,000 and director fees of $12,500, are reflected in “All Other Compensation.” |
| (3) | Represents director fees of $15,228 paid to Richard Paolone during the period he served as a member of the Board of Directors. |
| (4) | Represents the grant date fair value of restricted stock units issued during the year ended December 31, 2024. The assumptions used in the calculation of these amounts are included in Note 11 of the notes to the consolidated financial statements contained in this Annual Report. |
| (5) | Represents reimbursement of COBRA paid during the year ended December 31, 2024. |
| (6) | Mr. Paolone served as Interim Chief Executive Officer until his termination without cause effective September 3, 2025. |
| (7) | Mr. Sawyer was appointed Interim Chief Executive Officer effective September 4, 2025. |
Employment Arrangements and Potential Payments upon Termination or Change of Control
Sawyer Consulting Agreement. Effective as of September 4, 2025, we entered into a consulting agreement with Access Alternative Group S.A., a Bahamian corporation (the “Consultant”), in connection with Mr. Sawyer’s role as Interim Chief Executive Officer (the “Consulting Agreement”). Pursuant to the Consulting Agreement the company paid compensation of $12,500 per month. The Company was also obligated to defend and indemnify Mr. Sawyer in his capacity as Interim Chief Executive Officer to the fullest extent permitted under the Delaware General Corporation Law (“DGCL”) and also to maintain a policy for indemnifying its officers and directors, including Mr. Sawyer, for all actions permitted under the DGCL taken in good faith pursuit of their duties for the Company. On December 19, 2025, we entered into Amended and Restated Consulting Agreement (the “A&R Consulting Agreement”) with the Consultant in connection with the appointment of Mr. Sawyer as the Company’s Chief Executive Officer.
Pursuant to the A&R Consulting Agreement, the Consultant is entitled to (i) base compensation of $25,000 per month, retroactive to October 1, 2025, (ii) a quarterly fee of $20,000 per quarter for each quarter that the Company remains in compliance with Nasdaq rules and listing requirements with the first of such quarterly payments beginning on January 1, 2026 (if applicable), and (iii) a one-time payment of $150,000 and 400,000 shares issuable under the Company’s equity incentive plan, payable upon shareholder approval of the Company’s acquisition of Grid AI Corp. The Consulting Agreement further provides for equity compensation in the
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form of restricted stock units covering 1,000,000 shares of the Company’s common stock, with 25% vesting at the end of each calendar quarter of 2026 upon successful execution of the Company’s quarterly objectives and tasks, and with immediate vesting upon the earlier of: (a) termination without Cause, (b) a Change in Control (as defined in the A&R Consulting Agreement), or (c) the time more than 50% of the Company’s Series H preferred stock has been converted into shares of common stock of the Company.
The A&R Consulting Agreement has an initial two-year term commencing on December 19, 2025, and is renewable on a yearly basis at the Company’s discretion. The Consultant may terminate the Consulting Agreement upon not less than 30 days’ prior notice, and the Company may terminate the Consulting Agreement upon 10 business days’ prior notice. If the A&R Consulting Agreement is terminated for any reason other than for “Cause” (as defined in the A&R Consulting Agreement) before the end of the initial two-year term (or any renewal term), the Consultant is entitled to pro-rated cash severance equal to the remaining base compensation and the quarterly fee related to compliance with compliance with the Nasdaq rules and listing requirements for the unexpired portion of such term. The A&R Consulting Agreement also provides that the Company will defend and indemnify Mr. Sawyer in his capacity as Chief Executive Officer to the fullest extent permitted under the DGCL and maintain directors’ and officers’ liability insurance, subject to the terms set forth in the Consulting Agreement.
Skowron Consulting Agreement. We entered into a consulting agreement in connection with Ms. Skowron’s role as Interim Chief Financial Officer, pursuant to which she will receive compensation of $8,333 per month, effective as of the March 7, 2025. The Company will also defend and indemnify Ms. Skowron in her capacity as Chief Financial Officer of the Company to the fullest extent permitted under the DGCL and shall also maintain a policy for indemnifying its officers and directors, including Ms. Skowron, for all actions permitted under the DGCL taken in good faith pursuit of their duties for the Company
Paolone Consulting Agreement. On March 6, 2025, we entered into a consulting agreement in connection with Mr. Paolone’s role as Interim Chief Executive Officer, effective as of February 12, 2025, pursuant to which he will receive compensation of $12,500 per month. The Company will also defend and indemnify Mr. Paolone in his capacity as Chief Executive Officer of the Company to the fullest extent permitted under the DGCL and shall also maintain a policy for indemnifying its officers and directors, including Mr. Paolone, for all actions permitted under the DGCL taken in good faith pursuit of their duties for the Company. On September 3, 2025, in connection with his termination as Interim Chief Executive Officer and Chairman of the Board, the Company terminated the consulting agreement with Mr. Paolone. On November 28, 2025, Mr. Paolone notified the Company of his resignation as a director of the Company and in connection with this departure we entered into a Separation Agreement and Mutual Release (the “Separation Agreement”) with Mr. Paolone and 2818390 Ontario Corp., an Ontario, Canada corporation. Under the Separation Agreement we agreed to pay Mr. Paolone $500,000, consisting of an initial payment of $350,000 due upon the Effective Date (as defined in the separation Agreement), followed by three (3) monthly payments of $50,000 each, with installments payable respectively on January 1, 2026, February 1, 2026 and March 1, 2026, along with his legal fees in the amount of $50,000 in connection with the entry into the Separation Agreement.
Sapirstein Employment Agreement. Effective October 8, 2019, we entered into an employment agreement with Mr. Sapirstein to serve as our President and Chief Executive Officer for a term of three years, subject to further renewal upon agreement of the parties. The employment agreement with Mr. Sapirstein originally provided for a base salary of $450,000 per year, which was subsequently increased to $480,000 per year during the year ended December 31, 2020 and to $513,600 during the year ended December 31, 2023. In addition to the base salary, Mr. Sapirstein is eligible to receive (i) an initial bonus of up to 40% of his base salary on an annual basis, based on certain milestones that are yet to be determined, that was increased to a bonus of up to 50% of his base salary effective January 1, 2023; (ii) 1% of net fees received by us upon entering into license agreements with any third-party with respect to any product currently in development or upon the sale of all or substantially all of our assets; (iii) a grant of 33 restricted shares of our Common Stock which are subject to vesting as follows (a) 16 upon the first commercial sale of Adrulipase in the U.S., and (b) 17 upon our total market capitalization exceeding $1.0 billion for 20 consecutive trading days; (iv) a grant of 50 10-year stock options to purchase shares of our Common Stock which are subject to vesting as follows (a) 8 upon us initiating our next Phase 2 clinical trial in the U.S. for Adrulipase, (b) 8 upon us completing our next or subsequent Phase 2 clinical trial in the U.S. for Adrulipase, (c) 17 upon us initiating a Phase 2 clinical trial in the U.S. for Adrulipase, and (d) 17 upon us initiating a Phase 1 clinical trial in the U.S. for any product other than Adrulipase. Mr. Sapirstein was entitled to receive 20 days of paid vacation, participate in full employee health benefits and receive reimbursement for all reasonable expenses incurred in connection with his services to us.
Pursuant to the terms of his employment agreement, in the event that Mr. Sapirstein’s employment was terminated by us for Cause, as defined in his employment agreement, or by Mr. Sapirstein voluntarily, then would not be entitled to receive any payments beyond amounts already earned, and any unvested equity awards will terminate. In the event that Mr. Sapirstein’s employment was terminated as a result of an Involuntary Termination Other than for Cause, as defined in the Agreement, Mr. Sapirstein would be entitled
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to receive the following compensation: (i) severance in the form of continuation of his salary (at the Base Salary rate in effect at the time of termination, but prior to any reduction triggering Good Reason) for a period of 12 months following the termination date; (ii) payment of Executive’s premiums to cover COBRA for a period of 12 months following the termination date; and (iii) a prorated annual bonus.
On August 2, 2024, the Board approved the termination of the employment agreement with Mr. Sapirstein. Mr. Sapirstein did not receive any additional compensation or payments in connection with the termination of his employment agreement. Also on August 2, 2024, the Company and Mr. Sapirstein entered into a consulting agreement with Mr. Sapirstein pursuant to which the Company agreed to pay Mr. Sapirstein $400 an hour monthly for services rendered to the Company. Should travel be required, Mr. Sapirstein will additionally be compensated $200 per hour for travel time plus expenses and the federal mileage rate for car travel. The consulting agreement was terminated on February 2, 2025.
Romano Employment Agreement. Effective March 1, 2022, we entered into an employment agreement with Ms. Romano to serve as our Chief Financial Officer for a term of three years, subject to further renewal upon agreement of the parties. The employment agreement with Ms. Romano provides for a base salary of $365,000 per year, which was subsequently increased to $390,550 during the year ended December 31, 2023, and to $435,000 during the year ended December 31, 2024. In addition to the base salary, Ms. Romano is eligible to receive an annual milestone cash bonus of 35% of her annual salary based on certain milestones established by our Board or the Compensation Committee, which was subsequently increased to 40% on January 1, 2023. On March 1, 2022, Ms. Romano was granted stock options to purchase 250 shares of Common Stock on March 1, 2022, with an exercise price of $708.00 per share, which shall vest in over a term of three years pursuant to her employment agreement. Ms. Romano was entitled to receive 20 days of paid vacation, participate in full employee health benefits and receive reimbursement for all reasonable expenses incurred in connection with her service to us.
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In the event that Ms. Romano’s employment was terminated by us for Cause, as defined in Ms. Romano’s employment agreement, or by Ms. Romano voluntarily, she would not be entitled to receive any payments beyond amounts already earned, and any unvested equity awards would terminate. If we terminate her employment agreement without Cause, not in connection with a Change of Control, as such term is defined in Ms. Romano’s employment agreement, she would be entitled to (i) all salary owed through the date of termination; (ii) any unpaid annual milestone bonus; (iii) severance in the form of continuation of her salary for the greater of a period of six months following the termination date or the remaining term of the employment agreement; (iv) payment of premiums to cover COBRA for a period of six months following the termination date; (v) a prorated annual bonus equal to the target annual milestone bonus, if any, for the year of termination multiplied by the formula set forth in the agreement. If we terminate Ms. Romano’s employment agreement without Cause, in connection with a Change of Control, she would be entitled to the above and immediate accelerated vesting of any unvested options or other unvested awards.
Ms. Romano’s employment agreement expired pursuant to its terms on February 28, 2025 and Ms. Romano did not receive any additional compensation in connection with this expiration. Effective March 7, 2025 Ms. Romano resigned from her position as Chief Financial Officer.
Outstanding Equity Incentive Awards at Fiscal Year-End
As of December 31, 2025, none of the Company’s Named Executive Officers held any unexercised options or unvested stock awards.
Non-Executive Director Compensation
Effective October 1, 2022, following an independent review of external benchmarks, our Board adopted an updated Non-Executive Director Compensation Policy under which each of our non-executive directors is entitled to receive the following cash compensation for their service on the Board (paid quarterly): (i) an annual retainer of $60,000, (ii) the lead independent director an annual retainer of $20,000, (iii) the chair of the Audit Committee is entitled to receive an additional annual retainer in the amount of $15,000, (iv) each non-chairperson member of the Audit Committee is entitled to receive an additional annual retainer in the amount of $7,500, (v) the chair of the Compensation Committee is entitled to receive an additional annual retainer in the amount of $12,500, (vi) each non-chairperson member of the Compensation Committee is entitled to receive an additional annual retainer in the amount of $6,000, (vii) the chair of the Corporate Governance and Nominating Committee is entitled to receive an additional annual retainer in the amount of $10,000, and (viii) each non-chairperson member of the Corporate Governance and Nominating Committee is entitled to receive an additional annual retainer in the amount of $5,000. Additionally, under this policy, each of our non-executive directors is entitled to receive an annual grant, effective on the date of the Company’s annual meeting of stockholders, of restricted stock unit awards for their service on the Board equivalent to $75,000, which vests in equal quarterly installments.
Our Board will review the Non-Executive Director Compensation Policy on an annual basis prior to September 1 of each year.
The following table provides information regarding compensation paid to non-employee directors for the year ended December 31, 2025. Jason Sawyer did not receive compensation for his service on the Board in his capacity as Chief Executive Officer, other than director fees. Information regarding compensation paid to Mr. Sawyer in his capacity as Chief Executive Officer is reflected in the Summary Compensation Table under “Executive Compensation.”
| | | | | | | | | | | | | | | |
| | Fees Earned or | | Stock | | Option | | All Other | | | | ||||
Non-Executive Directors | | Paid in Cash(1) | | Award (2) | | Award | | Compensation | | Total | |||||
Edward J. Borkowski | | $ | 70,841 | | $ | 93,200 | | $ | — | | $ | — | | $ | 164,041 |
Manpreet Uppal | | $ | 40,787 | | $ | 93,200 | | $ | — | | $ | — | | $ | 133,987 |
Geordan G. Pursglove | | $ | 18,125 | | $ | 93,200 | | $ | — | | $ | — | | $ | 111,325 |
Eric Corbett (3) | | $ | 33,915 | | $ | — | | $ | — | | $ | — | | $ | 33,915 |
Jason Sawyer | | $ | 12,500 | | $ | — | | $ | — | | $ | — | | $ | 12,500 |
Jack Syage | | $ | 26,518 | | $ | 93,200 | | $ | — | | $ | — | | $ | 119,718 |
(1) | Represents cash compensation earned for board service during the year ended December 31, 2025. |
(2) | Represents the aggregate grant date fair value of restricted stock units granted to non-employee directors, determined in accordance with ASC Topic 718. Although the awards are dated January 1, 2026, they were approved in December 2025 and are considered granted as of December 31, 2025. |
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(3)Eric Corbett served as a member of the Board of Directors from February 2025 until his departure in September 2025.
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of December 31, 2025 regarding equity compensation plans approved by our security holders and equity compensation plans that have not been approved by our security holders:
| | | | | | | |
| | | | | | | Number of |
| | | | | | | securities |
| | Number of | | | | | remaining |
| | securities to be | | | | | available for |
| | issued upon | | Weighted-average | | future issuance | |
| | exercise of | | exercise price of | | under equity | |
| | outstanding | | outstanding | | compensation | |
| | options, warrants | | option, warrants | | plans reflected | |
Plan category | | and rights | | and rights | | in column (a) | |
| | (a) | | | | | |
Equity compensation plans approved by security holders (1) | | 19 | | $ | 39,125 | | 941,100 |
Equity compensation plans not approved by security holders | | — | | | — | | — |
Total | | 19 | | $ | 39,125 | | 941,100 |
| (1) | Represents outstanding stock options granted to our current or former employees, directors and consultants pursuant to the 2014 Plan and 2020 Plan. |
Summary of Amended and Restated 2014 Omnibus Equity Incentive Plan
The Board and stockholders adopted and approved the 2014 Plan, which took effect on May 12, 2014, and the 2020 Plan, which took effect on September 11, 2020. From the effective date of the 2020 Plan, no new awards have been or will be made under the 2014 Plan.
Stock Options. The 2014 Plan permitted the grant of “incentive stock options” (“ISOs”), which are intended to meet the requirements for special federal income tax treatment under the Code, and “nonqualified stock options” (“NQSOs”) that do not meet the requirements of Section 422 of the Code. No stock option may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime a stock option may be exercised only by the recipient. However, the Compensation Committee may permit the holder of a stock option, SAR or other award to transfer the stock option, right or other award to immediate family members or a family trust for estate planning purposes. The Compensation Committee will determine the extent to which a holder of a stock option may exercise the option following termination of service with us.
Restricted Stock Awards and Restricted Stock Unit Awards. A restricted stock award is a grant or sale of Common Stock to the participant, subject to our right to repurchase all or part of the shares at their purchase price (or to require forfeiture of such shares if issued to the participant at no cost) in the event that conditions specified by the Compensation Committee in the award are not satisfied prior to the end of the time period during which the shares subject to the award may be repurchased by or forfeited to us. A restricted stock unit entitles the participant to receive a cash payment equal to the fair market value of a share of Common Stock for each restricted stock unit subject to such restricted stock unit award, if the participant satisfies the applicable vesting requirement. The Compensation Committee will determine the restrictions and conditions applicable to each award of restricted stock award or restricted stock unit award, which may include performance-based conditions.
Unrestricted Stock Awards. An unrestricted stock award is a grant or sale of shares of our Common Stock to the participant that is not subject to transfer, forfeiture or other restrictions, in consideration for past services rendered to us or an affiliate or for other valid consideration.
Change-in-Control Provisions. In connection with the grant of an award, the Compensation Committee may provide that, in the event of a change in control, such award will become fully vested and immediately exercisable.
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Potential Limitation on Company Deductions
Section 162(m) of the Code generally disallows a tax deduction for compensation in excess of $1.0 million paid in a taxable year by a publicly held corporation to its Chief Executive Officer and certain other “covered employees.” Effective for taxable years beginning prior to January 1, 2018, an exception to this deduction limit applied to “performance-based compensation” that satisfied certain criteria. Under regulations issued by the Internal Revenue Service under Section 162(m), stock options and stock appreciation rights were treated as performance-based compensation if, among other things, an annual limit was placed on issuing such awards to a single individual. In order to comply with the foregoing exception to the $1.0 million deduction limit under Section 162(m), the 2014 Plan previously contained an annual limit on issuing awards of stock options and stock appreciation rights to a single individual, which was intended to allow us to deduct such awards granted as performance-based compensation. Pursuant to the Tax Cut and Jobs Act of 2017, however, the exception for performance-based compensation under Section 162(m) of the Code was repealed. As a result, the annual limit in the 2014 Plan was no longer effective to allow us to claim this deduction. Accordingly, effective July 16, 2020, our Board approved an amendment to the 2014 Plan that removed this annual limit.
Summary of the 2020 Omnibus Equity Incentive Plan
The Board and stockholders have adopted and approved the 2020 Plan, which is a comprehensive incentive compensation plan under which we can grant equity-based and other incentive awards to our officers, employees, directors, consultants and advisers. The purpose of the 2020 Plan is to help us attract, motivate and retain such persons with awards under the 2020 Plan and thereby enhance stockholder value.
Administration. The 2020 Plan is administered by the Compensation Committee of the Board, which consists of two members of the Board, each of whom is a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Compensation Committee may grant stock options, stock appreciation rights (“SARs”), performance stock awards, performance unit awards, dividend equivalent right awards, restricted stock awards, restricted stock unit awards, unrestricted stock awards, incentive bonus awards and other cash-based awards and other stock-based awards to our non-employee directors, officers, employees and nonemployee consultants or our affiliates. Among other things, the Compensation Committee has complete discretion, subject to the express limits of the 2020 Plan, to determine the directors, employees and individual consultants to be granted an award, the type of award to be granted, the terms and conditions of the award, the form of payment to be made and/or the number of shares of Common Stock subject to each award, the exercise price of each option and base price of each SAR, the term of each award, the vesting schedule for an award, whether to accelerate vesting, the value of the Common Stock underlying the award, and the required withholding, if any. Except as prohibited by applicable law or stock exchange rules, the Compensation Committee may delegate administrative functions under the 2020 Plan and may authorize a Reporting Person (as defined in the Exchange Act) to make certain awards under the 2020 Plan. Subject to the terms of the Plan, the Compensation Committee shall have the authority to amend the terms of an award in any manner that is not inconsistent with the Plan (including to extend the post-termination exercisability period of options and SARs), provided that no such action (except an action relating to a change of control) shall materially and adversely impair the rights of an award recipient with respect to such an outstanding award without the consent of the award recipient. The Compensation Committee is also authorized to construe the award agreements and may prescribe rules relating to the 2020 Plan.
Eligibility. Employees, directors and individual consultants of the Company or an affiliate as well as prospective employees, directors and individual consultants of the Company or an affiliate are eligible to participate in the 2020 Plan. The 2020 Plan allows for grants to employees, directors and individual consultants of the Company or an affiliate who are non-U.S. persons. Currently, we have nine employees (including one executive director), five non-executive directors and approximately ten non-employee consultants.
Shares Subject to the 2020 Plan. The initial number of shares of Common Stock available for issuance under the 2020 Plan was 238 shares. The 2020 Plan provides for an annual automatic increase on January 1 of each year, unless the Board determines otherwise, equal to ten percent (10%) of the total number of shares of Common Stock outstanding on December 31 of the immediately preceding calendar year, calculated on an as-converted basis. As-converted shares include all outstanding shares of Common Stock and all shares of Common Stock issuable upon the conversion of outstanding preferred stock, warrants and other convertible securities, but exclude shares issuable upon the exercise of options or other awards under the 2020 Plan or the Company’s Amended and Restated 2014 Omnibus Equity Incentive Plan.
If any award expires, is cancelled, or terminates unexercised or is forfeited, the number of shares subject thereto is again available for grant under the 2020 Plan. The maximum number of shares of Common Stock that may be subject to awards to any one
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outside director during any calendar year shall not exceed five, after giving effect to amendments, stock splits and recapitalizations that have occurred since the plan’s inception.
The number of shares authorized for issuance under the 2020 Plan and each of the preceding share limitations are subject to customary adjustments for stock splits, stock dividends, recapitalization, reorganization, merger, combination, exchange or similar transactions.
Stock Options. The 2020 Plan provides for either ISOs, which are intended to meet the requirements for special federal income tax treatment under the Code, or NQSOs that do not meet the requirements of Section 422 of the Code. Stock options may be granted on such terms and conditions as the Compensation Committee may determine; provided, however, that the per share exercise price under a stock option may not be less than the fair market value of a share of Common Stock on the date of grant and the term of the stock option may not exceed 10 years (110% of such value and five years in the case of an ISO granted to an employee who owns (or is deemed to own) more than 10% of the total combined voting power of all classes of our capital stock or our parent or subsidiary). ISOs may only be granted to employees. In addition, the aggregate fair market value of Common Stock covered by one or more ISOs (determined at the time of grant), which are exercisable for the first time by an employee during any calendar year may not exceed $100,000. Any excess is treated as a NQSO. Stock options granted under the 2020 Plan will be exercisable at such time or times as the Compensation Committee prescribes at the time of grant and recipients will be permitted to pay the exercise price as set forth by the Compensation Committee in the applicable option agreement. No stock option may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime a stock option may be exercised only by the recipient. However, the Compensation Committee may permit the holder of a stock option, SAR or other award to transfer the stock option, right or other award to immediate family members or a family trust for estate planning purposes. The Compensation Committee will determine the extent to which a holder of a stock option may exercise the option following termination of service with us.
Stock Appreciation Rights. A SAR entitles the participant, upon exercise, to receive an amount, in cash or stock or a combination thereof, equal to the increase in the fair market value of the underlying Common Stock between the date of grant and the date of exercise. SARs may be granted in tandem with, or independently of, stock options granted under the 2020 Plan. A SAR granted in tandem with a stock option (i) is exercisable only at such times, and to the extent, that the related stock option is exercisable in accordance with the procedure for exercise of the related stock option; (ii) terminates upon termination or exercise of the related stock option (likewise, the Common Stock option granted in tandem with a SAR terminates upon exercise of the SAR); (iii) is transferable only with the related stock option; and (iv) if the related stock option is an ISO, may be exercised only when the value of the stock subject to the stock option exceeds the exercise price of the stock option. A SAR that is not granted in tandem with a stock option is exercisable at such times as the Compensation Committee may specify. The Compensation Committee will determine the other terms applicable to SARs. The exercise price per share of a SAR will be determined by the Compensation Committee but will not be less than 100% of the fair market value of a share of our Common Stock on the date of grant, as determined by the Compensation Committee. The maximum term of any SAR granted under the 2020 Plan is ten years from the date of grant. Generally, each SAR will entitle a participant upon exercise to an amount equal to: (i) the excess of the fair market value on the exercise date of one share of our Common Stock over the exercise price, multiplied by (ii) the number of shares of Common Stock covered by the SAR. Payment may be made in shares of our Common Stock, in cash, or partly in Common Stock and partly in cash, all as determined by the Compensation Committee. No stock appreciation rights were granted or outstanding under the 2020 Plan during the years ended December 31, 2025 and 2024.
Performance Shares and Performance Unit Awards. Performance share and performance unit awards entitle the participant to receive cash or shares of Common Stock upon the attainment of specified performance goals. In the case of performance units, the right to acquire the units is denominated in cash values. The Compensation Committee will determine the restrictions and conditions applicable to each award of performance shares and performance units.
Dividend Equivalent Right Awards. A dividend equivalent right award entitles the participant to receive bookkeeping credits, cash payments and/or Common Stock distributions equal in amount to the distributions that would have been made to the participant had the participant held a specified number of shares of Common Stock during the period the participant held the dividend equivalent right. A dividend equivalent right may be awarded as a component of another award under the 2020 Plan, where, if so awarded, such dividend equivalent right will expire or be forfeited by the participant under the same conditions as under such other award.
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Restricted Stock Awards and Restricted Stock Unit Awards. A restricted stock award is a grant or sale of Common Stock to the participant, subject to our right to repurchase all or part of the shares at their purchase price (or to require forfeiture of such shares if issued to the participant at no cost) in the event that conditions specified by the Compensation Committee in the award are not satisfied prior to the end of the time period during which the shares subject to the award may be repurchased by or forfeited to us. Restricted stock units entitle the participant to receive a cash payment equal to the fair market value of a share of Common Stock for each restricted stock unit subject to such restricted stock unit award, if the participant satisfies the applicable vesting requirement. The Compensation Committee will determine the restrictions and conditions applicable to each award of restricted stock award or restricted stock unit award, which may include performance-based conditions.
Unrestricted Stock Awards. An unrestricted stock award is a grant or sale of shares of our Common Stock to the participant that is not subject to transfer, forfeiture or other restrictions, in consideration for past services rendered to us or an affiliate or for other valid consideration.
Other Cash-Based Awards and Other Stock-Based Awards. The Compensation Committee may award other types of cash-based or equity-based awards under the 2020 Plan, including the grant or offer for sale of shares of unrestricted shares and the right to receive one or more cash payments subject to satisfaction of such conditions as the Compensation Committee may impose.
Incentive Bonus Awards. Incentive bonus awards may be awarded to the participant based upon the attainment of specified levels of our performance as measured by pre-established, objective performance criteria determined at the discretion of the Compensation Committee.
Change-of-Control Provisions. The Compensation Committee may, at the time of the grant of an award, provide for the effect of a change of control (as defined in the 2020 Plan) on an award, including (i) accelerating or extending the time periods for exercising, vesting in, or realizing gain from any award, (ii) eliminating or modifying the performance or other conditions of an award, or (iii) providing for the cash settlement of an award for an equivalent cash value, as determined by the Compensation Committee. The Compensation Committee may, in its discretion and without the need for the consent of any recipient of an award, also take one or more of the following actions contingent upon the occurrence of a change of control: (a) cause any or all outstanding stock options and SARs to become immediately exercisable, in whole or in part; (b) cause any other awards to become non-forfeitable, in whole or in part; (c) cancel any stock option or SAR in exchange for a substitute option; (d) cancel any award of restricted stock, restricted stock units, performance shares or performance units in exchange for a similar award of the capital stock of any successor corporation; (e) redeem any restricted stock, restricted stock unit, performance share or performance unit for cash and/or other substitute consideration with a value equal to the fair market value of an unrestricted share of our Common Stock on the date of the change of control; (f) cancel any stock option or SAR in exchange for cash and/or other substitute consideration based on the value of our Common Stock on the date of the change in control, and cancel any stock option or SAR without any payment if its exercise price exceeds the value of our Common Stock on the date of the change of control; or (g) make such other modifications, adjustments or amendments to outstanding awards as the Compensation Committee deems necessary or appropriate.
Amendment and Termination. The Compensation Committee may adopt, amend and rescind rules relating to the administration of the 2020 Plan, and amend, suspend or terminate the 2020 Plan, provided, that (a) to the extent necessary and desirable to comply with any applicable law, regulation, or stock exchange rule, we shall obtain stockholder approval of any 2020 Plan amendment in such a manner and to such a degree as required, and (b) stockholder approval is required for any amendment to the 2020 Plan that (i) increases the number of shares available for issuance under the 2020 Plan, or (ii) changes the persons or class of persons eligible to receive awards.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding shares of our Common Stock beneficially owned as of April 1, 2026 by:
| ● | each of our officers and directors; |
| ● | all officers and directors as a group; and |
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| ● | each person known by us to beneficially own five percent or more of the outstanding shares of our Common Stock. Percentage of ownership is calculated based on 6,108,308 shares of Common Stock outstanding as of May 1, 2026. |
| | | | | |
| | | | Percent | |
| | Number | | Ownership | |
| | of Shares | | of Class | |
Name and Address of Beneficial Owner (1) | | (2) | | (3) | |
Current Executive Officers and Directors | | | | | |
Jason Sawyer, Chief Executive Officer | | 40,000 | | * | |
Anna Skowron, Interim Chief Financial Officer |
| 65,000 |
| * | |
Edward J. Borkowski, Director |
| 40,000 |
| * | |
Geordan Pursglove, Director |
| 40,000 |
| * | |
Manpreet Uppal, Director |
| 40,000 |
| * | |
Jack Syage, Director |
| 40,000 |
| * | |
All directors and executive officer as a group (6 persons) | | 265,000 | | 4.3 | % |
* | Less than 1%. |
(1) | Unless otherwise indicated, the address of such individual is c/o Grid AI Technologies Inc., 433 Plaza Real Suite 275, Boca Raton, Florida, 33432 |
(2) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. All entries exclude beneficial ownership of shares issuable pursuant to warrants, options or other derivative securities that have not vested or that are not otherwise exercisable as of the date hereof or which will not become vested or exercisable within 60 days. |
(3) | Percentages are rounded to nearest tenth of a percent. Percentages are based on 6,108,308 shares of Common Stock outstanding. Warrants, options or other derivative securities that are presently exercisable or exercisable within 60 days are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage of any other person. |
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ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Policy and Procedures Governing Related Party Transactions
The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest.
The SEC rules define a related party transaction to include any transaction, arrangement or relationship which: (i) we are a participant; (ii) the amount involved exceeds $120,000; and (iii) executive officer, director or director nominee, or any person who is known to be the beneficial owner of more than 5% of our Common Stock, or any person who is an immediate family member of an executive officer, director or director nominee or beneficial owner of more than 5% of our Common Stock had or will have a direct or indirect material interest.
Although we do not maintain a formal written procedure for the review and approval of transactions with such related persons, it is our policy for the disinterested members of our Board to review all related party transactions on a case-by-case basis. To receive approval, a related-party transaction must have a legitimate business purpose for us and be on terms that are fair and reasonable to us and our stockholders and as favorable to us and our stockholders as would be available from non-related entities in comparable transactions.
All related party transactions must be disclosed in our applicable filings with the SEC as required under SEC rules.
ImmunogenX Merger
In consideration for the Merger, our company issued 36,830 shares of Common Stock and 11,777.418 shares of Series G Preferred Stock to the shareholders of IMGX. The Preferred Stock was valued using an estimated price of $7.00 per share of Common Stock (actual price may differ), as agreed upon in the Merger Agreement. As a result of this payment, Dr. Syage received 15,400 shares of our Common Stock and 4,920.037 shares of Series G Preferred Stock, in exchange for shares of IMGX common stock that he held immediately prior to the Merger. Dr. Syage is a related party as a director.
Stockholder Notes
On March 13, 2024, in connection with the Merger and in order to fund the payment of $1.0 million to Lender, IMGX entered into a secured promissory note in favor of Jack Syage, in an aggregate principal amount of $500,000 (the “Syage Note”). The Syage Note bears interest at a per annum floating rate equal to the prime rate plus 4.5% and matures on October 13, 2025. Dr. Syage entered into a patent and trademark security agreement dated March 13, 2024 (the “Shareholder Security Agreement”), pursuant to which the obligations under the Syage Note are secured by, among other things, the patents and trademarks owned by IMGX.
The foregoing descriptions of the Syage Note and the Shareholder Security Agreement do not purport to be complete and are qualified in their entirety by reference to the Form of Shareholder Note and Form of Shareholder Security Agreement, which are incorporated by reference to this Report as Exhibit 10.58 and 10.59, respectively.
Rescission Agreement with IMGX and IMGX Shareholders
In March 2025, we announced that we entered into the Rescission Agreement, by and among the Company, IMGX and the former shareholders of IMGX. As part of the consideration in the Rescission Agreement, subject to approval from our shareholder, we will convey to the IMGX Shareholders all of the issued and outstanding Membership Interests of IMGX currently held by us. In addition, the parties to the Rescission Agreement agreed to rescind the issuances of the shares of Common Stock and Series G Preferred Stock that we have issued to the IMGX Shareholders as part of the Merger. The transactions contemplated in Rescission Agreement were closed on December 31, 2025. As a result of this Rescission Agreement, the 15,400 shares of our Common Stock and 4,920.037 shares of Series G Preferred Stock that Dr. Syage received in connection with the Merger were cancelled. In addition, as a result of this Rescission Agreement we conveyed to Dr. Syage 41.78% of the Membership Interests of IMGX, previously held by us. Dr. Syage was acting as the Shareholder Representative under the Rescission Agreement. Dr. Syage is a related party as a director.
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Executive Officer Consulting Arrangements
The Company has entered into consulting agreements with certain individuals serving as executive officers, including its Chief Executive Officer, Interim Chief Financial Officer and former Interim Chief Executive Officer. These arrangements were entered into directly or through affiliated entities and are considered related party transactions under applicable SEC rules. In connection with these arrangements, the Company incurred consulting fees during the year ended December 31, 2025. In addition, the Company entered into a separation agreement with its former Interim Chief Executive Officer providing for total payments of $500,000, plus legal fees, payable over a defined period. The terms of these arrangements were reviewed and approved by the disinterested members of the Board. For more information, See “Employment Arrangements and Potential Payments upon Termination or Change of Control” in this Annual Report.
Director Independence
The Board has determined that all of its members, other than Jason Sawyer, are “independent” within the meaning of Nasdaq Listing Rule 5605(a)(2) under the rules of the Nasdaq Stock Market (“Nasdaq”), and the Securities and Exchange Commission (“SEC”) rules regarding independence.
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
Set forth below are fees billed or expected to be billed to us by our independent registered public accounting firm Macias Gini & O’Connell LLP (“MGO”) for the year ended December 31, 2025. Mazars USA LLP (“Mazars”) was engaged for the year ended the quarterly review of the period ended March 31, 2024. Forvis Mazars (“Forvis”) was engaged for the quarterly review of the period ended June 30, 2024.
Audit Fees
The following table presents fees for professional services billed by MGO for the fiscal years ended December 31, 2025 and December 31, 2024.
| | | | | | |
| | For the years ended | ||||
| | December 31, | ||||
| | 2025 | | 2024 | ||
Audit fees (1) | | $ | 360,150 | | $ | 280,500 |
Audit-related fees (2) | |
| 53,000 | |
| 227,700 |
Tax fees | |
| — | |
| — |
All other fees (3) | |
| — | |
| 20,249 |
Total | | $ | 413,150 | | $ | 528,449 |
(1) | Professional services rendered by MGO for the audit of our annual financial statements and review of financial statements included in our Form 10-Qs. MGO billed fees of $360,150 for 2025 and $280,000 for 2024. |
(2) | The aggregate fees billed for assurance and related services by Mazars in 2025 and by Mazars and Forvis in 2024, which are reasonably related to the performance of the audit or review of our financial statements and are not reported under Note 1 above, principally related to registration statement filings. Mazars billed fees of $53,000 for 2025 and $227,700 for 2024. |
(3) | The aggregate fees billed for products and services provided by MGO in 2025 and by Mazars in 2024, other than the services reported in Notes 1 through 3 above. |
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has the sole authority for the appointment, compensation, and oversight of the work of our independent auditors. The Audit Committee has established a policy regarding pre-approval of all auditing services and the terms thereof and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Public Company Accounting Oversight Board) to be provided to us by the independent auditor. However, the pre-approval requirement may be waived with respect to the provision of non-audit services for us if the “de minimus” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied.
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The Audit Committee has considered whether the provision of audit-related fees, tax fees, and all other fees as described above is compatible with maintaining MGO’s independence and has determined that such services for fiscal year 2025 were compatible. All such services were approved by the Audit Committee pursuant to Rule 2-01 of Regulation S-X under the Exchange Act to the extent that rule was applicable.
The Audit Committee is responsible for reviewing and discussing the audited financial statements with management, discussing with the independent registered public accountants the matters required in Auditing Standards No. 16, receiving written disclosures from the independent registered public accountants required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accountants’ communications with the Audit Committee concerning independence and discussing with the independent registered public accountants their independence, and recommending to our board of directors that the audited financial statements be included in our annual report on Form 10-K.
PART IV
ITEM 15. | EXHIBITS |
Exhibit No. | | Description |
| | |
2.1 | | Agreement and Plan of Merger dated September 13, 2021, by and among the Company, Alpha Merger Sub, Inc., and Fortis Advisors LLC, as shareholder representative (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on September 13, 2021). |
2.2 | | Agreement and Plan of Merger dated March 13, 2024, by and among First Wave BioPharma, Inc., IMMUNO Merger Sub II, LLC, and ImmunogenX Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
2.3 | | Rescission Agreement effective March 24, 2025, by and among the Company, IMGX, currently a wholly owned subsidiary of the Company, and each of the individuals or entities who are the former shareholders of IMGX (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8 - K filed with the SEC on March 25, 2025) |
2.4 | | Amendment to Rescission Agreement effective July 15, 2025 by and among the Company, ImmunogenX, LLC, and the Shareholders (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8 - K filed with the SEC on July 16, 2025. |
2.5 | | Share Exchange Agreement (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2025). |
3.1 | | Amended and Restated Certificate of Incorporation of the Registrant, as amended. (incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2023). |
3.2 | | Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2022). |
3.3 | | Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended, of First Wave BioPharma, Inc. dated December 13, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8 - K filed with the SEC on December 14, 2023). |
3.4 | | Certificate of Designation of Series G Non - Voting Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
3.5 | | Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended, of First Wave BioPharma, Inc. dated May 15, 2024 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8 - K filed with the SEC on May 15, 2024) |
3.6 | | Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1, filed with the SEC on July 29, 2016). |
3.7 | | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Entero Therapeutics, Inc. dated August 14, 2025 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8 - K filed with the SEC on August 15, 2025) |
3.8 | | Certificate of Designation of Preferences, Rights and Limitations of Series H Non-Voting Convertible Preferred Stock filed with the Delaware Secretary of State on October 1, 2025 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8 - K filed with the SEC on October 6, 2025). |
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3.9 | | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Entero Therapeutics, Inc. dated November 26, 2025 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8 - K filed with the SEC on December 4, 2025) |
4.1 | | Form of Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 20, 2020). |
4.2 | | Form of Warrant for Convertible Notes Offering (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-3 filed with the SEC on July 27, 2020). |
4.3 | | Form of Private Placement Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on January 4, 2021). |
4.4 | | Form of Wainwright Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 8, 2021). |
4.5 | | Form of Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on March 10, 2021). |
4.6 | | Form of Wainwright Warrant (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K filed with the SEC on March 10, 2021). |
4.7 | | Form of Wainwright Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 27, 2021). |
4.8 | | Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K filed with the SEC on March 1, 2022). |
4.9 | | Form of Warrant Amendment Agreement (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K filed with the SEC on March 1, 2022). |
4.10 | | Form of Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2022). |
4.11 | | Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2022). |
4.12 | | Description of Capital Stock (incorporated by reference to Exhibit 4.31 of the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2024). |
4.13 | | Form of Common Warrant (incorporated by reference to Exhibit 4.36 of the Company’s Amendment No. 1 to its Registration Statement on Form S - 1 filed with the SEC on July 7, 2023). |
4.14 | | Form of Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8 - K filed with the SEC on July 21, 2023). |
4.15 | | Form of Common Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8 - K filed with the SEC on March 5, 2024). |
4.16 | | Form of Assumed Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
4.17 | | Form of Common Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on May 13, 2024). |
4.18 | | Form of Inducement Warrant, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 11, 2024. |
4.19 | | Form of Warrant (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on December 30, 2019). |
4.20 | | Description of Capital Stock* |
4.21 | | Form of Pre-Funded Warrant (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2025). |
4.22 | | Form of Warrant (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2025). |
4.23 | | Form of Warrant (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on October 22, 2025). |
10.1 | | 2020 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 16, 2020). |
10.2† | | First Wave Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 8, 2021). |
10.3 | | Settlement Agreement, by and between the Company and Fortis Advisors LLC, dated November 15, 2021 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 16, 2021). |
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10.4 | | Form of Waiver (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on February 7, 2022). |
10.5 | | Form on Indemnification Agreement (incorporated by referenced to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 5, 2022). |
10.6 | | Form of Waiver Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 13, 2022). |
10.7 | | Form of Term Sheet by and between the Representative and the Company, dated July 29, 2022 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 29, 2022). |
10.8# | | Form of Settlement Agreement, by and between the Representative and the Company, dated November 30, 2022) (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 2, 2022). |
10.9# | | Amendment to the 2020 Omnibus Equity Incentive Plan (incorporated by reference to the Company’s Current Report on Form 8 - K filed with the SEC on June 23, 2023). |
10.10† | | License Agreement, dated September 13, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8 - K filed with the SEC on October 10, 2023). |
10.11# | | Amended Credit Agreement, dated as of October 3, 2022 and amended on September 6, 2023 and March 13, 2024, by and between the Company and Mattress Liquidators, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
10.12 | | Second Amended and Restated Revolving Loan Promissory Note, dated March 13, 2024 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
10.13 | | Security Agreement, dated as of October 3, 2022, by and between ImmunogenX and Mattress Liquidators, Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
10.14 | | Lender Support Letter, dated as of March 13, 2024, by and between ImmunogenX and Mattress Liquidators, Inc. (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
10.15 | | Form of Shareholder Note (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
10.16 | | Form of Shareholder Security Agreement (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8 - K filed with the SEC on March 13, 2024). |
10.17 | | Form of Inducement Letter (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 11, 2024). |
10.18 | | Revolving Loan Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2025). |
10.19 | | Revolving Note (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2025). |
10.20 | | Consulting Agreement dated March 6, 2025 with Skowron Accounting Professional Corporation (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on March 7, 2025). |
10.21 | | Consulting Agreement dated March 6, 2025 with 2818390 Ontario Corp. (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on March 7, 2025). |
10.22 | | Form of Director Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on March 7, 2025). |
10.23 | | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2025). |
10.24 | | Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2025). |
10.25 | | Consulting Agreement dated September 8, 2025 between Company and Access Alternative Group S.A. for appointment of Jason D. Sawyer as Chief Executive Officer of the Company (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on September 12, 2025). |
10.26 | | Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2025). |
10.27 | | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 22, 2025). |
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10.28 | | Separation Agreement and Mutual Release dated November 28, 2025 between the Company, Richard Paolone and 2818390 Ontario Corp (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 4, 2025). |
10.29 | | Amended and Restated Consulting Agreement dated December 19, 2025 between Company and Access Alternative Group S.A. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 23, 2025). |
14.1 | | Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 of the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2024). |
16.1 | | Letter from Mazars USA LLP to the U.S. Securities and Exchange Commission, dated June 5, 2024 (incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 5, 2024). |
16.2 | | Letter from Forvis Mazars, LLP to the U.S. Securities and Exchange Commission, dated August 15, 2024 (incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 15, 2024). |
16.3 | | Letter from Macias Gini & O’Connell LLP to the U.S. Securities and Exchange Commission, dated August 29, 2024 (incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 29, 2024). |
19.1 | | Revised Insider Trading Policy (incorporated by reference to Exhibit 19.1 of the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2024). |
21.1 | | Subsidiaries of the Registrant |
31.1* | | Certification of CEO as Required by Rule 13a-14(a) or Rule 15d-14(a). |
31.2* | | Certification of CFO as Required by Rule 13a-14(a) or Rule 15d-14(a). |
32.1** | | Certification of CEO and CFO as Required by Rule 13a-14(a) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code. |
97.1 | | Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 of the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2024). |
101.INS* | | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
101.SCH* | | Inline XBRL Taxonomy Extension Schema. |
101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase. |
101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase. |
101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase. |
101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase. |
104* | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Filed herewith.
** Furnished herewith.
# Certain portions of this exhibit (indicated by “[*****]”) have been omitted as we have determined (1) it is not material and (2) is the type that the Company treats as private or confidential.
## Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.
### Certain annexes, schedules and exhibits have been omitted pursuant to Item 601 (a) (5) of Regulation S - K. The Company agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.
† Indicates a management contract or compensation plan, contract or arrangement.
ITEM 16: | FORM 10-K SUMMARY |
None.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.
| | |
| GridAI Technologies Corp. | |
| | |
May 1, 2026 | | |
| By: | /s/ Jason Sawyer |
| | Name: Jason Sawyer |
| | Title: Chief Executive Officer |
| | |
| By: | /s/ Anna Skowron |
| | Name: Anna Skowron |
| | Title: Interim Chief Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the registrant and in the capacities held on the dates indicated.
Signature | | Title | | Date |
| | | | |
/s/ Jason Sawyer | | Chief Executive Officer and Director | | May 1, 2026 |
Jason Sawyer | | (principal executive officer) | | |
| | | | |
/s/ Anna Skowron | | Interim Chief Financial Officer | | May 1, 2026 |
Anna Skowron | | (principal financial officer and accounting officer) | | |
| | | | |
/s/ Edward J. Borkowski | | Director | | May 1, 2026 |
Edward J. Borkowski | | | | |
| | | | |
/s/ Manpreet Uppal | | Director | | May 1, 2026 |
Manpreet Uppal | | | | |
| | | | |
/s/ Jack Syage | | Director | | May 1, 2026 |
Jack Syage | | | | |
| | | | |
/s/ Geordan Pursglove | | Director | | May 1, 2026 |
Geordan Pursglove | | | | |
| | | | |
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GridAI Technologies Corp.
Index to Consolidated Financial Statements
| ||
| | Page |
| | |
Report of Independent Registered Public Accounting Firm (Macias Gini & O’Connell LLP, New York, NY, PCAOB ID | | F-2 |
| | |
Consolidated Balance Sheets as of December 31, 2025 and 2024 | | F-4 |
| | |
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 | | F-5 |
| | |
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025 and 2024 | | F-6 |
| | |
Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 | | F-8 |
| | |
Notes to the Consolidated Financial Statements | | F-9 |
F-1
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of GridAI Technologies Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of GridAI Technologies Corp. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, mezzanine equity and changes in stockholders’ equity and cash flows, for the years then ended, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared as if the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred significant operating losses and negative cash flows from operations since inception. The Company also has a significant accumulated deficit. The Company is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute its development plans and continue operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
The business combination and the related computation and allocation of the purchase price of approximately $27.1 million to the assets acquired and liabilities assumed has been identified as a critical audit matter.
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Allocation of purchase price in accordance with ASC 805 (Business Combination)
Critical Audit Matter Description
As discussed in Notes 3 to the consolidated financial statements the Company entered into a business combination in September 2025. The Company allocated the total purchase price of the acquisition to the identifiable tangible and intangible assets acquired (including intangibles recognized) and liabilities assumed, based on their respective fair values as of the date of acquisition.
Considering the significant estimation, judgement, and subjectivity required in determining the future cash flows used to compute the fair value of recognized intangible assets required a high degree of auditor judgement and subjectivity.
How the Critical Matter Was Addressed in the Audit
Our audit procedures related to the business combination criteria, included the following procedures, among others:
| ● | Evaluated the purchase price and the opening balance of the assets acquired and liabilities assumed. |
| ● | Tested the mathematical accuracy of the calculations performed along with assessing the completeness and accuracy of the data used in the calculation of intangible assets recognized through the business combination. |
| ● | Evaluated the appropriateness of the valuation methodologies used, as well as auditing the key assumptions and inputs utilized by management in the valuation models, including anticipated future cash flows, discount rates, market multiples, risk-free rate, and other inputs, as applicable. To this effect, we utilized our valuation expert to help assist in independently replicating valuation models utilized in computing fair value and evaluating the reasonableness of underlying assumptions and estimates |
/s/
We have served as the Company’s auditor since 2024.
May 1, 2026
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GridAI Technologies Corp.
Consolidated Balance Sheets
| | | | | | |
| | December 31, | | December 31, | ||
| | 2025 | | 2024 | ||
ASSETS | | | | | | |
| | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Trade receivable | | | | | | — |
Prepaid expenses | |
| | |
| |
Assets of disposal group held-for-sale | |
| — | |
| |
Other receivables | | | | | | — |
Other current assets | | | | | | — |
Total Current Assets | | | | | | |
| | | | | | |
Other Assets: | | | | | | |
Restricted cash | |
| — | |
| |
Developed technology, net | | | | | | — |
Customer relations | | | | | — | |
Trade name | | | | | | — |
Goodwill | | | | | | |
Operating lease right-of-use assets | |
| — | |
| |
Deposits | |
| — | |
| |
Total Other Assets | |
| | |
| |
Total Assets | | $ | | | $ | |
| | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | | | | | |
| | | | | | |
Current Liabilities: | | | | | | |
Accounts payable | | $ | | | $ | |
Accrued expenses | | | | | | |
Due to related parties | | | | | | — |
Accrued dividend payable | |
| | | | |
Deferred consideration | | | | | | — |
Notes payable | | | | | | — |
Operating lease liabilities - current | | | | | | |
Liabilities held-for-sale | | | — | | | |
Other current liabilities | |
| | | | |
Total Current Liabilities | |
| | | | |
Deferred tax liability | | | | | | — |
Operating lease liabilities – non-current | | | — | | | |
Total Liabilities | |
| | |
| |
| | | | | | |
Mezzanine Equity: | | | | | | |
Series G preferred stock- Par value $ | | | | | | |
Stockholders’ Equity (Deficit): | | | | | | |
Series B preferred stock- Par value $ | |
| | |
| |
Series C preferred stock- Par value $ | |
| | |
| |
Series D preferred stock- Par value $ | | | | | | |
Series E preferred stock- Par value $ | | | | | | |
Series F preferred stock- Par value $ | | | | | | |
Series H preferred stock- Par value $ | | | | | | |
Common stock - Par value $ | | | | | | |
Additional paid-in capital | |
| | | | |
Accumulated deficit | |
| ( | | | ( |
Non-controlling interest | | | | | | — |
Cumulative translation adjustment | | | | | | — |
Total Stockholders’ Equity (Deficit) | |
| | | | ( |
Total Liabilities, Mezzanine Equity and Stockholders’ Equity (Deficit) | | $ | | | $ | |
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GridAI Technologies Corp.
Consolidated Statements of Operations and Comprehensive Loss
| | | | | | |
| | Years Ended December 31, | ||||
| | 2025 | | 2024 | ||
Revenue | | $ | | | $ | — |
Cost of Services | | | | | | — |
Gross loss | | | ( | | | — |
Operating expenses: | | | | | | |
Research and development expenses | | $ | | | $ | |
General and administrative expenses | |
| | | | |
Total operating expenses | | | | | | |
| | | | | | |
Loss from operations | |
| ( | | | ( |
| | | | | | |
Other expenses: | |
| | |
| |
Interest income (expense), net | |
| ( | |
| |
Other income (expense), net | |
| | |
| |
Total other expenses | | | | | | |
Loss from continued operations before tax recovery | | | ( | | | ( |
| | | | | | |
Income tax benefit | | | | | | — |
Loss from continued operations | | | ( | | | ( |
| | | | | | |
Loss from discontinued operations, net of tax | | | ( | | | ( |
Net loss | | $ | ( | | $ | ( |
| | | | | | |
Net loss attributed to non controlling interest | | | ( | | | — |
Net loss attributed to common shareholders | | | ( | | | ( |
Preferred stock dividend | | | ( | | | ( |
Net loss applicable to common shareholders | | $ | ( | | $ | ( |
| | | | | | |
Basic and diluted weighted average shares outstanding | | | | | | |
| | | | | | |
Loss per share - basic and diluted | | $ | ( | | $ | ( |
Loss per share from discontinued operations - basic and diluted | | $ | ( | | $ | ( |
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GridAI Technologies Corp.
Consolidated Statements of Mezzanine Equity and Changes in Stockholders’ Equity (Deficit)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Series G Convertible | | Series B Convertible | | Series H Convertible | | | | | | | Additional | | | | | | Non | | Cumulative | | Total | ||||||||||||
| | Preferred Stock | | Preferred Stock | | Preferred Stock | | Common Stock | | Paid In | | Accumulated | | | Controlling | | transaction | | Stockholders’ | ||||||||||||||||
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | | Interest | | adjustment | | Equity | ||||||||
Balance, January 1, 2025 | | | | $ | | | 476 | | $ | — | | — | | $ | — | | | | $ | | | $ | | | $ | ( | | $ | — | | $ | — | | $ | ( |
Issuance of common stock, pre-funded warrants and warrants in registered direct offering, net of issuance costs |
| — | | | — | | — | |
| — | | — | | | — | | | | | | | | | | | — | | | — | | | — | |
| |
Issuance of Series H upon acquisition of Grid AI | | — | | | — | | — | | | — | | | | | | | — | | | — | | | | | | — | | | — | | | — | | | |
Issuance of common stock to Grid AI shareholders | | — | | | — | | — | | | — | | — | | | — | | | | | | | | | | | — | | | — | | | — | | | |
Issuance of warrants tied to Promissory Notes | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | | | | — | | | — | | | — | | | |
Deemed dividend of Series B preferred stock |
| — | | | — | | — | |
| — | | — | | | — | | — | |
| — | |
| ( | |
| — | | | — | | | — | |
| ( |
Issuance of common stock from RSU vest |
| — | | | — | | — | | | — | | — | | | — | | | | | | | | | | | — | | | — | | | — | | | |
Recission IMGX | | ( | | | ( | | — | | | — | | — | | | — | | ( | | | ( | | | ( | | | — | | | — | | | — | | | ( |
Cumulative translation adjustment | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | | | | |
Non-controlling interest Grid AI | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | | | | — | | | |
Net loss | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Balance, December 31, 2025 | | | | $ | | | | | $ | — | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | | | $ | 24,942,986 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GridAI Technologies Corp.
Consolidated Statements of Changes in Stockholders’ Equity (deficit)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Series G Convertible Preferred Stock | | Series B Convertible | | | | | | | Additional | | | | | Total | ||||||||
| | | Mezzanine Equity | | Preferred Stock | | Common Stock | | Paid In | | Accumulated | | Stockholders’ | ||||||||||||
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Equity | ||||||
Balance, January 1, 2024 | | | — | | $ | — | | | | $ | — | | | | $ | | | $ | | | $ | ( | | $ | |
Issuance of common stock, pre-funded warrants and warrants in registered direct offering, net of issuance costs |
| | — | | | — | | — | |
| — |
| | | | | | | | | | — | |
| |
Issuance of common stock in connection with the exercise of warrants in the July 2024 Inducement Offering, net of offering costs | | | — | | | — | | — | | | — | | | | | | | | | | | — | | | |
Issuance of stock upon acquisition of IMGX | | | | | | | | — | | | — | | | | | | | | | | | — | | | |
Issuance of stock to financial advisors upon acquisition of IMGX | | | | | | | | — | | | — | | | | | | | | | | | — | | | |
Exercise of pre-funded warrants into common stock |
| | — | | | — | | — | |
| — |
| | |
| | |
| | |
| — | |
| |
Deemed dividend of Series B preferred stock |
| | — | | | — | | — | |
| — |
| — | |
| — | |
| ( | |
| — | |
| ( |
Conversion of Series B preferred shares into common stock |
| | — | | | — | | ( | |
| — |
| | |
| — | |
| — | |
| — | |
| — |
Common stock issued to consultants | | | — | | | — | | — | | | — | | | | | | | | | | | — | | | |
Issuance of common stock from RSU vest |
| | — | | | — | | — | | | — | | | | | | | | ( | | | — | | | — |
Recission IMGX | | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | — |
Stock-based compensation |
| | — | | | — | | — | |
| — |
| — | |
| — | |
| | |
| — | |
| |
Net Loss | | | — | | | — | | — | |
| — |
| — | |
| — | |
| — | |
| ( | |
| ( |
Balance, December 31, 2024 | | | | | $ | | | | | $ | — |
| | | $ | | | $ | | | $ | ( | | $ | ( |
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GridAI Technologies Corp.
Consolidated Statements of Cash Flows
| | | | | | |
| | Years Ended December 31, | ||||
| | 2025 | | 2024 | ||
Cash flows from operating activities: | | | | | | |
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | |
Depreciation and amortization | |
| | | | |
Debt amortization | |
| | | | |
Change in right-of-use assets | | | | | | |
Loss on termination of lease | | | | | | — |
Stock-based compensation | |
| | | | |
Common stock issued to consultants | |
| — | |
| |
Common stock issued to financial advisors at acquisition | | | — | | | |
Series G convertible preferred stock | | | — | | | |
Gain from IMGX Recission | | | ( | | | — |
Changes in operating assets and liabilities: | | | | | | |
Trade receivable | | | | | | — |
Other receivables | |
| ( | | | — |
Prepaid expenses and other current assets | | | | | | |
Lease liabilities | |
| ( | | | ( |
Deposits | | | | | | ( |
Accounts payable | | | | | | |
Accrued expenses | | | ( | | | ( |
Deferred tax liability | | | ( | | | — |
Other liabilities | |
| | | | |
Net cash used in operating activities | | | ( | | | ( |
| | | | | | |
Cash flows from investing activities: | | | | | | |
Cash acquired in acquisition of Grid AI | | | | | | — |
Payment related to license agreement | |
| — | | | |
Net cash provided by investing activities | | | | | | |
| | | | | | |
Cash flows from financing activities: | | | | | | |
Proceeds from issuance of common stock, pre-funded warrants and warrants, net of offering costs | |
| | | | |
Proceeds from the issuance of common stock in connection with the exercise of warrants from inducement offerings, net of offering costs | |
| — | |
| |
Proceeds from subscription receivable | | | | | | — |
Proceeds from promissory notes | | | | | | — |
Proceeds from exercise of pre - funded warrants | | | — | | | |
Proceeds from warrant exercises | | | | | | — |
Repayment of note payable | | | — | | | ( |
Payments of acquisition consideration | | | ( | | | — |
Proceeds from revolving credit borrowing | | | | | | — |
Net cash provided by financing activities | | | | | | |
| | | | | | |
Effect of exchange rate changes on cash | | | | | | — |
| | | | | | |
(Decrease) increase in cash and cash equivalents | |
| | | | ( |
Cash, cash equivalents and restricted cash, beginning balance | |
| | | | |
Cash, cash equivalents and restricted cash, ending balance | | $ | | | $ | |
| | | | | | |
Supplemental disclosures of cash flow information: | | | | | | |
Cash paid for interest | | $ | — | | $ | |
| | | | | | |
Non-cash investing and financing activities: | | | | | | |
Fair value of common shares issued in the IMGX acquisition, net of cash | | $ | — | | | |
Fair value of Series G preferred stock issued in the IMGX acquisition | | $ | — | | $ | |
Fair value of options assumed in the IMGX acquisition | | $ | — | | $ | |
Fair value of warrants assumed in the IMGX acquisition | | $ | — | | $ | |
Accrued dividends on preferred stock | | $ | ( | | $ | ( |
Warrants granted with promissory | | $ | | | | — |
Promissory notes settled for warrants exercise | | $ | ( | | | — |
Tangible and intangible assets acquired in the IMGX acquisition, net of cash | | $ | — | | $ | |
Liabilities assumed in the IMGX acquisition | | $ | — | | $ | ( |
Goodwill recognized in the IMGX acquisition | | $ | — | | $ | |
Total assets removed due to IMGX rescission | | $ | ( | | | — |
Total liability removed due to IMGX rescission | | $ | | | | — |
Total Series G preferred stock cancelled due to IMGX rescission | | $ | | | | — |
Total equity cancelled due to IMGX rescission | | $ | | | | — |
Total assets acquired in GridAI acquisition | | $ | | | | — |
Total intangible assets acquired in GridAI acquisition | | $ | | | | — |
Goodwill recognized in GridAI acquisition, net of cash | | $ | | | | — |
Total liabilities assumed in GridAI business acquisition | | $ | ( | | | — |
Total Series H preferred stock issued from GridAI business acquisition | | $ | ( | | | — |
Total common stock issued from GridAI business acquisition | | $ | ( | | | — |
Noncontrolling interest recognized in GridAI business acquisition | | $ | ( | | | — |
The accompanying notes are an integral part of these Consolidated Financial Statements.
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GridAI Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
Note 1 - The Company and Basis of Presentation
The Company
GridAI Technologies Corp. (formerly Entero Therapeutics, Inc.) (the “Company”) and its wholly-owned subsidiary, First Wave Bio, Inc. (“FWB”), are collectively referred to as the “Company.” Historically, the Company focused on the research and development of targeted, non-systemic therapies for the treatment of patients with gastrointestinal (“GI”) diseases. Non-systemic therapies are non-absorbable drugs that act locally, i.e., in the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation.
In May 2024, the Company previously changed its name from First Wave Biopharma, Inc. to Entero Therapeutics, Inc. The Company’s historical development pipeline consisted of gut-restricted GI clinical drug candidates, including the biologic Adrulipase (formerly MS1819), a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients. The Company is evaluating strategic alternatives related to its historical gastrointestinal therapeutic assets while continuing development activities related to Adrulipase.
The Company terminated its license agreement with Sanofi on February 26, 2025, and no further payments have been made related to its Capeserod program, a selective 5-HT4 receptor partial agonist. The Company is also exploring strategic alternatives for its Niclosamide program, an oral small molecule with antiviral and anti-inflammatory properties.
On September 30, 2025, the Company completed a share exchange transaction with GridAI Corp., a Nevada corporation (“GridAI”), and the stockholders of GridAI (the “Sellers”), pursuant to which GridAI became a wholly-owned subsidiary of the Company (the “GridAI Acquisition”). Following the GridAI Acquisition, the Company expanded its operations to include an artificial intelligence-driven energy technology platform focused on distributed energy resource optimization and grid-edge applications. In connection with the GridAI Acquisition, the Company subsequently changed its corporate name from Entero Therapeutics, Inc. to GridAI Technologies Corp on October 1, 2025.
Pursuant to the Share Exchange Agreement, the Company acquired all of the issued and outstanding shares of GridAI in exchange for (i) an aggregate of
See Note 3 – Business Combination – GridAI Acquisition for additional information regarding the transaction.
As of December 31, 2025, the Company’s consolidated subsidiaries include First Wave Bio, Inc., GridAI Corp., AMPX UK Holdings, and AMPX Limited. AMPX UK Holdings is a majority-owned subsidiary of the Company and is the parent of AMPX Limited. These entities are included in the Company’s consolidated financial statements.
The Company is also engaged in the research and development of targeted, non-systemic therapies for the treatment of patients with gastrointestinal (“GI”) diseases. Non-systemic therapies are non-absorbable drugs that act locally, i.e., in the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation.
Risks and Uncertainties
The Company records intellectual property acquired in business acquisitions that has not reached technological feasibility and which has no alternative future use as In-Process Research and Development (“IPR&D”) at the acquisition date. On March 13, 2024, the Company entered into an acquisition agreement with ImmunogenX, LLC (“IMGX”) which included intellectual property and patents for Latiglutenase and CypCel, which was accounted for as a business acquisition (see Note 3 and Note 4). The IMGX transaction was subsequently rescinded on December 31, 2025, and the Company no longer holds the related intellectual property or patents.
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As of December 31, 2025, the Company’s intangible assets primarily relate to technologies and intellectual property acquired in connection with the AMP X and GridAI transactions. Intangible assets related to IPR&D are considered indefinite-lived intangible assets until the completion or abandonment of the associated research and development efforts and are assessed for impairment annually or more frequently if impairment indicators exist. If the associated research and development effort is abandoned, the related assets will be written off, and the Company will record a noncash impairment loss in its Consolidated Statements of Operations. For those technologies that reach commercialization, the related intangible assets will be amortized over their estimated useful lives.
For tax purposes, intangible assets related to IPR&D are considered indefinite-lived intangible assets.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating losses and negative cash flows from operations since inception. As of December 31, 2025, the Company had cash and cash equivalents of $
The Company has been, and is expected to continue, exploring various potential strategies available including but not limited to raising capital, restructuring its indebtedness and identifying and evaluating potential strategic alternatives but there can be no assurance that these efforts will be successful, that the Company will be able to raise necessary capital on acceptable terms, reach agreement with lenders, or that the strategic review process will result in the Company pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. The Company is evaluating all potential strategic options, including a merger, reverse merger, sale, wind-down, liquidation and dissolution or other strategic transaction. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stakeholder value or that it will make any cash distributions to stockholders. Any failure in these efforts could force the Company to delay, limit or terminate operations, make reductions in its workforce, discontinue research and development programs, liquidate all or a portion of assets or pursue other strategic alternatives, and/or seek protection under the provisions of the U.S. Bankruptcy Code.
Without adequate working capital, the Company may not be able to meet its obligations and continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the date these financial statements are issued. If the Company is not able to obtain necessary capital, it may be required to terminate operations, liquidate all or a portion of assets and/or seek bankruptcy protection. As a result, the Company concluded that its plans at this stage do not alleviate substantial doubt about the ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of Grid AI and its wholly owned subsidiaries and FWB. Intercompany transactions and balances have been eliminated upon consolidation.
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Table of Contents
Note 2 - Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates
The accompanying consolidated financial statements are prepared in conformity with GAAP and include certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements (including goodwill), and the reported amounts of revenue and expense during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates.
Segment Information
The Company operates through
The Chief Executive Officer (“CEO”), as the Company’s chief operating decision maker, reviews financial information and allocates resources between these two operating segments based on their respective business activities, strategic priorities, and capital requirements. This approach enables the CEO to assess the performance of each segment and make decisions regarding resource allocation and strategic direction.
Reverse Stock Split
On December 18, 2023, the Company effected a reverse stock split, whereby every twenty shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.
On January 18, 2023, the Company effected a reverse stock split, whereby every seven shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.
On August 18, 2025, the Company effected a reverse stock split, whereby every three shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.
All share and per share amounts have been retroactively restated to reflect the reverse stock splits referenced above.
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with maturities of three months or less from date of purchase to be cash equivalents. As of December 31, 2025 and December 31, 2024, the Company has classified
Concentrations of Credit Risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally insured accounts in the U.S. In addition, the Company maintains cash balances in foreign financial institutions in jurisdictions in which it operates, including the United Kingdom and the Czech Republic. The Company may from time to time have cash in banks in excess of FDIC insurance limits. Cash held outside the United States may not be subject to U.S. federal deposit insurance and may be subject to foreign exchange risk and local regulatory restrictions. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and equivalents with high quality financial institutions.
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Equity-Based Payments to Non-Employees
Equity-based payments to non-employees are measured at fair value on the grant date per Accounting Standard Update (“ASU”) No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting.
Fair Value Measurements
The Company follows Accounting Standards Codification (“ASC”) Topic 820-10, Fair Value Measurements and Disclosures (“ASC 820”), which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions, which reflect those that a market participant would use.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period. See Note 5
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price of the acquired business over the fair value of amounts assigned to assets acquired and liabilities assumed. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. The Company has
Digital Assets
The Company is evaluating the planned acceptance of stable-coins as a form of consideration in future transactions. Under U.S. GAAP, digital assets similar to stable-coins are potentially classified within the scope of ASU 2023-08 (ASC 350-60, Crypto Assets) and would be measured at fair value with changes recognized in earnings. Digital assets that do not meet the scope criteria would continue to be accounted for as indefinite-lived intangible assets under ASC 350 and measured at cost, less impairment. The Company is currently assessing the appropriate classification and measurement for any such digital assets based on their specific characteristics. As of December 31, 2025, the Company did
Impairment of Long-Lived Assets
The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment (“ASC 360”). Potential impairment is assessed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Recoverability of these assets is assessed based on undiscounted expected future cash flows from the assets, considering a number of factors, including past operating results, budgets and economic projections, market trends and product development cycles. If impairments are identified, assets are written down to their estimated fair value. The Company has not recognized any impairment charges through December 31, 2025.
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Income Taxes
Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company operates in foreign jurisdictions, primarily in the United Kingdom, through its AMPX subsidiaries. The Company accounts for income taxes in these jurisdictions in accordance with ASC 740, including the recognition of deferred tax assets and liabilities based on local tax laws and enacted rates. Deferred tax liabilities arising from taxable temporary differences in foreign jurisdictions are evaluated in conjunction with available net operating loss carryforwards and other tax attributes. In certain foreign jurisdictions, net operating loss carryforwards are available to offset deferred tax liabilities, and accordingly, no valuation allowance has been recorded where such offsets are expected to be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. At December 31, 2025 and 2024, the Company does not have any significant uncertain tax positions.
Leases
Leases are recorded on the balance sheet as right of use assets and lease obligations. Lease liabilities are recognized based on the present value of the future minimum lease payments over the least term at the commencement date. Leases with a term of 12 months or less at inception are expensed monthly over the lease term. The lease term is determined by assuming the exercise of renewal options that are reasonably certain. The implicit interest rate or the incremental borrowing rate is used in determining the present value of future payments.
Income (Loss) Per Share
Basic income (loss) per share (“EPS”) is computed by dividing the loss attributable to common shareholders by the weighted average number of shares of Common Stock outstanding. Diluted EPS reflects the potential dilution that could occur from shares of Common Stock issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of options is excluded from diluted EPS if the effect of such inclusion would be anti-dilutive.
The dilutive effect of stock options and warrants is determined using the treasury stock method. Stock options and warrants to purchase shares of Common Stock of the Company during 2025 and 2024 were not included in the computation of diluted EPS because the Company has incurred a loss in 2025 and 2024 and the effect would be anti-dilutive. Prefunded warrants were also evaluated for inclusion in earnings per share; however, they were determined to be anti-dilutive for the year ended December 31, 2025 and the year ended December 31, 2024. See Note 18
Research and Development
The Company records intellectual property acquired in business acquisitions that has not reached technological feasibility and which has no alternative future use, as In-Process R&D (“IPR&D”) at the acquisition date. On March 13, 2024, the Company entered into an acquisition agreement with IMGX which included the intellectual property and patents for Latiglutenase and CypCel, which was accounted for as a business acquisition (see Note 3 and Note 4). Subsequent to the acquisition, the Company rescinded the IMGX transaction, which was completed on December 31, 2025. As a result, the Company no longer holds the related intellectual property or patents and derecognized associated assets of approximately $
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Intangible assets related to IPR&D are considered definite-lived intangible assets and are assessed for impairment annually or more frequently if impairment indicators exist. If the associated research and development effort is abandoned, the related assets will be written-off, and the Company will record a noncash impairment loss on its Consolidated Statements of Operations. For those compounds that reach commercialization, the IPR&D assets will be amortized over their estimated useful lives. The impairment test for indefinite-lived intangible assets is a one-step test that compares the fair value of the intangible asset to its carrying value. If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to the excess. The Company has not recognized any impairment charges through December 31, 2025 related to IPR&D.
Following the acquisition of Grid AI Corp. on September 30, 2025, the Company’s research and development activities also include technology and platform development related to energy optimization and digital infrastructure solutions. Costs associated with these activities, primarily consisting of professional fees and personnel-related expenses, are expensed as incurred. During the year ended December 31, 2025, certain of these costs were classified within research and development expense, while other costs continued to be classified within operating expenses based on their nature.
For tax purposes, intangible assets related to IPR&D are considered indefinite-lived intangible assets.
Stock-Based Compensation
The Company’s board of directors (the “Board”) and stockholders have adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”) which took effect on May 12, 2014, and the 2020 Omnibus Equity Incentive Plan, which took effect on September 11, 2020 (the “2020 Plan”). From the effective date of the 2020 Plan, no new awards have been or will be made under the 2014 Plan. The Company accounts for its stock-based compensation awards to employees, consultants, and Board members in accordance with ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, consultants, and Board members, including grants of employee stock options, to be recognized in the statements of operations by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation using a straight-line method over the requisite service period, generally the vesting period.
For awards with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable.
The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock.
Assets Held for Sale and Discontinued Operations
Assets and liabilities are classified as held for sale when all of the following criteria for a plan of sale have been met: (1) management, having the authority to approve the action, commits to a plan to sell the assets; (2) the assets are available for immediate sale, in their present condition, subject only to terms that are usual and customary for sales of such assets; (3) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; (4) the sale of the assets is probable and is expected to be completed within one year; (5) the assets are being actively marketed for a price that is reasonable in relation to their current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn. When all of these criteria have been met, the assets and liabilities are classified as held for sale in the condensed consolidated balance sheet. Depreciation and amortization of assets cease upon designation as held for sale.
Discontinued operations comprise activities that were disposed of, discontinued or held for sale at the end of the period, represent a separate major line of business that can be clearly distinguished for operational and financial reporting purposes, and represent a strategic business shift having a major effect on the Company’s operations and financial results according to ASC Topic 205, Presentation of Financial Statements.
As of December 31, 2025, the Company does not have any assets or liabilities classified as held for sale and has not presented any discontinued operations.
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Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
Energy generation revenue
Energy generation revenue is generated primarily from contracts with various non-affiliated parties under long-term power purchase agreements (“PPAs”) or feed-in tariffs. The Company recognizes energy revenue when persuasive evidence of an arrangement exists, and energy has been generated and transmitted to the grid. The price of energy is fixed or determinable and the collectability of the resulting receivable is reasonably assured.
Engineering, procurement & construction (“EPC”) revenue
The Company recognizes revenue for sale of EPC and development services over time based on the estimated progress to completion using a cost-based input method. In applying cost-based input methods of revenue recognition, the Company uses the actual costs incurred relative to the total estimated costs to determine the Company’s progress towards contract completion and to calculate the corresponding amount of revenue and gross profit to recognize.
Cost-based input methods of revenue recognition are considered a faithful depiction of the Company’s efforts to satisfy EPC and development services contracts and, therefore, reflect the transfer of goods or services to a customer under such contracts. Costs incurred towards contract completion may include costs associated with direct materials, labor, subcontractors, and other indirect costs related to contract performance.
Management fee and other revenues
Operation and maintenance (“O&M”) services are transferred over time when customers receive and consume the benefits provided by the Company’s performance under the terms of service arrangements. Revenues from O&M services are recognized when the work completed to date does not require re-performances and the costs of O&M services are expensed when incurred.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for expected credit losses, which is based on management’s assessment of the collectability of customer accounts, historical experience, and current economic conditions. As of December 31, 2025 and 2024, the Company did not record any allowance for credit losses.
Notes Payable and Warrants
The Company accounts for notes payable in accordance with applicable guidance under ASC 470, Debt. Notes payable are initially recorded at their principal amount, net of any discounts, and are subsequently measured at amortized cost using the effective interest method.
In connection with certain financing arrangements, the Company has issued warrants to purchase its common stock. The Company evaluates such warrants to determine whether they should be classified as equity or as a liability in accordance with ASC 480 and ASC 815. Warrants that meet the criteria for equity classification are recorded in additional paid-in capital, while warrants that require liability classification are recorded at fair value with changes in fair value recognized in earnings.
Foreign Currency
The Company’s functional currency is the U.S. dollar. For foreign subsidiaries, the functional currency is generally the local currency. The Company operates through subsidiaries in multiple jurisdictions, including the United Kingdom, Czech Republic, and Australia, whose functional currencies are primarily the British Pound Sterling, Czech Koruna, and Australian Dollar, respectively. Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while income and
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expense accounts are translated at average exchange rates during the period. Resulting translation adjustments are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity.
Foreign currency transaction gains and losses are recognized in the consolidated statements of operations as incurred. Transactions denominated in currencies other than the functional currency are recorded at the exchange rate in effect at the date of the transaction, and monetary assets and liabilities are remeasured at exchange rates in effect at the reporting date, with resulting gains and losses recognized in the consolidated statements of operations.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for all public entities for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 on January 1, 2025 and the adoption did not have a material effect on the Company’s financial statement disclosures.
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, introducing a practical expedient and an accounting policy election for certain entities in estimating expected credit losses for current accounts receivable and current contract assets arising from transactions within the scope of ASC 606, Revenue from Contracts with Customers. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing forecasts. ASU 2025-05 is effective for the Company beginning in the first quarter of 2026, with early adoption permitted, and should be applied prospectively. The Company is currently evaluating the potential impact of the new guidance on its consolidated financial statements; however, no material effect is expected based on the current nature of the Company’s receivables and contract assets.
In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). ASU 2025-04 revises the definition of “performance condition” for share-based consideration payable to a customer, removes the policy election to account for forfeitures as they occur for awards with service conditions, and clarifies that ASC 606 variable consideration guidance does not apply to such awards. This guidance is effective for the Company beginning in the first quarter of 2027, with early adoption permitted, and may be applied on a modified retrospective or retrospective basis. The Company does not currently issue share-based consideration to customers and does not expect the adoption of ASU 2025-04 to have a material impact, but will continue to monitor for applicability.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810) (“ASU 2025-03”), which clarifies the requirements for determining the accounting acquirer in the acquisition of a variable interest entity. ASU 2025-03 is effective beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The amendments in this update require that an entity apply the new guidance prospectively to any acquisition transaction that occurs after the initial application date. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of ASU 2025-03, however, does not expect it to have a material impact on its financial statements.
In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments. This ASU clarifies the requirements for determining whether certain settlements of convertible debt should be accounted for as induced conversions. The guidance is effective for the Company beginning in the first quarter of 2026, with early adoption permitted, and may be applied prospectively or retrospectively. While the Company has outstanding convertible debt, no induced conversions have been undertaken. Management does not expect the adoption of ASU 2024-04 to have a material impact unless future inducement transactions occur.
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires additional disclosures of specified expense categories, qualitative descriptions of remaining amounts in expense captions, and disclosure of selling expenses and the Company’s definition thereof. This guidance is effective for the Company beginning with the 2027 annual report, with early adoption permitted. The Company is evaluating its reporting processes to ensure compliance with the new disclosure requirements.
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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires expanded disclosures of rate reconciliation categories, significant reconciling items, and disaggregated income taxes paid, net of refunds. The guidance is effective for the Company beginning with the 2025 annual report, with early adoption permitted, and should be applied prospectively, with retrospective adoption also permitted.
Management has reviewed the above standards and, based on the Company’s current operations and transactions, does not expect their adoption to have a material impact on the Company’s consolidated financial statements.
The Company has evaluated other recently issued accounting pronouncements and has concluded that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.
Note 3 – Business Acquisitions
IMGX Acquisition (subsequently rescinded)
On March 13, 2024, the Company acquired ImmunogenX, Inc., a Delaware corporation, in accordance with the terms of an Agreement and Plan of Merger, dated March 13, 2024 (the “Merger Agreement”), by and among the Company, IMMUNO Merger Sub I, Inc., a Delaware corporation (“First Merger Sub”), IMMUNO Merger Sub II, LLC, a Delaware limited liability company (“Second Merger Sub”), and ImmunogenX. Pursuant to the Merger Agreement, First Merger Sub merged with and into ImmunogenX, pursuant to which ImmunogenX was the surviving corporation (the “First Merger”). Immediately following the First Merger, IMGX merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity and a wholly owned subsidiary of the Company (the “Second Merger” and, together with the First Merger, the “IMGX Merger”). Second Merger Sub subsequently changed its name to ImmunogenX, LLC. The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
Under the terms of the Merger Agreement, following the consummation of the Merger (the “Closing”), in exchange for the outstanding shares of capital stock of ImmunogenX immediately prior to the effective time of the First Merger, the Company issued to the stockholders of ImmunogenX an aggregate of (A)
The Company incurred transaction costs of approximately $
In addition, the Company assumed (i) all ImmunogenX stock options immediately outstanding prior to the First Merger, each becoming an option to purchase Common Stock subject to adjustment pursuant to the terms of the Merger Agreement (the “Assumed Options”) and (ii) all ImmunogenX warrants immediately outstanding prior to the First Merger, each becoming a warrant to purchase Common Stock subject to adjustment pursuant to the terms of the Merger Agreement (the “Assumed Warrants”). The Assumed Options are exercisable for an aggregate of
Tungsten Partners LLC (“Tungsten”) acted as financial advisor to the Company in connection with the Merger. As partial compensation for services rendered by Tungsten, the Company issued to Tungsten or its affiliates or designees an aggregate of
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The Merger was accounted for as a business combination under the acquisition method of accounting with First Wave as the accounting acquirer. Under the acquisition method, the total purchase price of the acquisition is allocated to the net identifiable tangible and intangible assets acquired and liabilities assumed based on the fair values as of the date of such acquisition. The preliminary fair value of the consideration totaled approximately $
| | | |
| | Amount | |
Common stock issued to ImmunogenX stockholders | | $ | |
Replacement options | |
| |
Replacement warrants | |
| |
Preferred stock issued to ImmunogenX stockholders | |
| |
Total consideration paid | | $ | |
The Company has made a provisional allocation of the purchase price of the Merger to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the provisional purchase price allocations relating to the Merger:
| | | |
Assets acquired: | | | |
Cash and cash equivalents | | $ | |
Prepaid expenses and other current assets | |
| |
Property and equipment, net | |
| |
Intangibles | |
| |
Operating lease right-of-use assets | |
| |
Total assets | | $ | |
Liabilities assumed: | |
| |
Accounts payable | |
| |
Accrued expenses and other current liabilities | |
| |
Long term debt | |
| |
Deferred tax liability | |
| |
Total liabilities | | $ | |
Goodwill recorded: | |
| |
Goodwill | | $ | |
Net assets acquired | | $ | |
The fair value of IPR&D was capitalized as of the IMGX Merger date and accounted for as definite-lived intangible assets until completion or disposition of the assets or abandonment of the associated research and development efforts. Upon successful completion of the development efforts, the useful lives of the IPR&D assets will be determined based on the anticipated period of regulatory exclusivity and will be amortized within operating expenses. Until that time, the IPR&D assets will be subject to impairment testing and will not be amortized. The goodwill recorded related to the IMGX Merger is the excess of the fair value of the consideration transferred by the acquirer over the fair value of the net identifiable assets acquired and liabilities assumed at the date of such acquisition. The goodwill recorded is not deductible for tax purposes.
All intangible assets acquired are not subject to amortization and their associated estimated acquisition date fair values are as follows:
| | | | | |
| | Estimated | | Acquisition Date | |
Intangible Asset | | Useful Life | | Fair Value | |
Patents |
| | $ | | |
Trade names and trademarks |
| |
| | |
IPR&D – Latiglutenase |
| Indefinite | |
| |
IPR&D - CypCel |
| Indefinite | | $ | |
Net loss in the Condensed Consolidated Statement of Operations for the twelve months ended December 31, 2024 includes net losses of IMGX from the date of acquisition to December 31, 2024 of approximately $
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On December 31, 2025, the Company completed the rescission of the IMGX transaction pursuant to a Rescission Agreement, as amended, pursuant to which the transaction was unwound. As a result, the Company no longer holds the assets and liabilities associated with the IMGX acquisition and the previously held for sale classification is no longer applicable.
Pro forma disclosure for the IMGX acquisition
The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the Acquisition had taken place on January 1, 2024. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date:
| | | |
| | Twelve Months | |
| | Ended December 31, 2024 | |
Operating expenses | | $ | |
Loss before discontinued operations |
| | ( |
Loss from discontinued operations |
| | ( |
Net loss applicable to common shareholders |
| | ( |
Basic and diluted weighted average shares outstanding |
| | |
Loss per share - basic and diluted | | $ | ( |
Acquisition of Grid AI Corp.
On September 30, 2025, the Company completed the acquisition of Grid AI Corp. (“Grid AI”), a Nevada corporation, pursuant to the terms of a Share Exchange Agreement (the “Grid AI Agreement”) dated September 30, 2025, by and among the Company and the shareholders of Grid AI (the “Sellers”). Under the terms of the Grid AI Agreement, each Seller transferred to Entero all of the issued and outstanding shares of Grid AI in exchange for equity interests of the Company as described below. The Share Exchange Agreement establishes the terms governing consideration allocation, post-closing ownership structure, milestone-based conversion features, and certain rescission mechanics that may impact the ultimate fully-diluted ownership of the Company.
The acquisition of Grid AI was undertaken to expand the Company’s capabilities in AI-driven energy optimization and distributed energy resource management, including battery storage and energy orchestration solutions. The transaction is expected to enhance the Company’s strategic positioning in the data center and energy infrastructure markets and provide access to Grid AI’s proprietary technology, customer relationships, and operational platform.
Additional Terms of the Share Exchange Agreement
In connection with the Share Exchange Agreement, the equity consideration issued to the Sellers includes adjustment provisions intended to ensure that the relative ownership levels of the parties remain consistent with the economic intent of the agreement, subject to the achievement of specified milestones and receipt of required shareholder approvals. The agreement also contains rescission and reallocation provisions under which certain elements of the consideration issued may be adjusted if those conditions are not met. These provisions do not affect the preliminary purchase accounting conclusions reached as of the acquisition date.
Consideration Transferred
At closing, the Company issued to the Sellers:
| ● |
| ● |
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The combined fair value of the equity consideration issued to the Sellers was estimated at $
Purchase Price Allocation
The transaction was accounted for under the acquisition method of accounting in accordance with ASC 805 with GridAI Technologies Corp. (formerly Entero Therapeutics, Inc.) identified as the accounting acquirer based on the evaluation of control, governance rights, and the legal form of the transaction. The preliminary allocation of the purchase price to the identifiable assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:
The purchase price allocation is preliminary and subject to adjustment during the measurement period, which extends up to one year from the acquisition date of September 30, 2025 (i.e., through September 30, 2026). During the measurement period, the Company may record adjustments to the provisional amounts recognized for assets acquired and liabilities assumed based on additional information obtained about facts and circumstances that existed as of the acquisition date.
| | | |
Assets acquired: | | | |
Cash and cash equivalents | | $ | |
Trade receivable and other current assets | |
| |
Prepaid | |
| |
Subscription receivable | |
| |
Developed technology | |
| |
Customer relationship | |
| |
Trade name | |
| |
Total assets | | $ | |
Liabilities assumed: | |
| |
Accounts payable | |
| |
Tax payable | | | |
Deferred consideration | |
| |
Notes payable | |
| |
Due to related parties | |
| |
Deferred tax liability | | | |
Total liabilities | | $ | |
Goodwill recorded: | |
| |
Goodwill | | $ | |
Net assets acquired | | $ | |
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Pro forma disclosure for the Grid AI Corp. Acquisition
The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the acquisition of Grid AI Corp. had taken place on January 1, 2025. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transaction been effected on the assumed date.
| | | |
| | Grid AI Corp | |
| | December 31, 2025 | |
Revenue | | $ | |
Operating expenses | |
| |
Loss from operations | |
| ( |
Other expenses | |
| |
Current tax benefit | |
| ( |
Net loss | | $ | ( |
Basic and diluted weighted average shares outstanding | |
| |
Loss per share - basic and diluted | |
| |
The excess of the fair value of the consideration transferred over the fair value of the identifiable net assets acquired was recorded as goodwill of approximately $
All intangible assets acquired are subject to amortization and their associated estimated acquisition date fair values are as follows:
| | | | | |
| | Estimated | | Acquisition Date | |
Intangible Asset | | Useful Life | | Fair Value | |
Developed technologies, net |
| | $ | | |
Customer relationships |
| |
| | |
Trade names |
| |
| | |
Note 4 – Discontinued Operations, Assets Held for Sale
The Company previously completed a merger with IMGX and, during the year ended December 31, 2024, initiated a plan to dispose of certain IMGX assets and liabilities. As a result, such assets and liabilities were classified as held for sale and the results of IMGX were presented as discontinued operations in the consolidated financial statements for the year ended December 31, 2024.
On December 31, 2025, the Company completed the rescission of the IMGX transaction pursuant to a Rescission Agreement, as amended. As a result of the rescission, the previously contemplated disposal of IMGX did not occur, and the Company no longer holds the assets and liabilities of IMGX and no longer classifies such amounts as held for sale or as discontinued operations.
In connection with the rescission, the Company returned all equity consideration previously issued to the IMGX shareholders, including (i)
As a result, the Company derecognized assets of approximately $
The rescission resulted in a loss of approximately $
Accordingly, upon completion of the rescission on December 31, 2025, the Company derecognized all assets and liabilities associated with IMGX and no longer consolidates IMGX in its financial statements.
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The following table summarizes the Company’s loss from discontinued operations for the years ended December 31, 2025 and 2024.
| | | | | | |
| | Year Ended | ||||
| | December 31, | ||||
| | 2025 | | 2024 | ||
Operating expenses: |
| | |
| | |
Research and development expenses | | $ | — | | $ | |
General and administrative expenses | |
| — | |
| |
Total operating expenses | |
| — | |
| |
Interest expense | |
| — | |
| ( |
Other (expense) income | |
| ( | |
| ( |
Loss from discontinued operations | | $ | ( | | $ | ( |
No discontinued operations were presented for the year ended December 31, 2025 as a result of the completion of the rescission of the IMGX transaction.
The assets and liabilities associated with discontinued operations consist of the following as of December 31, 2024 and the amounts derecognized during the year ended December 31, 2025:
| | | | | |
| | 2024 | | 2025 | |
Assets held for sale: | | | | | |
Prepaid expenses and other current assets | | $ | | ( | |
Property and equipment, net | |
| | ( | |
Goodwill and intangible assets | |
| | ( | |
Total assets held for sale | | $ | | ( | |
Liabilities held for sale: | |
| | | |
Accounts payable | | $ | | ( | |
Accrued expenses and other current liabilities | |
| | ( | |
Debt | |
| | ( | |
Deferred tax liability | |
| | ( | |
Total liabilities held for sale | | $ | | ( | |
As of December 31, 2024, assets and liabilities classified as held for sale were presented as current assets and liabilities, respectively, based on the Company’s plan at that time to dispose of IMGX.
The Company recognized total depreciation and amortization of $
Interest expense of approximately $
As a result of the rescission, the Company derecognized all assets and liabilities previously classified as held for sale, reversed the related equity consideration issued in connection with the IMGX acquisition, and recorded a gain of approximately $
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Note 5 - Fair Value Disclosures
Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value.
The fair value of the Company’s financial instruments are as follows:
| | | | | | | | | | | | | | | |
| | | | | Fair Value Measured at Reporting | | | | |||||||
| | | | | Date Using | | | | |||||||
| | Carrying | | | | | | | | | | | | | |
| | Amount | | Level 1 | | Level 2 | | Level 3 | | Fair Value | |||||
December 31, 2025: | | | | | | | | | | | | | | | |
Money market funds | | $ | | | $ | | | $ | — | | $ | — | | $ | |
Deferred consideration | | | | | | — | | | | | | — | | | |
Note payable | | | | | | — | | | | | | — | | | |
December 31, 2024: | | | | | | | | | | | | | | | |
Money market funds | | $ | | | $ | | | $ | — | | $ | — | | $ | |
At December 31, 2025 and 2024, the Company had no other assets or liabilities that are subject to fair value methodology and estimation in accordance with U.S. GAAP.
Note 6 – Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements consisted of the following:
| | | | | | |
| | December 31, | ||||
| | 2025 | | 2024 | ||
Computer equipment and software | | $ | | | $ | |
Office equipment | |
| | |
| |
Leasehold improvements | |
| | |
| |
Total property, plant, and equipment | |
| | |
| |
Less accumulated depreciation | |
| ( | |
| ( |
Property, plant and equipment, net | | $ | — | | $ | — |
Depreciation expense was $
Note 7 – Goodwill
Goodwill is as follows:
| | | |
| | Goodwill | |
Balance on December 31, 2024 | | $ | |
Goodwill associated with Grid AI acquisition | |
| |
Balance on December 31, 2025 | | $ | |
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Note 8 – Intangible Assets
The following identifiable intangible assets were recognized as part of the Grid AI acquisition and are not classified as held for sale. These assets are amortized on a straight-line basis over their estimated useful lives:
| | | | | |
| | Estimated | | December 31, | |
| | Useful Life | | 2025 | |
Developed Technology | | | $ | | |
Less: accumulated amortization | | | | | ( |
Developed Technology, net | | | | $ | |
Customer Relations | | | $ | | |
Less: accumulated amortization | | | | | ( |
Customer Relations, net | | | | $ | |
Trade Name | | | $ | | |
Less: accumulated amortization | | | | | ( |
Trade Name, net | | | | $ | |
| | | |
| | Estimated | |
Year ending December 31, | | Amortization Expense | |
2026 |
| | |
2027 |
| | |
2028 |
| | |
2029 |
| | |
2030 and thereafter |
| | |
Total | | $ | |
Note 9 - Accrued Expenses
Accrued expenses consisted of the following:
| | | | | | |
| | December 31, | | December 31, | ||
| | 2025 | | 2024 | ||
Professional fees |
| $ | |
| $ | |
Consulting |
| | |
| | |
Accrued interest |
| | |
| | — |
Lease write-off | | | | | | — |
Total accrued expenses | | $ | | | $ | |
Note 10 – Capital Stock
Our certificate of incorporation, as amended and restated (the “Charter”) authorized the issuance of up to
On December 18, 2023, the Company effected a reverse stock split, whereby every twenty shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.
On January 18, 2023, the Company effected a reverse stock split, whereby every seven shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.
On August 18, 2025, the Company effected a reverse stock split, whereby every three shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.
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All share and per share amounts have been retroactively restated to reflect the reverse stock splits referenced above.
Common Stock
The Company had
Each holder of Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of the stockholders. The Company’s Charter and Amended and Restated Bylaws (the “Bylaws”) do not provide for cumulative voting rights.
In addition, the holders of the Company’s Common Stock will be entitled to receive ratably such dividends, if any, as may be declared by the Board out of legally available funds; however, the current policy of the Board is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of the Company’s Common Stock will be entitled to share ratably in all assets that are legally available for distribution.
Holders of the Company’s Common Stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. The rights, preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of the Company’s preferred stock that it may designate and issue in the future.
Preferred Stock
The Board is authorized to divide the preferred stock into any number of series, fix the designation and number of each such series, and determine or change the designation, relative rights, preferences, and limitations of any series of preferred stock. The Board may increase or decrease the number of shares initially fixed for any series, but no decrease may reduce the number below the shares then outstanding and duly reserved for issuance.
On July 16, 2020, the Company designated approximately
On January 5, 2021, the Company designated
On July 15, 2022, the Company designated
On July 15, 2022, the Company designated
On November 28, 2022, the Company designated
On September 30, 2025, the Company designated
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The Series H Preferred Stock is convertible into shares of the Company’s Common Stock, subject to stockholder approval, achievement of defined milestone events relating to the business of AMPX, and certain beneficial ownership limitations. Following stockholder approval, each share is convertible at a stated conversion ratio (initially 1:1,000, subject to adjustment) and is issuable in multiple tranches upon the achievement of defined milestone events relating to the business of AMPX. Conversion is further limited such that holders may not convert shares if, as a result, they would beneficially own more than a specified percentage of the Company’s outstanding Common Stock.
The Series H Preferred Stock does not have voting rights, except as required by law or as otherwise provided in the Certificate of Designation, and is not redeemable.
As of and through December 31, 2025,
At December 31, 2025, the Company had approximately
Mezzanine Equity
Series G Preferred Stock
The Company had
On March 13, 2024, the Company issued
On December 31, 2025, the Company completed a rescission of the IMGX transaction pursuant to the Rescission Agreement, as amended. In connection with the rescission,
As of December 31, 2025,
The following is a summary of the principal terms of the Series G Convertible Preferred Stock as set forth in the Certificate of Designation of the Series G Convertible Preferred Stock:
General; Transferability. Share of Series G Preferred Stock will be uncertificated and issued in book-entry form. Shares of Series G Preferred Stock may be transferred by the holders thereof without the consent of the Company, provided that such transfer is in compliance with applicable securities laws.
Conversion. Following stockholder approval of the conversion of the Series G Preferred Stock into Common Stock in accordance with the listing rules of the Nasdaq Stock Market (the “Conversion”), each share of Series G Preferred Stock will automatically convert into
The Series G Preferred Stock is redeemable for cash at the option of the holder thereof at any time following the date that is six months after the initial issuance of the Series G Preferred Stock (without regard to the lack of obtaining the requisite stockholder approval to convert the Series G Preferred Stock into Common Stock), at a price per share equal to the then-current fair value of the Series G Preferred Stock, which shall be the last reported closing sale price of the Company’s Common Stock as reported on the Nasdaq Stock Market as of the trading day immediately prior to the conversion event. As such, Series G Preferred Stock is classified as Mezzanine Equity on the balance sheet.
Voting Rights. Except as otherwise required by law, the Series G Preferred Stock does not have voting rights. However, as long as any shares of Series G Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series G Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the
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Series G Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Charter or bylaws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, in each case if any such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series G Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Charter or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further shares of Series G Preferred Stock, (iii) prior to the earlier of stockholder approval of the Conversion or the six-month anniversary of issuance, consummate either: (A) any Fundamental Transaction (as in the Certificate of Designation) or (B) any stock sale to, or any merger, consolidation or other business combination of the Company with or into, another entity in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the capital stock of the Company immediately after such transaction, or (iv) enter into any agreement with respect to any of the foregoing.
Liquidation Preference. The Series G Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.
Dividend Rights. Holders of Series G Preferred Stock are entitled to receive dividends on shares of Series G Preferred Stock equal to, on an as-if-converted-to-Common-Stock basis, and in the same form as dividends actually paid on shares of the Common Stock.
Redemption. The shares of Series G Preferred Stock shall not be redeemable at the option of the Company or the holder thereof.
Trading Market. There is no established trading market for any of the Series G Preferred Stock, and we do not expect a market to develop. We do not intend to apply for a listing for any of the Series G Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series G Preferred Stock will be limited.
Most Favored Nations Exchange Right and Waiver Agreements
In the event the Company effects any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, or a combination of units thereof (a “Subsequent Financing”), each holder of the Series B Preferred Stock used to have the right, subject to certain exceptions set forth in the Series B Certificate of Designations, at its option, to exchange (in lieu of cash subscription payments) all or some of the Series B Preferred Stock then held (with a value per share of Series B Preferred Stock equal to the stated value of each share of Series B Preferred Stock, or $
As of December 31, 2024, (i) holders of approximately
At The Market Agreement with H.C. Wainwright
On May 26, 2021, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, pursuant to which the Company may issue and sell, from time to time, through Wainwright, shares of its Common Stock, and pursuant to which Wainwright may sell its Common Stock by any method permitted by law deemed to be an “at the market offering” as defined by Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission of
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up to $
August 2025 Reverse Stock Split
On August 18, 2025, the Company effected a reverse stock split of its issued and outstanding common stock at a ratio of 1-for-3. As a result of the reverse stock split, every three shares of the Company’s issued and outstanding common stock were automatically converted into one share of common stock, without any change to the par value per share or the number of authorized shares. The reverse stock split proportionately adjusted the number of shares underlying the Company’s outstanding warrants and pre-funded warrants, and the corresponding exercise prices of such warrants were adjusted in accordance with their terms.
September 2025 Registered Direct Offering
On or about September 2025, the Company completed a Registered Direct Offering (the “September 2025 Offering”) priced at market under Nasdaq rules, for an aggregate of (i) shares of Common Stock, (ii) pre-funded warrants (the “September 2025 Pre-Funded Warrants”) to purchase shares of Common Stock and (iii) common warrants (the “September 2025 Warrants”) to purchase shares of Common Stock. The September 2025 Pre-Funded Warrants have an exercise price of $
Pre-Funded Warrant Exercises
During the year ended December 31, 2025, investors exercised pre-funded warrants to purchase shares of the Company’s Common Stock in connection with previous offerings. In connection with such exercises, the Company issued shares of Common Stock in excess of the number of pre-funded warrants exercised. The excess shares issued were recorded as a deemed dividend and recognized as a reduction to additional paid-in capital.
July 2024 Inducement Offering
On July 10, 2024, the Company entered into a warrant exercise inducement offer letter (the “Inducement Letter”) with a holder (the “Holder”) of warrants to purchase shares of the Company’s common stock (the “Existing Warrants”) pursuant to which the Holder agreed to exercise for cash their Existing Warrants to purchase
May 2024 Registered Direct Offering
On May 14, 2024, the Company completed a Registered Direct Offering (the “May 2024 Offering”) priced at market under Nasdaq rules, for an aggregate of (i)
The Company received gross proceeds of approximately $
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March 2024 Registered Direct Offering
On March 6, 2024, the Company completed a Registered Direct Offering (the “March 2024 Offering”) priced at market under Nasdaq rules, for an aggregate of (i)
Common Stock Issuances
2025 Issuances
During the year ended December 31, 2025, the Company issued
During the year ended December 31, 2025, the Company issued an aggregate of
During the year ended December 31, 2025, in connection with the rescission of the IMGX transaction, the Company canceled an aggregate of
During the year ended December 31, 2025, the Company issued an aggregate of
During the year ended December 31, 2025, the Company issued an aggregate of
2024 Issuances
During the year ended December 31, 2024, the Company issued
During the year ended December 31, 2024, the Company issued
During the year ended December 31, 2024, the Company issued an aggregate of
During the year ended December 31, 2024, the Company issued an aggregate of
During the year ended December 31, 2024, the Company issued an aggregate of
During the year ended December 31, 2024, the Company issued an aggregate of
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During the year ended December 31, 2024, the Company issued an aggregate of
During the year ended December 31, 2024, the Company issued an aggregate of
Note 11 – Warrants
Warrant activity for the years ending December 31, 2025 and 2024 were as follows:
| | | | | | | |
| | | | Weighted | | Weighted | |
| | | | Average | | Average | |
| | Number of | | Exercise Price | | Remaining | |
| | Warrants | | Per Share | | Term in Years | |
Warrants outstanding and exercisable on January 1, 2025 |
| | | $ | |
| |
Issued during the period |
| | | | |
| |
Cancelled during the period | | ( | | | | | |
Expired during the period |
| ( | | | |
| — |
Exercised during the period |
| ( | | | |
| — |
Warrants outstanding and exercisable on December 31, 2025 |
| | | $ | |
| |
| | | | | | | |
Warrants outstanding and exercisable on January 1, 2024 |
| | | $ | |
| |
Issued during the period |
| | | | |
| |
Assumed from IMGX | | | | | | | |
Expired during the period |
| ( | | | |
| — |
Exercised during the period |
| ( | | | |
| |
Warrants outstanding and exercisable on December 31, 2024 |
| | | $ | |
| |
The weighted average fair value of warrants granted during the years ended December 31, 2025 and 2024, was $
| | | | | |
| | December 31, |
| ||
| | 2025 | | 2024 |
|
Expected life (in years) |
|
| | ||
Volatility |
| % | % | ||
Risk-free interest rate |
| % | % | ||
Dividend yield |
| — | % | — | % |
The outstanding warrants expire from 2025 through 2030.
During the year ended December 31, 2025, the Company issued warrants to purchase an aggregate of
During the year ended December 31, 2024, the Company issued warrants to purchase
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During the year ended December 31, 2024, an investor exercised pre-funded warrants to purchase
Note 12 – Equity Incentive Plan
The Company’s Board and stockholders adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”), which took effect on May 12, 2014. The Company’s Board and stockholders adopted and approved the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which took effect on September 11, 2020. From the adoption and approval of the 2020 Plan, no new awards have been or will be made under the 2014 Plan.
The 2020 Plan allows for the issuance of securities, including stock options to employees, Board members and consultants. The initial number of shares of Common Stock available for issuance under the 2020 Plan was
As of January 1, 2026, the number of shares of Common Stock available for issuance under the 2020 Plan automatically increased to
The following table summarizes the Company’s stock option activity:
| | | | | | | | | | |
| | | | Weighted | | Remaining | | | | |
| | | | Average | | Contract | | | | |
| | Number | | Exercise | | Life | | Intrinsic | ||
| | of Shares | | Price | | (Years) | | Value | ||
Outstanding as of January 1, 2025 |
| | | $ | | | | $ | — | |
Acquired from IMGX | | — | | | — | | — | | | — |
Expired | | ( | | | — | | — | | | — |
Cancelled due to IMGX rescission | | ( | | | — | | — | | | — |
Outstanding as of December 31, 2025 |
| | | $ | | | | $ | — | |
Exercisable as of December 31, 2025 |
| | | $ | | | | $ | — | |
| | | | | | | | | | |
Outstanding as of January 1, 2024 |
| | | $ | | | | $ | — | |
Acquired from IMGX |
| | |
| | | |
| — | |
Cancelled | | ( | | | — | | — | | | — |
Outstanding as of December 31, 2024 |
| | | $ | | | 7.06 | | $ | — |
Exercisable as of December 31, 2024 |
| | | $ | | | | $ | — | |
There were
The total fair value of the stock options vested, subject to service-based milestone vesting conditions, during the year ended December 31, 2025 and 2024 was approximately$
The total fair value of the stock options vested, subject to performance-based milestone vesting conditions, during the year ended December 31, 2025 and 2024 was approximately $
Restricted Stock and Restricted Stock Units
Restricted stock refers to shares of Common Stock subject to vesting based on certain service, performance, and market conditions. Restricted stock unit awards (“RSUs”) refer to an award under the 2014 Plan, which constitutes a promise to grant shares of Common Stock at the end of a specified restriction period.
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Restricted stock refers to shares of Common Stock subject to vesting based on certain service, performance, and market conditions. Restricted stock unit awards (“RSUs”) refer to awards under the Company’s 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which represent a right to receive shares of Common Stock upon satisfaction of applicable vesting conditions.
As of December 31, 2025 and December 31, 2024, the Company had
RSU activity under the 2020 Plan for the year ended December 31, 2025 was as follows:
| | | | | | | |
| | | | Weighted- | | Weighted-Average | |
| | | | Average | | Remaining | |
| | Number | | Grant Date | | Recognition | |
| | of Shares | | Fair Value | | Period (Years) | |
Non-vested Outstanding at January 1, 2025 |
| | | $ | | | |
Granted |
| | |
| |
| — |
Vested |
| ( | |
| |
| — |
Non-vested Outstanding at December 31, 2025 | | | | $ | | | — |
| | | | | | | |
Non-vested Outstanding at January 1, 2024 |
| | | $ | |
| |
Awarded |
| | |
| |
| — |
Vested |
| ( | |
| |
| — |
Cancelled |
| ( | |
| |
| — |
Non-vested Outstanding at December 31, 2024 | | | | $ | | | |
During the year ended December 31, 2025, the Board approved the grant of
During the year ended December 31, 2024, the Board approved the grant of
Stock - based Compensation Expense
The total stock-based compensation expense for employees and non-employees is included in the accompanying condensed consolidated statements of operations and as follows:
| | | | | | |
| | Year Ending December 31, | ||||
| | 2025 | | 2024 | ||
Research and development | | $ | — | | $ | |
General and administrative | |
| | |
| |
Total stock-based compensation expense | | $ | | | $ | |
As of December 31, 2025, the Company had
As of December 31, 2024, the Company had unrecognized stock - based compensation expense of approximately $
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Note 13 – Agreements
License Agreement with Sanofi
On September 13, 2023, the Company entered into a License Agreement with Sanofi, pursuant to which the Company received a license to obtain certain exclusive worldwide rights to develop and commercialize Capeserod, a selective 5-HT4 receptor partial agonist which the Company intended to repurpose and develop for gastrointestinal indications.
The Company paid Sanofi an upfront payment of $
The upfront payment of $
The License Agreement was to expire on a country-by-country basis upon the later of: (i) the expiration of the last to expire valid claim of an applicable patent in such country covering such licensed product, (ii) the expiration of the regulatory exclusivity for such licensed product in the applicable country and (iii) the tenth anniversary of the date of first commercial sale of a licensed product in such country. Each party may terminate the License Agreement if the other party materially breaches its obligations under the License Agreement and fails to cure such material breach within
Note 14 – Leases
On June 30, 2025, the Company terminated its lease for office space consisting of
As of December 31, 2025, the weighted-average remaining lease term and weighted-average discount rate under operating leases were as follows:
| | | |
| | December 31, |
|
| | 2025 |
|
Lease term and discount rate |
| | |
Weighted-average remaining lease term (years) |
| | |
Weighted-average discount rate |
| | % |
Future minimum lease payments under non-cancelable operating leases as of December 31, 2025 were as follows:
| | | |
Year | | Amount | |
2025 | | $ | |
2026 | | $ | |
Total lease payments | | $ | |
Less: imputed interest | | $ | ( |
Present value of lease liabilities | | $ | |
In connection with the lease default, the Company fully impaired the related right-of-use (“ROU”) asset.
The Company continues to recognize the related lease liability of $
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Additionally, the Company recorded an accrual of $
The default was accounted for in accordance with ASC 842 and resulted in the following impact on the Company’s financial statements:
| ● | decrease in ROU assets of $ |
| ● | accrual (penalty/remaining obligation) $ |
Note 15 – Debt
The below balances are presented on the consolidated balance sheets as deferred consideration of $
Deferred Consideration
In connection with the acquisition of Grid AI Corp., the Company recognized deferred consideration payable of $
Note Payable
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Revolving | | Promissory note | | Promissory | | | | |||
| | line of credit | | with warrants | | Notes | | Total | ||||
Principal balance as of January 1, 2025 | | $ | — | | $ | — | | $ | — | | $ | — |
Additions | |
| | |
| | |
| | |
| |
Debt repayment (non-cash) | |
| — | |
| ( | |
| — | |
| ( |
Debt discount | |
| — | |
| ( | |
| — | |
| ( |
Total debt as of December 31, 2025 | | $ | | | $ | | | $ | | | $ | |
As of December 31, 2025, all outstanding debt is classified as current.
Revolving Line of Credit
Effective January 31, 2025, the Company entered into a Revolving Loan Agreement dated January 27, 2025 (the “Revolving Loan Agreement”), pursuant to which the lender agreed to make available borrowings up to $
Borrowings under the Revolving Loan Agreement are evidenced by a revolving note (the “Revolving Note”) which bears interest at a rate of
The Revolving Loan Agreement has a contractual maturity date of January 29, 2026.
The Revolving Loan Agreement contains customary affirmative and negative covenants, including restrictions on the incurrence of additional indebtedness, affiliate transactions, and certain corporate actions without lender consent.
On April 1, 2026, the Company received a notice of default from the lender under the Revolving Loan Agreement due to the failure to repay the outstanding balance by the maturity date. The lender has demanded repayment of the outstanding principal of $
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Promissory Note with Warrants
During the period from October 17, 2025 through December 26, 2025, the Company entered into financing arrangements that included promissory notes issued together with warrants to purchase shares of the Company’s common stock. The aggregate principal amount of the notes issued during the period was $
Promissory Notes Payable
The Company had two unsecured promissory notes outstanding with an aggregate principal balance of approximately $
Note 16 - Related Party Transactions
The Company has related party transactions with AMP Solar Group Ltd. (“AMP Solar Group”), which holds a
AMP Solar Group is part of the broader Amp Energy group of companies. Amp Z is an affiliated platform within the Amp Energy ecosystem and operates under common ownership and/or control with AMP Solar Group. As a result of this relationship, transactions between Grid AI Corp. and Amp Z are considered related party transactions.
In connection with the acquisition of Grid AI Corp. on September 30, 2025, the Company assumed deferred consideration liabilities totaling $
The Company also has amounts payable to related parties, including North York and Strategic EP LLC, related to services provided under arrangements predating the Grid AI acquisition. These obligations are non-interest bearing and are included within notes payable on the consolidated balance sheets.
The Company has entered into consulting and service arrangements with certain members of management, including the Chief Executive Officer and Chief Financial Officer, either directly or through affiliated entities. For the year ended December 31, 2025, the Company incurred expenses related to these arrangements, which were recorded within general and administrative expenses in the consolidated statements of operations. As of December 31, 2025, amounts due to related parties associated with these arrangements were not material.
Consulting Agreement and Equity Compensation
On December 19, 2025, the Compensation Committee of the Board of Directors approved an Amended and Restated Consulting Agreement between the Company and Access Alternative Group S.A. (the “Consultant”), an entity affiliated with the Company’s Chief Executive Officer, pursuant to which the Consultant provides services to the Company, including services in connection with the duties of the Chief Executive Officer. Under the terms of the Consulting Agreement, the Company agreed to pay the Consultant base compensation of $
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Omnibus Equity Incentive Plan. The RSUs vest in equal quarterly installments during 2026, subject to the achievement of certain performance objectives, with accelerated vesting upon certain events, including a change in control or termination without cause.
Note 17- Commitments and Contingencies
Legal Matters
The Company is currently engaged in discussions with Ellenoff Grossman & Schole LLP (“EGS”) regarding certain outstanding legal fees. As of the date of issuance of these financial statements, the parties are actively negotiating a potential resolution. EGS has proposed a settlement in the range of approximately $
Government Grant
During 2025, AMPX, a subsidiary of the Company, applied for government grants related to research and development expenditure tax credits in the United Kingdom. For the year ended December 31, 2025, the Company recognized approximately $
Note 18 - Income Taxes
The Company is subject to taxation at the federal and state levels in the United States. At December 31, 2025 and 2024, the Company had no tax provision.
At December 31, 2025 and 2024, the Company had gross deferred tax assets of approximately $
| | | | | | |
| | December 31, | ||||
| | 2025 | | 2024 | ||
Gross deferred tax assets: |
| | |
| | |
Net operating loss carry-forwards | | $ | | | $ | |
Stock compensation | |
| | |
| |
Intangible assets | |
| | |
| |
Capitalized research and development | |
| | |
| |
Research and development credits | |
| | |
| |
Other | |
| | |
| |
Deferred tax assets before valuation allowance | | $ | | | $ | |
Valuation allowance | |
| ( | |
| ( |
Deferred tax assets net of valuation allowance | | $ | | | $ | |
Gross deferred tax liabilities: | |
| | |
| |
Right of use asset | |
| — | |
| ( |
Indefinite lived intangibles | | | ( | | | ( |
Total deferred tax liability | | $ | ( | | $ | ( |
Total deferred tax liability, net | | $ | ( | | $ | ( |
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Income taxes computed using the federal statutory income tax rate differs from the Company’s effective tax rate primarily due to the following:
| | | | | |
| | December 31, |
| ||
| | 2025 | | 2024 |
|
Income tax benefit at statutory rate |
| | % | | % |
State income tax |
| — | | | |
Non-deductible expense |
| — | | ( | |
Change in valuation allowance |
| ( | | ( | |
Prior year adjustments |
| — | | — | |
Non-deductible transaction costs |
| — | | ( | |
Other |
| | | | |
Total income tax benefit |
| | % | | % |
At December 31, 2025 and 2024, the Company had gross deferred tax assets of approximately $
At December 31, 2025, the Company had approximately $
Note 19 - Net Loss per Common Share
Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the periods presented, all potentially dilutive securities have been excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive.
All shares of Common Stock that may potentially be issued in the future are as follows:
| | | | |
| | December 31, 2025 | | December 31, 2024 |
Series G convertible preferred stock | | | | |
Common stock warrants |
| |
| |
Stock options |
| |
| |
RSUs not yet issued |
| |
| |
Convertible preferred stock |
| |
| |
Series H preferred stock | | | | — |
Restricted stock not yet issued |
| |
| |
Total shares of common stock issuable |
| |
| |
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Note 20 – Employee Benefit Plans
401(k) Plan
Since 2015, the Company has sponsored a multiple employer defined contribution benefit plan, which complies with Section 401(k) of the Internal Revenue Code and covers substantially all employees of the Company.
All employees are eligible to participate in the plan. Employees may contribute from
The Company did
Note 21 - Segments
The Company applies the provisions of ASC 280, Segment Reporting, which requires segment information to be reported based on the “management approach,” reflecting the manner in which the Company’s Chief Operating Decision Maker (“CODM”) allocates resources and assesses performance.
In 2025, in connection with the acquisition of Grid AI Corp. on September 30, 2025, the Company reassessed its operating and reportable segments. Based on this assessment, the Company determined that it operates through
| ● | AI Segment – consisting of the Company’s artificial intelligence–driven energy technology platform focused on distributed energy resource optimization and grid-edge applications through Grid AI Corp. and its subsidiaries |
| ● | GI Segment – consisting of the Company’s legacy biotechnology operations, including the development of targeted, non-systemic therapies for gastrointestinal diseases. The Company’s Chief Executive Officer, Jason D. Sawyer, has been identified as the CODM. The CODM reviews operating results on both a segment basis and a consolidated basis to evaluate performance and allocate resources. |
The measure of segment profit or loss is loss from operations, as reported in the consolidated statements of operations. This measure is used by the CODM to assess performance and make resource allocation decisions. Segment assets are measured as total assets, as reported in the consolidated balance sheets. The Company’s segments differ with respect to the nature of products and services, regulatory environments, and customer bases. As such, management has concluded that aggregation of these segments is not appropriate under ASC 280.
The following represents selected information for the Company’s reportable segments:
| | | | | | |
| | December 31, 2025 | | December 31, 2024 | ||
Total assets by reportable segments: |
| | |
| | |
AI segment | | $ | | | $ | — |
GI segment | |
| | |
| 85,409,586 |
Total assets by reportable segments | | $ | | | $ | 85,409,586 |
| | | | | | |
| | December 31, 2025 | | December 31, 2024 | ||
Operating loss by reportable segments: |
| | |
| | |
AI segment | | $ | ( | | $ | — |
GI segment | | | ( | | | ( |
Total operating loss by reportable segments | | $ | ( | | $ | ( |
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Operations by reportable segment for the year ending December 31, 2025 are as follows:
| | | | | | | | | |
| | GridAI Technologies | | Grid AI Corp | | | | ||
| | Corp (GI Segment) | | (AI Segment) | | Total | |||
Revenue | | $ | — | | | | | | |
Cost of Services | | | — | | | | | | |
Gross Margin | | | — | | | ( | | | ( |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Research and development expenses | | $ | | | $ | | | $ | |
General and administrative expenses | | | | |
| | |
| 5,500,253 |
Total operating expenses | | | | |
| | |
| |
Loss from operations | | | ( | |
| ( | |
| ( |
| | | | | | | | | |
Other expenses: | | | | | | | | | |
Interest Income (expense), net | | | ( | | | | | | ( |
Foreign exchange loss | | | — | | | ( | | | ( |
Financing costs | | | — | | | ( | | | ( |
Other income (expense), net | | | ( | | | | | | |
Total other income (expense) | | | ( | | | | | | |
Loss from continuing operations | | | ( | |
| ( | |
| ( |
Income tax benefit | | | — | |
| | |
| |
Loss from continued operations | | | ( | |
| ( | |
| ( |
Loss from discontinued operations | | | ( | |
| — | |
| ( |
Net loss | | $ | ( | | $ | ( | | $ | ( |
Operations by reportable segment for the year ending December 31, 2024 are as follows:
| | | | | | | | | |
| | GridAI Technologies | | | | | | | |
| | Corp | | Grid AI Corp | | Total | |||
Revenue | | $ | — | | $ | — | | $ | — |
Cost of Services | | | — | | | — | | | — |
Gross Margin | | | — | | | — | | | — |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Research and development expenses | | $ | | | $ | — | | $ | |
General and administrative expenses | | | | |
| — | |
| |
Total operating expenses | | | | |
| — | |
| |
Loss from operations | | | ( | |
| — | |
| ( |
| | | | | | | | | |
Other expenses: | | | | | | | | | |
Interest Income (expense), net | | | | | | — | | | |
Other income (expense), net | | | | | | — | | | |
Total other income (expense) | | | | | | — | | | |
Loss from continuing operations | | | ( | |
| — | |
| ( |
Income tax benefit | | | — | |
| — | |
| — |
Loss from continued operations | | | ( | |
| — | |
| ( |
Loss from discontinued operations | | | ( | |
| — | |
| ( |
Net loss | | $ | ( | | $ | — | | $ | ( |
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Note 22 - Subsequent Events
Revolving Loan Agreement
On January 27, 2025, the Company entered into a Revolving Loan Agreement (the “Revolving Loan Agreement”) pursuant to which the lender agreed to provide up to $
As of the Maturity Date, the Company did not repay the amounts due under the Revolving Loan Agreement and, accordingly, is in default under the agreement. On April 1, 2026, the Company received a demand letter from the lender’s counsel asserting that the Company is in default and demanding repayment of approximately $
The Revolving Loan Agreement provides that upon an event of default, the lender may accelerate the indebtedness and require repayment of up to
Equity Awards
On January 1, 2026, the Company issued an aggregate of
During the period from January 1, 2026 through April 24, 2026, the Company issued an aggregate of approximately
On April 24, 2026, the Company issued
Promissory Note- $255,000
On February 5, 2026, the Company issued a promissory note (the “$
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Promissory Note- $
On February 20, 2026, the Company issued a promissory note (the “$
Promissory Note - $
On March 6, 2026, the Company issued a promissory note (the “$
Promissory Note- $
On March 30, 2026, the Company issued a promissory note (the “$
Warrant Exercises
On February 23, 2026, the Company approved the exercise of common stock purchase warrants held by Strategic EP LLC and North York Ltd. In lieu of cash payment of the exercise price, the Company authorized the cancellation of outstanding promissory notes totaling approximately $
Settlement Agreement
On March 17, 2026, the Company approved the issuance of shares of common stock with an aggregate value of approximately $
Marketing Agreement
On March 17, 2026, the Company approved the issuance of
Board Actions
On February 23, 2026, the Board of Directors approved certain corporate actions, including the exercise of common stock purchase warrants, which resulted in the issuance of approximately
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