UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026

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

Commission File Number: 001-42204

EXOZYMES INC.

(Exact name of registrant as specified in its charter)

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

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

(626) 415-1488

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

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

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

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

TABLE OF CONTENTS

		Page Number
PART I	FINANCIAL INFORMATION	3

Item 1 - Condensed Unaudited Consolidated Financial Statements		3

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

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

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

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

Notes to Condensed Unaudited Consolidated Financial Statements		7

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

Item 3	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4	Controls and Procedures	26

PART II	OTHER INFORMATION	28

Item 1	Legal Proceedings	28

Item 1A	Risk Factors	28

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

Item 3	Defaults upon Senior Securities	29

Item 4	Mine Safety Disclosures	29

Item 5	Other Information	29

Item 6	Exhibits	26

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

PART I – FINANCIAL INFORMATION

CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS

	March 31, 2026			December 31, 2025
ASSETS
Cash and cash equivalents	$	1,444,562		$	3,039,343
Grants receivable		302,863			517,359
Prepaid expenses and other current assets		342,545			382,886
Total current assets		2,089,970			3,939,588
Property and equipment, net		747,858			764,401
Operating lease right-of-use asset, net		981,092			1,053,641
Finance lease right-of-use asset, net		94,716			108,682
Tax receivable		105,205			105,205
Total assets	$	4,018,841		$	5,971,517

LIABILITIES AND EQUITY
Accounts payable	$	1,234,080		$	1,235,337
Due to affiliates		13,406			5,330
Operating lease liabilities – Current		289,804			281,979
Finance lease liabilities – Current		45,095			44,255
Total current Liabilities		1,582,385			1,566,901
Deferred grant reimbursement		78,373			90,365
Operating lease liabilities - Long term		777,150			852,575
Finance lease liabilities - Long term		52,833			64,427
Total liabilities	$	2,490,741		$	2,574,268
Stockholders’ Equity:
Preferred stock, $0.000001 par value, 5,000,000 shares authorized; no shares issued and outstanding on March 31, 2026, and December 31, 2025, respectively.		-			-
Common shares, 100,000,000 authorized shares at $0.000001; 8,478,992 and 8,406,681 shares issued and outstanding as of March 31, 2026, and December 31, 2025, respectively		8			8
Additional Paid-in-capital		25,003,031			24,501,933
Accumulated deficit		(23,474,939	)		(21,104,692	)
Total equity		1,528,100			3,397,249
Total liabilities and equity	$	4,018,841		$	5,971,517

See accompanying notes to the condensed unaudited consolidated financial statements.

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	2026			2025
	Three Months ended March 31,
	2026			2025
Total operating income	$	-		$	-

Operating costs:
General and administrative costs:
Compensation		830,724			613,924
Professional fees		277,679			532,235
Information technology		10,305			25,317
General and administrative-other		147,258			204,236
Total general and administrative costs		1,265,966			1,375,712
Research and development costs		1,121,008			575,016
Total operating costs		2,386,974			1,950,728
Net operating loss		(2,386,974	)		(1,950,728	)
Other income/(expense):
Interest income/ (expense), net		13,716			94,307
Other income/(expense)		3,011			-
Loss before income taxes		(2,370,247	)		(1,856,421	)
Income tax expense		-			-
Net loss	$	(2,370,247	)	$	(1,856,421	)

Net loss per common share – basic and diluted	$	(0.28	)	$	(0.22	)
Weighted average of common shares outstanding – basic and diluted		8,458,847			8,367,810

See accompanying notes to the condensed unaudited consolidated financial statements.

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended March 31, 2026

	Shares		Amount		Capital		Deficit			Total
	Common Stock				Additional Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance, December 31, 2025		8,406,681	$	8	$	24,501,933	$	(21,104,692	)	$	3,397,249
Stock based compensation		-		-		501,098		-			501,098
Issuance of common stock due to vesting of RSU		10,002		-		-		-			-
Issuance of Common stock for exercise of options		62,309		-		-		-			-
Net loss		-		-		-		(2,370,247	)		(2,370,247	)
Balance, March 31, 2026		8,478,992	$	8	$	25,003,031	$	(23,474,939	)	$	1,528,100

Three Months Ended March 31, 2025

	Common Stock				Additional Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance, December 31, 2024		8,367,810	$	8	$	22,366,725	$	(11,945,958	)	$	10,420,775
Stock based compensation		-		-		317,277		-			317,277
Net loss		-		-		-		(1,856,421	)		(1,856,421	)
Balance, March 31, 2025		8,367,810	$	8	$	22,684,002	$	(13,802,379	)	$	8,881,631

See accompanying notes to the condensed unaudited consolidated financial statements.

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	2026			2025
	Three Months ended March 31,
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,370,247	)		(1,856,421	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of Deferred Grant Reimbursement		(11,992	)		(13,455	)
Depreciation of property and equipment		74,147			70,503
Non-cash lease expense		20,897			7,314
Stock-based compensation		501,098			317,277
Changes in operating assets and liabilities:
(Increase) decrease in -
Grants receivable		214,496			142,122
Prepaid expenses and other current assets		40,341			51,580
Increase (decrease) in -
Accounts payable and accrued expenses		(1,257	)		147,547
Due to related party		8,076			-
Net cash (used in) operating activities	$	(1,524,441	)		(1,133,533	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(57,604	)		(31,046	)
Net cash (used in) investing activities	$	(57,604	)		(31,046	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Related Party Note		-			(43,254	)
Payments on finance lease obligations		(12,736	)		-
Net cash (used in) financing activities	$	(12,736	)		(43,254	)

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

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

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	1,444,562			8,511,477
Supplemental disclosures of cash flow information:
Interest Expense		1,981			-

See accompanying notes to condensed unaudited consolidated financial statements.

EXOZYMES INC.

NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Three Months Ended March 31, 2026 and 2025

1. Organization and Description of Business

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

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

Going Concern

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

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

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

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

Use of Estimates

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

Recent Accounting Pronouncements

ASU 2024-03

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

Emerging Growth Company

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

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

Concentration of Risk

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

Revenue Recognition

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

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

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

Cash and Cash Equivalents

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

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

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

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

Fair Value Measurements

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

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

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

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

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

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

	Level 1		Level 2		Level 3		Total
	March 31, 2026
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents		1,271,430		-		-		1,271,430

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

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

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

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

Property and Equipment

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

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

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

Schedule of Property and Equipment

	March 31, 2026			December 31, 2025
Laboratory equipment	$	1,455,543		$	1,397,939
Furniture and fixtures		54,338			54,338
Leasehold improvements		328,786			328,786
Total property and equipment		1,838,667			1,781,063
Less: Accumulated depreciation		(1,090,809	)		(1,016,662	)
Property and equipment, net	$	747,858		$	764,401

Research Grants

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

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

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

Schedule of Grants Receivable Activity

	2026			2025
	Three Months ended March 31,
	2026			2025
Balance at beginning of period	$	517,359		$	737,282
Grant costs expensed		337,196			571,822
Grant fees		3,724			3,959
Grant funds received		(555,416	)		(717,903	)
Balance at end of period	$	302,863		$	595,160

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

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

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

Research and Development Costs

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

Patent and Licensing Legal and Filing Fees and Costs

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

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

Related Party and Due to Affiliates Expenses

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

Segment Reporting

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

3. Equity

Equity

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

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

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

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

Description	Number of Warrants		Exercise Price		Expiration Date
Balance at 12/31/2025		351,528		4.75	Various (2029)
Issued		-		-
Exercised		-		-
Expired		-		-
Balance at 3/31/2026		351,528	$	4.75 (weighted avg)	Various (2029)

4. Stock-Based Compensation

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

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

Schedule of Stock Option Grants

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

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

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

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

As of March 31, 2026, stock options to purchase 971,797 shares of Common Stock were vested, the weighted average exercise price is $5.93, the aggregate intrinsic value is $2,351,078 and the weighted average remaining contractual term is 4.68 years. The stock options were issued in 2021, 2023 and 2024 and had a vesting term of five years with an expiry of seven years. eXoZymes stock-based compensation were $501,101 and $317,277 for the three months ended March 31, 2026, and 2025. As of March 31, 2026, the unrecognized stock-based compensation is $5,119,985.

A summary of stock option activity during the three months ended March 31, 2026, and December 31, 2025, 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		7.00
Exercised		(89,742	)		3.25		5.18
Expired		-			-		-
Forfeited / Cancelled		(197,349	)		3.83		5.37

Stock options outstanding on March 31, 2026		1,870,615		$	6.25		4.59

Stock options exercisable on March 31, 2025		1,747,789		$	4.57		5.54
Stock options exercisable on March 31, 2026		1,870,615		$	6.25		4.59

On July 19, 2021, eXoZymes granted 81,118 restricted stock units (“RSUs”) at a value of $2.44 per share. These RSUs were issued in 2020 in lieu of cash bonuses. As these RSUs do not vest until the expiration of any lock up, or upon the change of control of the Company by eXoZymes, which is outside of the control of the Company, no compensation expense related to these RSUs has been recorded. These RSUs fully vest upon the expiration of any lockup period on November 11, 2025, or upon the change of control of eXoZymes. The lockup period was extended on November 10, 2025. The Company will record stock-based compensation for these RSUs when the RSUs begin to vest, and the unrecognized stock-based compensation is $164,236.

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. As these RSUs do not vest until the expiration of any lock up, or upon the change of control of the Company by eXoZymes, which is outside of the control of the Company, no compensation expense related to these RSUs has been recorded. These RSUs fully vest upon the expiration of any lockup period on November 11, 2025, or upon the change of control of eXoZymes. The lockup period was extended on November 10, 2025. The Company will record stock-based compensation for these RSUs when the RSUs begin to vest, and the unrecognized stock-based compensation is $588,709.

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. As these RSUs do not vest until the expiration of any lock up, or upon the change of control of the Company by eXoZymes, which is outside of the control of the Company, no compensation expense related to these RSUs has been recorded. These RSUs fully vest upon the expiration of any lockup period, on November 11, 2025, or upon the change of control of eXoZymes. The lockup period was extended on November 10, 2025. The Company will record stock-based compensation for these RSUs when the RSUs begin to vest, and the unrecognized stock-based compensation is $334,711.

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 extends 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 Thursday, 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 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.

	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		-			-		-
Exercised		(10,002	)		9.48		6.33
Forfeited		-			-		-
Restricted stock units outstanding on March 31, 2026		426,784		$	2.81		6.12

Restricted stock units on March 31, 2025		424,656		$	2.64		7.37
Restricted stock units on March 31, 2026		426,784		$	2.81		6.12

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 2,648,927 and 2,523,982 shares for the three months ended March 31, 2026, and 2025, respectively.

Basic and fully diluted earnings (loss) per share is calculated as follows for the three months ended March 31, 2026 and 2025:

	March 31, 2026 Common shares			March 31, 2025 Common shares
Net loss	$	(2,370,247	)	$	(1,856,421	)

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

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

The following financial instruments were not included in the diluted loss per share calculations as of the three months ended March 31, 2026, and 2025 because their effect was anti-dilutive:

	March 31, 2026		March 31, 2025
Warrants to purchase common stock		351,528		351,537

Options		1,870,615		1,747,789

Restricted stock awards units		426,784		424,656

Total		2,648,927		2,523,982

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 March 31, 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 March 31, 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.

7. Employee Benefit Plans

eXoZymes sponsors an individual 401(k) defined contribution plan for the benefit of employees when eligible. The plan allows eligible employees to contribute a portion of their annual compensation, not to exceed annual limits for the employee as established by the Department of Treasury. eXoZymes makes matching contributions for participating employees up to a certain percentage of the employee contributions; matching contributions were funded for the three months ended March 31, 2026, and 2025. Benefits under this plan were available to all employees, and employees become fully vested in the employer’s contribution upon receipt. A total of $36,323 and $43,508 were contributed to the 401(k) plan for the three months ended March 31, 2026 and 2025, respectively.

eXoZymes also provides health and related benefit plans for eligible employees.

8. Exclusive License Agreement (eXoZymes)

On April 19, 2019, eXoZymes entered into a license agreement (the “License Agreement”) with The Regents of the University of California (“The Regents”) for patent rights and associated technology relating to the biosynthetic platform being developed by the Company. Certain individuals named as inventors of the patent rights are also the founding stockholders of eXoZymes. One of the founders of eXoZymes was the head of the laboratory which was used in the research and development of patents and associated technology subject to the agreement with The Regents.

Under the License Agreement, eXoZymes holds an exclusive license of the patent rights and a non-exclusive license for the associated technology to make, have made, use, have used, sell, have sold, offer for sale, and import licensed products in the field of use. Under the License Agreement, eXoZymes paid an initial license fee and is to pay an annual license fee and royalties on net sales, a minimum annual royalty that is credited against the royalties on net sales, and a percentage of any sublicensing income. The net income royalty commences after the first commercial sale of a licensed product. As of March 31, 2026, there were no accrued royalties recorded.

Under the License Agreement, eXoZymes is required to achieve certain development milestones. eXoZymes is obligated to make payments upon achievement of certain sales thresholds, as defined in the License Agreement. As of March 31, 2026 the development milestones have been met.

The following net sales milestone payments have not yet been incurred. The net sales milestones do not have a deadline and are listed below as of March 31, 2026.

	●	A payment of $250,000 when a licensed product reaches $1,000,000 in cumulative net sales.

	●	A payment of $350,000 when a second licensed product reaches $2,000,000 in cumulative net sales.

The Regents have the right terminate the License Agreement for breaches of the License Agreement by eXoZymes

eXoZymes may terminate the License Agreement, in whole or in part as to a particular patent right, at any time by providing notice of termination to The Regents as defined in the License Agreement.

The payments made to the Regents in connection with our license agreement with the Regents, from 2019 to March 31, 2026, have aggregated $408,338. This includes payments for patent fees associated with the license and maintenance fees.

Under the License Agreement, the Company also issued 249,689 shares of Common Stock, then representing four percent of its common equity, as initial consideration.

eXoZymes accounts for the costs incurred in connection with the License Agreement in accordance with ASC Topic 730, Research and Development. The Company paid license fees of $1,250 and $3,263 for the three months ended March 31, 2026, and 2025, respectively.

9. Leases

For operating leases, the Company records right-of-use assets and corresponding lease liabilities in the consolidated balance sheets for all leases with terms longer than twelve months. The Company has two operating leases, with no variable lease costs, and one finance lease as of March 31, 2026.

On April 3, 2023, the Company executed a lease for new office space next to the existing space at eXoZymes in the Los Angeles, California metropolitan area. The lease with a term of 60 months began on July 1, 2023, and ends on June 30, 2028, without an option to extend. The initial base rent was $13,277 per month. The lease provides for annual increases. The base rent for the lease in the final year is $14,943 per month.

In April 2023, eXoZymes made changes to an existing lease agreement, which resulted in an extension of the lease term by an additional 21 months. The revised lease maintained the same escalation rate for lease payments as the previous arrangement. To account for this modification, the Company reevaluated the remaining lease term at the time of execution. As the Company was actively utilizing the premises, adjustments were made to reflect the revaluation of both the right-to-use asset and the corresponding lease liability in line with the updated lease term. This was originally entered into in August 2021, with a term of 60 months beginning on May 1, 2023 and ending on April 30, 2028, with an option to extend for 60 additional months. At the time the lease commenced, it was not probable the Company would exercise the one five-year option to extend the facility lease; therefore, this extension option is not included in the lease analysis. The initial base rent is $14,371 per month. The lease provides for annual increases. The base rent for the lease in the final year is $16,259 per month. Additionally, eXoZymes is responsible for annual operating cost increases of 2.5%, which are included in the rent.

On October 30, 2023, the Company executed an addendum to the current lease for additional office space in Monrovia, California. The expected occupancy of the additional space was May 1, 2023. The lease adds a term of 20 months to the current term for a total of 72 months for the current term. The additional space is for 72 months, both spaces will expire on April 30, 2028, without an option to extend. The expansion space will have an initial base rent of $13,277 per month, along with the current lease of $14,371 per month for the current leased space for a new total of $27,648. The lease provides for annual increases. The base rent for the lease in the final year is $15,391 per month for the expansion space and $16,747 for the current space for a total of $32,138.

eXoZymes entered into a 36-month equipment lease with Thermo Fisher Scientific in December 2024 for medical equipment to be used in research and development. The Company took possession of the equipment in May 2025. The lease agreement provides for a purchase option at the end of the lease term for a purchase value of the then fair market value of the equipment.

Discussions with management indicate that it is unlikely that the purchase option will be exercised at the end of the lease term. Some contributing factors to this decision include the uncertainty of the purchase price and the possible changes in technology over the next three years. Accordingly, an assumed purchase option is not included in the calculation of the total lease liability.

The fair value of the equipment is documented in the lease agreement as $146,642 at the inception of the lease. Management does not believe there is any change in fair value from the inception date to the commencement date. The Company has used its assumed incremental borrowing rate (IBR) to determine the present value of future rent payments. The assumed rate is 7.54% and is also equal to the IBR used in its operating lease for office space. The resulting present value is $136,391 or 93% of the asset’s fair value.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses the implicit rate in its lease calculations when it is readily determinable. Since the Company’s leases do not provide implicit rates, to determine the present value of lease payments, management uses the Company’s estimated incremental borrowing rate for a fully collateralized loan with a similar term of the lease that is based on the information available at the inception of the lease.

Schedule of Operating Leases

	March 31, 2026			December 31, 2025

Operating leases:
Right-of-use assets	$	981,092		$	1,053,641
Operating lease liabilities	$	1,066,954		$	1,134,554

Weighted average remaining lease term in years		3.33			3.58
Weighted average discount rate		7.58	%		7.58	%

Cash paid for amounts included in the measurement of lease liabilities	$	88,683		$	348,873
Right-of-use assets obtained in exchange for lease liabilities	$	-		$	-

Finance leases:
Right-of-use assets	$	94,716		$	108,682
Finance lease liabilities	$	97,928		$	108,682

Weighted average remaining lease term in years		2.09			2.33
Weighted average discount rate		7.54	%		7.54	%

Amortization of assets under finance lease	$	13,966		$	27,709
Interest	$	1,981		$	6,252

For the three months ended March 31, 2026, and 2025, the Company recognized operating lease expenses of $93,633 in each period. Finance lease payments totaled $12,736 for the three months ended March 31, 2026, with no finance lease payments made during the comparable period in 2025.

As of March 31, 2026, the future minimum lease payments under non-cancelable operating and finance leases are as follows:

Year	Operating Lease			Financial Lease

2026	$	269,745		$	38,206
2027		368,250			50,941
2028		378,576			16,980
2029		192,828			0
Total	$	1,209,399		$	106,127
Less effects of discounting		(142,445	)		(8,199	)
Total lease liabilities	$	1,066,954		$	97,928

10. Income Taxes

eXoZymes Inc. is a corporation for U.S. federal income tax purposes, incorporated in the State of Nevada. The Company wholly owns eXoZymes (CA) Inc., a corporation for U.S. federal income tax purposes incorporated in the State of California, and NCTx LLC, a limited liability company organized in the State of Delaware.

The Company recognized income-tax expense of $0 for both the three months ended March 31, 2026, and 2025, respectively. The effective tax rates for the three months ended March 31, 2026, and 2025, were 0% and 0%, respectively. The Company’s federal and state statutory tax rate net of the federal tax benefit was approximately 28% and, and the difference between the Company’s effective tax rate and the statutory tax rate was primarily due to the full valuation allowance recorded against the Company’s U.S. deferred-tax assets.

During the third quarter of 2025, the Company recognized a discrete income-tax benefit of $105,826 related to amended U.S. federal income-tax returns for the 2022 and 2023 tax years filed under the One Big Beautiful Bill Act (“OBBBA”), enacted July 4, 2025. The OBBBA retroactively permitted the immediate expensing of domestic research and experimental expenditures under I.R.C. § 174. Accordingly, the Company filed amended federal returns for 2022 and 2023 to claim refunds totaling $105,826. The amendments eliminated previously capitalized § 174 amounts and increased federal net-operating-loss carryforwards. The refund receivable was recorded as a discrete current-tax benefit in the third quarter of 2025 and did not materially affect the Company’s deferred-tax assets or valuation-allowance position.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. At the end of 2024, the Company’s corporate earnings were in a cumulative loss position. Based on the cumulative losses and projections of future taxable income for the periods in which the deferred tax assets are deductible, the Company recorded a valuation allowance against all its net deferred tax assets as of the three months ended March 31, 2026, and December 31, 2025. The Company intends to maintain a full valuation allowance on its net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. The amount of deferred tax assets considered realizable could materially increase in the future, and the amount of valuation allowance recorded could materially decrease if estimates of future taxable income are increased.

11. Subsequent Events

The Company has evaluated subsequent events through May 14, 2026, the date on which these financial statements were issued.

On April 10, 2026, Public Venture, LLC, a subsidiary of the Company’s largest shareholder, MDB Capital Holdings, LLC announced that it plans to serve as an underwriter for a proposed public offering of approximately $15 million of the Company’s Common Stock. On April 9, 2026, the Company filed a preliminary prospectus supplement in connection with the proposed offering. The proposed offering is expected to support the Company’s ongoing product development and commercialization activities. The Company has not yet entered into a definitive underwriting agreement for this transaction, and the timing, terms, and completion of the proposed offering remain subject to market conditions and other factors.

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

Overview

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

Results of Operations

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

The Company’s consolidated statements of operations as discussed herein are presented below.

Consolidated Results of Operations for the Three months Ended March 31, 2026 and 2025

	Three Months ended March 31,
	2026			2025			$ Change			% Change
Total operating income	$	-		$	-			-			0.0	%

Operating costs:
General and administrative costs:
Compensation		830,724			613,924			216,800			35.3	%
Professional fees		277,679			532,235			(254,556	)		-47.8	%
Information technology		10,305			25,317			(15,012	)		-59.3	%
General and administrative-other		147,258			204,236			(56,978	)		-27.9	%
Total general and administrative costs		1,265,966			1,375,712			(109,746	)		-8.0	%
Research and development costs		1,121,008			575,016			545,992			95.0	%
Total operating costs		2,386,974			1,950,728			436,246			22.4	%
Net operating loss		(2,386,974	)		(1,950,728	)		(436,246	)		22.4	%
Other income/(expense):
Interest income/ (expense), net		13,716			94,307			(80,591	)		-85.5	%
Other income/(expense)		3,011			-			3,011			100.0	%
Loss before income taxes		(2,370,247	)		(1,856,421	)		(513,826	)		27.7	%
Income tax expense		-			-			-			0.0	%
Net loss	$	(2,370,247	)	$	(1,856,421	)		(513,826	)		27.7	%

General and Administrative Costs.

For three months ended March 31, 2026, and 2025, respectively, several factors contributed to changes in various expense categories:

	●	Compensation Expense: The increase in compensation expenses for the three months ended March 31, 2026, was primarily driven by the hiring of new employees not funded by grants.
	●	Professional Fees: The decrease in professional fees over the prior period were mainly due to lower consulting expenses related to business operations, as well as lower legal and financial audits expenses.
	●	Information Technology Costs: The decrease in IT expenses during the three months ended March 31, 2026, were associated with lower technology initiatives in the period.
	●	Other General and Administrative Costs: The decrease for the three months ended March 31, 2026, was primarily due to lower investor relations expenses compared to the prior-year period

Research and Development Costs.

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

Consolidated Balance Sheet as of March 31, 2026 and December 31, 2025

	March 31, 2026			December 31, 2025			$ Change			% Change
ASSETS
Cash and cash equivalents	$	1,444,562		$	3,039,343			(1,594,781	)		-52.5	%
Grants receivable		302,863			517,359			(214,496	)		-41.5	%
Prepaid expenses and other current assets		342,545			382,886			(40,341	)		-10.5	%
Total current assets		2,089,970			3,939,588			(1,849,618	)		-46.9	%
Property and equipment, net		747,858			764,401			(16,543	)		-2.2	%
Operating lease right-of-use asset, net		981,092			1,053,641			(72,549	)		-6.9	%
Finance lease right-of-use asset, net		94,716			108,682			(13,966	)		-12.9	%
Tax receivable		105,205			105,205			-			0.0	%
Total assets	$	4,018,841		$	5,971,517			(1,952,676	)		-32.7	%

LIABILITIES AND EQUITY
Accounts payable	$	1,234,080		$	1,235,337			(1,257	)		-0.1	%
Due to affiliates		13,406			5,330			8,076			151.5	%
Operating lease liabilities – Current		289,804			281,979			7,825			2.8	%
Finance lease liabilities – Current		45,095			44,255			840			1.9	%
Total current Liabilities		1,582,385			1,566,901			15,484			1.0	%
Deferred grant reimbursement		78,373			90,365			(11,992	)		-13.3	%
Operating lease liabilities - Long term		777,150			852,575			(75,425	)		-8.8	%
Finance lease liabilities - Long term		52,833			64,427			(11,594	)		-18.0	%
Total liabilities	$	2,490,741		$	2,574,268			(83,527	)		-3.2	%
Stockholders’ Equity:
Preferred stock		-			-			-			0.0	%
Common shares		8			8			-			0.0	%
Additional Paid-in-capital		25,003,031			24,501,933			501,098			2.0	%
Accumulated deficit		(23,474,939	)		(21,104,692	)		(2,370,247	)		11.2	%
Total equity		1,528,100			3,397,249			(1,869,148	)		-55.0	%
Total liabilities and equity	$	4,018,841		$	5,971,517			(1,952,676	)		-32.7	%

Financial Condition:

The decrease in assets was due to changes in several asset classes, but primarily in cash and cash equivalents. The decrease in grants receivable was driven by completion of certain grants and timing of grant drawdowns. The decrease in prepaid expenses was due to ongoing amortization of prepaids to expenses. The decrease in property and equipment was due to the ongoing accumulated depreciation of fixed assets. The decrease in operating lease right-of-use assets resulted from the usage and payments of office space during the period. The decrease in finance lease right-of-use assets resulted from the periodic amortization of the asset and the lease payments made during the period

Total liabilities decreased for the three months ended March 31, 2026, primarily due to lower long-term operating lease liabilities and a reduction in finance lease liabilities as scheduled lease payments reduced outstanding balances. The decrease was partially offset by higher amounts due to affiliates.

The equity decrease was due to losses generated by operations.

Liquidity and Capital Resources – March 31, 2026, and 2025

The Company’s consolidated statements of cash flows as discussed herein are presented below:

	Three Months ended March 31,
	2026			2025
Net cash (used in) operating activities	$	(1,524,441	)		(1,133,533	)
Net cash (used in) investing activities		(57,604	)		(31,046	)
Net cash (used in) by financing activities		(12,736	)		(43,254	)
Net increase (decrease) in cash and cash equivalents	$	(1,594,781	)		(1,207,833	)

On March 3, 2026, the Company had working capital of $507,586, as compared to working capital of $2,372,687 on December 31, 2025, reflecting a decrease in working capital of $1,865,101. This decrease in working capital was the result of usage of cash and cash equivalents to fund operations. On March 31, 2026, the Company had cash of $1,444,562 available to fund its operations.

On November 11, 2024, the Company signed a firm commitment underwriting agreement for its IPO, in which it sold an aggregate of 1,987,666 shares of Common Stock, including 112,666 shares pursuant to the underwriter overallotment option, for gross proceeds of $15,901,328, and net proceeds of approximately $15,206,543. The Company used approximately $4,243,022 to repay loans from MDB Capital Holdings, LLC shortly after the closing of the IPO. The balance of the proceeds as of March 31, 2026, will continue to be used, throughout 2026, in the expansion of its production capabilities, staffing, R&D, and other working capital requirements.

In a private placement (“Concurrent Private Offering”) completed 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 October 2024, the Company received a cost share grant from the Department of Defense (DOD) BioMADE initiative to help fund next steps toward cell-free biomanufacturing of isobutanol in the amount of approximately $1,000,000 against our own required expenses of an equal amount.

In March 2025, the Company received an additional grant in the amount of $283,805 from the National Institute of Health (NIH) BioClick. The BioClick grant focuses on a cell-free high-throughput platform for engineering of enzymatic group transfer reactions. The Company intends to pursue additional grants from time to time, which if granted to the Company will further improve its working capital position.

As of March 31, 2026, the Company had working capital of approximately $507,586. Given its current operating cash burn, the Company’s existing working capital is not sufficient to fund operations for a full twelve-month period, determined as of March 31, 2026. In addition to the proposed public offering of common stock, the Company also will continue to pursue non-dilutive funding opportunities, including grants, and may seek institutional or bank financing, and the sale or licensing of intellectual property. The Company does not have any committed sources of additional financing, and there is no assurance that such funding will be available on commercially reasonable terms, if at all. The Company’s ability to continue its operations and meet its long-term obligations will depend on securing additional financial resources or ultimately achieving profitable operations.

Operating Activities.

For the three months ended March 31, 2026, operating activities utilized cash of $1,524,441, which was driven by an increased research and development activity, as well as increased general and administrative costs.

For the three months ended March 31, 2025, operating activities utilized cash of $1,133,533. This was primarily driven by increased research and development activity, as well as higher general and administrative expenses, which resulted in a deficit for the period. However, this deficit was offset by cash received from related parties.

Investing Activities.

For the three months ended March 31, 2026, and 2025, investing activities primarily consisted of the purchase of laboratory equipment.

Financing Activities.

For the three months ended March 31, 2026, the Company made cash payments of $12,736 related to its finance lease obligations.

For the three months ended March 31, 2025, the Company made cash payments of $43,254 related to a note payable to a related party.

Critical Accounting Estimates

The preparation of financial statements in conformity with general accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We have identified certain accounting policies as being critical because they require us to make difficult, subjective, or complex judgments about matters that are uncertain. We believe that the judgment, estimates, and assumptions used in the preparation of our condensed unaudited consolidated financial statements are appropriate given the factual circumstances at the time. However, actual results could differ, and the use of other assumptions or estimates could result in material differences in our results of operations or financial condition. Our critical accounting estimates are:

Accounting for Research Grants

eXoZymes receives grant reimbursements, 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. 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 recorded as offsets to expenses, to the extent of disbursements and commitments for allowable expenses incurred as of March 31, 2026, that are expected to be reimbursed in the subsequent period. Management considers the grants receivable as of March 31, 2025, to be fully collectible, based on historical experience with the Federal Government of the United States of America. Accordingly, no allowance for credit losses on grants receivable was recorded in the accompanying condensed unaudited consolidated financial statements.

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 (a process of submitting expenses for reimbursement) the research grants after incurring the related expenses. Amounts received under research grants are offset against the related research and development costs in the Company’s consolidated statement of operations.

Summary of Business Activities and Plans

In January 2026, eXoZymes established a shelf registration (Form S-3) to offer up to $50.0 million of securities including common stock, preferred stock, debt, warrants, subscription rights or units, in one or more future offerings.

Under the shelf registration statement, in April 2026 the Company filed a preliminary prospectus supplement to sell shares of common stock in a proposed firm commitment public offering. This offering will) be underwritten by one or more underwriters, one of which will be Public Ventures, LLC (d/b/a MDB Capital.

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. The Company continues to monitor changes in tariffs and indirect trade restraints and the results of the conflict in the Persian Gulf. The Company does not currently expect that supply chain issues will have a significant impact on its business activities.

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.

Technology. The Company’s endeavors to create and bring new technologies to the market may never come to fruition or might not reach a level of development sufficient for commercial viability. Even if they do achieve a commercial level of development, the acceptance of these technologies within the marketplace is uncertain. There’s a possibility that the technologies they develop may not gain widespread or timely acceptance. Moreover, technologies from our Company that undergo regulatory scrutiny, testing, and approval may ultimately fail to receive the necessary approvals from relevant regulatory bodies.

Trends, Events and Uncertainties

Other than as discussed above, we are not currently aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition in the near term, although it is possible that new trends or events may develop in the future that could have a material effect on our financial condition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company, with the participation of the Chief Executive Officer and VP of Finance, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act). Based on that evaluation, and as a result of the material weaknesses in internal control over financial reporting described below, the Chief Executive Officer and VP of Finance concluded that, as of March 31, 2026, the disclosure controls and procedures were not effective at the reasonable assurance level. In light of this fact, the Company has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in the internal control over financial reporting, the condensed unaudited consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly state, in all material respects, the financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Ongoing Remediation of Previously Identified Material Weakness

The Company is implementing measures designed to ensure that control deficiencies contributing to the previously disclosed material weakness are remediated, such that these controls are designed, implemented, and operating effectively. These remediation actions are ongoing, and they include our expansion of our controls or control designs based on updated enhanced risk assessments. We have redesigned the financial reporting process, to remediate the previously identified material weakness. We expect these changes to materially improve our internal controls.

The weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control Over Financial Reporting

Other than the material weakness remediation efforts underway, there were no changes in the internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls and Procedures

The Company’s management, including the Chief Executive Officer and VP of Finance, believes that disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, management does not expect that the disclosure of controls and procedures or the internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened litigation that would have a material adverse effect on our business, operating results, cash flows, or financial condition should such litigation be resolved unfavorably. We believe that from time to time we will have commercial disputes arising in the ordinary course of our business.

Item 1A. Risk Factors

In addition to the information set forth in this Form 10-Q, you should also carefully review and consider the risk factors contained in our other registration statements, reports and periodic filings with the SEC that could materially and adversely affect our business, financial condition, and results of operations. The risk factors we have identified and discussed, however, do not identify all risks that we face because our business operations could also be affected by additional factors that are not known to us or that we currently consider to be immaterial to our operations.

Additional Risk Factors

Changes to United States tariff and import/export regulations may have an adverse effect on our business, financial condition and results of operations.

The United States has enacted and continues to enact significant new tariffs, and President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy. There has been and are ongoing discussions and commentaries regarding potential significant changes to U.S. trade policies, treaties and tariffs. There exists significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global and domestic economic conditions, whether or not there will be a recession, and the stability of global and domestic financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. These actions and policies may adversely affect the ability of the Company and our subsidiaries to fund their operations, affect our ability to develop products and work with partner companies and generally carry on our respective businesses. Although it is not yet possible to assess their impact, any of these factors could depress economic activity and restrict access to suppliers or customers, hinder our ability to obtain funding from the government through grants and from investors, and have a material adverse effect on our overall business, financial condition and results of operations.

Government Action on tariffs and research grants and other funding may impede our ability to conduct our research and to raise capital by and for our partner companies and other clients.

Early 2025 federal government actions to impose tariffs, to change trade policies, to change immigration policies, and to limit research grants and other forms of federal government funding, including direct government grants and the funding of universities and research enterprises. These government actions separately or together may cause disruption to our consolidated business activities based on their direct and indirect effect on our partner companies and our clients for our product solutions. Many of these government actions have been only recently implemented, others are being threatened, and many will be ongoing, changed or abandoned. Therefore, the full impact has yet to be realized by the Company and its partner companies and clients. Nonetheless, (i) tariffs are likely to increase the cost of doing business in the general economy and to make it more difficult to obtain items where imported equipment is required by our own activities and the activities of our partner companies and clients, (ii) ending or reducing research funding is likely to make it more difficult to find collaborative research partners to work with us and our partner companies as government funding is an indirect support for research and product development activities, and (iii) the curtailment of direct funding will have an immediate adverse impact on our partner companies and clients and their ability to continue their development work based on our solutions. We also believe that as these policies are implemented, it will make raising capital from private investors far more difficult, as they will want to know if the Company will be able to use the proceeds effectively and will be of sufficient amount.

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

Not applicable.

Item 6. Exhibits

The documents listed in the Exhibit Index of this Form 10-Q are incorporated by reference or are filed with this Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed in Monrovia, California, on its behalf by the undersigned, thereunto duly authorized.

	EXOZYMES INC.
	(the “Registrant”)

Dated: May 14, 2026	By:	/s/ Michael Heltzen
		Michael Heltzen
		President and Chief Executive Officer
		(Principal Executive Officer)

Dated: May 14, 2026	By:	/s/ Fouad Nawaz
		Fouad Nawaz
		VP of Finance (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit
Number		Description of Exhibit

31.1 *		Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 *		Certification of Principal Financial and Accounting Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Principal Financial and Accounting, 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

101.SCH*		Inline XBRL Taxonomy Schema

101.CAL*		Inline XBRL Taxonomy Calculation Linkbase

101.DEF*		Inline XBRL Taxonomy Definition Linkbase

101.LAB*		Inline XBRL Taxonomy Label Linkbase

101.PRE*		Inline XBRL Taxonomy Presentation Linkbase

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith.
**	Furnished herewith.

SEC Form 10-Q filed by eXoZymes Inc.