Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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You should read the following discussion and analysis together with our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described under Part I, Item 1A, "Risk Factors," and elsewhere in this Annual Report.

Overview

GridAI Technologies Corp. is a diversified technology company with operations that, as of December 31, 2025, consisted of (i) energy orchestration and grid optimization software solutions through our subsidiaries Grid AI Corp. and AMPX, and (ii) legacy biopharmaceutical development activities centered on Adrulipase for the treatment of exocrine pancreatic insufficiency.

Historically, the Company operated primarily as a clinical-stage biopharmaceutical company focused on the development of targeted, non-systemic therapies for gastrointestinal diseases. During 2025, the Company underwent a significant strategic transformation. On September 30, 2025, the Company completed a share exchange transaction pursuant to which it acquired 100% of the outstanding equity interests of Grid AI Corp. At the time of the acquisition, Grid AI Corp. owned 75% of the issued and outstanding equity interests of AMPX, which holds the operating subsidiary AMPX Limited. Following the transaction, Grid AI Corp. and its subsidiaries, including AMPX, became consolidated subsidiaries of the Company. As a result, the Company's business profile changed materially, and its primary strategic focus shifted toward AI-driven energy technology operations.

In March 2025, the Company entered into a rescission agreement with ImmunogenX, LLC, formerly a wholly owned subsidiary of the Company, and the former shareholders of ImmunogenX. Under the rescission transaction, the parties agreed to unwind the Company's prior acquisition of ImmunogenX by rescinding the previously issued Common Stock and Series G Preferred Stock issued in the transaction, conveying the equity interests of ImmunogenX back to the former ImmunogenX shareholders, and canceling the assumed ImmunogenX options and warrants. The Company retained $695,814 of ImmunogenX accounts payable, while ImmunogenX remained responsible for approximately $9.3 million of secured debt and certain other obligations. The rescission transaction closed on December 31, 2025. Following the closing, ImmunogenX ceased to be a subsidiary of the Company, and the Company no longer held any ownership interest in that business.

As a result, as of December 31, 2025, the Company's business consists of its newly acquired subsidiaries (Grid AI Corp. and AMPX) together with its continuing Adrulipase development program and related corporate activities

Grid AI Corp. develops software and services designed to accelerate power availability and optimize energy infrastructure for artificial intelligence (AI) data centers and other large energy users. Grid Ai Corp. is currently in the development stage of an AI data center platform. This platform aims to use and optimize distributed energy resources, including battery energy storage systems, on-site generation, and grid interconnections. Currently, there is no revenue generated from this AI data center platform. Grid Ai Corp.'s commercial pipeline has recently been re-established and is continuing to develop through consulting-led engagements and targeted business development initiatives.

For the year ended December 31, 2025, the Company's consolidated financial statements include the post-acquisition results of Grid AI Corp. and AMPX beginning on September 30, 2025. Prior to the Grid AI Corp. acquisition, the Company operated primarily as a clinical-stage biopharmaceutical company focused on targeted, non-systemic therapies for gastrointestinal diseases. Non-systemic therapies are non-absorbable drugs that act locally, such as in the intestinal lumen, skin or mucosa, without reaching an individual's systemic circulation. In May 2024, the Company changed its name from First Wave BioPharma, Inc. to Entero Therapeutics, Inc.

The Company's continuing legacy biopharmaceutical focus is Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in patients with exocrine pancreatic insufficiency, including patients with cystic fibrosis and chronic

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pancreatitis. The Company plans to continue development activities relating to Adrulipase. The Company's former Latiglutenase and CypCel programs were part of the ImmunogenX business, which was disposed of on December 31, 2025 in connection with the rescission transaction described below. The Company has also discontinued its Capeserod and Niclosamide programs. The Company terminated its license agreement with Sanofi relating to Capeserod on February 26, 2025 and no further payments were due thereunder.

In March 2024, the Company acquired ImmunogenX, Inc., whose operations were subsequently carried through ImmunogenX, LLC. During 2025, the Company determined to unwind that transaction. In March 2025, the Company entered into a rescission agreement with ImmunogenX and the former ImmunogenX shareholders, which was subsequently amended in July 2025. On December 31, 2025, the Company completed the rescission transaction. In connection with the closing, the Company transferred its ownership interests in ImmunogenX, rescinded the shares previously issued in the acquisition, cancelled the related assumed options and warrants and retained approximately $695,000 of ImmunogenX accounts payable, while ImmunogenX remained responsible for approximately $9.3 million of its secured debt. As a result, ImmunogenX is no longer a subsidiary of the Company.

On February 26, 2025, the Company provided notice of termination of its license agreement with Sanofi relating to Capeserod. That termination became effective in April 2025. The Company also determined not to continue pursuing previously announced strategic transactions involving Journey Therapeutics and Data Vault.

As a result of the acquisition of Grid AI Corp., the completion of the ImmunogenX rescission transaction and the discontinuation of several legacy biotechnology programs, comparability between periods is affected. The Company's 2025 results reflect a materially different business profile than its 2024 results.

Nasdaq Listing Matters

During 2025, the Company received multiple notices from The Nasdaq Stock Market LLC relating to listing compliance matters.

On September 6, 2024, the Company received notice that it was not in compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). On March 6, 2025, the Company received notice that Nasdaq had granted an additional 180-day extension, through September 1, 2025, to regain compliance. On September 3, 2025, Nasdaq notified the Company that it had regained compliance with the minimum bid price requirement because the closing bid price of the Company's common stock had been at least $1.00 per share for the required period, and the matter was closed.

On January 7, 2025, the Company received notice that it was not in compliance with Nasdaq Listing Rule 5620(a) because it had not held an annual meeting of stockholders in 2024 within the required time period. The Company held its Annual Meeting on June 30, 2025, and on July 3, 2025, Nasdaq notified the Company that it had regained compliance and that the matter was closed.

On October 28, 2025, the Company received a letter from Nasdaq confirming that, based on the Company's Form 8-K filed on October 6, 2025, the Company was in compliance with the minimum stockholders' equity requirement under Listing Rule 5550(b)(1). Nasdaq also noted that if the Company failed to evidence compliance upon filing its next periodic report, it could again become subject to delisting proceedings.

On November 5, 2025, the Company received a letter from Nasdaq stating that the Company's proposed transaction with GridAI Corp. constituted a business combination resulting in a change of control under Nasdaq Listing Rule 5110(a). Nasdaq indicated that the post-transaction company would be required to satisfy Nasdaq's initial listing criteria and complete the applicable Nasdaq initial listing review process in connection with the second step of the transaction.

On April 22, 2026, the Company received a notice from Nasdaq Listing Qualifications indicating that it is not in compliance with Nasdaq Listing Rule 5250(c)(1) due to its failure to timely file its Annual Report on Form 10-K for the year ended December 31, 2025. The notice provides the Company with 60 calendar days, or until June 22, 2026, to submit a plan to regain compliance. If the plan is accepted, Nasdaq may grant an exception of up to 180 calendar days from the original filing due date, or until October 12, 2026, for the Company to regain compliance.

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Revolving Loan Agreement

Effective January 31, 2025, the Company entered into a Revolving Loan Agreement providing for borrowings of up to $2.0 million. The revolving note bears interest at 18% per annum and matured on January 31, 2026. The agreement includes customary conditions, covenants and events of default, as well as provisions relating to board composition and the Company's reasonable best efforts to pursue a qualified public equity offering.

Under the Revolving Loan Agreement, the outstanding principal balance of all outstanding loans, all accrued and unpaid interest and all other amounts, costs, expenses and/or liquidated damages were due in full the "Maturity Date". On April 1, 2026, the Company received a demand letter from the Lender's counsel, asserting that the Company is in default of the Revolving Loan Agreement as the Maturity Date has passed and the amounts due under the Revolving Loan Agreement have not been repaid, and demanding the Company to pay a total sum of $1,014,675, which includes the principal amounts received by the Company ($700,000), interest and a 20% increase of these amounts due to the default pursuant to the terms of Revolving Loan Agreement. The Company is evaluating the effects of this event and as of the date of this report is in active discussions with the Lender. Our ability to repay, refinance or otherwise address this indebtedness on acceptable terms will affect our liquidity and financial flexibility. There can be no assurance that we will be able to refinance or satisfy this indebtedness on favorable terms or at all.

Financial Operations Overview

The Company operates through two reportable segments: (i) its artificial intelligence-driven energy technology business ("AI Segment") and (ii) its legacy biotechnology operations focused on gastrointestinal therapies ("GI Segment"). The AI Segment consists of operations conducted through Grid AI Corp. and its subsidiaries, including AMPX, while the GI Segment reflects the Company's retained biopharmaceutical development activities, including Adrulipase. Management evaluates performance and allocates resources across these segments based on strategic priorities and expected returns.

Revenue

Historically, the GI Segment did not generate revenue from the sale of approved biopharmaceutical products. Following the acquisition of Grid AI Corp. on September 30, 2025, the Company began generating revenue within its AI Segment from its energy technology operations conducted through Grid AI Corp. and AMPX.

Accordingly, beginning in the fourth quarter of 2025, our consolidated results include revenue associated with the Grid AI Corp. and AMPX business. This revenue has been generated primarily from software-enabled energy orchestration, optimization, dispatch, monitoring and related service offerings. Prior to the Grid AI Corp. acquisition, our legacy operations did not generate product revenue.

Looking forward, we expect our revenue profile to differ materially from prior periods as a result of the inclusion of the Grid AI Corp. and AMPX business. With respect to our retained legacy biopharmaceutical operations, we have not generated revenue from product sales and do not expect to do so unless and until a product candidate receives regulatory approval and is successfully commercialized. We may also seek to generate revenue in the future from strategic relationships, licensing arrangements, milestone payments, service arrangements, grants or other sources, although there can be no assurance that any such revenue will be realized. All revenue recognized during 2025 relates to the AI Segment, as the GI Segment has not generated product revenue.

Research and Development Expense

Research and development expenses relate primarily to the Company's GI Segment. Prior to 2025, a significant portion of our research and development expenses related to the development of Adrulipase, Niclosamide, Capeserod and Latiglutenase. Following the discontinuation of certain legacy biotechnology programs, the completion of the rescission transaction involving ImmunogenX, LLC on December 31, 2025 and the acquisition of Grid AI Corp. on September 30, 2025, our retained biopharmaceutical research and development activities are primarily focused on Adrulipase.

Research and development expenses generally consist of internal and external costs incurred in connection with our legacy product development activities, including, among other things:

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Following the strategic shift in the Company's business, research and development expense is expected to reflect a narrower retained life sciences portfolio than in prior periods. Adrulipase is the Company's only remaining active biotechnology development program.

Because the Company now also operates an AI-driven energy technology business through Grid AI Corp. and AMPX, operating expenses may include technology, engineering, implementation, systems, data and platform-related costs that are distinct from legacy biopharmaceutical research and development activities. The classification of such costs depends on their nature and the applicable accounting treatment in the relevant period.

We expect the composition of our operating expenses to continue to evolve over time as management allocates resources among:

The process of conducting clinical development activities and expanding a software-enabled energy technology business is costly and time-consuming. It is difficult to predict with certainty the timing and level of future expenditures, the duration of development activities, the pace of commercial growth or the timing of future revenues.

The success of our activities depends on numerous factors, including clinical outcomes, access to capital, technological performance, customer adoption, regulatory considerations, competitive conditions and commercial viability. Management expects to continue evaluating the allocation of capital and operating resources across the Company's retained life sciences activities and its energy technology operations based on strategic priorities, liquidity and expected returns.

We do not believe that historical program-by-program comparisons are necessarily meaningful for all periods presented, particularly in light of the Company's significant business transformation during 2025. The AI Segment does not incur research and development expenses of the nature associated with biopharmaceutical development.

General and Administrative Expense

General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation, related to executive, finance, business development, legal, compliance and other administrative functions. General and administrative expenses also include legal fees relating to corporate, transactional, governance and intellectual property matters, insurance, information technology costs, professional fees for accounting, auditing, tax and other advisory services, public company costs, including corporate communications and investor relations expenses, and facility-related costs.

General and administrative expenses increased in importance during 2025 as a result of the Company's acquisition of Grid AI Corp., the integration of the Grid AI Corp. and AMPX business, changes in management and board composition and the continued requirements of operating as a public company.

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We expect general and administrative expenses to remain significant and they may increase in future periods as we continue to support the operation and integration of the Grid AI Corp. and AMPX business, satisfy public company reporting and compliance obligations and incur costs associated with corporate governance, legal, accounting, finance, investor relations and information technology infrastructure.

General and administrative expenses may also increase in connection with business development initiatives, financing activities, strategic transactions, integration efforts and the expansion of our administrative and operational infrastructure, including the engagement of additional personnel, consultants and outside service providers. General and administrative expenses support both the AI Segment and the GI Segment and are managed on a consolidated basis.

Liquidity and Capital Resources

To date, we have not generated revenue from product sales and have experienced net losses and negative cash flows from operations. Our historical operations were funded primarily through sales of equity securities, equity-linked securities and debt financings. In 2025, our business changed significantly as a result of the acquisition of Grid AI Corp. and the completion of the rescission transaction involving ImmunogenX, LLC. Notwithstanding those transactions, as of December 31, 2025, we remained dependent on external sources of capital to fund our operations, satisfy our obligations and execute our business plan. Our capital requirements reflect the combined needs of both the AI Segment and the GI Segment, including funding for platform development, operations and integration activities within the AI Segment and potential future development activities within the GI Segment.

As of December 31, 2025, we had cash and cash equivalents of approximately $899,000, working capital deficit of approximately $12,563,000, and an accumulated deficit of approximately $208,780,000. We have not yet achieved profitability and expect to continue to incur losses for the foreseeable future. Our future capital needs will depend on a number of factors, including the operating requirements of the GridAI and AMPX business, our corporate overhead, debt service obligations, public company costs and the extent to which we seek to preserve, resume or advance development activities relating to Adrulipase.

Our liquidity has been, and we expect will continue to be, dependent on access to outside capital. We may seek additional funds through public or private offerings of equity or debt securities, exercises of outstanding warrants, strategic transactions, commercial partnerships, licensing arrangements, asset sales or other financing alternatives. The availability and terms of financing will depend on many factors, including market conditions, our operating performance, investor sentiment, Nasdaq listing status, the trading price of our Common Stock, our capital structure and broader macroeconomic and geopolitical conditions.

In January 2025, we entered into a revolving loan arrangement that provided for borrowings of up to $2.0 million. The facility bears interest at a high rate and matures on January 31, 2026. As of April 1, 2026, the Company was in default under the revolving loan arrangement as a result of its failure to repay amounts due at maturity, and the lender has issued a demand for repayment of the outstanding amounts. As a result of this default, the lender may accelerate the indebtedness, and amounts in excess of the outstanding principal, including accrued interest, fees and other costs, may become immediately due and payable. Our ability to repay, refinance or otherwise address this indebtedness on acceptable terms will affect our liquidity and financial flexibility. There can be no assurance that we will be able to refinance or satisfy this indebtedness on favorable terms or at all.

During 2025, we also completed the acquisition of Grid AI Corp., which expanded our operations beyond our legacy life sciences activities to include software-enabled energy orchestration and grid-edge platform activities through Grid AI Corp. and AMPX. In addition, on December 31, 2025, we completed the rescission transaction involving ImmunogenX, LLC, pursuant to which that business ceased to be our subsidiary. Following the rescission, we no longer held any ownership interest in ImmunogenX, although we retained certain liabilities as set forth in the related transaction documents. As a result of these transactions, our liquidity and capital resource profile at year-end 2025 differed materially from prior periods.

We expect to continue to incur substantial expenditures in the foreseeable future, including expenditures relating to operation and integration of the Grid AI Corp. and AMPX business, maintenance of our public company infrastructure, professional fees, debt service and evaluation of strategic and financing alternatives. In addition, although Adrulipase remains our principal retained legacy biopharmaceutical asset, any meaningful advancement of that program would require substantial additional capital for manufacturing, clinical development, regulatory activities and related support functions.

Because we do not currently generate revenue from approved pharmaceutical product sales and because the Grid AI Corp. and AMPX business remains in an early stage within our consolidated structure, we expect to continue to rely on external capital resources.

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If we are unable to obtain additional financing when needed, on acceptable terms or at all, we may be required to delay, reduce or terminate operating activities, defer strategic initiatives, reduce headcount, dispose of assets, restructure obligations or pursue other alternatives that may materially adversely affect our business, financial condition and results of operations.

Our access to capital may also be adversely affected by factors beyond our control, including inflation, interest rates, capital markets volatility, geopolitical conflicts, supply chain disruption and changing investor sentiment toward small-cap public companies, biotechnology issuers, emerging energy technology companies or issuers with complex capital structures.

Based on our cash position, operating plans, debt obligations and expected cash requirements, management concluded that substantial doubt existed regarding our ability to continue as a going concern for a period of one year from the date of issuance of the financial statements, unless we are able to obtain additional capital or otherwise improve liquidity. The accompanying financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

Our ability to issue additional securities will depend on market conditions, the availability of effective registration statements or applicable exemptions from registration, stockholder approval requirements, Nasdaq rules and the terms of our existing securities and financing arrangements. Future equity or equity-linked financings may be dilutive to existing stockholders and may include rights, preferences or privileges senior to those of our Common Stock.

Consolidated Results of Operations for the Years Ended December 31, 2025 and 2024

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

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Revenues

Revenue for the year ended December 31, 2025 was approximately $36,000, compared to no revenue for the year ended December 31, 2024.

Our consolidated revenue in 2025 entirely reflects the inclusion of the Grid AI and AMPX business following the acquisition of Grid AI Corp. on September 30, 2025. Prior to that acquisition, our historical operations did not generate revenue from approved pharmaceutical product sales. Accordingly, comparability between 2025 and 2024 is affected by the fact that 2025 includes the post-acquisition results of the Grid AI and AMPX business, while 2024 reflects our pre-acquisition legacy business profile.

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Cost of Services

Cost of Services for the year ended December 31, 2025 was approximately $694,000, compared to no cost of services for the year ended December 31, 2024.

Cost of services in 2025 primarily relates to expenses associated with the delivery of services by the Grid AI and AMPX business following the acquisition of Grid AI Corp. on September 30, 2025, including personnel, platform and operational costs. Prior to the acquisition, the Company's legacy pharmaceutical operations did not incur cost of services, as no revenue-generating service activities were conducted. Accordingly, comparability between 2025 and 2024 is limited, as 2025 includes post-acquisition operating costs associated with the Grid AI and AMPX business, while 2024 reflects the Company's pre-acquisition legacy operations. Cost of services relates entirely to the AI Segment.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2025 were approximately $925,000, compared to approximately $904,000 for the year ended December 31, 2024, representing a decrease of approximately $21,000, or 2.4%.

Research and development expenses in 2025 primarily reflect development activities associated with the Company's Grid AI Corp. and AMPX business, together with limited retained legacy biopharmaceutical activities, including Adrulipase, and transition, evaluation or wind-down activity associated with the Company's prior product portfolio. Following the completion of the rescission transaction involving ImmunogenX, LLC on December 31, 2025, the Latiglutenase and CypCel programs were no longer part of the Company's business. In addition, the Company terminated the Sanofi license relating to Capeserod during 2025 and is no longer actively pursuing the Niclosamide program. As a result, research and development expense in 2025 reflects a shift from legacy life sciences development activities to technology and platform development within the Company's Grid AI Corp. and AMPX business. Additionally, during 2025, approximately $890,000 of costs incurred by Grid AI Corp., primarily related to professional fees and labor, were classified outside of research and development expenses, further contributing to the decrease in reported research and development expenses compared to the prior year.

General and Administrative Expense

General and administrative expenses for the year ended December 31, 2025 were approximately $5,500,000, compared to approximately $14,717,000 for the year ended December 31, 2024, representing a decrease of approximately $9,217,000, or 62.6%.

General and administrative expenses in 2025 primarily related to corporate overhead, public company costs, legal and professional fees, finance and administrative functions, insurance, investor and compliance costs, stock-based compensation and costs associated with operating and integrating the GridAI and AMPX business following the September 30, 2025 acquisition. Comparability to 2024 is affected by the expansion of our business and corporate infrastructure during 2025, including transaction-related, integration-related and governance-related costs.

The year-over-year decrease in general and administrative expense primarily reflected the absence in 2025 of the significant transaction-related, advisory, legal and non-cash costs recorded in 2024 in connection with the IMGX transaction and related activities.

Other Income (Expense), Net

Other income (expense), net for the year ended December 31, 2025 was approximately $443,000 all related to the revolver in the GI segment, compared to $2,253 for the year ended December 31, 2024.

Other income (expense), net in 2025 primarily reflected other income, net of approximately $934,000, partially offset by interest expense, net of approximately $491,000 this reflects government grants recognized by the Company's AI Segment through the AMPX business. Other income (expense), net for 2024 was not significant.

Loss from Continuing Operations

Loss from continuing operations for the year ended December 31, 2025 was approximately $6,640,000, compared to approximately $15,619,000 for the year ended December 31, 2024.

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The loss from continuing operations in 2025 reflected the combined operating results of the AI Segment and the GI Segment, including corporate overhead, retained biopharmaceutical activities and the operating profile of the GridAI and AMPX business following the September 30, 2025 acquisition.

Income tax benefit as of year ended December 31, 2025 was approximately $399,000, compared to $0 for the year ended December 31, 2024

Loss from Discontinued Operations

Loss from discontinued operations for the year ended December 31, 2025 was approximately $312,000, compared to approximately $2,440,000 for the year ended December 31, 2024.

Discontinued operations for 2025 and 2024 related primarily to the ImmunogenX business, which had previously been classified as held for sale and was ultimately disposed of through the rescission transaction completed on December 31, 2025. As a result, this line item reflects the operating results and other effects of that disposal group for the applicable periods.

Net Loss

As a result of the factors described above, net loss for the year ended December 31, 2025 was approximately $6,554,000, compared to approximately $18,059,000 for the year ended December 31, 2024, representing an improvement of approximately $11,506,000, or 63.8%.

Cash Flows for the Years Ended December 31, 2025 and 2024

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

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Operating Activities

Operating Activities

Net cash used in operating activities during the year ended December 31, 2025 was approximately $5,703,000, compared to net cash used in operating activities of approximately $9,218,000 during the year ended December 31, 2024.

Cash used in operating activities during 2025 was primarily attributable to our net loss, adjusted for non-cash items and changes in working capital. Significant non-cash items during 2025 included, depreciation and amortization of approximately $575,000, stock-based compensation of approximately $734,000, debt discount amortization of approximately $366,000, IMGX recission of approximately $(607,000) and a loss on termination of lease of approximately $109,000. Operating cash flows in 2025 were also impacted by changes in working capital, including increases in other current assets of approximately $45,000, deposits of approximately $98,000, accounts payable of approximately $464,200, trade receivables of approximately $7,000, and other current liabilities of approximately $758,000, as well as decreases in accounts receivable of approximately $1,201,000, deferred tax liabilities of approximately $419,000, accrued expenses of approximately $93,000, and lease liabilities of approximately $5,000.

Comparability between 2025 and 2024 is affected by the acquisition of GridAI Corp. on September 30, 2025, the inclusion of the GridAI and AMPX business for the post-acquisition period and the completion of the rescission transaction involving ImmunogenX, LLC on December 31, 2025. As a result, operating cash flows in 2025 reflect a materially different business profile than in 2024.

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Net cash used in operating activities during the year ended December 31, 2024 of approximately $9.2 million was primarily attributable to the net loss of approximately $18 million. Other non-cash expenses totaling approximately $6.3 million include Series G convertible preferred stock issued to financial advisors at acquisition of approximately $4 million, Common Stock granted to consultants of approximately $1.5 million, stock-based compensation of approximately $0.6 million, and Common Stock issued to financial advisors in connection with the IMGX acquisition of approximately $121,000. Additionally, changes in working capital contributed to cash flow usage, including a decrease in prepaid expenses of $1.1 million and a net increase in accounts payable and accrued expenses of $1.5 million.

Investing Activities

Net cash provided by investing activities during the year ended December 31, 2025 was approximately $323,000, compared to net cash provided by investing activities of approximately $88,000 during the year ended December 31, 2024.

Investing cash flows in 2025 primarily reflected cash acquired in connection with the acquisition of GridAI Corp.

Net cash provided by investing activities during the year ended December 31, 2024 was approximately $88,000 of cash acquired in the IMGX acquisition.

Financing Activities

Net cash provided by financing activities during the year ended December 31, 2025 was approximately $5,899,000, compared to approximately $5,581,000 during the year ended December 31, 2024.

Financing cash flows in 2025 primarily reflected proceeds from the issuance of common stock, pre-funded warrants and warrants, net of offering costs, of approximately $3,025,000, proceeds from promissory notes of approximately $2,300,000 and proceeds from notes payable of approximately $700,000, partially offset by repayments of acquisition consideration of $(750,000).

Net cash provided by financing activities of approximately $5.6 million for the year ended December 31, 2024 was primarily due to net proceeds of approximately $1.7 million from the exercise of warrants in the July 2024 Inducement Offering, as well as net proceeds of approximately $4.5 million from the issuance of Common Stock, pre-funded warrants, and warrants. These inflows were partially offset by approximately $645,000 related to the repayment of a note payable.

Net Increase (Decrease) in Cash and Cash Equivalents

As a result of the factors described above, cash and cash equivalents increased by approximately $715,000 during the year ended December 31, 2025, compared to a decrease of approximately $(3,548,300) during the year ended December 31, 2024.

Critical Accounting Policies and Significant Judgements and Estimates

Our management's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue, expenses and related disclosures during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described below. We base our estimates on historical experience, current conditions and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described more fully in Note 2 to our consolidated financial statements, management believes that the following accounting policies and estimates involve the most significant judgments and estimates used in the preparation of our financial statements: stock-based compensation, business combinations, goodwill and intangible assets, and the accounting for discontinued operations and assets held for sale. Because of the significance of the judgments involved, changes in assumptions or conditions could materially affect our reported results.

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Stock-Based Compensation

We account for stock-based compensation awards issued to employees, directors and certain non-employees by measuring the fair value of the award on the grant date and recognizing that fair value as compensation expense over the requisite service period, which is generally the vesting period. For certain awards with performance-based or transaction-based vesting conditions, expense is recognized when achievement of the applicable condition becomes probable.

The determination of the fair value of stock options and certain other equity awards requires the use of judgment and estimates, including expected term, expected volatility, risk-free interest rate and, where applicable, the probability and timing of performance conditions. Changes in these assumptions can materially affect the amount of stock-based compensation expense recognized in a given period.

Stock-based compensation became a more significant area of judgment during 2025 due to changes in management and board composition, transaction-related equity arrangements and additional equity awards granted in connection with the Company's transition following the GridAI transaction.

Business Combinations

We account for acquired businesses using the acquisition method of accounting, which requires us to allocate the purchase consideration to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Any excess of the purchase consideration over the estimated fair value of the net assets acquired is recorded as goodwill.

In 2025, our acquisition of GridAI Corp. required significant management judgment in determining the fair value of the acquired assets and assumed liabilities, including developed technology, customer relationships, trade names, deferred consideration, other assumed obligations and non-controlling interests. These estimates required the use of assumptions regarding future cash flows, discount rates, useful lives, market participant assumptions and other valuation inputs. Because these valuations are inherently judgmental, actual results may differ from the assumptions used, and such differences could be material.

Goodwill and Intangible Assets

Goodwill represents the excess of purchase consideration over the fair value of net identifiable assets acquired in a business combination. As of December 31, 2025, our goodwill balance reflects historical goodwill as well as goodwill recorded in connection with the GridAI acquisition, while goodwill previously associated with the ImmunogenX transaction was affected by the accounting for assets held for sale, discontinued operations and the subsequent rescission transaction.

Goodwill is not amortized, but is tested for impairment at least annually and more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. Identifiable intangible assets with finite useful lives are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets determined to have indefinite useful lives are not amortized but are tested for impairment at least annually.

The accounting for goodwill and intangible assets requires significant judgment, including in determining whether impairment indicators exist, identifying reporting units, estimating fair value, determining useful lives and assessing whether acquired assets should be classified as finite-lived, indefinite-lived or held for sale. In particular, following the GridAI acquisition and the rescission of ImmunogenX, the Company was required to make significant judgments regarding the carrying value, classification and presentation of goodwill and intangible assets. If actual results differ from these estimates or if market, operational or strategic conditions change, we may be required to record impairment charges that could be material. [update for final 2025 numbers]

Discontinued Operations and Assets Held for Sale

The determination of whether a business, disposal group or related assets and liabilities should be classified as held for sale or presented as discontinued operations requires significant judgment. These judgments include whether the criteria for held-for-sale classification have been met, whether a disposal represents a strategic shift that has or will have a major effect on the Company's operations and financial results and how the related assets, liabilities and operating results should be measured and presented.

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