# Exozymes Inc.: Form 10-Q for the period ended Jun 30, 2026

- Company: [Exozymes Inc.](/companies/exoz.md) (CIK 2010788)
- Form: 10-Q
- Filed: 2026-08-13
- Accepted by EDGAR: Aug 13, 2026, 15:50 ET
- Period: 2026-06-30
- Accession: 0001493152-26-037725
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/2010788/000149315226037725/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/2010788/000149315226037725/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2026-04-01 to 2026-06-30 | $1.4m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2026-01-01 to 2026-06-30 | $2.6m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2026-04-01 to 2026-06-30 | −$3.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2026-01-01 to 2026-06-30 | −$5.3m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2026-04-01 to 2026-06-30 | −$2.9m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2026-01-01 to 2026-06-30 | −$5.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2026-04-01 to 2026-06-30 | −$0.33 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2026-01-01 to 2026-06-30 | −$0.61 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2026-04-01 to 2026-06-30 | −$0.33 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2026-01-01 to 2026-06-30 | −$0.61 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2026-04-01 to 2026-06-30 | 8,660,246 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2026-01-01 to 2026-06-30 | 8,563,419 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2026-01-01 to 2026-06-30 | −$3.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2026-01-01 to 2026-06-30 | $57.6k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2026-06-30 | $5.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-06-30 | $6.2m | us-gaap:AssetsCurrent |
| Total assets | at 2026-06-30 | $8.0m | us-gaap:Assets |
| Current liabilities | at 2026-06-30 | $1.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-06-30 | $4.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2026-06-30 | $3.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 19,978 characters.

### 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 Six months Ended June 30, 2026 and 2025

|  | Six Months ended June 30, 2026 | 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total operating income | $- | $- | - | 0.0% |
| Operating costs: |  |  |  |  |
| General and administrative costs: |  |  |  |  |
| Compensation | 1,958,391 | 1,682,762 | 275,629 | 16.4% |
| Professional fees | 492,563 | 901,167 | (408,604) | -45.3% |
| Information technology | 22,064 | 67,152 | (45,088) | -67.1% |
| General and administrative-other | 308,680 | 469,689 | (161,009) | -34.3% |
| Total general and administrative costs | 2,781,698 | 3,120,770 | (339,072) | -10.9% |
| Research and development costs | 2,559,166 | 1,378,003 | 1,181,163 | 85.7% |
| Total operating costs | 5,340,864 | 4,498,773 | 842,091 | 18.7% |
| Net operating loss | (5,340,864) | (4,498,773) | (842,091) | 18.7% |
| Other income/(expense): |  |  |  |  |
| Interest income, net | 15,556 | 170,864 | (155,308) | -90.9% |
| Offering costs | (201,784) | - | (201,784) | -100.0% |
| Change in fair value of derivative instruments | 172,859 | - | 172,859 | 100.0% |
| Other income | 105,373 | 111,202 | (5,829) | -5.2% |
| Loss before income taxes | (5,248,861) | (4,216,707) | (1,032,154) | 24.5% |
| Income tax expense | - | - | - | 0.0% |
| Net loss | $(5,248,861) | $(4,216,707) | (1,032,154) | 24.5% |

22

**General and Administrative Costs.**

For the six months ended June 30, 2026, and 2025, respectively, several factors contributed to changes in various expense categories:

- Compensation Expense: The increase in compensation expenses for the six months ended June 30, 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 was 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 six months ended June 30, 2026, was associated with lower technology initiatives in the period.
- Other General and Administrative Costs: The decrease for the six months ended June 30, 2026, was primarily due to lower investor relations expenses compared to the prior-year period.

**Research and Development Costs.**

For the six months ended June 30, 2026, research and development costs increased 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 Results of Operations for three months Ended June 30, 2026 and 2025

|  | Three Months ended June 30, 2026 | 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total operating income | $- | $- | - | 0.0% |
| Operating costs: |  |  |  |  |
| General and administrative costs: |  |  |  |  |
| Compensation | 1,127,667 | 1,068,838 | 58,829 | 5.5% |
| Professional fees | 214,884 | 368,932 | (154,048) | -41.8% |
| Information technology | 11,759 | 41,835 | (30,076) | -71.9% |
| General and administrative-other | 161,422 | 265,449 | (104,027) | -39.2% |
| Total general and administrative costs | 1,515,732 | 1,745,054 | (229,322) | -13.1% |
| Research and development costs | 1,438,158 | 802,991 | 635,167 | 79.1% |
| Total operating costs | 2,953,890 | 2,548,045 | 405,845 | 15.9% |
| Net operating loss | (2,953,890) | (2,548,045) | (405,845) | 15.9% |
| Other income/(expense): |  |  |  |  |
| Interest income, net | 1,840 | 76,557 | (74,717) | -97.6% |
| Offering costs | (201,785) | - | (201,785) | -100.0% |
| Change in fair value of derivative instruments | 172,859 | - | 172,859 | 100.0% |
| Other income | 102,362 | 111,202 | (8,840) | -7.9% |
| Loss before income taxes | (2,878,614) | (2,360,286) | (518,328) | 22.0% |
| Income tax expense | - | - | - | 0.0% |
| Net loss | $(2,878,614) | $(2,360,286) | (518,328) | 22.0% |

**General and Administrative Costs.**

For the three months ended June 30, 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 June 30, 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 was 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 June 30, 2026, was associated with lower technology initiatives in the period.
- Other General and Administrative Costs: The decrease for the three months ended June 30, 2026, was primarily due to lower investor relations expenses compared to the prior-year period.

23

**Research and Development Costs.**

For the three months ended June 30, 2026, research and development costs increased 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 June 30, 2026 and December 31, 2025

| ASSETS | June 30, 2026 | December 31, 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Cash and cash equivalents | $5,652,696 | $3,039,343 | 2,613,353 | 86.0% |
| Grants receivable | 201,256 | 517,359 | (316,103) | -61.1% |
| Due from affiliates | 18,616 | - | 18,616 | 100.0% |
| Prepaid expenses and other current assets | 296,227 | 382,886 | (86,659) | -22.6% |
| Total current assets | 6,168,795 | 3,939,588 | 2,229,207 | 56.6% |
| Property and equipment, net | 670,908 | 764,401 | (93,493) | -12.2% |
| Operating lease right-of-use asset, net | 954,097 | 1,053,641 | (99,544) | -9.4% |
| Finance lease right-of-use asset, net | 83,350 | 108,682 | (25,332) | -23.3% |
| Tax receivable | 105,205 | 105,205 | - | 0.0% |
| **Total assets** | **$7,982,355** | **$5,971,517** | **2,010,838** | **33.7%** |
| LIABILITIES AND EQUITY |  |  |  |  |
| Accounts payable | $1,274,226 | $1,235,337 | 38,889 | 3.1% |
| Due to affiliates | - | 5,330 | (5,330) | -100.0% |
| Operating lease liabilities – Current | 297,778 | 281,979 | 15,799 | 5.6% |
| Finance lease liabilities – Current | 45,950 | 44,255 | 1,695 | 3.8% |
| Total current Liabilities | 1,617,954 | 1,566,901 | 51,053 | 3.3% |
| Deferred grant reimbursement | 66,382 | 90,365 | (23,983) | -26.5% |
| Warrant Liability | 1,902,612 | - | 1,902,612 | 100.00% |
| Operating lease liabilities - Long term | 700,287 | 852,575 | (152,288) | -17.9% |
| Finance lease liabilities - Long term | 41,020 | 64,427 | (23,407) | -36.3% |
| Total liabilities | $4,328,255 | $2,574,268 | 1,753,987 | 68.1% |
| Stockholders’ Equity: |  |  |  |  |
| Preferred stock | - | - | - | 0.0% |
| Common shares | 9 | 8 | 1 | 12.5% |
| Additional Paid-in-capital | 30,007,644 | 24,501,933 | 5,505,711 | 22.5% |
| Accumulated deficit | (26,353,553) | (21,104,692) | (5,248,861) | 24.9% |
| Total equity | 3,654,100 | 3,397,249 | 256,851 | 7.6% |
| **Total liabilities and equity** | **$7,982,355** | **$5,971,517** | **2,010,838** | **33.7%** |

24

### Financial Condition:

The increase in assets was due to changes in several asset classes, but primarily in cash and cash equivalents, reflecting the net proceeds of the June 2026 offerings. The decrease in property and equipment was mostly explained by the depreciation for the period. These increases were partially offset by a decrease in grants receivable, driven by completion of certain grants and timing of grant drawdowns; a decrease in prepaid expenses, due to ongoing amortization of prepaids to expenses; a decrease in operating lease right-of-use assets, resulting from the usage and payments of office space during the period; and a decrease in finance lease right-of-use assets, resulting from the periodic amortization of the asset and the lease payments made during the period.

Total liabilities increased for the six months ended June 30, 2026, primarily due to the recognition of a warrant liability related to the warrants issued in connection with the Company’s June 2026 offerings. This increase was partially offset by reductions in long-term operating lease liabilities, finance lease liabilities, deferred grant reimbursement, and amounts due to affiliates.

The equity increase was due to the net proceeds of the June 2026 offerings and stock-based compensation recognized during the period, partially offset by losses generated by operations.

### Liquidity and Capital Resources – June 30, 2026, and 2025

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

|  | Six Months ended June 30, 2026 | 2025 |
| --- | ---: | ---: |
| Net cash (used in) operating activities | $(3,164,719) | (2,671,532) |
| Net cash (used in) investing activities | (57,603) | (61,920) |
| Net cash (used in) by financing activities | 5,835,675 | - |
| Net increase (decrease) in cash and cash equivalents | $2,613,353 | (2,733,452) |

On June 30, 2026, the Company had working capital of $4,550,841, as compared to working capital of $2,372,687 on December 31, 2025, reflecting an increase in working capital of $2,178,154. This increase in working capital was the result of the net proceeds of the June 2026 offerings, partially offset by the usage of cash and cash equivalents to fund operations. On June 30, 2026, the Company had cash of $5,652,696 available to fund its operations.

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.

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.

On June 9, 2026, the Company closed an underwritten public offering of units and, on June 30, 2026, a concurrent registered direct offering of units under its shelf registration statement, for aggregate net proceeds of $5,861,147.

Given the Company’s current operating cash burn, its existing working capital as of June 30, 2026, is not sufficient to fund operations for twelve months from the date these condensed unaudited consolidated financial statements are issued, and management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern. Beyond the offerings completed in June 2026, the Company will continue to pursue non-dilutive funding opportunities, including grants, and may seek additional offerings under its shelf registration statement, 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 six months ended June 30, 2026, and 2025, operating activities utilized cash of $3,164,719 and $2,671,532, respectively. The increase in cash used in operations was primarily driven by increased research and development activity, partially offset by lower general and administrative costs.

### Investing Activities.

For the six months ended June 30, 2026, and 2025, investing activities primarily related to laboratory equipment purchases.

### Financing Activities.

For the six months ended June 30, 2026, financing activities provided net cash of $5,835,675, consisting of net proceeds of $5,861,147 from the June 2026 offerings, partially offset by cash payments of $25,472 related to the Company’s finance lease obligations.

For the six months ended June 30, 2025, the Company had no cash flows from financing activities.

### 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 June 30, 2026, that are expected to be reimbursed in the subsequent period. Management considers the grants receivable as of June 30, 2026, 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 June 2026 the Company completed an underwritten public offering and a concurrent registered direct offering of units, underwritten by Public Ventures, LLC (d/b/a MDB Capital), resulting in the issuance of 732,260 shares of common stock and 366,130 warrants for net proceeds of $5,861,147.

### 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.

## Controls and procedures

As filed, 4,023 characters.

### 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 June 30, 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 June 30, 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.

## Risk factors

As filed, 5,273 characters.

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

**Management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern.**

Given the Company’s current operating cash burn, its existing working capital as of June 30, 2026, is not sufficient to fund operations for twelve months from the date these condensed unaudited consolidated financial statements are issued, and management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern. Beyond the offerings completed in June 2026, the Company will continue to pursue non-dilutive funding opportunities, including grants, and may seek additional offerings under its shelf registration statement, 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.

**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.

Filed Aug 13, 2026.
Source: SEC EDGAR, the filing index for accession 0001493152-26-037725. Last ingested by Listed: Nov 9, 2026, 18:13 ET. No prices; not investment advice.