[10-Q] Entero Therapeutics, Inc. Quarterly Earnings Report

Q: How did Entero Therapeutics (ENTO) perform financially in Q3 2025?

Entero reported a Q3 2025 net loss of $1,152,809 , improved from a net loss of $2,580,971 in Q3 2024, as operating expenses fell to $934,787 from $1,892,607 .

Q: What is Entero Therapeutics cash position as of September 30, 2025?

As of September 30, 2025, Entero had $2,517,218 in cash and cash equivalents and total assets of $135,370,340 . The company also reported an accumulated deficit of $205,798,707 .

Q: What are the key terms of Entero Therapeutics acquisition of Grid AI Corp.?

On September 30, 2025 , Entero acquired Grid AI by issuing 424,348 shares of common stock and 38,801.546 shares of Series H Non‑Voting Convertible Preferred Stock, which are convertible into 38,801,546 common shares subject to shareholder approval and specified conditions. The equity consideration was valued at about $27.1M .

Q: How did the Grid AI acquisition affect Entero Therapeutics balance sheet?

The Grid AI deal added developed technology of $18,387,000 , customer relationships of $2,630,000 , a trade name of $782,000 , cash of $336,429 , and contributed to goodwill of $25,796,163 . It also resulted in a non‑controlling interest of $5,287,000 .

Q: How have Entero Therapeutics shares outstanding changed in 2025?

Common shares outstanding increased to 2,547,147 at September 30, 2025 from 1,584,650 at December 31, 2024, mainly due to a registered direct offering and shares issued to Grid AI shareholders. There were 3,361,903 common shares outstanding as of November 18, 2025 .

Filing Impact

(Neutral)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

Entero Therapeutics, Inc. reported a Q3 2025 net loss of $1,152,809, improving from $2,580,971 a year earlier as operating expenses declined. For the first nine months of 2025, net loss narrowed to $3,410,700 from $5,821,067 in the prior-year period. Cash and cash equivalents were $2,517,218 at September 30, 2025, with an accumulated deficit of $205,798,707, and management states there is substantial doubt about the company’s ability to continue as a going concern.

Total assets rose to $135,370,340 from $85,409,506, driven by the March 2024 ImmunogenX acquisition and the September 30, 2025 acquisition of Grid AI Corp., which added developed technology, customer relationships, trade name intangibles and $25,796,163 of goodwill. Assets and liabilities related to ImmunogenX, including Latiglutenase and CypCel, are classified as held for sale and treated as discontinued operations. The Grid AI deal also introduced a non-controlling interest of $5,287,000 and new Series H preferred stock that is convertible into common shares subject to shareholder approval.

Positive

None.

Negative

Substantial doubt about going concern: With cash of $2.52M, an accumulated deficit of $205.80M, recurring losses and reliance on external financing, management concludes substantial doubt exists about the company’s ability to continue as a going concern.

Insights

Entero narrows losses and adds Grid AI, but low cash and a formal going-concern warning dominate the risk profile.

Entero reports a Q3 2025 net loss of $1.15M and a nine‑month loss of $3.41M, both smaller than the prior year as operating expenses declined sharply. Total assets climbed to $135.37M, helped by the Grid AI and ImmunogenX deals, with sizable new intangibles such as $18.39M of developed technology and $25.80M of goodwill on the balance sheet.

The company closed the acquisition of Grid AI Corp. on September 30, 2025, issuing 424,348 common shares and 38,801.546 Series H preferred shares, which are convertible into 38,801,546 common shares upon shareholder approval and conditions. It also recognized a non‑controlling interest of $5.29M tied to AMPX, Grid AI’s 75%-owned subsidiary, and continues to classify ImmunogenX as held for sale with $83.17M of related assets.

Despite the improved loss profile, the filing highlights that cash was only $2.52M at September 30, 2025 against an accumulated deficit of $205.80M, recurring negative operating cash flows, and dependence on external financing. Management explicitly concludes that these factors create substantial doubt about the ability to continue as a going concern one year from issuance, while it evaluates options such as capital raises, restructuring, strategic transactions, or potential liquidation or bankruptcy, with outcomes not assured.

11/19/2025 - 05:13 PM

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2025


☐	TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

From the transition period from to

Commission File Number 001-37853

ENTERO THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

46-4993860

(State or other jurisdiction of

incorporation or organization)

(I.R.S Employer

Identification No.)

79014th St N # 21135
St. Petersburg, Florida		33702
(Address of principal executive offices)		(Zip Code)

(561) 589-7020

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common stock, par value $0.0001 per share	ENTO	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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

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

There were 3,361,903 shares of the registrant’s common stock, par value $0.0001 per share (the “Common Stock”), outstanding as of November 18, 2025.

Table of Contents

TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44

Item 4.	Controls and Procedures	44

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3.	Defaults Upon Senior Securities	45

Item 4.	Mine Safety Disclosures	45

Item 5.	Other Information	45

Item 6.	Exhibits	46

SIGNATURES

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different 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 about:

●

our ability to maintain compliance with the applicable listing requirements of The Nasdaq Capital Market;

●

our ability to satisfy our existing payment obligations and other payment obligations as they become due, including those related to the acquisition of First Wave Bio, Inc. and the Grid AI acquisition, as well as risks and uncertainties associated with integrating Grid AI’s operations and meeting related financial commitments;

●

statements regarding the impact of geopolitical events, including the war in Ukraine and the Middle East, and their effects on our operations, access to capital, research and development and clinical trials and potential disruption in the operations and business of third-party vendors, contract research organizations (“CROs”), contract development and manufacturing organizations (“CDMOs”), other service providers, and collaborators with whom we conduct business;

●

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 our capital needs;

●

our ability to consummate our disposal of our IMGX subsidiary and related liabilities;

●

the accuracy of our estimates regarding expense, future revenue and capital requirements;

●

our ability to continue operating as a going concern;

●

our plans to develop and commercialize our product candidates, including Adrulipase,

●

our ability to initiate and complete our clinical trials and to advance our principal product candidates into additional clinical trials, including pivotal clinical trials, and successfully complete such clinical trials;

●

regulatory developments in the U.S. and foreign countries;

●

the performance of our third-party vendor(s), CROs, CDMOs and other third-party non-clinical and clinical development collaborators and regulatory service providers;

●

our ability to obtain and maintain intellectual property protection for our core assets;

●

the size of the potential markets for our product candidates and our ability to serve those markets;

●

the rate and degree of market acceptance of our product candidates for any indication once approved;

●

the success of competing products and product candidates in development by others that are or become available for the indications that we are pursuing;

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●

the loss of key scientific, clinical and nonclinical development, and/or management personnel, limited internal staff or from one of our third-party collaborators; and

●

other risks and uncertainties, including those listed under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K/A.

Factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K/A and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, industry and future growth. Given these uncertainties, you should not rely 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 assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for certain drugs and consumer products, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medical 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 events and circumstances reflected in this 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 and we have not independently verified the data from third party sources. In some cases, we do not expressly refer to the sources from which these data are derived.

In this Quarterly Report on Form 10-Q, unless otherwise stated or as the context otherwise requires, references to “Entero,” the “Company,” “we,” “us,” “our” and similar references refer to Entero Therapeutics, Inc. and its subsidiaries on a consolidated basis. References to “FWB” refer to First Wave Bio, Inc., Entero’s wholly-owned subsidiary. References to “IMGX” refer to ImmunogenX, LLC (formerly ImmunogenX, Inc.), which has been Entero’s wholly-owned subsidiary since March 13, 2024. References to “Grid AI” refer to Grid AI Corp. and its operating subsidiary, AmpX, which became Entero’s wholly-owned subsidiary upon the closing of the Grid AI acquisition on September 30, 2025.

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PART I

FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. We have consolidated such financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, such financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America. In preparing these unaudited condensed consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the unaudited condensed consolidated financial statements were issued by filing with the SEC.

These financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2024, included in our Annual Report filed on Form 10 – K/A, filed with the SEC on April 9, 2025.

The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2025.

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ENTERO THERAPEUTICS, INC.

Consolidated Balance Sheets (unaudited)


	September 30,
	2025		December 31,
	(unaudited and consolidated)		2024
ASSETS

Current Assets:
Cash and cash equivalents	$	2,517,218	$	163,476
Accounts receivable		37,490		—
Prepaid expenses		451,879		145,319
Assets of disposal group held-for-sale		83,170,009		83,170,009
Other current assets		1,521,939		—
Total Current Assets		87,698,535		83,478,804

Other Assets:
Restricted cash		—		21,516
Property and equipment, net		27,520		—
Developed technology, net		18,387,000		—
Customer relationships		2,630,000		—
Trade name		782,000		—
Goodwill		25,796,163		1,684,182
Operating lease right-of-use assets		—		126,753
Deposits		49,122		98,251
Total Other Assets		47,671,805		1,930,702

Total Assets	$	135,370,340	$	85,409,506

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:
Accounts payable	$	4,973,285	$	2,959,248
Accrued expenses		410,324		252,048
Deferred consideration- short term		2,000,000		—
Accrued dividend payable		1,564,753		1,310,581
Line of credit		700,000		—
Operating lease liabilities - current		135,609		81,510
Liabilities held-for-sale		23,672,708		22,941,497
Other current liabilities		59,482		1,236
Total Current Liabilities		33,516,161		27,546,120

Deferred consideration- long term		5,000,000		—
Due to related party		7,292,101		—
Operating lease liabilities – non-current		—		59,024
Total Liabilities		45,808,262		27,605,144

Mezzanine Equity:
Series G preferred stock- Par value $0.0001 per share; 13,000 shares designated; 12,373.226 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively.		61,681,100		61,681,100
Stockholders’ Equity (Deficit):
Series B preferred stock- Par value $0.0001 per share; 1,731.6 shares authorized; 475.56 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively.		—		—
Series C preferred stock- Par value $0.0001 per share; 25,000 shares authorized; 0 shares issued and outstanding at September 30, 2025 and December 31, 2024.		—		—
Series D preferred stock- Par value $0.0001 per share; 50 shares designated; 0 shares issued and outstanding at September 30, 2025 and December 31, 2024.		—		—
Series E preferred stock- Par value $0.0001 per share; 50 shares designated; 0 shares issued and outstanding at September 30, 2025 and December 31, 2024.		—		—
Series F preferred stock- Par value $0.0001 per share; 2,333 shares designated; 0 shares issued and outstanding at September 30, 2025 and December 31, 2024.		—		—
Series H preferred stock-Par value $0.0001 per share, 38,801.546 shares designated and 28,604.5 shares issued and outstanding at September 30, 2025 and 0 at December 31, 2024		4		—
Common stock - Par value $0.0001 per share; 100,000,000 shares authorized; 2,547,147 and 1,584,650 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively.		255		159
Additional paid-in capital		228,392,426		198,511,111
Accumulated deficit		(205,798,707)		(202,388,008)
Non-controlling interest		5,287,000		—
Total Stockholders’ Equity (Deficit)		27,880,978		(3,876,738)
Total Liabilities, Mezzanine Equity and Stockholders’ Equity (Deficit)	$	135,370,340	$	85,409,506

See accompanying notes to unaudited condensed consolidated financial statements

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ENTERO THERAPEUTICS, INC.

Consolidated Statements of Operations (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Operating expenses:
Research and development expenses	$	6,673	$	206,999	$	32,080	$	882,522
General and administrative expenses		928,114		1,685,608		2,362,957		13,535,241
Total operating expenses		934,787		1,892,607		2,395,037		14,417,763

Loss from operations		(934,787)		(1,892,607)		(2,395,037)		(14,417,763)

Other expenses:
Interest income (expense), net		(36,069)		229		(90,037)		675
Other expense, net		—		(2,874)		(108,818)		(7,859)
Total other expenses		(36,069)		(2,645)		(198,855)		(7,184)

Loss from continued operations	$	(970,856)	$	(1,895,252)	$	(2,593,892)	$	(14,424,947)

Income tax benefit		—		—		—		10,604,640
Net loss from continued operations	$	(970,856)	$	(1,895,252)	$	(2,593,892)	$	(3,820,307)

Loss from discontinued operations net of tax		(181,953)		(685,719)		(816,808)		(2,000,760)
Net loss	$	(1,152,809)	$	(2,580,971)	$	(3,410,700)	$	(5,821,067)

Preferred stock dividends		(90,745)		(84,632)		(254,172)		(150,776)
Net loss applicable to common shareholders	$	(1,243,554)	$	(2,665,603)	$	(3,664,872)	$	(5,971,843)

Weighted average shares outstanding, basic and diluted		1,652,679		1,517,340		1,609,863		1,001,685
Loss per share, basic and diluted	$	(0.75)	$	(1.76)	$	(2.28)	$	(5.96)
Loss per share from discontinued operations, basic and diluted	$	(0.11)	$	(0.45)	$	(0.51)	$	(2.00)

See accompanying notes to unaudited condensed consolidated financial statements

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ENTERO THERAPEUTICS, INC.

Consolidated Statements of Mezzanine Equity and Changes in Stockholders’ Equity (Deficit) (unaudited)


	Series G Convertible			Series B Convertible			Series H Convertible						Additional				Non		Total
	Preferred Stock			Preferred Stock			Preferred Stock			Common Stock			Paid In		Accumulated		Controlling		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Interest		Equity
Balance, July 1, 2025	12,373.23	$	61,681,100	476	$	—	—		—	1,588,576	$	161	$	198,347,683	$	(204,645,898)		—	$	(6,298,054)
Issuance of common stock, pre-funded warrants and warrants in registered direct offering, net of issuance costs	—		—	—		—	—		—	534,252		52		3,024,948		—		—		3,025,000
Issuance of Series H upon acquisition of Grid AI	—		—	—		—	38,802		4	—		—		24,988,842		—		—		24,988,846
Issuance of common stock to Grid AI shareholders	—		—	—		—	—			424,348		42		2,121,698		—		—		2,121,740
Deemed dividend of Series B preferred stock	—		—	—		—	—		—	—		—		(90,745)		—		—		(90,745)
Non-controlling interest Grid AI	—		—	—		—	—		—	—		—		—		—		5,287,000		5,287,000
Net loss	—		—	—		—	—		—	—		—		—		(1,152,809)		—		(1,152,809)
Balance, September 30, 2025	12,373	$	61,681,100	476	$	—	38,802	$	4	2,547,147	$	255	$	228,392,426	$	(205,798,707)	$	5,287,000	$	27,880,978


	Series G Convertible			Series B Convertible						Additional				Total
	Preferred Stock			Preferred Stock			Common Stock			Paid In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balance, July 1, 2024	12,373	$	61,681,100	476	$	—	980,369	$	98	$	196,689,069	$	(187,568,768)	$	9,120,595
Issuance of common stock in connection with the exercise of warrants in July 2024 Inducement Offering, net of offering costs	—		—	—		—	587,558		59		1,730,306		—		1,730,365
Exercise of pre-funded warrants into common stock	—		—	—		—	—		—		—		—		—
Deemed dividend of Series B preferred stock	—		—	—		—	—		—		(84,632)		—		(84,632)
Conversion of Series B preferred shares into common stock	—		—	—		—	—		—		—		—		—
Common stock issued to consultants	—		—	—		—	—		—		—		—		—
Issuance of common stock from RSU vest	—		—	—		—	12,727		2		(4)		—		—
Stock-based compensation	—		—	—		—	—		—		183,646		—		183,646
Net loss	—		—	—		—	—		—		—		(2,580,971)		(2,580,971)
Balance, September 30, 2024	12,373	$	61,681,100	476	$	—	1,580,655	$	159	$	195,518,385	$	(190,149,739)	$	8,369,003

See accompanying notes to unaudited condensed consolidated financial statements

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ENTERO THERAPEUTICS, INC.

Consolidated Statements of Mezzanine Equity and Changes in Stockholders’ Equity (Deficit) (unaudited)


	Series G Convertible			Series B Convertible			Series H Convertible						Additional				Non		Total
	Preferred Stock			Preferred Stock			Preferred Stock			Common Stock			Paid In		Accumulated		Controlling		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Interest		Equity
Balance, January 1, 2025	12,373.23	$	61,681,100	476	$	—	—		—	1,584,650	$	159	$	198,511,110	$	(202,388,007)		—	$	(3,876,738)
Issuance of common stock, pre-funded warrants and warrants in registered direct offering, net of issuance costs	—		—	—		—	—		—	534,252		52		3,024,948		—		—		3,025,000
Issuance of Series H upon acquisition of Grid AI	—		—	—		—	38,802		4	—		—		24,988,842		—		—		24,988,846
Issuance of common stock to Grid AI shareholders	—		—	—		—	—		—	424,348		42		2,121,698		—		—		2,121,740
Deemed dividend of Series B preferred stock	—		—	—		—	—		—	—		—		(254,172)		—		—		(254,172)
Issuance of common stock from RSU vest	—		—	—		—	—		—	3,897		2		—		—		—		2
Non-controlling interest Grid AI	—		—	—		—	—		—	—		—		—		—		5,287,000		5,287,000
Net loss	—		—	—		—	—		—	—		—		—		(3,410,700)		—		(3,410,700)
Balance, September 30, 2025	12,373	$	61,681,100	476	$	—	38,802	$	4	2,547,147	$	255	$	228,392,426	$	(205,798,707)	$	5,287,000	$	27,880,978


	Series G Convertible			Series B Convertible						Additional				Total
	Preferred Stock			Preferred Stock			Common Stock			Paid In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balance, January 1, 2024	—	$	—	515	$	—	520,333	$	52	$	187,931,445	$	(184,328,672)	$	3,602,929
Issuance of common stock, pre-funded warrants and warrants in registered direct offerings, net of issuance costs	—		—	—		—	149,367		15		4,495,482		—		4,495,526
Issuance of common stock in connection with the exercise of warrants in July 2024 Inducement Offering, net of offering costs	—		—	—		—	587,558		59		1,730,306		—		1,730,365
Issuance of Series G convertible preferred stock upon acquisition of IMGX	11,777		57,790,474	—		—	—		—		—		—		—
Issuance of common stock upon acquisition of IMGX	—		—	—		—	12,277		1		2,300,496		—		2,300,500
Issuance of Series G convertible preferred stock to financial advisors	596		3,890,626	—		—	—		—		—		—		—
Issuance of common stock to financial advisors	—		—	—		—	6,158		1		120,646		—		120,648
Exercise of pre-funded warrants into common stock	—		—	—		—	147,842		15		—		—		45
Deemed dividend of Series B preferred stock	—		—	—		—	—		—		(188,834)		—		(188,834)
Conversion of Series B preferred shares into common stock	—		—	(30)		—	9		—		—		—		—
Common stock issued to consultants	—		—	—		—	116,667		12		1,541,960		—		1,541,995
Issuance of common stock from RSU vest	—		—	—		—	40,445		4		(12)		—		—
Stock-based compensation	—		—	—		—	—		—		586,896		—		586,896
Net loss	—		—	—		—	—		—		—		(5,821,067)		(5,821,067)
Balance, September 30, 2024	12,373	$	61,681,100	485	$	—	1,580,655	$	159	$	195,518,385	$	(190,149,739)	$	8,369,003

See accompanying notes to unaudited condensed consolidated financial statements

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ENTERO THERAPEUTICS, INC.

Consolidated Statements of Cash Flows (unaudited)


	Nine Months Ended September 30,
	2025		2024
Cash flows from operating activities:
Net loss	$	(3,410,700)	$	(5,821,067)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		—		48,946
Amortization of debt discount		—		5,848
Change in right-of-use assets		17,994		55,262
Impairment of right-of-use assets		108,759		—
Stock-based compensation		—		586,896
Common stock granted to consultants		—		1,541,995
Common stock issued to financial advisors at acquisition		—		120,648
Series G convertible preferred stock issued to financial advisors at acquisition		—		3,890,626
Deferred taxes		—		(10,604,640)
Changes in assets and liabilities:
Prepaid expenses		47,144		939,005
Lease liabilities		(4,925)		(58,004)
Deposits		49,130		(117,000)
Accounts payable		515,662		900,546
Accrued expenses		158,276		(531,127)
Other liabilities		789,460		(4,239)
Net cash used in operating activities		(1,729,201)		(9,046,305)

Cash flows from investing activities:
Cash acquired in acquisition of IMGX		—		88,169
Cash acquired in acquisition of Grid AI		336,427		—
Net cash provided by investing activities		336,427		88,169

Cash flows from financing activities:
Proceeds from issuance of common stock, prefunded warrants and warrants, net		3,025,000		4,495,526
Proceeds from the issuance of common stock in connection with the exercise of warrants in the July 2024 Inducement Offering, net		—		1,730,365
Proceeds from exercise of warrants		—		45
Repayments of note payable		—		(644,582)
Proceeds from line of credit		700,000		31,798
Net cash provided by financing activities		3,725,000		5,613,152

Net (decrease) in cash, cash equivalents and restricted cash		2,332,226		(3,344,984)

Cash, cash equivalents and restricted cash, beginning balance		184,992		3,733,292
Cash, cash equivalents and restricted cash, ending balance	$	2,517,218	$	388,308

Supplemental disclosures of cash flow information:
Cash paid for interest	$	—	$	30,468

Non-cash investing and financing activities:
Fair value of common shares issued in the IMGX acquisition, net of cash	$	—	$	152,331
Fair value of the Series G preferred stock issued in the IMGX acquisition	$	—	$	57,790,474
Fair value of options assumed in the IMGX acquisition	$	—	$	1,271,000
Fair value of warrants assumed in the IMGX acquisition	$	—	$	789,000
Fair value of common shares issued in the Grid AI acquisition	$	2,121,740		—
Fair value of the Series H preferred stock issued in the Grid AI acquisition	$	24,988,846		—
Accrued dividends on preferred stock	$	(254,172)	$	(188,834)

See accompanying notes to unaudited condensed consolidated financial statements

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ENTERO THERAPEUTICS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Note 1 - The Company and Basis of Presentation

The Company

Entero Therapeutics, Inc. (“Entero”) and its wholly-owned subsidiaries, First Wave Bio, Inc. (“FWB”) and ImmunogenX, LLC (“IMGX”), are collectively referred to as the “Company”. The Company is 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. In addition, through the acquisition of Grid AI on September 30, 2025, 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 May 2024, the Company changed its name from First Wave Biopharma, Inc. to Entero Therapeutics, Inc.

The Company’s development pipeline consists 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 plans to continue development of its Adrulipase program in 2026.

In March 2024, the Company acquired ImmunogenX, Inc. (“ImmunogenX”) (the Company’s acquisition of ImmunogenX, the “Merger”), a private, clinical-stage biopharmaceutical company founded in 2013, which was developing the biologic, Latiglutenase, for celiac disease. ImmunogenX was also developing CypCel, a metabolic marker compound that can measure the state of small-intestinal recovery of celiac patients undergoing gluten-free diets (“GFDs”). The Company is seeking avenues to dispose of certain assets and liabilities of IMGX, including Latiglutenase and CypCel. As of December 31, 2024, these were classified as assets and liabilities held for sale and are reported at their fair value less cost to sell. The Company determined that the discontinued operations of IMGX represents a strategic shift that will have a major effect on the Company’s operations and financial statements. See Note 3 for additional details regarding the Merger and see Note 4 for additional details surrounding the Company’s assets and liabilities held for sale and discontinued operations.

The Company terminated its license agreement with Sanofi on Feb 26, 2025 and no payments have been made since for 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 anti-viral and anti-inflammatory properties.

On September 30, 2025, the Company entered into and consummated a share exchange agreement (“Share Exchange Agreement”) with GridAI Corp, a Nevada corporation (“GridAI”), and the stockholders of all of the issued and outstanding shares of GridAI (such shares, the “Shares,” and the stockholders, collectively, the “Sellers,”). GridAI is a grid - edge, AI - driven software and device platform that enables utilities, retailers, and large power users to dynamically manage load and distributed energy resources. Pursuant to the Share Exchange Agreement, the Company purchased the Shares from the Sellers for a purchase price consisting of (i) an aggregate of 424,348 shares of the Company’s common stock, which represents 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 the Company’s Series H Non - Voting Convertible Preferred Stock, having such rights and preferences as set forth in the 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. The shares of Series H Non - Voting Convertible Preferred Stock can be convertible into an aggregate of 38,801,546 shares of Common Stock, subject to shareholder approval and certain conditions and adjustments as set forth in the Certificate of Designation. See Note 3 - Business Combination - Grid AI Acquisition for additional discussion of segment evaluation.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development and regulatory success, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, and ability to secure additional capital to fund clinical trials and operations.

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Worldwide supply chain constraints and economic and capital markets uncertainty arising out of conflicts between Russia and Ukraine and conflicts in the Middle East triggered by attacks on Israel in October of 2023 have disrupted commercial and capital markets and emerged as new barriers to long-term economic recovery. Capital markets uncertainty, with public stock price decreases and volatility, could make it more difficult for us to raise capital when needed.

In addition, the Company is subject to other challenges and risks specific to its business, its ability to maintain compliance with the continued listing requirements of The Nasdaq Capital Market and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the biotechnology and pharmaceutical industries with development and commercial operations, including, without limitation, risks and uncertainties associated with: obtaining regulatory approval of its drug candidates; delays or problems in the manufacture and supply of its drug candidates, loss of single source suppliers or failure to comply with manufacturing regulations; identifying, acquiring or in-licensing additional products or drug candidates; pharmaceutical product development and the inherent uncertainty of clinical success; and the challenges of protecting and enhancing our intellectual property rights; complying with applicable regulatory requirements and, beginning in 2025, risks and uncertainties associated with the acquisition and integration of Grid AI, including the Company’s ability to successfully integrate Grid AI’s operations, retain key Grid AI personnel, manage operational and financial controls for a non - biotechnology business, and realize anticipated benefits from the acquisition.

Principles of Consolidation

The accompanying unaudited interim condensed 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 Entero and its wholly owned subsidiaries, FWB and IMGX as well as Grid AI Corp. (“Grid AI”) and which in turn holds a 75% ownership interest in AMPX Ltd. (“AMPX”). Intercompany transactions and balances have been eliminated upon consolidation. The Company recognizes a non-controlling interest for the 25% ownership in AMPX not owned directly or indirectly by the Company.

In our opinion, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2024, has been derived from audited financial statements of that date. The unaudited interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited financial statements and notes previously distributed in the Company’s Annual Report Form 10-K/A for the year ended December 31, 2024, filed with the SEC on April 9, 2025.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying unaudited interim condensed 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. On September 30, 2025, the Company had cash and cash equivalents of approximately $2.5 million and an accumulated deficit of approximately $205.8 million. The Company has incurred recurring losses, has experienced recurring negative operating cash flows, and requires significant cash resources to execute its business plans. Historically, the Company’s major sources of cash have been comprised of proceeds from various public and private offerings of its capital stock. 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.

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.

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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.

Note 2 - Significant Accounting Policies and Recent Accounting Pronouncements

Use of Estimates

The accompanying unaudited condensed 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 as one operating segment with a focus on research and development. The Chief Executive Officer (“CEO”), as the Company’s chief operating decision maker, manages and allocates resources to the operations of the Company on an aggregated basis. This enables the CEO to assess the Company’s overall level of available resources and determine how best to deploy these resources across functions, product and service lines, and strategic opportunities in line with the long-term Company-wide strategic goals. Following the acquisition of Grid AI Corp. (see Note 3), management evaluated the Company’s operating and reportable segments in accordance with ASC 280, Segment Reporting. Grid AI represents a distinct operating component of the business; however, as of September 30, 2025, it does not meet the quantitative or qualitative thresholds for separate reportable segment presentation. The Company’s operations are therefore presented as a single operating and reportable segment.

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 September 30, 2025 and December 31, 2024, the Company has classified approximately zero and $22,000 respectively as restricted cash.

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. The Company may from time to time have cash in banks in excess of FDIC insurance limits. 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 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.

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 not recognized any impairment charges through September 30, 2025 related to goodwill.

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 September 30, 2025, the Company did not hold any stable-coins or other in-scope crypto assets.

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. The 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 September 30, 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 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 September 30, 2025 and December 31, 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 lease 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. The company has not entered into any new leases in the nine months ended September 30, 2025.

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 2024 and for the three and nine months ended September 30, 2025 were not included in the computation of diluted EPS because the Company has incurred a loss for the three and nine months ended September 30, 2025 and year ended December 31, 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 three and nine months ended September 30, 2025 and the year ended December 31, 2024.

Research and Development

Research and development costs are charged to operations when incurred and are included in operating expenses, except for goodwill related to patents. Research and development costs consist principally of compensation of consultants that perform the Company’s research activities, payments to third parties for preclinical and non-clinical activities, expenses with clinical research organizations (“CROs”), investigative sites, consultants and contractors that conduct or provide other services relating to clinical trials, costs to acquire drug product, drug supply and clinical trial materials from contract development and manufacturing organization (“CDMOs”) and third-party contractors relating to chemistry, manufacturing and controls (“CMC”) efforts, the fees paid for and to maintain the Company’s licenses and research and development costs related to Adrulipase, Capeserod and Niclosamide. Depending upon the timing of payments to the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs. These accrued or prepaid expenses are based on management’s estimates of the work performed under service agreements, milestones achieved and experience with similar contracts. The Company monitors each of these factors and adjusts estimates accordingly.

Research and Development – Intellectual Property Acquired

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).

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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 September 30, 2025 related to IPR&D.

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. On March 13, 2024, in connection with the IMGX acquisition, the Company assumed IMGX’s 2021 Stock Option Plan (the “IMGX Plan”), including all IMGX stock options immediately outstanding prior to the IMGX acquisition, with each becoming an option to purchase Common Stock, subject to adjustment. The IMGX Plan was adopted and approved by the board of directors and stockholders of IMGX in 2021. Following the assumption of the IMGX Plan by the Company, no new awards have been or will be made under the IMGX 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. A newly acquired business in a business combination that has met the held for sale criteria should be measured at fair value less costs to sell. This is because the business has been recently acquired and its carrying value has been adjusted to its fair value. 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.

Additional details surrounding the Company’s assets and liabilities held for sale and discontinued operations are included in Note 4.

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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.

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. The Company is evaluating enhancements to its income tax disclosures in preparation for adoption.

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.

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Note 3 – Business Acquisition

IMGX Acquisition

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) 36,830 shares of Common Stock, and (B) 11,777.418 shares of Series G Preferred Stock, each share of which is convertible into 1,000 shares of Common Stock, upon shareholder approval. Following the closing of the acquisition, the Company had 2,303,135 shares of common stock issued and outstanding.

The Company incurred transaction costs of $5,456,038 which are included in the Company’s condensed consolidated statement of operations.

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 200,652 shares of Common Stock, have an exercise price of $0.81 and expire between February 1, 2031 and June 6, 2033. The Assumed Warrants are exercisable for an aggregate of 127,680 shares of Common Stock, have exercise prices ranging from $3.03 to $3.92 and expire between September 30, 2032 and September 6, 2033.

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 18,475 shares of Common Stock and 595.808 shares of Series G Preferred Stock. The fair value of the advisory fees was approximately $4.0 million which are included in the approximately $5.5 million of transaction costs noted above.

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 fair value of the consideration totaled approximately $60.1 million, summarized as follows:


	Amount
Common stock issued to ImmunogenX stockholders	$	240,500
Replacement options		1,271,000
Replacement warrants		789,000
Preferred stock issued to ImmunogenX stockholders		57,790,474
Total consideration paid	$	60,090,974

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The Company has made an 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 purchase price allocations relating to the Merger:


Assets acquired:
Cash and cash equivalents	$	88,169
Prepaid expenses and other current assets		3,131,929
Property and equipment, net		18,963
Intangibles		63,370,000
Operating lease right-of-use assets		4,232
Total assets	$	66,613,293
Liabilities assumed:
Accounts payable		916,209
Accrued expenses and other current liabilities		2,131,439
Long term debt		6,397,889
Deferred tax liability		15,431,108
Total liabilities	$	24,876,645
Goodwill recorded:
Goodwill	$	18,354,326
Net assets acquired	$	60,090,974

The fair value of IPR&D was capitalized as of the IMGX Merger date and accounted for as indefinite-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. 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 subject to amortization and their associated estimated acquisition date fair values are as follows:


	Estimated	Acquisition Date
Intangible Asset	Useful Life	Fair Value
Patents	2 years	$	140,000
Trade names and trademarks	6 years		230,000
IPR&D – Latiglutenase	Indefinite		54,000,000
IPR&D - CypCel	Indefinite	$	9,000,000

Net loss in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2025 includes net losses of IMGX from the date of acquisition to September 30, 2025 of approximately $0.8 million, which is classified as discontinued operations.

The Merger is classified as held for sale as of September 30, 2025. Refer to Note 4 for further information.

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:


	Nine Months		Twelve Months Ended
	Ended September, 2025		December 31, 2024
Operating expenses	$	—	$	15,621,274
Loss before income tax benefit		—		(15,619,022)
Loss from discontinued operations		(816,808)		(2,440,315)
Net loss applicable to common shareholders		(816,808)		(18,300,301)

Basic and diluted weighted average shares outstanding		1,609,863		45,657
Loss per share - basic and diluted	$	(0.51)	$	(400.82)

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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.

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:

●

424,348 shares of the Company’s common stock, par value $0.0001 per share, representing approximately 19.99% of the Company’s issued and outstanding common stock as of the closing date; and

●

38,801.546 shares of Series H Non-Voting Convertible Preferred Stock, par value $0.0001 per share, each share having a liquidation value of $618.53 and convertible into an aggregate of not less than 38,801,546 shares of common stock upon achievement of specified milestones and shareholder approval. The Series H Preferred Stock includes milestone-based conversion features that require specified operational and corporate events to be satisfied before conversion into common stock. Conversion is also subject to shareholder approval of the related conversion proposal.

The combined fair value of the equity consideration issued to the Sellers was estimated at $27.1 million, consisting of $2.1 million attributable to the common stock issued and $25.0 million attributable to the Series H Preferred Stock. The Company recognized a non-controlling interest of approximately $5.3 million, representing the estimated fair value of the 25% ownership interest in AMPX, a subsidiary of Grid AI, not owned directly or indirectly by the Company.

No cash consideration was paid. Transaction costs related to the acquisition were not material and were expensed as incurred.

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Purchase Price Allocation

The transaction was accounted for under the acquisition method of accounting in accordance with ASC 805 with Entero 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:


Assets acquired:
Cash and cash equivalents	$	336,429
Accounts receivable		37,490
Other current assets		1,521,939
Prepaid		353,704
Property plant and equipment, net		27,520
Developed technology, net		18,387,000
Customer relationship		2,630,000
Trade name		782,000
Total assets	$	24,076,082
Liabilities assumed:
Accounts payable		1,498,376
Deferred consideration- short term		2,000,000
Other non-current liabilities		7,292,101
Deferred consideration- long term		5,000,000
Total liabilities	$	15,790,477
Goodwill recorded:
Goodwill	$	24,111,981
Net assets acquired	$	32,397,586

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 $24.1 million. None of the goodwill is expected to be deductible for tax purposes.

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 technology, net	10 years	$	18,387,000
Customer relationships	8 years		2,630,000
Trade names	10 years		782,000

Supplemental Pro Forma Financial Information

The acquired business did not contribute any revenue or net income / (loss) for the nine months ended September 30, 2025, because the acquisition closed on September 30, 2025.

The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it had occurred as of January 1, 2025. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition been consummated as of that time.


	Nine Months Ended
	September 30, 2025
Revenue	$	394,833
Net Loss	$	5,860,858

There was no activity in Grid AI in 2024 as entity was dormant in 2024.

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Segment Consideration

Following the acquisition of Grid AI Corp., management evaluated the Company’s operating and reportable segments in accordance with ASC 280, Segment Reporting. Grid AI represents a distinct operating component of the business due to its differentiated technology platform and customer base. However, as of September 30, 2025, Grid AI does not meet the quantitative or qualitative thresholds for separate reportable-segment presentation. The Company’s operations are therefore presented as a single operating and reportable segment. Management will continue to monitor the financial significance of Grid AI’s operations in future periods and will reassess segment presentation if warranted.

Note 4 – Discontinued Operations and Assets and Liabilities Held for Sale

The Company has initiated a plan to dispose of certain assets and liabilities of IMGX. These are classified as assets and liabilities held for sale and, due to the short period of time since the close of the Merger, are reported at their fair value less cost to sell. The Company determined that the discontinued operations of IMGX represents a strategic shift that will have a major effect on the Company’s operations and financial statements.

In March 2025, the Company announced that it entered into a rescission agreement (the “Rescission Agreement”), by and among the Company, IMGX and the former shareholders of IMGX (the “IMGX Shareholders”). Under the terms of the Rescission Agreement, the parties have amicably determined that it is in their collective best interest to: (i) rescind the issuances of the shares of Common Stock and Series G Preferred Stock that the Company has issued to the IMGX Shareholders as part of the Merger, (ii) convey to the IMGX Shareholders all of the issued and outstanding membership interests (the “Membership Interests”) of IMGX currently held by the Company, (iii) cancel the Assumed Options and Assumed Warrants, and (iv) provide for such additional agreements as are set forth in the Rescission Agreement. Also as set forth in the Rescission Agreement, following the closing, the Company will retain up to approximately $695,000 of IMGX’s accounts payable, and IMGX will remain responsible for approximately $9,278,400 of IMGX’s secured debt. On June 30, 2025, the Company and the IMGX Shareholders representative mutually agreed that the transactions contemplated by the Rescission Agreement may be consummated on or prior to December 31, 2025. The Company expects that the closing of the Rescission Agreement will occur on or prior to November 30, 2025, subject to satisfaction or waiver of all conditions for closing. After the transactions contemplated by the Rescission Agreement have been consummated, IMGX will no longer be a subsidiary of the Company, and the Company will no longer be holding any interest in IMGX. In July 2025, the Company announced the it entered into an amendment to the Rescission Agreement, by and among the Company, IMGX and the IMGX Shareholders (“Rescission Agreement Amendment”), whereby the parties to the Rescission Agreement Amendment agreed to add additional shareholder representations and warranties, including providing for an accredited investor representation by each of the IMGX Shareholders.

The following table summarizes the Company’s loss from discontinued operations for the three months ended September 30, 2025 and nine months ended September 30, 2025.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Operating expenses:
Research and development expenses	$	—	$	301,661	$	—	$	1,225,533
General and administrative expenses		—		76,971		—		152,187
Total operating expenses		—		378,632		—		1,377,720
Interest expense		(337,259)		(305,614)		(972,114)		(670,298)
Other (expense) income		155,306		(1,473)		155,306		47,256
Loss from discontinued operations	$	(181,953)	$	(685,719)	$	(816,808)	$	(2,000,760)

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The assets and liabilities associated with discontinued operations consist of the following as of September 30, 2025:


Assets held for sale:
Prepaid expenses and other current assets	$	3,131,929
Property and equipment, net		16,180
Goodwill and intangible assets		80,021,900
Total assets held for sale	$	83,170,009
Liabilities held for sale:
Accounts payable	$	141,906
Accrued expenses and other current liabilities		3,254,381
Debt		6,403,737
Deferred tax liability		13,872,684
Total liabilities held for sale	$	23,672,708

Total assets and liabilities classified as held for sale are presented as current assets and liabilities, respectively, as they are anticipated to be sold within 12 months.

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. U.S. 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
September 30, 2025 (unaudited):
Money market funds	$	18	$	18	$	—	$	—	$	18
Note Payable (carried at amortized cost)	$	700,000		—	$	700,000		—	$	700,000

December 31, 2024:
Money market funds	$	12,723	$	12,723	$	—	$	—	$	12,723
Note Payable	$	612,784		—	$	612,784		—	$	612,784

The note payable is carried at amortized cost; its fair value is disclosed above for informational purposes only, as its stated interest rate approximates a market rate for similar instruments. The Company has not elected the fair value option for any of its financial liabilities.

At September 30, 2025 and December 31, 2024, the Company had no other assets or liabilities that are subject to fair value methodology and estimation in accordance with U.S. GAAP. The note payable is carried at amortized cost and is not subject to recurring fair value measurement.

Note 6 –Goodwill

Goodwill is as follows:


	Goodwill
Balance on Dec 31, 2024	$	1,684,182
Balance on March 31, 2025		1,684,182
Goodwill associated with IMGX acquisition		18,354,326
Goodwill reclassified as held for sale		(18,354,326)
Goodwill associated with Grid AI acquisition		24,111,981
Balance on Sept 30, 2025 (unaudited)	$	25,796,163

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Note 7 – Intangible Assets and In-Process R&D

The Company’s intangible assets consist of (i) intangible assets acquired from ImmunogenX, LLC (“IMGX”), including patents, tradenames and trademarks, and (ii) identifiable intangible assets acquired in the Grid AI acquisition, including developed technology, customer relationships, and trade names. As of September 30, 2025, all IMGX intangible assets and in-process R&D (“IPR&D”) have been reclassified as held for sale in connection with the Company’s plans to divest the IMGX business. The activity related to IMGX intangible assets is presented separately below.


IMGX Intangible Assets (held for sale)	Estimated	September 30,
	Useful Life	2025
Patents	2 years	$	140,000
Trademarks and trade names	6 years		230,000
Less: accumulated amortization			(31,598)
Intangible assets, net			338,402
In-process R&D			63,000,000
Intangible assets and in-process R&D reclassified as held for sale			(63,338,402)
Total intangible assets and in-process R&D, net		$	—

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		September 30,
	Useful Life		2025
Developed Technology, net		10 years	$	18,387,000
Customer Relations		8 years		2,630,000
Trade Name		10 years		782,000
Total intangible assets, net			$	21,799,000


	Estimated
Year ending December 31,	Amortization Expense
2025 (remaining 3 months)	$	561,412
2026		2,245,650
2027		2,245,650
2028		2,245,650
2029		2,245,650
2030 and thereafter		12,254,988
Total	$	21,799,000

Note 8 - Accrued Expenses

Accrued expenses consisted of the following:


	September 30,
	2025		December 31,
	(unaudited)		2024
Lease write-off	$	236,511	$	—
Professional fees		142,313		186,173
Consulting fees		31,500		65,875
Total accrued expenses	$	410,324	$	252,048

Note 9 – Capital Stock

Our certificate of incorporation, as amended and restated (the “Charter”) authorized the issuance of up to 100,000,000 shares of Common Stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 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 2,547,147 and 1,584,650 shares of its Common Stock issued and outstanding at September 30, 2025 and December 31, 2024, respectively.

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 of 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 1,731.6 shares as Series B Preferred Stock. As of September 30, 2025 and December 31, 2024, 475.56 shares of Series B Preferred Stock were issued and outstanding, respectively. There are 760.74 shares of Series B Preferred Stock remain authorized but undesignated and unissued.

On January 5, 2021, the Company designated 25,000 shares as Series C Preferred Stock. Shares of Series C Preferred Stock converted into Common Stock (or Prefunded Warrants, as applicable) or redeemed shall be canceled and shall not be reissued. As of September 30, 2025 and December 31, 2024, 0 shares of Series C Preferred Stock were issued and outstanding, with 13,967.67 shares of Series C Preferred Stock remaining authorized but unissued.

On July 15, 2022, the Company designated 50 shares as Series D Preferred Stock and had 0 shares of Series D Preferred Stock issued and outstanding on as of September 30, 2025 and December 31, 2024.

On July 15, 2022, the Company designated 50 shares as Series E Preferred Stock and had 0 shares of Series E Preferred Stock issued and outstanding on September 30, 2025 and December 31, 2024.

On November 28, 2022, the Company designated 2,333 shares as Series F Preferred Stock and had 0 shares of Series F Preferred Stock issued and outstanding on September 30, 2025 and December 31, 2024.

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On September 30, 2025, the Company designated 38,801.546 shares of Series H Non-Voting Convertible Preferred Stock. As of September 30, 2025 and December 31, 2024, 28,604.5 and 0 shares of Series H Preferred Stock were issued and outstanding, respectively. Each share of Series H Preferred Stock has a liquidation preference of $618.53 per share, resulting in an aggregate liquidation preference of approximately $24.0 million as of September 30, 2025. The Series H Preferred Stock was issued to the shareholders of Grid AI Corp. as part of the consideration for the acquisition of Grid AI Corp. (See Note 3).

As of September 30, 2025, the aggregate liquidation preference of the Company’s outstanding preferred stock consisted of approximately $61.7 million for Series G Preferred Stock and $24.0 million for Series H Preferred Stock.

Mezzanine Equity

Series G Preferred Stock

The Company had 12,373.226 and 12,373.226 shares of Series G stock issued and outstanding on September 30, 2025 and December 31, 2024, respectively.

On March 13, 2024, the Company issued 12,373.226 shares of Series G Preferred stock in connection with the IMGX Merger. The following is a summary of the principal terms of the Series G Preferred Stock as set forth in the Certificate of Designation of the Series G Preferred Stock:

General; Transferability. Share of Series G Preferred Stock was issued in book-entry form at the time of designation and initial issuance in 2022. The Series G Preferred Stock is uncertificated, meaning no physical certificates are issued and ownership is recorded electronically on the Company’s books and records. Shares of Series G Preferred Stock may be transferred by the holders thereof without the consent of the Company, subject to applicable securities law restrictions and compliance with the Company’s transfer agent procedures.

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 333.33 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.

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 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.

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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 Series G Preferred Stock is redeemable for cash at the option of the holder any time beginning six months after issuance, at a price per share equal to the then-current fair value and is not redeemable at the option of the Company.

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.

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 3.0% of the aggregate gross proceeds from each sale of Common Stock. The Company has not made any sales of common stock under the ATM Agreement to date. As of May 24, 2022, the Company was authorized to offer and sell up to $8.0 million of its Common Stock pursuant to the ATM Agreement. The Company did not utilize the ATM Agreement during the nine months ended September 30, 2025 or the year ended December 31, 2024.

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 587,558 shares of the Company’s common stock (the “Existing Warrant Shares”), in the aggregate, at a reduced exercised price of $1.09 per share, in exchange for the Company’s agreement to issue new warrants (the “Inducement Warrants”) on substantially the same terms as the Existing Warrants as described below, to purchase up to 1,175,116 shares of the Company’s common stock (the “Inducement Warrant Shares”). The Inducement Warrants will be exercisable upon the receipt of stockholder approval and may be exercised until the fifth anniversary of the date on which such stockholder approval is obtained. The Company received aggregate gross proceeds of approximately $1.9 million from the exercise of the Existing Warrants by the Holder and the sale of the Inducement Warrants. The Company engaged Roth Capital Partners, LLC (“Roth”) to act as its financial advisor in connection with the transactions summarized above and paid Roth approximately $0.1 million for its services, in addition to reimbursement for certain expenses.

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) 91,667 shares of Common Stock, (ii) pre-funded warrants (the “May 2024 Pre-Funded Warrants”) to purchase up to an aggregate of 30,033 shares of Common Stock and (iii) common warrants (the “May 2024 Warrants”) to purchase up to an aggregate of 244,000 shares of Common Stock. The public offering price for each share of Common Stock and accompanying May 2024 Warrant to purchase one share of Common Stock was $8.85 per share. The May 2024 Pre-Funded Warrants have an exercise price of $0.0003 per share, are exercisable immediately and will expire when exercised in full. The May 2024 Warrants have an exercise price of $8.10 per share, are exercisable immediately and will expire six years from the initial exercise date.

The Company received gross proceeds of approximately $1.1 million less placement agent’s fees and other offering expenses of approximately $0.2 million.

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) 57,700 shares of Common Stock, (ii) pre-funded warrants (the “March 2024 Pre-Funded Warrants”) to purchase up to an aggregate of 117,508 shares of Common Stock and (iii) common warrants (the “March 2024 Warrants”) to purchase up to an aggregate of 175,208 shares of Common Stock. The public offering price for each share of Common Stock and accompanying March 2024 Warrant to purchase one share of Common Stock was $22.83 per share. The March 2024 Pre-Funded Warrants have an exercise price of $0.0003 per share, are exercisable immediately and will expire when exercised in full. The March 2024 Warrants have

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an exercise price of $22.44 per share, are exercisable immediately and will expire five years from the initial exercise date. The Company received gross proceeds of approximately $4.0 million less placement agent’s fees and other offering expenses of approximately $0.4 million.

Common Stock Issuances

Issuances for the Three Months Ended September 30, 2025

During the three months ended September 30, 2025, the Company issued an aggregate of 534,223 shares of Common Stock upon the exercise of pre-funded warrants issued at a par value of $0.0001 (See Note 11).

During the three months ended September 30, 2025, the Company issued an aggregate of 424,348 shares of Common Stock to the shareholders of Grid AI Corp. as consideration for the acquisition of Grid AI Corp. (See Note 3).

Issuances for the Nine Months Ended September 30, 2025

During the nine months ended September 30, 2025, the Company issued an aggregate of 3,897 shares of Common Stock upon the vesting of RSUs (See Note 11).

During the nine months ended September 30, 2025, the Company issued an aggregate of 534,223 shares of Common Stock upon the exercise of pre-funded warrants issued at a par value of $0.0001 (See Note 10).

Issuances for the Three Months Ended September 30, 2024

During the three months ended September 30, 2024, the Company issued 587,558 shares of Common Stock under the July 2024 Inducement Offering for which the Company received net proceeds of approximately $1.7 million.

During the three months ended September 30, 2024, the Company issued an aggregate of 12,727 shares of Common Stock upon the vesting of RSUs (See Note 11).

Issuances for the Nine Months Ended September 30, 2024

During the nine months ended September 30, 2024, the Company issued 57,700 and 91,667 shares of Common Stock under the March 2024 Offering and May 2024 Offering, respectively, for which the Company received net proceeds of approximately $4.5 million.

During the nine months ended September 30, 2024, the Company issued 587,558 shares of Common Stock under the July 2024 Inducement Offering for which the Company received net proceeds of approximately $1.7 million.

During the nine months ended September 30, 2024, the Company issued an aggregate of 12,277 shares of Common Stock with a value of $2.3 million in connection with the IMGX acquisition.

During the nine months ended September 30, 2024, the Company issued an aggregate of 6,158 shares of Common Stock with a value of $0.1 million to its financial advisors in connection with the IMGX acquisition.

During the nine months ended September 30, 2024, the Company issued an aggregate of 147,842 shares of Common Stock upon the exercise of pre-funded warrants issued at a par value of $0.0003 (See Note 10).

During the nine months ended September 30, 2024, the Company issued an aggregate of 9 shares of Common Stock upon the exchange of an aggregate of 10 shares of Series B Preferred Stock with a stated value of approximately $234,376 plus accrued dividends of approximately $70,429.

During the nine months ended September 30, 2024, the Company issued an aggregate of 116,667 shares of its Common Stock to consultants with a grant date fair value of approximately $1,541,995 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.

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During the nine months ended September 30, 2024, the Company issued an aggregate of 40,445 shares of Common Stock upon the vesting of RSUs (See Note 11).

Note 10 – Warrants

Warrant activity for the nine months ended September 30, 2025 and September 30, 2024 was 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	1,642,544	$	20.94	4.71
Issued during the period	4,945,340		0.81	4.86
Expired during the period	(52)		96,627.31	—
Exercised during the period	(534,223)		0.81	4.86
Warrants outstanding and exercisable on September 30, 2025	6,053,609	$	4.28	4.62

Warrants outstanding and exercisable on January 1, 2024	593,260	$	57.87	4.99
Issued during the period	1,742,166		5.61	4.85
Assumed from IMGX	42,560		10.44	8.47
Expired during the period	(1)		157,500.00	—
Exercised during the period	(735,400)		11.97	8.58
Warrants outstanding and exercisable on September 30, 2024	1,642,585	$	21.63	4.96

As of September 30, 2025, the outstanding warrants expire from 2025 through 2033.

During the nine months ended September 30, 2025, investors exercised pre-funded warrants to purchase 534,223 shares of the Company’s Common Stock and common stock warrants to purchase 534,252 shares of the Company’s Common Stock in connection with previous offerings.

During the nine months ended September 30, 2024, the Company issued warrants to purchase 525,625 shares of the Company’s Common Stock and pre-funded warrants to purchase 352,525 shares of the Company’s Common Stock in connection with the March 2024 Offering, warrants to purchase 732,000 shares of the Company’s Common Stock and pre-funded warrants to purchase 91,000 shares of the Company’s Common Stock in connection with the May 2024 Offering, and warrants to purchase 3,525,348 shares of the Company’s Common Stock in connection with the July Inducement Offering (See Note 9). Additionally, the Company assumed warrants to purchase 127,680 shares of the Company’s Common Stock in connection with the IMGX acquisition.

During the nine months ended September 30, 2024, an investor exercised pre-funded warrants to purchase 443,525 shares of the Company’s Common Stock and common stock warrants to purchase 1,762,674 shares of the Company’s Common Stock in connection with previous offerings.

Note 11 – 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 238 shares, which will, on January 1 of each calendar year, unless the Board decides otherwise, automatically increase to equal 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 will not include any shares of Common Stock issuable upon the exercise of options and other convertible securities issued pursuant to either the 2014 Plan, the 2020 Plan, or the IMGX Plan. The number of shares permitted to be issued as “incentive stock options” (“ISOs”) is 357 under the 2020 Plan.

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On March 13, 2024, in connection with the IMGX acquisition, the Company assumed the IMGX Plan, including all 200,652 IMGX stock options immediately outstanding prior to the IMGX acquisition, with each becoming an option to purchase Common Stock, subject to adjustment. Such stock options were the only awards that had been made under the IMGX Plan as of the closing of the IMGX acquisition. The IMGX Plan was adopted and approved by the board of directors and stockholders of IMGX in 2021. Following the assumption of the IMGX Plan by the Company, no new awards have been or will be made under the IMGX Plan.

As of September 30, 2025, there were an aggregate of 73 total shares available (but un-issuable) under the 2014 Plan, of which 9 are issued and outstanding, and 4 shares are reserved subject to issuance of restricted stock and RSUs.

As of September 30, 2025, 817,644 total shares were authorized under the 2020 Plan, of which 50,274 were issued and outstanding and 767,370 shares were available for potential issuances.

As of January 1, 2025, the number of shares of Common Stock available for issuance under the 2020 Plan automatically increased to 969,356 under the 2020 Plan’s evergreen provision.

During the nine months ended September 30, 2025 and 2024, stock option activity under the 2014 Plan, 2020 Plan, and IMGX 2021 Plan was as follows:


		Average		Remaining
	Number	Exercise		Contract	Intrinsic
	of Shares	Price		Life (Years)	Value
Outstanding at January 1, 2025	29,950	$	8,181.66	7.06	$	—
Expired	(27,194)	$	227.07	—		—
Assumed from IMGX	—		—	—		—
Outstanding at September 30, 2025	2,756	$	39,125.16	7.01	$	—
Exercisable at September 30, 2025	2,756	$	39,125.16	7.01	$	—

		Average		Remaining
	Number	Exercise		Contract	Intrinsic
	of Shares	Price		Life (Years)	Value
Outstanding at January 1, 2024	142	$	18,311.43	8.53	$	—
Expired	(5)		56,162.40	—		—
Assumed from ImmunogenX	66,884		2.43	7.05		—
Outstanding at September 30, 2024	67,021	$	36.03	7.05	$	—
Exercisable at September 30, 2024	67,021	$	35.22	7.05	$	—

There were no grant of options during the nine months ended September 30, 2025 by the Company. During the nine months ended September 30, 2024, the Company assumed fully vested options to purchase 66,884 shares of the Company’s Common Stock issued under the IMGX 2021 Plan.

For the nine months ended September 30, 2025 and 2024, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:


	2025		2024
Contractual term (in years)	—		7.6
Expected Volatility	—	%	110.35	%
Risk-free interest rate	—	%	4.20	%
Expected Dividend yield	—	%	0	%

Using the Black-Scholes Option Pricing Model, the estimated weighted average fair value of an option to purchase one share of common stock assumed during the nine months ended September 30, 2024 was $18.96.

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 units (“RSUs”) refer to an award which constitutes a promise to grant shares of Common Stock at the end of a specified restriction period.

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As of each September 30, 2025 and September 30, 2024, under the 2014 Plan, the Company had 1 shares of restricted stock outstanding and an aggregate unrecognized restricted Common Stock expense of approximately $269,500, which will be recognized when vesting of certain milestones become probable.

During the nine months ended September 30, 2025 and 2024, RSU activity under the 2020 Plan was as follows:


		Weighted-Average		Weighted-Average
	Number	Grant Date		Remaining Recognition
	of Shares	Fair Value		Period (Years)
Non-vested Outstanding at January 1, 2025	1,667	$	11.88	2.24
Awarded	—		—	—
Vested	—		—	—
Cancelled	(1,667)		11.88	—
Non-vested Outstanding at September 30, 2025	—	$	—	—

Non-vested Outstanding at January 1, 2024	17,424	$	12.93	9.96
Awarded	50,140		10.71	—
Vested	(44,467)		11.73	—
Cancelled	(17,408)		9.96
Non-vested Outstanding at September 30, 2024	5,689	$	11.58	0.85

During the nine months ended September 30, 2025 and September 30, 2024, the Board approved the grant of 0 and 50,140 RSUs, respectively. All grants of RSUs were pursuant to the 2020 Plan and vest quarterly over a one-year period. During the nine months ended September 30, 2024, 44,467 RSUs vested, of which 4,022 were issued in October 2024.

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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Research and development	$	—	$	9,550	$	—	$	60,045
General and administrative		—		174,096		—		526,851
Total stock-based compensation expense	$	—	$	183,646	$	—	$	586,896

As of September 30, 2024, the Company had unrecognized stock-based compensation expense related to stock options and RSUs of approximately $78,000. Approximately $61,000 of this unrecognized expense will be recognized over the average remaining vesting term of the stock awards of 0.85 years. Approximately $17,000 of this unrecognized expense will vest upon achieving certain clinical and/or corporate milestones. The Company will recognize the expense related to these milestones when the milestones become probable. Stock-based compensation related to IMGX for the three and nine months ended September 30, 2024 of approximately $6,000 and $19,000, respectively, is included in discontinued operations on the statement of operations. There was none for 2025.

Note 12 – 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 $500,000 in October 2023 and Sanofi was eligible to receive up to $46.0 million in potential development and regulatory milestone payments and up to $235.0 million in potential commercial milestone payments. Sanofi was also eligible to receive mid-to-high single-digit royalties on net sales, as well as a percentage of sublicense and transfer revenues with respect to Capeserod. Sanofi also had a right of first refusal with respect to Capeserod out-licensing transactions.

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The upfront payment of $500,000 was recorded as research and development expense in the year ended December 31, 2023. Depending on the status of development at the time a contingent payment is recognized, the Company may determine that the payment should be expensed as research and development or be capitalized as an intangible asset. This determination will be based on the facts and circumstances that exist at the time a contingent payment is recognized.

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 60 days from the date of such notice of breach, except in the case of payment breach, as to which the breaching party will have only a ten-day cure period. Sanofi may terminate the License Agreement upon any bankruptcy proceedings by the Company. The Company may terminate the License Agreement by providing Sanofi with at least 60 days prior written notice; provided, however, that Sanofi shall be entitled to any and all payments due and owed to Sanofi prior to the effective date of termination. On February 26, 2025, the Company provided notice to Sanofi to terminate the License Agreement. No payments are due to Sanofi and the Company terminated it’s agreement effective in February 2025.

Note 13 – Leases

On March 20, 2025, the Company received notice that it’s lease for the office space of 3,472 square feet in Boca Raton, Florida that was used for its corporate headquarters with a term through August 31, 2026, was in default. The Company no longer has rights to the premises. Lease expenses amounted to approximately $35,000 for the nine months ended September 30, 2025.

The weighted-average remaining lease term and weighted-average discount rate under operating leases are:


	September 30,		September 30,
	2025		2024
Lease term and discount rate
Weighted-average remaining lease term (years)	0.9		1.9
Weighted-average discount rate	7.00	%	7.00	%

As a result of the default, the Company fully impaired the related the Right-of-Use (ROU) asset. The carrying amounts of lease liability, which was moved to current as of September 30, 2025 were as follows:


Lease Liability		$	135,609

The impairment of the right of use asset was $108,759, which is included in the income statement under “Other Expenses.” Additionally, an accrual of $100,902 has been made to cover outstanding payments and penalties.

The default was accounted for in accordance with ASC 842, resulting in the following impact on the financial statements:


Impairment of ROU Asset	$	108,759
Increase in general and administrative expenses	$	100,902

Note 14 – Debt

Debt consists of the following:




	Revolving
	line of credit
Principal balance as of January 1, 2025	$	—
Additions		700,000
Payments		—
Debt discount		—
Reclassification to liabilities held for sale		—
Total debt as of September 30, 2025	$	700,000

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Revolving line of credit

Effective January 31, 2025, we entered into a Revolving Loan Agreement dated January 27, 2025 (the “Revolving Loan Agreement”), with a Lender pursuant to which the Lender agreed to make loans to us. 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 (the “Revolving Note” and such amount, the “Total Outstanding Amount”). This transaction is referred to as the “Financing”. We shall use the proceeds from the Financing for general corporate purposes, including but not limited to financing the expense of a Qualified Public Equity Offering (as defined below) and payment of certain items. As of September 30, 2025, approximately $1.3 million remained available for future borrowings under the Revolving Loan Agreement, subject to the satisfaction of customary draw - down conditions. Out of the Total Outstanding Amount, the Lender disbursed a loan amount of $700,000. The Revolving Note bears interest at the rate of 18% per annum, and interest accumulated as of September 30, 2025 was approximately $79,500.

In connection with the IMGX acquisition, the Company assumed a revolving line of credit. In October 2022, ImmunogenX entered into a credit agreement, which allowed for a revolving line of credit (the “Revolver”) for borrowings up to $6.0 million, initially maturing on October 1, 2024, and bearing interest per annum of the prime rate plus 4.5%. The credit agreement was amended in September 2023 (the “First Amendment”) to increase the maximum borrowings of the Revolver to $7.5 million. The credit agreement was amended and restated on March 13, 2024 (the “Second Amendment”). Terms under the Second Amendment include an extended maturity date of September 13, 2025, interest per annum of the prime rate plus 6.0%, and no further draws on the line of credit after March 13, 2024. As of September 30, 2025, the Revolver and accrued interest have been reclassified to liabilities of the disposal group held for sale (see Note 4).

As of September 30, 2025, the Company was in compliance with all covenants under the Revolving Loan Agreement. The Company has not taken any action that would constitute a breach of the negative covenants, and no event has occurred that, with the passage of time or the giving of notice, would constitute an event of default under the Revolving Loan Agreement. Additionally, the Company has not incurred any indebtedness requiring lender consent, made any prohibited equity repurchases or payments, or engaged in any affiliate transactions or corporate actions restricted by the Revolving Loan Agreement.

Management continues to monitor compliance with the Revolving Loan Agreement on an ongoing basis and currently believes the Company will remain in compliance with all covenants for at least the next twelve months.

Promissory notes

In connection with the IMGX acquisition, the Company assumed two promissory notes, one of which is with a related party. The notes are each in the amount of $0.5 million, accrue interest at a rate of the prime rate plus 4.5% per annum, and have a maturity date of September 30, 2025. As of September 30, 2025, the promissory notes and all accrued interest has been reclassified to liabilities of disposal group held for sale.

EIDL loan

In connection with the IMGX acquisition, the Company assumed an Economic Injury Disaster Loan (“EIDL”) loan with a principal balance of $0.5 million bearing interest of 3.75% per annum, with interest payable monthly in arrears. The Company determined the loan has a fair value as of the assumption date of March 13, 2024 of $38,000, resulting in a discount of $462,000 which is amortized over the remaining life of the loan. All unpaid principal and interest are due at maturity on June 30, 2050. As of September 30, 2025, the EIDL loan and all accrued interest has been reclassified to liabilities of disposal group held for sale.

Directors and Officer’s Liability Insurance

On February 5, 2025, the Company entered into 10-month financing agreements for its directors and officer’s liability insurance, as well as other corporate insurances, in the amount of approximately $0.1 million that bears interest at an annual rate of 10.75%. Monthly payments going forward, including principal and interest, are approximately $15,000 per month. The balance due under these financing agreements was $0.06 million at September 30, 2025 and $0 at December 31, 2024.

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Note 15 - Related Party Balances

The Company has related party transactions with AMP Solar Group Ltd. (“AMP Solar Group”), the holder of a 25% non-controlling interest in AMP UK Holdings, a Grid AI subsidiary. As a result of the acquisition of Grid AI on September 30, 2025, the Company assumed Grid AI’s deferred consideration liability totaling $7.0 million, consisting of $2.0 million classified as current and $5.0 million classified as non-current, representing amounts payable to AMP Solar Group for acquisition of equity interest in AMP UK Holdings.

The Company also recorded other non-current liabilities of approximately $7.3 million classified as “Other Non-Current Liabilities” in the consolidated balance sheet. These amounts likewise represent balances payable to AMP Solar Group for the services provided under arrangements predating the Grid AI acquisition. The obligations are non-interest-bearing and are expected to be settled through future cash payments or other negotiated arrangements.

No cash settlements were made between these entities during the nine months ended September 30, 2025.

Note 16 – Net (Loss) Income per Common Share

Basic net loss per share is computed by dividing net loss available to Common Stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed to be anti-dilutive.

For the nine months ended September 30, 2025 stock options in the amount of 2,759 and warrants in the amount of 6,053,557 were excluded from the calculation of diluted net loss per share as they did not have a dilutive effect.

All shares of Common Stock that may potentially be issued in the future are as follows:


	September 30, 2025	September 30, 2024
	(unaudited)	(unaudited)
Series G convertible preferred stock	4,124,409	4,124,409
Common stock warrants	6,053,557	1,642,585
Stock options	2,759	67,021
RSUs not yet issued	—	5,689
Series B convertible preferred stock (1)	140	45
Restricted stock not yet issued	1	1
Total shares of common stock issuable	10,180,866	5,839,750

(1)	Series B convertible preferred stock is assumed to be converted at the rate of $97,020 per common share, which is the conversion price as of September 30, 2025.

Note 17 - 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 covering substantially all employees of the Company. All employees are eligible to participate in the plan. Employees may contribute from 1% to 100% of their compensation and the Company matches an amount equal to 100% on the first 6% of the employee contribution and may also make discretionary profit-sharing contributions.

Employer contributions under this 401(k) plan amounted to approximately $1,000 and $84,000 for the nine months ended September 30, 2025 and 2024, respectively, and approximately $95,000 for year ended December 31, 2024.

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Note 18 - Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Where applicable, the Company records a valuation allowance to reduce any deferred tax assets that it determines will not be realizable in the future.

The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position. These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. Although the Company believes that it has adequately reserved for uncertain tax positions (including interest and penalties), it can provide no assurance that the final tax outcome of these matters will not be materially different. The Company makes adjustments to these reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and operating results. Carryforward attributes that were generated in tax years prior to those that remain open for examination may still be adjusted by relevant tax authorities upon examination if they either have been, or will be, used in a future period.

In applying the estimated annual effective tax rate approach prescribed under ASC 740 - 270 and based on present evidence and conclusions around the realizability of deferred tax assets, the Company determined that any deferred tax benefits related to the forecasted tax rate and pretax activity during the first quarter of 2025 and 2024 are neither more likely than not to be realized in the current year nor realizable as a deferred tax asset at the end of the year. Therefore, the appropriate amount of income tax benefit to recognize related to deferred tax assets generated during the three months ended September 30, 2025 and 2024 is zero.

The Company’s effective income tax rate was approximately 0% and 160% for the nine months ended September 30, 2025 and 2024, respectively. The income tax provision for interim periods is determined using an estimate of the annual effective tax rate adjusted for discrete items. The Company’s effective tax rate for the nine months ended September 30, 2025 differs from the applicable statutory tax rate primarily due to the valuation allowance recorded against its deferred tax assets. The Company’s effective tax rate for the nine months ended September 30, 2024 differs from the applicable statutory tax rate primarily due to the impact of the accounting for the IMGX Merger during the period, which resulted in the release of a portion of the valuation allowance that had previously been recorded against the deferred tax assets of the Company.

Note 19 - Contingencies

On December 31, 2024, Mattress Liquidators, Inc. filed a Complaint in the District Court, Boulder County, State of Colorado against Defendants IMGX, Jack A. Syage and Elizabeth T. Syage Revocable Trust, Case No. 2024CV31070.

Succinctly, Plaintiff complains that it entered into a Credit Agreement on October 3, 2022 with IMGX for a loan in the principal amount of $6,000,000. Jack Syage and Elizabeth T. Syage Revocable Trust executed a Guaranty of Payment that same day. The Credit Agreement was modified on September 6, 2023, which increased the principal amount of the loan to $7,500,000. Once more, on March 13, 2024, the Credit Agreement was modified to increase the principal amount of the loan to $8,212,345.17. Plaintiff alleges that in the summer of 2024, Defendants were not repaying the loan so on August 2, 2024, a Notice of Default was sent, which demanded immediately payment of the entire balance. After being provided with additional information, on August 29, 2024, Plaintiff suspended the Notice of Default and demanded Defendants provide certain financial reporting information under Section 7.5 of the Credit Agreement. On October 11, 2024, November 7, 2024, and November 14, 2024, Plaintiff sent Defendants letters of non-compliance regarding their financial reporting obligations. Thereafter, on November 21, 2024, Plaintiff sent Defendants a Notice of Default and Demand for Payment, which accelerated the Loan obligations, demanded that Defendants cure the financial reporting defaults, and demanded that Defendants pay all loan obligations no later than December 5, 2024.

Plaintiff claims that as of December 31, 2024, the total amount due and owing is $7,575,568.91, which consists of $7,460,245.47 in principal, $115,323.44 in accrued contract interest, and $47,069 in authorized attorneys’ fees and costs. Plaintiff asserts three causes of action. The first is against IMGX for alleged breach of the Credit Agreement. The other two causes of action asserted are alleged breaches of the Guaranty’s by Jack Syage, and the Elizabeth T. Syage Revocable Trust.

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After receiving an extension, IMGX timely filed its Answer on February 28, 2025. The case is now at issue. A required meet and confer with counsel to discuss drafting the (proposed) case management order and to discuss procedural matters was held on March 14, 2025.

Under the terms of the Rescission Agreement entered into in March 2025, by and among the Company, IIMGX, and each of the individuals or entities who are the former shareholders of IMGX, upon consummation of the transactions contemplated in Recission Agreement, the Company shall have no further duties, liabilities or obligations in connection with this complaint.

On May 8, 2025 the Company’s subsidiary ImmunogenX, LLC entered into a settlement agreement effective April 9, 2025 with Mattress Liquidators Inc. (the “Plaintiff”), Jack A. Syage and The Jack A. Syage and Elizabeth T. Syage Revocable Trust (the “Trust”, and Trust collectively with Jack, the “Guarantors”) (such agreement, the “Settlement Agreement”). Under the Settlement Agreement, the Guarantors agreed to pay the Plaintiff (a) $5,500,000.00 to be applied to the obligations amounting to approximately $7.9 million owed to the Plaintiff (which amount was paid to the Plaintiff on April 9, 2025) with the Guarantors being solely responsible for payment of all obligations due to be paid to the Plaintiff. In addition, ImmunogenX, LLC agreed to pay all of Plaintiff’s attorneys’ fees and costs incurred to date amounting to approximately $62,000.

The parties to the Settlement Agreement also agreed to enter into amended and restated loan documents dated April 9, 2025 which provide for, among others, a revolving loan of $2,436,338.30 (the “Commitment”) to ImmunogenX, LLC, to be repaid and the principal amount thereof reborrowed before the earliest of: (i) April 9, 2028; (ii) the date ImmunogenX, LLC prepays the revolving loan in full in accordance with amended and restated credit agreement; or (iii) the date on which the Commitment is terminated in whole pursuant to amended and restated credit agreement. Under amended and restated guarantees, the Guarantors unconditionally guaranteed the prompt payment of all monies owed by ImmunogenX, LLC to Plaintiff under the terms and conditions as stated herein. Under the Settlement Agreement, the Plaintiff agreed to release its security interest in ImmunogenX, LLC, and the parties agreed to execute a Stipulation of Dismissal with Prejudice to be filed in the action before the District Court, Boulder County, State of Colorado.

On July 15, 2025, the Company, ImmunogenX, LLC (“Immuno LLC”) and each of the individuals or entities (each a “Shareholder” and collectively, the “Shareholders”) who are the former shareholders of ImmunogenX, Inc., entered into an Amendment to the Rescission Agreement (“Rescission Agreement Amendment”), originally entered into by the parties on March 25, 2025, whereby the parties agreed to add additional shareholder representations and warranties, including providing for an accredited investor representation by each Shareholder.

On March 17, 2025, Ellenoff Grossman & Schole LLP (“EGS”) initiated an action against the Company by filing a summons and complaint in the Supreme Court of the State of New York, New York County. The complaint alleges that the Company owes to EGS $749,301.00 in fees for legal services EGS allegedly provided to the Company between September 2023 to January 2025, a period of time prior to the appointment of certain new directors to the Board and of Mr. Paolone as Interim Chief Executive Officer. EGS’s lawsuit alleges breach of contract, account stated, and quantum meruit claims. The Company is in the process of investigating the allegations of the complaint and plans to defend the action. The full amount claimed has been accrued as of September 30, 2025. On July 28, 2025, the parties filed a Stipulation Extending the Company’s Time to Answer, Move, or Otherwise Respond to the Complaint until January 13, 2026.

On January 8, 2025, Asymchem, Inc. (“Asymchem”) commenced an action against the Company by filing a complaint in the Supreme Court of the State of New York, New York County. The complaint alleges that the Company failed to pay $171,219 for services allegedly rendered under an Agreement dated May 25, 2023, which amended, restated, and superseded a Master Services Agreement dated December 3, 2020. Asymchem asserts causes of action for breach of contract and account stated in connection with services purportedly provided in the development and manufacture of the Company’s products. The Company filed its Answer on April 4, 2025, and the parties are currently engaged in discovery. On September 5, 2025, Asymchem filed a motion for summary judgment on the claims asserted in the complaint, and the Company submitted its opposition on September 29, 2025. The motion is presently pending before the Court.

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Note 20 - Subsequent Events

Subsequent to September 30, 2025, the Company completed additional equity activities and financing events.

On October 17, 2025, the Company entered into a Securities Purchase Agreement with an investor, pursuant to which the Company may sell up to $5.0 million in gross proceeds consisting of (i) Promissory Notes (“Notes”) and (ii) common stock purchase warrants (“Warrants”) to purchase up to 1,520,000 shares of common stock. The initial closing occurred on October 17, 2025, for gross proceeds of $500,000 and included the issuance of a Note in the principal amount of $500,000 and a Warrant to purchase 200,000 shares of common stock.

Between October 14 and November 10, 2025, multiple holders of warrants issued in the October 2025 private placement exercised their warrants for shares of common stock pursuant to the terms of the agreements. The exercises occurred in several tranches and included both cash and cashless exercises. In aggregate, approximately 0.8 million warrants were exercised, resulting in the issuance of approximately 0.8 million shares of common stock. Following these exercises, approximately 25 thousand warrants remain outstanding under the October 2025 issuance.

As a result of these warrant exercises, the Company’s total common shares outstanding increased from approximately 2.5 million as of September 30, 2025 to approximately 3.3 million as of November 12, 2025.

On October 28, 2025, the Company received a letter from Nasdaq confirming that based on the Form 8-K filed by the Company on October 6, 2025, the Company is in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market, under Listing Rule 5550(b)(1). 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 November 5, 2025, the Company received a Staff Determination Letter from Nasdaq Listing Qualifications stating that the Company’s proposed share exchange transaction with GridAI Corp. constitutes a “Change of Control” under Nasdaq Listing Rule 5110(a). The letter indicates that, as a result of this determination, the post-transaction entity will be required to satisfy all initial listing requirements and complete Nasdaq’s initial listing process prior to obtaining shareholder approval for the second step of the transaction. The letter further states that if the Company does not meet these requirements, Nasdaq may issue a delisting determination, at which time the Company would have the opportunity to request a hearing to appeal such determination. The Company is evaluating the Staff’s determination and its available options.

The Company evaluated all subsequent events through the date these condensed consolidated financial statements were issued and determined that no other material subsequent events occurred that would require recognition or additional disclosure in the accompanying financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this interim report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. As discussed in the section titled “CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS,” The following discussion and analysis contains forward-looking statements including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” included in this Report and in our Annual Report filed on Form 10-K/A for the year ended December 31, 2024 filed with the SEC on April 9, 2025.

Overview

We are 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. In addition to our biotechnology programs, we also conduct operations through Grid AI, an artificial intelligence - driven energy technology platform acquired on September 30, 2025, which offers software designed to optimize and coordinate distributed energy resources.

We are currently focused on developing the biologic Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in cystic fibrosis and chronic pancreatitis patients with exocrine pancreatic insufficiency. Our other programs consisted of Latiglutenase, a targeted oral biotherapeutic for celiac disease designed to breakdown gluten into non-immunogenic peptides; Capeserod, a selective 5-HT4 receptor partial agonist which was being developed as a gastroparesis therapeutic; and Niclosamide, an oral small molecule with anti-inflammatory properties for patients with inflammatory bowel diseases such as ulcerative colitis and Crohn’s disease. We have determined to discontinue the Latiglutenase, Capeserod and Niclosamide programs.

On September 30, 2025, the Company entered into and consummated a share exchange agreement (“Share Exchange Agreement”) with GridAI Corp, a Nevada corporation (“GridAI”), and the stockholders of all of the issued and outstanding shares of GridAI (such shares, the “Shares,” and the stockholders, collectively, the “Sellers,”). GridAI is a grid-edge, AI-driven software and device platform that enables utilities, retailers, and large power users to dynamically manage load and distributed energy resources. Pursuant to the Share Exchange Agreement, the Company purchased the Shares from the Sellers for a purchase price consisting of (i) an aggregate of 424,348 shares of the Company’s common stock, which represents 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 the Company’s Series H Non-Voting Convertible Preferred Stock, having such rights and preferences as set forth in the 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. The shares of Series H Non-Voting Convertible Preferred Stock can be convertible into an aggregate of 38,801,546 shares of Common Stock, subject to shareholder approval and certain conditions and adjustments as set forth in the Certificate of Designation.

In March 2024, we announced the closing of a merger with ImmunogenX, Inc. (“IMGX”) (the Company’s acquisition of IMGX, the “Merger”), a private, clinical-stage biopharmaceutical company founded in 2013, which is developing the biologic Latiglutenase for the treatment of celiac disease. IMGX is also developing CypCel, a metabolic marker compound that can measure the state of small-intestinal recovery of celiac patients undergoing gluten-free diets (“GFDs”). We have initiated a plan to dispose of certain assets and liabilities of IMGX, including Latiglutenase and CypCel. As of December 31, 2024, these were classified as assets and liabilities held for sale and due to the short period of time since the close of the Merger, are reported at their fair value less cost to sell. We determined that the discontinued operations of IMGX represents a strategic shift that will have a major effect on our operations and financial statements.

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In March 2025, we announced that we entered into a rescission agreement (the “Rescission Agreement”), by and among the Company, IMGX and the former shareholders of IMGX (the “IMGX Shareholders”). Under the terms of the Rescission Agreement, the parties have amicably determined that it is in their collective best interest to: (i) rescind the issuances of the shares of Common Stock and Series G Preferred Stock that the Company has issued to the IMGX Shareholders as part of the Merger, (ii) convey to the IMGX Shareholders all of the issued and outstanding membership interests (the “Membership Interests”) of IMGX currently held by the Company, (iii) cancel the Assumed Options and Assumed Warrants, and (iv) provide for such additional agreements as are set forth in the Rescission Agreement. Also as set forth in the Rescission Agreement, following the closing, the Company will retain up to approximately $695,000 of IMGX’s accounts payable, and IMGX will remain responsible for approximately $9,278,400 of IMGX’s secured debt. On June 30, 2025, the Company and the IMGX Shareholders representative mutually agreed that the transactions contemplated by the Rescission Agreement may be consummated on or prior to December 31, 2025. The Company expects that the closing of the Rescission Agreement will occur on or prior to November 30, 2025, subject to satisfaction or waiver of all conditions for closing. After the transactions contemplated by the Rescission Agreement have been consummated, IMGX will no longer be a subsidiary of the Company, and the Company will no longer be holding any interest in IMGX.

In July 2025, we announced that we entered into an amendment to the Rescission Agreement, by and among the Company, IMGX and the IMGX Shareholders (“Rescission Agreement Amendment”), whereby the parties to the Rescission Agreement Amendment agreed to add additional shareholder representations and warranties, including providing for an accredited investor representation by each of the IMGX Shareholders.

On February 26, 2025, we gave notice to terminate our license agreement with Sanofi for the development of Capeserod, a selective 5 - HT4 receptor partial agonist. This termination was effective in April 2025. No payments are due to Sanofi.

In November 2024, we announced a binding term sheet, subject to several closing conditions, for a reverse merger transaction with Journey Therapeutics, Inc. We do not anticipate that this transaction will move forward.

In September 2024, we announced a binding letter of intent with Data Vault Holdings, Inc. (“Data Vault”), a privately held technology holding company, to exclusively license two technology product suites owned by Data Vault. We do not anticipate that this transaction will move forward.

In December 2023, we announced that we have entered into a non-binding term sheet to sell our Niclosamide program. This transaction is not expected to move forward.

Our Product Candidates

Our Adrulipase programs are focused on the development of an oral, non-systemic, biologic capsule for the treatment of exocrine pancreatic insufficiency (“EPI”) in patients with cystic fibrosis (“CF”) and chronic pancreatitis (“CP”). Our goal is to provide CF and CP patients with a safe and effective therapy to control EPI that is non-animal derived and offers the potential to dramatically reduce their daily pill burden. In July 2023, we announced topline results from our Phase 2b monotherapy bridging study using a new enteric microgranule formulation of Adrulipase. Although the primary efficacy endpoint was not achieved, data from the study indicated that the enhanced Adrulipase formulation was safe, well tolerated and demonstrated an improvement over prior formulations of Adrulipase. We are planning to move this program forward in 2026.

Our Latiglutenase program was focused on the development of an orally administered, minimally-absorbed, biologic for improving multiple gluten-induced symptoms and consequent quality of life (“QOL”) due to inadvertent gluten consumption in patients with celiac disease (“CeD”) by breaking down the gluten into non-immunogenic peptides. We are no longer working on this program and have initiated a plan for its disposition as part of the Recission Agreement.

Our Capeserod program was in-licensed from Sanofi in September 2023. Sanofi conducted Phase 1 and Phase 2 Central Nervous System (“CNS”) trials with over 600 patients. In Sanofi’s CNS trials, Capeserod appeared safe and well-tolerated. Research on Capeserod and subsequent artificial intelligence (“AI”) empowered analyses suggest that the drug possesses a unique mechanism of action that is applicable to several GI indications underserved by currently available therapeutics. We are no longer working on this program and on February 26, 2025, notified Sanofi of our intent to terminate the license agreement. As of September 30, 2025 the agreement with Sanofi has been terminated.

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Our Niclosamide programs leveraged proprietary oral and topical formulations to address multiple GI conditions, including inflammatory bowel diseases (“IBD”) indications. In 2022 we advanced four separate Phase 2 clinical programs of our Niclosamide formulations, including FW-COV for Severe Acute Respiratory Syndrome Coronavirus 2 (“COVID-19”) GI infections, FW-UP for ulcerative proctitis (“UP”) and ulcerative proctosigmoiditis (“UPS”), FW ICI AC for Immune Checkpoint Inhibitor associated colitis (“ICI AC”), and FW CD for Crohn’s disease. We are no longer actively pursuing these programs.

Grid AI and AMPX Initiatives

On September 30, 2025, the Company completed the acquisition of Grid AI Corp., a grid-edge, AI-driven software and device platform that enables utilities, energy retailers, and large commercial and industrial customers to manage distributed energy resources and optimize power usage. Grid AI, through its operating subsidiary AmpX, provides an artificial intelligence–based orchestration platform that integrates with existing grid and on-site infrastructure to support automated load management, distributed generation optimization, and real-time energy system coordination. The platform applies machine-learning models to analyze grid conditions and adjust asset performance to improve reliability, reduce operating costs, and support the increasing adoption of renewable and decentralized energy resources.

The operations of Grid AI, together with related technology initiatives including the AMPX platform, represent a new operating component of the business. Because the acquisition occurred at the end of the reporting period, Grid AI’s operations are not separately discussed or presented in this Form 10-Q. Management will begin providing expanded discussion of Grid AI and AMPX activities in subsequent filings as integration progresses and operational data becomes available. See Note 3 – Business Combination (Grid AI Acquisition) for further information.

Nasdaq Listing Requirements

We received a letter on September 6, 2024 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). If at any time prior to September 1, 2025, the bid price of our Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive trading days, we will regain compliance with the minimum bid price requirement. On July 3, 2025, Entero Therapeutics, Inc. (the “Company”) received a letter from the Listing Qualifications department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, as the Company held its Annual Meeting on June 30, 2025, as disclosed in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on July 2, 2025, Nasdaq had determined that the Company has regained compliance with Nasdaq Listing Rule 5620(a) (the “Annual Meeting Rule”), and that the matter is now closed.

The extension notice has no immediate effect on the listing of our Common Stock on The Nasdaq Capital Market and does not affect our reporting requirements with the Securities and Exchange Commission. If we do not regain compliance with the minimum bid price requirement during the additional 180-day extension, Nasdaq will provide written notification that our Common Stock will be delisted. At that time, we may appeal the delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules. However, there can be no assurance that, if the Company does appeal the delisting determination by Nasdaq to the hearings panel, that such appeal would be successful. There can be no assurance that we will regain compliance with the minimum bid price requirement during the additional 180-day compliance period ending September 1, 2025 or maintain compliance with any other Nasdaq listing requirement. We intend to monitor the closing bid price of our Common Stock and may, if appropriate, consider implementing available options to regain compliance with the minimum bid price requirement.

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 June 30, 2025, we held our Annual Meeting and on July 3, 2025, we received a letter from the Listing Qualifications department of 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.

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On October 28, 2025, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) confirming that, based on the Form 8-K filed by the Company on October 6, 2025, the Company is in compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market under Listing Rule 5550(b)(1). The letter also noted that if the Company fails to evidence compliance upon filing its next periodic report, it may be subject to delisting and would have the opportunity to appeal any such determination to a Nasdaq Hearings Panel.

Revolving Loan Agreement

Effective January 31, 2025, we entered into a Revolving Loan Agreement dated January 27, 2025 (the “Revolving Loan Agreement”), with a Lender pursuant to which the Lender agreed to make loans to us. 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 (the “Revolving Note” and such amount, the “Total Outstanding Amount”). This transaction is referred to as the “Financing”. We shall use the proceeds from the Financing for general corporate purposes, including but not limited to finance the expense of a Qualified Public Equity Offering (as defined below) and payment of certain items. Out of the Total Outstanding Amount, the Lender disbursed an initial loan amount of $700,000. The Revolving Note bears interest at the rate of 18% per annum interest accumulated as of September 30, 2025 was approximately $79,500. The Revolving Loan Agreement provides that it is a condition of the closing of the Financing that not less than three of the current members of our Board of Directors resign and that three nominees designated by the Lender (“Lender Board Member Candidates”) be appointed to the Board of Directors by the remaining members of the Board of Directors. The Revolving Loan Agreement also provides that we will use our reasonable best efforts to consummate an underwritten or “best efforts” public offering of not less than $5,000,000 by us of our Common Stock and/or any convertible security or warrant, option or other right to subscribe for or purchase any additional shares of our Common Stock (“Qualified Public Equity Offering”) as soon as practicable, and the Lender shall cooperate with us in connection therewith. If, despite the reasonable best efforts of the Borrower, (x) a registration statement with respect to securities to be offered in a Qualified Public Equity Offering (the “QPEO S-1”) is not filed within 45 days following the initial Closing Date, or (y) a Qualified Public Equity Offering is not consummated within the earlier of (A) 120 days from the initial filing of the QPEO S-1 and (B) 30 days of a QPEO S-1 being declared effective by the SEC, then the Lender Board Member Candidates shall, upon the written request of the remaining members of the Board of Directors, resign from all of their respective positions on the Board of Directors.

As of September 30, 2025, the Company was in compliance with all covenants under the Revolving Loan Agreement. The agreement includes customary conditions and covenants, including requirements related to board composition and the Company’s reasonable best efforts to complete a Qualified Public Equity Offering (“QPEO”) within specified timeframes. Management is actively pursuing such offering and does not currently anticipate any default or acceleration under the terms of the facility.

Rescission Agreement with ImmunogenX

In March 2024, we announced the closing of a merger with IMGX. As a result of the Merger, IMGX became a limited liability company and our wholly owned subsidiary. As consideration for the Merger we issued the former shareholders of IMGX (A) 36,830 shares of Common Stock of the Company and (B) 11,777.418 shares of Series G Preferred Stock. In addition, we assumed (i) all ImmunogenX stock options immediately outstanding prior to the 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 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 200,652 shares of Common Stock, have an exercise price of $0.81 and expire between February 1, 2031 and June 6, 2033. The Assumed Warrants are exercisable for an aggregate of 127,682 shares of Common Stock, have exercise prices ranging from $3.02 to $3.92 and expire between September 30, 2032 and September 6, 2033.

Under the terms of the Rescission Agreement, the parties have amicably determined that it is in their collective best interest to: (i) rescind the issuances of the of the shares of Common Stock and Series G Preferred Stock that the Company has issued to the IMGX Shareholders as part of the Merger, (ii) convey to the IMGX Shareholders all of the issued and outstanding Membership Interests of IMGX currently held by the Company, (iii) cancel the Assumed Options and Assumed Warrants; and (iv) provide for such additional agreements as are set forth therein.

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Pursuant to the terms of the Rescission Agreement (i) each Shareholder agreed to cancel, waive, relinquish and disclaim in all respects any and all claims and/or rights to record or beneficial ownership in and to the shares of Common Stock and Series G Preferred Stock that the Company has issued to the IMGX Shareholders as part of the Merger, as set forth in the Rescission Agreement, (ii) each Shareholder agreed to cancel, waive, relinquish and disclaim in all respects any and all claims and/or rights to record or beneficial ownership in and to the Assumed Options and Assumed Warrants as set forth in the Rescission Agreement, including any Common Stock into which such Assumed Options and Assumed Warrants are not or ever have been converted or are convertible, (iii) the Company agreed to cancel, waive, relinquish and disclaim in all respects any and all claims and/or rights to record or beneficial ownership in and to the Membership Interests of IMGX, and (iv) the Company will retain up to approximately $695,000 of IMGX’s accounts payable, and IMGX will remain responsible for approximately $9,278,400 of IMGX’s secured debt.

In addition, under the terms of the Rescission Agreement, the Company shall have no obligation and will released from any and all obligations with respect to the assets or business of IMGX incurred after the Closing Date, as defined in the Rescission Agreement, or prior to the Closing Date, except as provided in the Rescission Agreement, unless approved in writing by the Company.

The obligations of each party to the Rescission Agreement to consummate the transactions contemplated by the Rescission Agreement are subject to the fulfillment, at or prior to the Closing, as defined in the Rescission Agreement, of each of the conditions set forth in the Rescission Agreement, and among others, that (i) the Company shall have obtained approval of its shareholders for the transfer of the Membership Interests to the Shareholders, and the other consents, authorizations or approvals from the parties as set forth in the Rescission Agreement to consummate the transactions contemplated by this Agreement, (ii) the Shareholders shall have delivered a mutually satisfactory voting agreement agreeing to, including other things, vote the Shares held by them in favor of the transactions contemplated by the Rescission Agreement, and (iii) the Company shall have received a resignation letter from Jack Syage resigning from all positions with the Company.

The Rescission Agreement may be terminated and the transactions contemplated thereby may be abandoned by the Company or the Shareholder Representative, as defined in the Rescission Agreement, if the transactions contemplated thereby shall not have been consummated by June 30, 2025, unless the Company and Shareholder Representative shall have consented to a subsequent date. On June 30, 2025, the Company and the IMGX Shareholders representative mutually agreed that the transactions contemplated by the Rescission Agreement may be consummated on or prior to December 31, 2025.

In July 2025, we announced the we entered into an amendment to the Rescission Agreement, by and among the Company, IMGX and the IMGX Shareholders (“Rescission Agreement Amendment”), whereby the parties to the Rescission Agreement Amendment agreed to add additional shareholder representations and warranties, including providing for an accredited investor representation by each Shareholder.

Liquidity and Capital Resources

To date, we have not generated any revenues and have experienced net losses and negative cash flows from our activities.

As of September 30, 2025, we had cash and cash equivalents of approximately $2.5 million, and had sustained cumulative losses attributable to common stockholders of approximately $3.7 million. We have closed on a revolving loan agreement in the principal amount of $2.0 million. We have not yet achieved profitability and anticipate that we will continue to incur net losses for the foreseeable future. We expect that our expenses will continue to grow and, as a result, we will need to generate significant product revenues to achieve profitability. We may never achieve profitability. As such, 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. Without adequate funding, we may not be able to meet our obligations. We believe these conditions may raise substantial doubt about our ability to continue as a going concern.

Our primary sources of liquidity come from capital raises through additional equity and/or debt financings. This may be impacted by geopolitical events, including war in Ukraine and in the Middle East, which are evolving and could negatively impact our ability to raise additional capital in the future.

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We have funded our operations to date primarily through the issuance of debt, convertible debt securities, preferred stock, as well as the issuance of Common Stock in various public offerings and private placement transactions. We expect to incur substantial expenditures in the foreseeable future for the development of Adrulipase. We will require additional financing to develop our product candidate, run clinical trials, prepare regulatory filings and obtain regulatory approvals, fund operating losses, and, if deemed appropriate, establish manufacturing, sales and marketing capabilities. Our current financial condition raises substantial doubt about our ability to continue as a going concern. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies. We will seek funds through additional equity and/or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing.

Although we are primarily focused on the development of our product candidate, Adrulipase, we are also opportunistically focused on expanding our product pipeline of clinical assets through collaborations, and also through acquisitions of products and companies. We are continually evaluating potential asset acquisitions business combinations, and other partnership opportunities. To finance such acquisitions, we might raise additional equity capital, incur additional debt, or both.

Our ability to issue securities is subject to market conditions. Each issuance under the shelf registration statements will require the filing of a prospectus supplement identifying the amount and terms of the securities to be issued.

Debt Obligations

Revolving line of credit

In connection with the IMGX acquisition, we assumed a revolving line of credit. In October 2022, IMGX entered into a credit agreement, which allowed for a revolving line of credit (the “Revolver”) for borrowings up to $6.0 million, maturing on October 1, 2024, and bearing interest per annum of the prime rate plus 4.5%. The credit agreement was amended in September 2023 (the “First Amendment”) to increase the maximum borrowings of the Revolver to $7.5 million. The credit agreement was amended and restated on March 13, 2024 (the “Second Amendment”). Terms under the Second Amendment include a maturity date of September 13, 2025, interest per annum of the prime rate plus 6.0%, and no further draws on the line of credit after March 13, 2024. As of September 30, 2024, the Revolver and accrued interest has been reclassified to liabilities of the disposal group held for sale.

Promissory notes

In connection with the IMGX acquisition, we assumed two promissory notes, one of which is with a related party. The notes are each in the amount of $0.5 million, accrue interest at a rate of the prime rate plus 4.5% per annum, and have a maturity date of September 30, 2025. As of September 30, 2024, the promissory notes and all accrued interest has been reclassified to liabilities of the disposal group held for sale.

EIDL loan

In connection with the IMGX acquisition, we assumed an EIDL loan with a principal balance of $0.5 million bearing interest of 3.75% per annum, with interest payable monthly in arrears. All unpaid principal and interest are due at maturity on June 30, 2050. As of September 30, 2024, the EIDL loan and all accrued interest has been reclassified to liabilities of the disposal group held for sale.

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Financial Operations Overview

Revenue

To date, we have not generated any revenue from the sale of our product candidates or otherwise. In the future, we expect that we will seek to generate revenue primarily from product sales, but we may also generate non-product revenue from sources including, but not limited to, research funding, development and milestone payments, and royalties on future product sales in connection with any out-license or other strategic relationships and/or government grants we may establish. Our product candidates are at an early stage of development and may never be successfully developed or commercialized.

Research and Development Expense

Conducting research and development is central to our business. Historically, the majority of our research and development expenses have been focused on the development of Adrulipase, Niclosamide, Capeserod and Latiglutenase. Research and development expenses consist primarily of internal and external costs incurred for our development activities, which include, among other things:

●

personnel-related costs, which include salaries, benefits, and stock-based compensation expense;

●

fees paid to third parties for services directly related to our drug development and regulatory efforts;

●

Expenses incurred under agreements with clinical research organizations (“CROs”), investigative sites and consultants and contractors that conduct or provide other services relating to our clinical trials and research activities;

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the cost of acquiring drug product, drug supply and clinical trial materials from contract development and manufacturing organization (“CDMOs”) and third-party contractors;

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costs associated with preclinical and non-clinical activities;

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payments and other costs in connection with the acquisition our product candidates under licensing agreements; and

●

amortization of intangible assets, including patents, in-process research and development and license agreements.

●

Costs incurred in connection with research and development activities are expensed as incurred.

We expect our research and development expenses to increase for the foreseeable future as we focus our efforts on the clinical development of our product candidates, including Adrulipase, through late-stage clinical trials, as well as chemistry, manufacturing and controls (“CMC”) efforts. The process of conducting non-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time-consuming. It is difficult to determine with certainty the duration and costs of any non-clinical study or clinical trial that we may conduct. In addition, if our product development efforts are successful, we expect to incur substantial costs to prepare for potential commercialization of any late-stage product candidates and, in the event any of our product candidates receives regulatory approval, to potentially fund the launch and sales and marketing efforts of the product.

The probability of success for any of our current or future product candidates will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each drug candidate, as well as an assessment of each drug candidate’s commercial potential.

We do not record or maintain information regarding costs incurred in research and development on a program or project specific basis. Our research and development staff, outside consultants, contractors, CROs, and CDMOs are deployed across several programs and/or indications. Additionally, many of our costs are not attributable to individual programs and/or indications. Therefore, we believe that allocating costs on the basis of time incurred by our personnel does not accurately reflect the actual costs of a project.

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General and Administrative Expense

General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation, related to our executive, finance, business development and support functions, legal fees relating to both intellectual property and corporate matters, insurance, costs associated with operating as a public company, including corporate communications and investor relations expense, information technology, professional fees for accounting, auditing and other professional services, and facility-related costs.

We anticipate our general and administrative expenses to increase for the foreseeable future to support of our expanded research and development activities, intellectual property, patent and corporate legal expense, insurance, and costs associated with operating as a public company, including corporate communications and investor relations expense. Additional increases in general and administrative expenses are expected in connection with increased business development efforts, including potential partnership and/or collaboration agreements and financing activities, expanding infrastructure, including information technology administration, and the hiring of additional personnel and consultants, among other expenses.

Consolidated Results of Operations for the Three Months Ended September 30, 2025 and 2024

The following table summarizes our consolidated results of operations for the periods indicated:


	Three Months Ended
	September 30,				Increase
	2025		2024		(Decrease)
Operating expenses:
Research and development expenses	$	6,673	$	206,999	$	(200,326)
General and administrative expenses		928,114		1,685,608		(757,494)
Total operating expenses		934,787		1,892,607		(957,820)
Other expenses		(36,069)		2,645		33,424
Loss before Income tax expense		(970,856)		(1,895,252)		924,396
Income Tax Expense		—		—		—
Loss from continued operations	$	(970,856)	$	(1,895,252)	$	924,396
Loss from discontinued operations		(181,953)		(685,719)		503,766
Net income (loss)	$	(1,152,809)	$	(2,580,971)	$	1,428,162

Revenues

We have not yet achieved revenue-generating status from any of our product candidates. Since inception, we have devoted substantially all of our time and efforts to acquiring and developing our product candidates, including Adrulipase, Niclosamide, Capeserod and Latiglutenase. As a result, we did not have any revenue during the three months ended September 30, 2025 and 2024, respectively.

Research and Development Expense

Research and development expenses for the three months ended September 30, 2025 totaled approximately $6,673, a decrease of approximately $0.2 million, over the approximately $0.2 million recorded for the three months ended September 30, 2024.

We expect research and development expenses to increase during the remainder of this fiscal year.

General and Administrative Expense

General and administrative expenses include expenses primarily relating to our overall operations and being a public company, including personnel, legal and financial professional services, insurance, corporate communications and investor relations, listing and compliance related costs, rent, and expenses associated with obtaining and maintaining intellectual property and patents, among others.

General and administrative expenses for the three months ended September 30, 2025 totaled approximately $0.9 million, a decrease of approximately $0.8 million, or 46% over the approximately $1.7 million recorded for the three months ended September 30, 2024.

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The decrease of approximately $0.8 million in total general and administrative expenses was primarily attributable to a decrease of $0.6 million related to a decrease in overall headcount, and reduction in D&O insurance of $0.2 million, approximately.

Other Expenses

Other expenses for the three months ended September 30, 2025 related to the write down of the right of use asset see note 13 and the interest expense on the revolving loan of $31,500.

Loss from discontinued operations

Loss from discontinued operations for the three months ended September 30, 2025 of $0.2 million and $0.7 million for September 30, 2024 represents expenses related to the disposal group that was classified as held for sale.

Net income (loss)

As a result of the factors above, our net loss for the three months ended September 30, 2025 totaled approximately $1.2 million, a decrease of approximately $1.4 million, or 54%, over the net loss of approximately $2.6 million recorded for the three months ended September 30, 2024.

Consolidated Results of Operations for the Nine Months Ended September 30, 2025 and 2024

The following table summarizes our consolidated results of operations for the periods indicated:


	Nine Months Ended
	September 30,				Increase
	2025		2024		(Decrease)
Operating expenses:
Research and development expenses	$	32,080	$	882,522	$	(850,442)
General and administrative expenses		2,362,957		13,535,241		(11,172,284)
Total operating expenses		2,395,037		14,417,763		(12,022,726)
Total other income (expense)		(198,855)		7,184		191,671
Loss before Income tax expense		(2,593,892)		(14,424,947)		11,831,055
Income Tax Expense		—		10,604,640		10,604,640
Loss from continued operations	$	(2,593,892)	$	(3,820,307)	$	1,226,415
Loss from discontinued operations		(816,808)		(2,000,760)		1,183,952
Net income (loss)	$	(3,410,700)	$	(5,821,067)	$	2,410,367

Revenues

We have not yet achieved revenue-generating status from any of our product candidates. Since inception, we have devoted substantially all of our time and efforts to acquiring and developing our product candidate, Adrulipase. As a result, we did not have any revenue during the nine months ended September 30, 2025 and 2024, respectively.

Research and Development Expense

Research and development expenses for the nine months ended September 30, 2025 totaled approximately $32,080, a decrease of approximately $0.9 million, over the approximately $0.9 million recorded for the nine months ended September 30, 2025.

The decrease in research and development expenses of $0.9 due to primarily attributable to a decrease in clinical related expenses.

We expect research and development expenses to increase during the remainder of this fiscal year.

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General and Administrative Expense

General and administrative expenses include expenses primarily relating to our overall operations and being a public company, including personnel, legal and financial professional services, insurance, corporate communication and investor relations, listing and compliance related costs, rent, and expenses associated with obtaining and maintaining intellectual property and patents, among others.

General and administrative expenses for the nine months ended September 30, 2025 totaled approximately $2.4 million, a decrease of approximately $11.2 million, or 83% over the approximately $13.5 million recorded for the nine months ended September 30, 2024.

The decrease of approximately $11.2 million in total general and administrative expenses was primarily attributable to a decrease of $4.2 million of non-cash expense recorded for the Tungsten financial advisor fees related to IMGX merger, decrease of legal fees of $1.0 million, $1.5 million related to a decrease in overall headcount, $1.7 million in share-based compensation for consultants and $0.3 million decrease for employees, and $1.2 million in public company fees, $0.3 million in personnel related costs and $0.5 million in professional fees and reduction in D&O coverage $0.5 million.

Other Expenses

Other expenses for the nine months ended September 30, 2025 related to the write down of the right of use asset (see note 13) and the interest expense on the revolving loan of $79,500.

Loss from discontinued operations

Loss from discontinued operations for the nine months ended September 30, 2025 of $0.8 million and $2.0 million for September 30, 2024 represents expenses related to the disposal group that was classified as held for sale.

Net income (loss)

As a result of the factors above, our net loss for the nine months ended September 30, 2025 totaled approximately $3.4 million, a decrease of approximately $2.4 million, or 41%, over the income of approximately $5.8 million recorded for the nine months ended September 30, 2024.

Cash Flows for the nine months Ended September 30, 2025 and 2024

The following table summarizes our cash flows for the periods indicated:


	Nine Months Ended
	September 30,
	2025		2024
Net cash (used in) provided by:
Operating activities	$	(1,729,201)	$	(9,046,305)
Investing activities		336,427		88,169
Financing activities		3,725,000		5,613,152
Net (decrease) in cash, cash equivalents and restricted cash	$	2,332,226	$	(3,344,984)

Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2025 was approximately $1.7 million, primarily attributable to our net loss of approximately $3.4 million. This was partially offset by a net increase in other assets and liabilities of approximately $0.8 million, an increase in accounts payable of approximately $0.5 million, and the loss on termination of lease of approximately $0.1 million. These offsets were partially reduced by increases in accrued expenses of approximately $0.2 million and deposits of approximately $0.1 million.

Net cash used in operating activities during the nine months ended September 30, 2024 of approximately $9.0 million was primarily attributable to our non-cash change in deferred tax valuation allowance of $10.6 million and our net loss of $5.8 million, partially offset by other non-cash expenses totaling approximately $7.4 million, mainly related to stock issued to our financial advisors in connection with the IMGX acquisition of $4.0 million, common stock granted to consultants of $1.5 million, and stock-based compensation of $0.6 million, as well as a decrease in prepaid expenses of $0.9 million.

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Investing Activities

There was $336,427 cash provided by investing activities as a result of the Grid AI acquisition during the nine months ended September 30, 2025 and $0 in 2024.

Net cash provided by investing activities during the nine months ended September 30, 2024 of approximately $0.1 million was due to the net cash acquired in the acquisition of IMGX.

Financing Activities

Net cash provided by financing activities of approximately $3.7 million for the nine months ended September 30, 2025 was due to net proceeds of approximately $0.7 million from the draw from the revolver loan and approximately $3.0 million from proceeds from pre-funded warrants.

Net cash provided by financing activities of approximately $5.6 million for the nine months ended September 30, 2024 was primarily due to net proceeds of approximately $4.5 million from the March 2024 and May 2024 registered direct offerings and $1.7 million from the July Inducement offering, partially offset by approximately $0.6 million of cash repayments of the note payable financing for corporate insurances.

Critical Accounting Policies and Estimates

Our accounting policies are essential to understanding and interpreting the financial results reported on the consolidated financial statements. The significant accounting policies used in the preparation of our consolidated financial statements are summarized in Note 2 to the consolidated financial statements and notes thereto found in our Annual Report on Form 10-K/A for the year ended December 31, 2024. Certain of those policies are considered to be particularly important to the presentation of our financial results because they require us to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain.

During the three months ended September 30, 2025, there were no material changes to matters discussed under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2024.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a - 15(b) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10 - Q, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a - 15(e) and 15d - 15(e) under the Exchange Act. Based on that evaluation, our CEO and our CFO each concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act, (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) is accumulated and communicated to our management, including our CEO and our CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a - 15(d) or 15d - 15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10 - Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. 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 to the Company from September 2023 through January 2025, and is claiming breach of contract, account stated, and quantum meruit. EGS seeks monetary damages in the amount of $749,301.00, with applicable interest, and costs and disbursements for the lawsuit. On May 21, 2025, the court issued a stipulation to extend the time to answer, move or otherwise respond to the complaint to June 30, 2025, and a subsequent stipulation dated June 24, 2025 further extending such time to July 31, 2025. The Company is currently evaluating the claims and defenses and is in negotiations with EGS to settle the lawsuit. On July 28, 2025, the parties filed a Stipulation Extending the Company’s Time to Answer, Move, or Otherwise Respond to the Complaint until January 13, 2026.

ITEM 1A. RISK FACTORS

As a smaller reporting company, we are not required to provide the information called by this item. However, for a discussion of the material risks uncertainties and other factors that could have material effect on us, please refer to Part I, Item 1A. “Risk Factor” in our Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the quarter ended September 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

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ITEM 6. EXHIBITS

(b)

Exhibits

Exhibit No.		Description
31.1*		Certification of the Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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 Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

*filed herewith

**furnished, not filed, herewith

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENTERO THERAPEUTICS, INC.

	By	/s/ Jason Sawyer
		Jason Sawyer
		Interim Chief Executive Officer
		(Principal Executive Officer)

	By	/s/ Anna Skowron
		Anna Skowron
		Interim Chief Financial Officer
Date: November 19, 2025		(Principal Financial and Accounting Officer)

-47-

Source: View Original Filing on SEC EDGAR

FAQ

How did Entero Therapeutics (ENTO) perform financially in Q3 2025?

Entero reported a Q3 2025 net loss of $1,152,809, improved from a net loss of $2,580,971 in Q3 2024, as operating expenses fell to $934,787 from $1,892,607.

What is Entero Therapeutics cash position as of September 30, 2025?

As of September 30, 2025, Entero had $2,517,218 in cash and cash equivalents and total assets of $135,370,340. The company also reported an accumulated deficit of $205,798,707.

Why does Entero Therapeutics disclose substantial doubt about its going concern status?

The company cites significant operating losses, recurring negative operating cash flows, limited cash of about $2.5M, and dependence on raising additional capital. Management states these conditions raise substantial doubt about its ability to continue as a going concern for one year from the issuance date.

What are the key terms of Entero Therapeutics acquisition of Grid AI Corp.?

On September 30, 2025, Entero acquired Grid AI by issuing 424,348 shares of common stock and 38,801.546 shares of Series H Non‑Voting Convertible Preferred Stock, which are convertible into 38,801,546 common shares subject to shareholder approval and specified conditions. The equity consideration was valued at about $27.1M.

How did the Grid AI acquisition affect Entero Therapeutics balance sheet?

The Grid AI deal added developed technology of $18,387,000, customer relationships of $2,630,000, a trade name of $782,000, cash of $336,429, and contributed to goodwill of $25,796,163. It also resulted in a non‑controlling interest of $5,287,000.

What is the status of the ImmunogenX (IMGX) business within Entero Therapeutics?

Entero acquired ImmunogenX in March 2024 and later classified its assets and liabilities, including Latiglutenase and CypCel, as held for sale. Net losses from IMGX of about $0.8M for the nine months ended September 30, 2025 are reported as discontinued operations.

How have Entero Therapeutics shares outstanding changed in 2025?

Common shares outstanding increased to 2,547,147 at September 30, 2025 from 1,584,650 at December 31, 2024, mainly due to a registered direct offering and shares issued to Grid AI shareholders. There were 3,361,903 common shares outstanding as of November 18, 2025.

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