What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-30 compared with 2025-03-31 · 163 added, 155 removed, 90 unchanged (78% of the section changed)

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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 diverse range of select chemicals will enable the

production of pharmaceuticals, fuels, materials, food additives, and novel compounds.

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.

As the eXoZymes synthetic biology platform continues to develop over time, it is expected to enable the production

of a diverse range of selected chemicals, including pharmaceuticals, fuels, materials, food additives, and novel compounds

of Operations

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manages the business.

Accordingly, the Company does not have separately reportable segments.

Accordingly, the Company does not have separate reportable segments.

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

Results of Operations for the Years Ended December 31, 2024 and 2023

ended December 31,

Total operating income

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Total general and administrative costs

Research and development costs, net of grants amounting to $2,333,722 and $2,954,208, for the years ended December 31

Research and development

Total operating costs

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Other income/(expense):

Interest income/ (expense)

Interest income, net

Other income/(expense)

Change in fair value of SAFE

Change in fair value of

Loss before income taxes

Income tax benefit

$ (9,158,734 )

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and Administrative Costs .

During years ended December 31, 2024, and 2023, respectively, several factors contributed to changes

in various expense categories:

● Compensation

The increase in compensation expense during the year ending December 31, 2024, resulted

from the recruitment of additional administrative staff, in the latter half of 2023, who

are not covered by grants.

● Professional

The increase in professional fees compared to previous period was due to higher consulting

costs related to operations and the expenses of the initial public offering.

Along with higher

legal, tax, audit, and consulting costs associated with completing year-end financial audits

and preparing for the initial public offering.

● Information

years ended December 31, 2025, and 2024, respectively, several factors contributed to changes in various expense categories:

For the year ended December 31, 2025, the increase was primarily driven by the hiring of additional administrative staff

whose costs were not funded by grants.

Compared to year ended December 31, 2024, the increase was primarily attributable to higher consulting costs supporting operational

activities, as well as increased legal, tax, and audit fees related to financial reporting.

In addition, Nasdaq and SEC compliance

and filing fees increased following the 2024 IPO.

Technology Costs:

The increase in costs for the year ending December 31, 2024, were negligible

compared to the same period in the previous year.

This increase was primarily related to additional IT projects undertaken to enhance the Company’s infrastructure

and operational capabilities.

General and Administrative Costs:

The increase in costs for the year ending December 31,

2024, were negligible compared to the same period in the previous year.

The increase was primarily related to D&O insurance costs and director fees, which were not

incurred in 2024.

and Development Costs .

For the year ended December 31, 2024, there was an increase of $1,341,286 in research and development

costs due to an increase in salary and lab expenses and a decrease in grant funding.

It is important to note that the upswing in grant

funding was not linked to any specific event.

the year ended December 31, 2025, research and development costs increased by $1,838,225 compared to the same period in 2024, primarily

due to higher salary, bonus accruals, stock-based compensation and laboratory expenses, as well as a reduction in grant funding.

important to note that the decrease in grant funding was not attributable to any specific event.

Balance Sheet as of December 31, 2025, and December 31, 2024

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Grants receivable

Prepaid expenses and other current assets

Prepaid expenses and other

current assets

Total current assets

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Operating lease right-of-use asset, net

LIABILITIES AND DEFICIT

Finance lease right-of-use asset, net

Tax receivable

LIABILITIES AND EQUITY

Accounts payable

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Operating lease liabilities – Current

SAFE Liability

Taxes payable

Finance lease liabilities

Total current Liabilities

Deferred grant reimbursement

Operating lease liabilities

Operating lease liabilities - Long term

Finance lease liabilities

Total liabilities

Stockholders’ Equity:

Preferred stock

Common shares

Paid-in-capital

Additional Paid-in-capital

Accumulated deficit

(21,104,692 )

Total deficit

Total liabilities and deficit

increase in assets was due to changes in several asset classes, but mainly in cash and cash equivalents after closing IPO.

decrease in grants receivable was driven by completion of certain grants and timing of grant drawdowns.

The increase in prepaid expenses was due to prepayment of the D&O insurance policy.

The increase in property and equipment was due to the purchase of lab equipment.

The decrease in

operating lease right-of-use assets resulted from the usage and payments of office space during the period.

decrease in liabilities were primarily driven by the conversion of the SAFE note by $1,000,000 to common shares and repayment of related party balances.

in operating lease liability was due to normal lease liability payments during the period.

equity increase was driven by the increase of commons shares, paid-in capital and warrants because of the initial public offering

officially closed on November 11, 2024.

(11,945,958 )

liabilities and equity

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 increase in prepaid expenses was mainly explained by the increase of

prepaid related to software acquisition.

The decrease in property and equipment was due to the ongoing accumulated depreciation of fixed

The decrease in operating lease right-of-use assets resulted from the usage and payments of office space during the period.

The decrease in total liabilities was primarily attributable to the reduction of operating lease obligations and

related-party debt.

In contrast, accounts payable increased, driven mainly by higher supplier-financed commercial activity and the accrual

of employee bonuses.

equity decrease was due to losses generated by operations.

and Capital Resources – December 31, 2025, and 2024

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ended December 31,

cash used in operating activities

Net cash (used in) operating activities

$ (6,502,040 )

Net cash (used in) investing activities

Net cash (used in) by

financing activities

Net increase (decrease)

in cash and cash equivalents

$ (6,679,967 )

cash used in investing activities

cash provided by financing activities

increase (decrease) in cash and cash equivalents

December 31, 2025, the Company had working capital of $2,372,687, as compared to working capital of $9,487,137, on December 31, 2024,

reflecting an increase in working capital of $10,688,817.

This increase in working capital was primarily the result of an increase

in cash and cash equivalents due to the closing of the initial public offering.

On December 31, 2024, the Company had cash of

$9,719,310 available to fund its operation.

reflecting a decrease in working capital of $(7,114,450).

This decrease in working capital was the result of usage of cash and cash equivalents

to fund operations.

On December 31, 2025, the Company had cash of $3,039,343 available to fund its operation.

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 $15,901,328, and

net proceeds of approximately $15,206,543.

The proceeds are planned to be used, throughout 2025, in the expansion of its production capabilities,

staffing, R&D and other working capital requirements, and repayment of approximately $4,243,022 in loans from MDB Capital Holdings, LLC.

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 December 31, 2025, will continue to be used throughout 2025,

in the expansion of its production capabilities, staffing, R&D, and other working capital requirements.

a private placement (“Concurrent Private Offering”) completed concurrently with the IPO, the Company sold to accredited investors

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and if the Private Warrants are fully exercised, for cash, the Company will receive up to $750,000.

October 2024, the Company received an additional 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.

The Company intends to pursue additional grants which will further improve its working capital position.

on its working capital of approximately $9,487,137 after the IPO, and its program of seeking various grants, the Company believes it

is in a good financial position.

If, however, it does require capital, it may sell its equity securities, seek

institutional and bank funding, and sell or license various of its intellectual property rights.

For the year ended December 31, 2024, operating activities utilized cash of $8,505,650, which was driven by an

increased research and development activity, as well as increased general and administrative costs.

Additionally, the Company paid $4,243,022 in related party loans to MDB Capital Holdings, LLC.

the year ended December 31, 2023, operating activities utilized cash of $1,180,870, which was driven by a combination of increased research

and development activity, as well as increased general and administrative costs.

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

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.

intends to pursue additional grants from time to time, which if granted to the Company will further improve its working capital position.

on its working capital of approximately $2,372,687 as of December 31, 2025, the Company 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

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

These consolidated 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.

the year ended December 31, 2025, operating activities used cash of $6,502,040 primarily due to increased research and development costs

and higher general and administrative expenses.

the year ended December 31, 2024, operating activities used cash of $8,505,650, which was driven by an increased research and development

activity, as well as increased general and administrative costs.

Additionally, the Company paid $4,243,022 in related party loans to

MDB Capital Holdings, LLC.

the years ended December 31, 2025, and 2024, investing activities consisted of the purchase of laboratory equipment.

For the year ended December 31, 2024, financing activities consisted of loans from a related party and the proceeds

from the IPO.

the year ended December 31, 2023, financing activities consisted of investments from the parent company in the form of a SAFE

and related party notes.

Issued Accounting Pronouncements

Recent Accounting Pronouncements

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 15 December 2026 and

interim periods beginning after 15 December 2027, with early adoption permitted.

ASU 2024-03 should be applied prospectively;

retrospective application is permitted.

We are currently evaluating the impact of ASU 2024-03 on our disclosures.

In November 2023, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

to Reportable Segment Disclosures (“ASU 2023-07”), which requires all public entities, including public entities with a single

reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating

decision maker to allocate resources and assess performance.

Additionally, the standard requires disclosures of significant segment expenses

and other segment items as well as incremental qualitative disclosures.

The Company adopted ASU 2023-07 effective December 31, 2024, on

a retrospective basis.

The adoption of 2023-07 did not change the way that the Company identifies its reportable segments and, as a result,

did not have a material impact on the Company’s segment-related disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures ( ASU

2023-09 ), which is intended to enhance the transparency of income tax matters within financial statements, providing stakeholders

with a clearer understanding of an entity’s operations and the associated tax risks.

ASU 2023-09 requires public business entities to

disclose, on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items

that meet a specific quantitative threshold.

There is a further requirement that public business entities will need to disclose a tabular

reconciliation, using both percentages and reporting currency amounts.

the year ended December 31, 2025, the Company incurred cash payments of $27,709 related to its finance lease obligations.

the year ended December 31, 2024, financing activities consisted of loans from a related party and the proceeds from the IPO.

Pronouncements Issued and Not Yet Adopted

November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 ASU 2024-03 to determine the impact

it may have on its consolidated financial statements.

December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic 270):

Narrow-Scope Improvements (ASU 2025-11), which clarifies and

improves the guidance for interim financial reporting.

The amendments introduce a disclosure principle requiring entities to disclose

events since the end of the previous annual reporting period that materially affect the entity, consolidate a comprehensive list of interim

disclosure requirements within ASC 270, and provide guidance on the form and content of condensed interim financial statements.

will be effective for interim reporting periods in fiscal years beginning after December 15, 2027.

Early adoption is permitted.

is currently evaluating ASU 2025-11 to determine the impact it may have on its consolidated financial statements.

Adopted Accounting Pronouncements

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU

2023-07”) , which requires all public entities, including public entities with a single reportable segment, to provide in interim

and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and

assess performance.

Additionally, the standard requires disclosures of significant segment expenses and other segment items as well as

incremental qualitative disclosures.

The Company adopted ASU 2023-07 effective December 31, 2024, on a retrospective basis.

of 2023-07 did not change the way that the Company identifies its reportable segments and, as a result, did not have a material impact

on the Company’s segment-related disclosures.

December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures ( ASU 2023-09 ), which is

intended to enhance the transparency of income tax matters within consolidated financial statements, providing stakeholders with a clearer

understanding of an entity’s operations and the associated tax risks.

ASU 2023-09 requires public business entities to disclose,

on an annual basis, specific categories in the rate of reconciliation and provide additional information for reconciling items that meet

a specific quantitative threshold.

There is a further requirement that public business entities will need to disclose a tabular reconciliation,

using both percentages and reporting currency amounts.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

The adoption of ASU 2023-09 will result in modifications to our income tax disclosures beginning in 2025.

adoption of ASU 2023-09 resulted in modifications to our income tax disclosures for the fiscal year ended December 31, 2025.

Accounting Estimates

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about matters that are uncertain.

We believe that the judgment, estimates, and assumptions used in the preparation of our consolidated financial statements are appropriate given the factual circumstances

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:

We believe that the judgment, estimates, and assumptions used in the preparation of our 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.

accounting estimates are:

for Research Grants

receives grant reimbursements, which are netted against research and development expenses in the consolidated statement

of operations.

Grant reimbursements for capitalized assets are recognized over the useful life of the assets, with the unrecognized portion

considered a deferred liability and are included in accounts payable and accrued expenses in the consolidated balance

receives grant reimbursements, which are netted against research and development expenses in the consolidated statement of operations.

Grant reimbursements for capitalized assets are recognized over the useful life of the assets, with the unrecognized portion considered

a deferred liability and are included in accounts payable and accrued expenses in the consolidated balance sheet.

that operate on a reimbursement basis are recognized on the accrual basis as revenues to the extent of disbursements and commitments

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from funding sources in the subsequent year.

Management considers such receivables at December 31, 2024 and 2023, to be fully

collectable, due to the historical experience with the Federal Government of the United States of America.

Accordingly, no allowance

for grants receivable was recorded in the accompanying consolidated financial statements.

Management considers such receivables on December 31, 2025 and 2024, respectively, to

be fully collectable, due to the historical experience with the Federal Government of the United States of America.

Accordingly, no

allowance for grants receivable was recorded in the accompanying consolidated financial statements.

grants received from organizations are subject to the contract agreement as to how eXoZymes conducts its research activities, and eXoZymes

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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.

of Business Activities and Plans

November 11, 2024, the Company signed a firm commitment underwriting agreement for its initial public offering (IPO) with a closing

date of November 11, 2024, which consisted of the sale of an aggregate of 1,875,000 shares of Common Stock.

The public offering

price was $8.00 per share, for gross proceeds of $15,000,000.

The underwriter was granted its overallotment option for up to an

additional 281,250 shares until December 26, 2024.

The net proceeds for the initial public offering with the overallotment were

$15,206,543 as of the date of this report.

The proceeds will be used for the development of eXoZymes, expansion of production

capabilities, increased staff and related expenses, R&D expenses, repayment of a related party loan and other general corporate

and working capital requirements.

Amounts received under research grants are offset against the related research and development costs in the Company’s

consolidated statement of operations.

Risks Associated with the Company’s Business Activities

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The Company continues to monitor changes in tariffs and indirect trade restraints.

The Company does not

currently expect that supply chain issues will have a significant impact on its business activities.

The Company does not currently

expect that supply chain issues will have a significant impact on its business activities.

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.

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.

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

become available.

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.

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.

Events and Uncertainties

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Quantitative and Qualitative Disclosures About Market Risk

are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, therefore are not required to provide the information

are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, therefore we are not required to provide the information

under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis