UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026

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

Commission File Number: 001-42204

EXOZYMES INC.

(Exact name of registrant as specified in its charter)

Nevada		83-4550057
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

750 Royal Oaks Drive, Suite 106 Monrovia, CA 91016		91016
(Address of principal executive offices)		(Zip code)

(626) 415-1488

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $.000001		EXOZ		Nasdaq Capital Markets

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

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

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

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

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☒
		Emerging Growth Company	☒

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

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

As of August 13, 2026, the number of outstanding shares of Common Stock was 9,281,359.

TABLE OF CONTENTS

		Page Number
PART I	FINANCIAL INFORMATION	3

Item 1 - Condensed Unaudited Consolidated Financial Statements		3

Condensed Unaudited Consolidated Balance Sheets – June 30, 2026, and December 31, 2025		3

Condensed Unaudited Consolidated Statements of Operations – Three months and Six months ended June 30, 2026, and 2025		4

Condensed Unaudited Consolidated Statements of Changes in Equity – Three months and Six months ended June 30, 2026, and 2025		5

Condensed Unaudited Consolidated Statements of Cash Flows – Six months ended June 30, 2026, and 2025		6

Notes to Condensed Unaudited Consolidated Financial Statements		7

Item 2	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	22

Item 3	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4	Controls and Procedures	28

PART II	OTHER INFORMATION	30

Item 1	Legal Proceedings	30

Item 1A	Risk Factors	30

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3	Defaults upon Senior Securities	31

Item 4	Mine Safety Disclosures	31

Item 5	Other Information	31

Item 6	Exhibits	31

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

PART I – FINANCIAL INFORMATION

CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30, 2026 (Unaudited)			December 31, 2025
ASSETS
Cash and cash equivalents	$	5,652,696		$	3,039,343
Grants receivable		201,256			517,359
Due from affiliates		18,616			-
Prepaid expenses and other current assets		296,227			382,886
Total current assets		6,168,795			3,939,588
Property and equipment, net		670,908			764,401
Operating lease right-of-use asset, net		954,097			1,053,641
Finance lease right-of-use asset, net		83,350			108,682
Tax Receivable		105,205			105,205
Total assets	$	7,982,355		$	5,971,517

LIABILITIES AND EQUITY
Accounts payable	$	1,274,226		$	1,235,337
Due to affiliates		-			5,330
Operating lease liabilities – Current		297,778			281,979
Finance lease liabilities – Current		45,950			44,255
Total current Liabilities		1,617,954			1,566,901
Deferred grant reimbursement		66,382			90,365
Warrant Liability		1,902,612			-
Operating lease liabilities - Long term		700,287			852,575
Finance lease liabilities - Long term		41,020			64,427
Total liabilities	$	4,328,255		$	2,574,268
Stockholders’ Equity:
Preferred stock, $0.000001 par value, 5,000,000 shares authorized; no shares issued and outstanding on June 30, 2026, and December 31, 2025, respectively.		-			-
Common shares, 100,000,000 authorized shares at $0.000001; 9,281,359 and 8,406,681 shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively		9			8
Additional Paid-in-capital		30,007,644			24,501,933
Accumulated deficit		(26,353,553	)		(21,104,692	)
Total equity		3,654,100			3,397,249
Total liabilities and equity	$	7,982,355		$	5,971,517

See accompanying notes to the condensed unaudited consolidated financial statements.

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	2026			2025			2026			2025
	Three Months ended June 30,						Six Months ended June 30,
	2026			2025			2026			2025
Total operating income	$	-		$	-		$	-		$	-

Operating costs:
General and administrative costs:
Compensation		1,127,667			1,068,838			1,958,391			1,682,762
Professional fees		214,884			368,932			492,563			901,167
Information technology		11,759			41,835			22,064			67,152
General and administrative-other		161,422			265,449			308,680			469,689
Total general and administrative costs		1,515,732			1,745,054			2,781,698			3,120,770
Research and development costs		1,438,158			802,991			2,559,166			1,378,003
Total operating costs		2,953,890			2,548,045			5,340,864			4,498,773
Net operating loss		(2,953,890	)		(2,548,045	)		(5,340,864	)		(4,498,773	)
Other income/(expense):
Interest income, net		1,840			76,557			15,556			170,864
Offering costs		(201,784	)		-			(201,784	)		-
Change in fair value of derivative instruments		172,859			-			172,859			-
Other income		102,362			111,202			105,373			111,202
Loss before income taxes		(2,878,614	)		(2,360,286	)		(5,248,861	)		(4,216,707	)
Income tax expense		-			-			-			-
Net loss	$	(2,878,614	)	$	(2,360,286	)	$	(5,248,861	)	$	(4,216,707	)

Net loss per common share – basic and diluted	$	(0.33	)	$	(0.28	)	$	(0.61	)	$	(0.50	)
Weighted average of common shares outstanding – basic and diluted		8,660,246			8,377,265			8,563,419			8,372,564

See accompanying notes to the condensed unaudited consolidated financial statements.

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three and Six Months Ended June 30, 2026

					Additional
	Common Stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance, December 31, 2025		8,406,681		8		24,501,933		(21,104,692	)		3,397,249
Stock based compensation		-		-		501,098		-			501,098
Issuance of common stock due to vesting of RSU		10,002		-		-		-			-
Issuance of Common stock for exercise of options		62,309		-		-		-			-
Net loss		-		-		-		(2,370,247	)		(2,370,247	)
Balance, March 31, 2026		8,478,992		8		25,003,031		(23,474,939	)		1,528,100
Issuance of common stock in public offering		661,150		1		3,390,165		-			3,390,166
Issuance of common stock in registered direct offering		71,110		-		395,509		-			395,509
Issuance of common stock for compensation		30,557				257,872					257,872
Issuance of common stock for exercise of options		291		-		-		-			-
Issuance of common stock due to vesting of RSU		39,259		-		-		-			-
Stock-based compensation		-		-		961,067		-			961,067
Net loss		-		-		-		(2,878,614	)		(2,878,614	)
Balance, June 30, 2026		9,281,359		9		30,007,644		(26,353,553	)		3,654,100

Three and Six Months Ended June 30, 2025

					Additional
	Common Stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance, December 31, 2024		8,367,810		8		22,366,725		(11,945,958	)		10,420,775
Stock-based compensation		-		-		317,277		-			317,277
Net loss		-		-		-		(1,856,421	)		(1,856,421	)
Balance, March 31, 2025		8,367,810		8		22,684,002		(13,802,379	)		8,881,631
Stock options		-		-		323,479		-			323,479
Issuance of common stock for compensation		19,440		0		243,778		-			243,778
Related Party Debt Forgiveness		-		-		147,103		-			147,103
Net loss		-		-		-		(2,360,286	)		(2,360,286	)
Balance, June 30, 2025		8,387,250		8		23,398,362		(16,162,665	)		7,235,705

See accompanying notes to the condensed unaudited consolidated financial statements.

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW

	2026			2025
	Six Months ended June 30,
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,248,861	)		(4,216,707	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of Deferred Grant Reimbursement		(23,983	)		(27,158	)
Depreciation of property and equipment		151,096			142,759
Change in fair value of derivative instruments		(172,859	)		-
Non-cash lease expense		(7,854	)		14,629
Stock-based compensation		1,720,037			884,531
Changes in operating assets and liabilities:
(Increase) decrease in -
Grants receivable		316,103			479,875
Due from related party		(18,616	)		-
Prepaid expenses and other current assets		86,659			76,371
Increase (decrease) in -
Accounts payable and accrued expenses		38,889			6,377
Due to related party		(5,330	)		(32,209	)
Net cash (used in) operating activities	$	(3,164,719	)		(2,671,532	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Deferred grant reimbursement		-			19,699
Purchases of property and equipment		(57,603	)		(81,619	)
Net cash provided by (used in) investing activities	$	(57,603	)		(61,920	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock and warrants		5,861,147			-
Payments on finance lease obligations		(25,472	)		-
Net cash provided by financing activities	$	5,835,675			-

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS		2,613,353			(2,733,452	)

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

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	5,652,696			6,985,858
Supplemental disclosures of cash flow information:
Interest Expense		3,759			1,693
Non-cash investing and financing activities:
Forgiveness of debt		-			147,103

See accompanying notes to condensed unaudited consolidated financial statements.

EXOZYMES INC.

NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Three and Six Months Ended June 30, 2026 and 2025

1. Organization and Description of Business

eXoZymes Inc., formerly known as Invizyne Technologies Inc., was formed in Nevada in 2019 and its wholly owned subsidiary eXoZymes (CA) Inc., formerly known as Invizyne Technologies Inc., was formed in California in 2014, together (“eXoZymes”) eXoZymes was formed with the vision of taking nature’s building blocks to make molecules of interest, effectively simplifying nature. eXoZymes’ technology is a differentiated and unique synthetic biology platform which would enable the scalable exploration of large number of molecules and properties found in nature. eXoZymes was a majority owned technology development subsidiary of MDB Capital Holdings, LLC (“MDB”) until the November 2024 initial public offering, when the holdings by MDB were diluted to a current 46.4% minority interest as of June 30, 2026.

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

Going Concern

These condensed unaudited consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company incurred net losses of $5,248,861 and $4,216,707 during the six months ended June 30, 2026 and 2025, respectively, and used cash for operations of $(3,164,719) and $(2,671,532) for the six months ended June 30, 2026 and 2025, respectively. Although the Company believes it has sufficient working capital for the near term, management believes that there remains substantial doubt about its ability to continue as a going concern due to anticipated funding shortfalls and the Company’s pre-revenue status. The Company’s ability to meet its long-term liabilities and obligations depends on securing additional financial support, whether through continued shareholder funding, raising equity or debt financing, or ultimately achieving profitable operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts or the classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying condensed unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q, and the rules and regulations of the Securities and Exchange Commission. All intercompany accounts and transactions have been eliminated in consolidation. Accordingly, these interim financial statements do not include all disclosures required by U.S. GAAP for complete annual financial statements. In the opinion of management, the accompanying condensed unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position as of June 30, 2026, and its results of operations, cash flows, and changes in stockholders’ equity for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026.

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

Use of Estimates

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

Recent Accounting Pronouncements

ASU 2024-03

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

Emerging Growth Company

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

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

Concentration of Risk

The Department of Energy has contributed 37.6%, National Science Foundation has contributed 48.2% and the National Institute of Health has contributed 14.2% of all grant reimbursements for the six months ended June 30, 2026. The Company believes it is not exposed to significant credit risk on government grant funding, based on the nature of eXoZymes’ grant receivables.

Revenue Recognition

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

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

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

Cash and Cash Equivalents

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

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

The Company periodically reviews the financial condition of the financial institutions and assesses the credit risk of such investments. On June 30, 2026, the Company had approximately $5,049,222 of cash and cash equivalents in financial institutions exceeding FDIC and SIPC insured limits. The Company did not experience any credit risk losses during the six months ended June 30, 2026 and 2025.

Fair Value Measurements

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

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

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

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

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

The following tables set forth the fair value of the Company’s consolidated financial instruments that were measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025:

	Level 1		Level 2		Level 3		Total
	June 30, 2026
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents		5,549,222		-		-		5,549,222

Total Assets		5,549,222		-		-		5,549,222

Warrant liabilities		-		-		1,902,612		1,902,612

Total liabilities		-		-		1,902,612		1,902,612

	Level 1		Level 2		Level 3		Total
	December 31, 2025
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents		2,917,721		-		-		2,917,721

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

Warrant liabilities		-		-		-		-

Total liabilities		-		-		-		-

The fair value of certain assets and liabilities of the Company, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying condensed unaudited consolidated balance sheets. The fair values of cash and cash equivalents, prepaid expenses and other, accounts payable and accrued expenses, and due to related party are estimated to approximate the carrying values as of June 30, 2026, and December 31, 2025.

Property and Equipment

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

Laboratory equipment		5 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of the lease duration or the life of the improvements

Property and equipment consist of the following as of June 30, 2026, and December 31, 2025, respectively:

Schedule of Property and Equipment

	June 30, 2026			December 31, 2025
Laboratory equipment	$	1,455,542		$	1,397,939
Furniture and fixtures		54,338			54,338
Leasehold improvements		328,786			328,786
Total property and equipment		1,838,666			1,781,063
Less: Accumulated depreciation		(1,167,758	)		(1,016,662	)
Property and equipment, net	$	670,908		$	764,401

Research Grants

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

Grants that operate on a reimbursement basis are recognized on the accrual basis and are offsets to expenses to the extent of disbursements and commitments that are reimbursable for allowable expenses incurred as of the six months ended June 30, 2026, and 2025, respectively, expected to be received from funding sources in the subsequent year. Management considers such receivables on June 30, 2026, and 2025, respectively, to be fully collectable due to the historical experience with the Federal Government of the United States of America. Accordingly, no allowance for credit losses on the grants receivable was recorded in the accompanying condensed unaudited consolidated financial statements.

Summary of grants receivable activity for the six months ended June 30, 2026, and 2025, is presented below:

Schedule of Grants Receivable Activity

	2026			2025
	Six Months ended June 30,
	2026			2025
Balance at beginning of period	$	517,359		$	737,282
Grant costs expensed		540,820			864,433
Grants for equipment purchased		-			19,699
Grant fees		3,724			8,715
Grant funds received		(860,647	)		(1,372,722	)
Balance at end of period	$	201,256		$	257,407

eXoZymes has received two grants, one from the National Institutes of Health (NIH) and one from the National Science Foundation (NSF). The NIH grant was awarded on July 1, 2026, and expires on June 30, 2028. The NSF grant was awarded on July 1, 2025, and expires on June 30, 2028. Both grants can be extended, or new phases can be granted, extending the expiration of the grant. None of the grants has commitments made by the parties, provisions for recapture, or any other contingencies, beyond complying with the terms of each research and development grant. Research grants received from organizations are subject to the contract agreement as to how eXoZymes conducts its research activities, and eXoZymes is required to comply with the agreement terms relating to those grants. Amounts received under research grants are nonrefundable, regardless of the success of the underlying research project, to the extent that such amounts are expended in accordance with the approved grant project. eXoZymes is permitted to draw down the research grants after incurring the related expenses.

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

Amounts received under research grants are offset against the related research and development costs in the consolidated statements of operations. For the six months ended June 30, 2026, and 2025, respectively, grants amounting to $540,820 and $864,433 were offset against the research and development costs. Grant drawdowns, which includes grant costs expensed, grants for equipment purchased, and grant fees, for the six months ended June 30, 2026, and 2025, respectively, totaled $544,544 and $892,847.

For the three months ended June 30, 2026 and 2025, respectively, grants amounting to $203,624 and $292,611 were offset against the research and development costs. Grant drawdowns, which includes grant costs expensed, grants for equipment purchased, and grant fees, for the three months ended June 30, 2026 and 2025, respectively, totaled $203,624 and $317,066.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs consist primarily of compensation costs, fees paid to consultants, and other expenses relating to the development of eXoZymes’s technology. For the six months ended June 30, 2026, and 2025, research and development costs prior to offset of the grants amounted to $3,103,710 and $2,268,677, respectively, which includes grant costs expensed, grants fees, and research and development costs, net of the grant received.

For the three months ended June 30, 2026 and 2025, research and development costs prior to offset of the grants amounted to $1,641,782, and $1,120,057, respectively, which includes grant costs expensed, grants fees, and research and development costs, net of the grant received.

Patent and Licensing Legal and Filing Fees and Costs

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

Patent and licensing legal and filing fees and costs were $144,382 and $148,528 for the six months ended June 30, 2026, and 2025, respectively. Patent and licensing legal and filing fees and costs are included in general and administrative costs in the consolidated statements of operations.

Related Party and Due to Affiliates Expenses

The Company had outstanding receivables from MDB Capital Holdings, LLC of $18,616 as of June 30, 2026, and outstanding payables to the same party of $5,330 as of December 31, 2025. These balances are non-interest bearing and are expected to be settled in accordance with standard payment terms.

Segment Reporting

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

3. Equity

Equity

In April 2022, pursuant to an equity subscription agreement the Company sold a total of 2,052,931 shares of eXoZymes’s Common Stock for $5,000,000 at $2.44 per share. In connection with the equity subscription agreement, the Company issued warrants (“Funding Warrants”) to purchase 205,293 shares of eXoZymes Common Stock. Through June 30, 2026, and December 31, 2025, respectively, 205,293 and 205,293 of Funding Warrants have vested. The total value of the funding warrants was $320,790 as of both June 30, 2026 and December 31, 2025, with no change in value between the two periods.

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

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

In June 2026, under its shelf registration statement on Form S-3, the Company completed an underwritten public offering and a concurrent registered direct offering of units at a price of $18.00 per unit, each unit consisting of two shares of Common Stock and one warrant to purchase one share of Common Stock. The Company issued an aggregate of 732,260 shares of Common Stock and 366,130 warrants for gross proceeds of $6,590,340 and net proceeds of $5,861,147, after offering costs of $729,194.

The warrants issued in the offerings (the “Warrants”) have an exercise price of $11.24 per share, become exercisable on June 5, 2027, and expire on June 5, 2031. They provide for cashless exercise and include a one-time down-round adjustment of the exercise price to $0.001 per share if the Company sells common stock below the offering price prior to June 5, 2027. The Warrants were determined to be liability-classified and were recorded as liabilities at fair value. The gross proceeds were allocated between the Common Stock and the Investor Warrants based on their respective relative fair values, with the fair value of the Investor Warrants determined using a Black-Scholes valuation model. Also, the Company issued 109,838 equity-classified warrants to the underwriter and placement agent as compensation for capital-raising services, with the same exercise price and a 5five-year term.

The warrants outstanding, issued, exercised, and expired, along with their respective exercise prices and expiration dates, as of December 31, 2025, and for the six months ended June 30, 2026, are presented below:

Description	Number of Warrants		Exercise Price		Expiration Date
Balance at 12/31/2025		351,528		4.75		Various (2029)
Issued		475,968		11.24		2031
Exercised		-		-		-
Expired		-		-		-
Balance at 06/30/2026		827,496		$8.48 (weighted avg)		Various (2029-2031)

4. Stock-Based Compensation

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

eXoZymes stock-based compensation was $1,720,037 and $640,753 for the six months ended June 30, 2026, and 2025. As of June 30, 2026, the unrecognized stock-based compensation is $6,000,774.

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

Schedule of Stock Option Grants

Grant Date	Shares Granted		Exercise Price ($)		Vesting Term	Expected Life (Years)		Risk-Free Rate			Expected Volatility
07/01/25		235,817		12.40	4 years		4		3.99	%		88.47	%
07/30/25		20,000		9.48	12 months		1		3.87	%		88.08	%
10/30/25		40,000		12.65	4 years		4		3.71	%		87.12	%
01/14/26		146,437		9.49	4 years		4		3.72	%		83.40	%

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

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

During the six months ended June 30, 2026, option holders exercised a total of 90,742 vested stock options through cashless exercises. Of this amount, 81,951 options were exercised at an exercise price of $3.31 per share, 7,791 options were exercised at an exercise price of $2.44 per share, and 1,000 options were exercised at an exercise price of $8.00 per share. In connection with these exercises, a total of 28,142 shares were withheld to cover the exercise consideration, resulting in the issuance of 62,600 shares. All options exercised during the period were fully vested.

As of June 30, 2026, stock options to purchase 1,860,526 shares of Common Stock were outstanding, with a weighted average exercise price of $6.24, an aggregate intrinsic value of $3,986,993, and a weighted average remaining contractual term of 4.34 years. Of these, options to purchase 1,084,181 shares were vested and exercisable, with a weighted average exercise price of $4.81. The outstanding options were issued between 2021 and 2026 and have vesting terms ranging from twelve months to five years, with an expiry of seven years.

A summary of stock option activity for the six months ended June 30, 2026, is presented below:

Schedule of Stock Options Activity

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Stock options outstanding on December 31, 2025		2,011,269		$	5.67		4.76
Granted		146,437		$	9.49		6.75
Exercised		(90,742	)	$	3.32		5.04
Expired		-			-		-
Forfeited / Cancelled		(206,438	)	$	3.96		5.32

Stock options outstanding on June 30, 2026		1,860,526		$	6.24		4.34

Stock options exercisable on June 30, 2025		557,840		$	4.59		5.91
Stock options exercisable on June 30, 2026		1,084,181		$	4.81		3.52

On July 19, 2021, eXoZymes granted 82,118 restricted stock units (“RSUs”) at a value of $2.44 per share. These RSUs were issued in 2020 in lieu of cash bonuses. These RSU were previously under a lock up which expired as of April 1, 2026. The lock agreement released the RSU’s evenly over the course of 12 months on a one-twelfth (1/12) basis. The Company has begun expensing the RSU’s starting April 1, 2026. In the period ending June 30, 2026, the Company expensed $50,092 and unrecognized stock-based compensation related to these RSUs is $150,276.

On March 28, 2022, eXoZymes granted 241,718 restricted stock units (“RSUs”) at a value of $2.44 per share. These RSUs were issued in 2021 in lieu of cash bonuses. These RSU were previously under a lock up which expired as of April 1, 2026. The lock agreement released the RSU’s evenly over the course of 12 months on a one-twelfth (1/12) basis. The Company has begun expensing the RSU’s starting April 1, 2026. In the period ending June 30, 2026, the Company expensed $144,669 and unrecognized stock-based compensation related to these RSUs is $434,008.

On May 1, 2023, eXoZymes granted 100,820 restricted stock units (“RSUs”) at a value of $3.32 per share. These RSUs were issued in 2023 in lieu of cash bonuses. These RSU were previously under a lock up which expired as of April 1, 2026. The lock agreement released the RSU’s evenly over the course of 12 months on a one-twelfth (1/12) basis. The Company has begun expensing the RSU’s starting April 1, 2026. In the period ending June 30, 2026, the Company expensed $80,923 and unrecognized stock-based compensation related to these RSUs is $242,770.

On July 1, 2025, eXoZymes granted 20,000 restricted stock units (“RSUs”) at a value of $9.48 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The RSUs vest monthly over a 12-month period.

On November 10, 2025, eXoZymes extended the lock up period for current employees that had unvested RSU’s. The Lock Up Agreement extended the lock up period to April 1, 2026, as to all of the Common Shares (the “RSU Shares”), and thereafter one-twelfth (1/12) of the RSU shares will be permanently released from the provisions of the Lock Up Agreement on the first of each month, starting as of April 1, 2026, and continuing until the last release date of March 1, 2027. The extension of the Lock Up Agreement was voluntary and of the 424,656 restricted stock units individuals holding 7,870 chose to exercise their Restricted Stock Units and converted to common stock on November 14, 2025.

On January 14, 2026, eXoZymes granted 62,759 restricted stock units (“RSUs”) at a value of $10.77 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The RSUs vest 15,689 on April 1, 2026, and there after vest equally per quarter until March 31, 2029.

On March 18, 2026, the Company issued 10,002 shares of its common stock to an individual upon the vesting and settlement of previously granted Restricted Stock Units (“RSUs”), in accordance with the terms of the Company’s equity incentive plan. The shares were issued on a one-for-one basis for each vested RSU and were issued on a gross basis.

In the three months ended June 30, 2026, the Company issued 39,259 shares of its common stock upon the vesting and settlement of previously granted Restricted Stock Units (“RSUs”), in accordance with the terms of the Company’s equity incentive plan. The shares were issued on a one-for-one basis for each vested RSU and were issued on a gross basis.

	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (in Years)
Restricted stock units outstanding on December 31, 2025		436,786		$	2.96		6.37
Granted		62,759		$	10.77		6.54
Exercised		(49,261	)	$	4.11		5.83
Forfeited		-			-		-
Restricted stock units outstanding on June 30, 2026		450,284		$	5.25		5.97

Vested Restricted stock units on June 30, 2025		424,656		$	2.64		7.37
Vested Restricted stock units on June 30, 2026		417,385		$	4.79		5.92

5. Earnings Per Share

The Company’s computation of earnings (loss) per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) attributable to holders of the Common Stockholders divided by the weighted average of the common shares outstanding for the period. Diluted EPS is like basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., preferred shares, warrants and stock options) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Loss per common share is calculated by dividing net loss by the weighted-average number of shares of Common Stock outstanding during the period. Basic and diluted net loss per common share are the same for all periods presented because the effect of warrants, stock options, and restricted stock units was anti-dilutive. Potentially dilutive securities excluded from the computation totaled 3,138,306 and 2,066,102 shares for the six months ended June 30, 2026, and 2025, respectively.

Basic and fully diluted earnings (loss) per share is calculated as follows for the six months ended June 30, 2026 and 2025:

	June 30, 2026 Common shares			June 30, 2025 Common shares
Net loss	$	(5,248,861	)	$	(4,216,707	)

Weighted average shares outstanding – basic and diluted		8,563,419			8,372,564

Net loss per share – basic and diluted	$	(0.61	)	$	(0.50	)

The following financial instruments were not included in the diluted loss per share calculations as of the six months ended June 30, 2026, and 2025 because their effect was anti-dilutive:

	June 30, 2026		June 30, 2025
Warrants to purchase common stock		827,496		205,293

Options		1,860,526		1,436,153

Restricted stock awards units		450,284		424,656

Total		3,138,306		2,066,102

6. Commitments and Contingencies

Legal Claims

The Company may be subject to legal claims and actions from time to time as part of its business activities. As of June 30, 2026 and 2025, the Company was not subject to any pending or threatened legal claims or actions.

External Risks Associated with the Company’s Business Activities

Inflation Risk. The Company does not believe that inflation has had a material effect on its operations to date, other than its impact on the general economy.

Supply Chain Issues. As of June 30, 2026, the Company continues to monitor changes in tariffs and indirect trade restraints and the effects of the Persian Gulf conflict, and it does not believe they will have a significant impact on its business activities currently or in the near future.

Potential Recession. There are various indications that the United States economy may be entering a recessionary period. Also, there is possible economic instability due to the possibility of tariffs and other economic changes due to government policy of the United States and other countries. Although unclear at this time an economic recession would likely impact the general business environment and the capital markets, which could, in turn, affect the Company.

The Company is continuing to monitor these matters and will adjust its current business and financing plans as more information and guidance become available.