Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this interim report. Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. As discussed in the section titled "CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS," the following discussion and analysis contains forward-looking statements including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies. In evaluating our business, you should carefully consider the information set forth under the heading "Risk Factors" included in this Report and in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on May 1, 2026.

Overview

GridAI Technologies Corp., formerly known as Entero Therapeutics, Inc., is a diversified technology and life sciences company operating through two reportable segments: (i) an artificial intelligence-driven energy technology business focused on distributed energy resource optimization and grid-edge applications through Grid AI Corp. and its subsidiaries, and (ii) a legacy gastrointestinal biopharmaceutical business focused primarily on Adrulipase.

On September 30, 2025, we completed the acquisition of Grid AI Corp., a Nevada corporation. Following the acquisition, Grid AI Corp. became a wholly owned subsidiary of the Company. Grid AI Corp., through its subsidiaries, including AMPX UK Holdings and AMPX Limited, is focused on AI-driven energy optimization, distributed energy resource management, battery storage, energy orchestration, and related technology solutions.

Prior to the Grid AI acquisition, we operated primarily as a clinical-stage biopharmaceutical company focused on targeted, non-systemic therapies for gastrointestinal diseases. Our continuing legacy biopharmaceutical activities are centered on 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 pancreatitis.

In March 2024, we completed a merger with ImmunogenX, Inc., which became ImmunogenX, LLC following the transaction. IMGX was developing Latiglutenase for celiac disease and CypCel, a metabolic marker compound. In March 2025, we entered into a rescission agreement with IMGX and the former shareholders of IMGX. The rescission transaction was completed on December 31, 2025. As a result, IMGX is no longer a subsidiary of the Company, and the Company no longer holds any ownership interest in IMGX.

Following the rescission of the IMGX transaction, the Company no longer owns or develops the Latiglutenase and CypCel programs. The Company also terminated its license agreement with Sanofi for Capeserod effective in 2025, and no further payments are due to Sanofi. The Company is no longer actively pursuing the Niclosamide program.

For the three months ended June 30, 2026, our results reflect the Company's post-Grid AI acquisition structure, including the operations of Grid AI and AMPX, together with our continuing legacy Adrulipase-related activities and public company costs.

Our Product Candidates and Technology Platforms

Following the acquisition of Grid AI Corp., our business includes both AI-driven energy technology activities and legacy biopharmaceutical development activities.

Our Grid AI business is focused on AI-driven energy optimization, distributed energy resource management, battery storage, energy orchestration, and related technology solutions. Through Grid AI Corp. and its subsidiaries, including AMPX UK Holdings and AMPX Limited, we are developing and commercializing technology intended to optimize energy infrastructure and grid-edge applications.

Our continuing legacy biopharmaceutical activities are focused primarily on Adrulipase, an oral, non-systemic biologic therapy being developed for the treatment of exocrine pancreatic insufficiency ("EPI") in patients with cystic fibrosis ("CF") and chronic pancreatitis ("CP"). Adrulipase is designed as a recombinant lipase enzyme intended to enable the digestion of fats and other nutrients. Our goal is to provide CF and CP patients with a non-animal-derived therapy that may reduce daily pill burden.

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In July 2023, we announced topline results from our Phase 2b monotherapy bridging study using a new enteric microgranule formulation of Adrulipase. Although the primary efficacy endpoint was not achieved, data from the study indicated that the enhanced Adrulipase formulation was safe and well tolerated and demonstrated improvement over prior formulations of Adrulipase. We continue to evaluate next steps for the Adrulipase program, subject to available capital and strategic priorities.

Our former Latiglutenase and CypCel programs were part of the IMGX business. Following the completion of the IMGX rescission transaction on December 31, 2025, we no longer own or develop those programs.

Our Capeserod program was in-licensed from Sanofi in September 2023. On February 26, 2025, we notified Sanofi of our intent to terminate the license agreement. The agreement was terminated in 2025, and no further payments are due to Sanofi. We are no longer developing Capeserod.

Our Niclosamide programs previously involved proprietary oral and topical formulations for multiple gastrointestinal conditions, including inflammatory bowel disease indications. We are no longer actively pursuing these programs.

Nasdaq Listing Requirements

On September 6, 2024, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that it was not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share, because the closing bid price of the Company's common stock had remained below $1.00 per share for 30 consecutive business days.

The Company was initially provided 180 calendar days, or until March 5, 2025, to regain compliance. On March 6, 2025, Nasdaq granted the Company an additional 180-day compliance period, or until September 1, 2025, to regain compliance with the minimum bid price requirement.

On September 2, 2025, the Company received written notice from Nasdaq that it had regained compliance with the minimum bid price requirement.

In addition, on January 7, 2025, the Company received a notice from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5620(a) due to the failure to hold an annual meeting of stockholders within twelve months of the Company's fiscal year end. The Company submitted a compliance plan to Nasdaq and subsequently regained compliance with the annual meeting requirement during 2025.

On April 22, 2026, The Nasdaq Stock Market LLC notified the Company that it was not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of the delayed filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Nasdaq advised the Company that it had 60 calendar days to submit a plan to regain compliance and that Nasdaq could grant an exception period until October 12, 2026. On May 1, 2026, the Company filed its Annual Report on Form 10-K for the year ended December 31, 2025. On May 4, 2026, Nasdaq notified the Company that, based on the filing of the Form 10-K, the Company had regained compliance with Nasdaq Listing Rule 5250(c)(1) and that the matter was closed.

Although the Company has regained compliance with the foregoing Nasdaq listing requirements, there can be no assurance that the Company will continue to maintain compliance with all applicable Nasdaq continued listing standards in the future.

Revolving Loan Agreement

Effective January 31, 2025, the Company entered into a Revolving Loan Agreement dated January 27, 2025 with 1396974 BC Ltd., pursuant to which the lender agreed to make loans to the Company. Under the Revolving Loan Agreement, all outstanding principal, accrued and unpaid interest and other amounts were due in full on January 31, 2026.

On April 1, 2026, the Company received a demand letter from the lender asserting that the Company was in default and demanding payment of $1,014,675, consisting of $700,000 of principal, interest, and default amounts.

On May 14, 2026, the Company entered into a Debt Settlement and Subscription Agreement with the lender. Under the settlement agreement, the Company agreed to satisfy the outstanding obligation through (i) a cash payment of $800,000, consisting of $700,000 of

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principal and $100,000 of accrued interest, and (ii) the issuance of 71,482 shares of common stock at a deemed price of $3.25 per share, in satisfaction of remaining accrued interest obligations of $232,315.

Pursuant to the agreement, the Company paid $800,000 in cash and issued 71,482 shares of common stock at a deemed price of $3.25 per share in full satisfaction of the outstanding balance. As a result, the indebtedness has been fully satisfied and extinguished, and the Company no longer has access to borrowings under the revolving loan agreement.

Rescission Agreement with ImmunogenX

In March 2025, the Company entered into a rescission agreement with ImmunogenX, LLC ("IMGX") and the former shareholders of IMGX to unwind the Company's March 2024 acquisition of IMGX. The rescission transaction was completed on December 31, 2025.

As a result of the rescission, IMGX is no longer a subsidiary of the Company, and the Company no longer holds any ownership interest in IMGX. The Company also no longer owns or develops the Latiglutenase and CypCel programs that were previously part of the IMGX business.

In connection with the rescission, the Company returned or cancelled the equity consideration previously issued to the former IMGX shareholders, including common stock and Series G preferred stock, and cancelled the assumed IMGX options and warrants. Following the closing of the rescission transaction, the Company retained certain agreed obligations, while IMGX and/or its former shareholders remained responsible for certain IMGX liabilities, including secured debt obligations.

For the three months ended June 30, 2026, IMGX was not included in the Company's consolidated results.

Liquidity and Capital Resources

To date, we have not generated significant product and service revenue 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 June 30, 2026, we remained dependent on external sources of capital to fund our operations, satisfy our obligations and execute our business plan.

As of June 30, 2026, we had cash and cash equivalents of approximately $1.4 million, a working capital deficit of approximately $11.8 million and an accumulated deficit of approximately $224.9 million.

We remain dependent on obtaining additional working capital funding from the sale of equity and/or debt securities, warrant exercises, strategic transactions, commercial arrangements, or other sources of financing in order to continue operations and execute our business plan. Without adequate funding, we may not be able to meet our obligations as they become due. These conditions raise substantial doubt about our ability to continue as a going concern.

Our primary sources of liquidity have been capital raises through equity and debt financings. During 2025 and 2026, we also entered into promissory note arrangements and other financing transactions to fund working capital needs. Our ability to raise additional capital may be affected by market conditions, our operating performance, our Nasdaq listing status, the trading price of our common stock, our capital structure, and broader macroeconomic and geopolitical conditions.

We expect to incur expenditures in the foreseeable future related to the operation and development of the Grid AI and AMPX business, maintenance of our public company infrastructure, professional fees, financing costs, debt service, and, subject to available capital, development activities related to Adrulipase. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition, our ability to meet obligations, and our ability to pursue our business strategies.

We may seek funds through additional equity and/or debt financings, warrant exercises, strategic or commercial arrangements, asset sales, or other sources of financing. Future equity or equity-linked financings may be dilutive to existing stockholders. There can be no assurance that additional financing will be available on acceptable terms or at all.

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

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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. On May 14, 2026, GridAI Technologies Corp. entered into a Debt Settlement and Subscription Agreement with 1396974 BC Ltd. to settle the outstanding indebtedness, consisting of principal and accrued interest under a revolving loan agreement dated January 27, 2025. Pursuant to the agreement, the Company paid $800,000 in cash and issued 71,482 shares of common stock at a deemed price of $3.25 per share in full satisfaction of the outstanding balance. As a result, the indebtedness has been fully satisfied and extinguished, and the Company no longer has access to borrowings under the revolving loan agreement.

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.

In May 2026, the Company completed two private placement financing transactions providing for aggregate gross proceeds of approximately $7.8 million. The financings closed on May 18, 2026. The Company received approximately $2.54 million of gross proceeds from the first financing at closing. With respect to the approximately $5.25 million additional financing, 20% of the gross proceeds was payable at closing and the remaining 80% is payable upon effectiveness of the related Form S-1 resale registration statement.

On July 1, 2026, the Company entered into a securities purchase agreement with the purchasers identified therein pursuant to which the Company agreed to sell to the Purchasers in private placements an aggregate of (i) 108,932 shares of common stock, which shares have been issued as of the date of this Quarterly Report (ii) pre-funded warrants to purchase up to an aggregate of 1,742,991 shares of common stock (the "Pre-Funded Warrants") and (iii) common stock purchase warrants to purchase up to an aggregate of 1,851,923 shares of common stock (the "Common Warrants") for gross proceeds to the Company of approximately $8,500,000. The combined purchase price for one share of common stock or Pre-Funded Warrant in lieu of share of common stock and one Common Warrant is $4.59 per unit.

On July 17, 2026, the Company made a loan ("Loan") to Pronghorn Resources, LLC, a Delaware limited liability company ("Pronghorn", and, together with the Company, the "Parties"), pursuant to the terms of a Secured Convertible Promissory Note ("Note"), in the principal sum of $2,000,000 (the "Principal Amount"). The Principal Amount, in addition to all interest due under the Note, is payable on the earlier to occur of: (i) December 31, 2026; and (ii) the consummation of a Change of Control Transaction (as defined below). The Note bears interest at an annual rate of seven percent (7%), such interest calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and accrues daily, commencing on the Maturity Date until payment in full of the Note.

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. 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

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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.

Debt Obligations

Revolving line of credit

Effective January 31, 2025, the Company entered into a Revolving Loan Agreement dated January 27, 2025 with 1396974 BC Ltd., pursuant to which the lender agreed to make loans to the Company. Under the Revolving Loan Agreement, the lender made an initial advance of $700,000 to the Company. The Revolving Note bears interest at a rate of 18% per annum.

All outstanding principal, accrued interest and other amounts under the Revolving Loan Agreement were due on January 31, 2026. The Company did not repay the amounts due at maturity. On April 1, 2026, the Company received a demand letter from the lender asserting that the Company was in default and demanding payment of $1,014,675.

On May 14, 2026, the Company entered into a Debt Settlement and Subscription Agreement with the lender. Under the settlement agreement, the Company agreed to satisfy the outstanding obligation through a cash payment of $800,000, consisting of $700,000 of principal and $100,000 of accrued interest, and the issuance of 71,482 shares of common stock at a deemed price of $3.25 per share in satisfaction of remaining accrued interest obligations of $232,315. Following the settlement, the Company no longer has access to the revolving loan facility.

Promissory notes

As of June 30, 2026, the Company had outstanding promissory notes and related financing obligations classified as current liabilities. These obligations included promissory notes issued in connection with financing arrangements entered into during 2025 and 2026, including notes issued together with warrants to purchase shares of the Company's common stock.

The Company continues to evaluate repayment, refinancing, restructuring, settlement, or equity-linked alternatives with respect to its outstanding indebtedness. There can be no assurance that the Company will be able to refinance or settle these obligations on acceptable terms or at all.

IMGX debt obligations

In connection with the rescission of the IMGX transaction completed on December 31, 2025, IMGX is no longer a subsidiary of the Company. Accordingly, IMGX debt obligations, including the former IMGX revolving credit facility, promissory notes, and EIDL loan, are no longer obligations of the consolidated Company, except for any obligations expressly retained by the Company under the rescission arrangements.

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.

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Revenue

Historically, the Company's legacy 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 operations conducted through Grid AI Corp. and AMPX.

For the three months ended June 30, 2026, the Company recognized revenue of $85,876, all of which was attributable to the AI Segment. The GI Segment did not generate product revenue during the period.

Looking forward, the Company expects its revenue profile to differ from prior periods as a result of the inclusion of Grid AI Corp. and AMPX. With respect to the Company's retained legacy biopharmaceutical operations, the Company has not generated revenue from product sales and does not expect to do so unless and until a product candidate receives regulatory approval and is successfully commercialized. The Company 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.

Research and Development Expense

Research and development expenses for the three months ended June 30, 2026 related primarily to the Company's retained biopharmaceutical activities within the GI Segment. During the quarter, the Company incurred limited research and development expense associated with Adrulipase and related retained development activities.

Following the discontinuation of certain legacy biotechnology programs and the completion of the rescission transaction involving ImmunogenX, LLC on December 31, 2025, Adrulipase is the Company's only remaining active biotechnology development program. The Company no longer owns or develops the Latiglutenase or CypCel programs, and is no longer developing Capeserod or Niclosamide.

Research and development expenses generally include internal and external costs incurred in connection with product development, regulatory activities, consultants, professional fees and personnel-related expenses, contractors, contract, contract development and manufacturing organizations, drug substance, drug product, clinical materials, preclinical activities, non-clinical activities, and other costs associated with maintaining or evaluating retained development assets in the GI and AI Segments.

For the three months ended June 30, 2026, research and development expenses were $8,424, compared with $10,631 for the three months ended June 30, 2025.

Management expects the level and composition of research and development expense to depend on available capital, strategic priorities, and future decisions regarding the Adrulipase program.

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.

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.

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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.

Condensed Consolidated Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

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Revenues

Historically, we did not generate revenue from the sale of approved biopharmaceutical products and devoted substantially all of our time and efforts to acquiring and developing our product candidates, including Adrulipase, Niclosamide, Capeserod and Latiglutenase.

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During the three months ended June 30, 2026, the Company recognized revenue of $85,876 from energy technology operations within the AI Segment, compared with no revenue in the three months ended June 30, 2025. For the six months ended June 30, 2026, revenue was $124,084, compared with no revenue in the six months ended June 30, 2025.

With respect to our legacy GI Segment 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.

Cost of Services

Cost of services was approximately $0.1 million for the three months ended June 30, 2026 and approximately $0.8 million for the six months ended June 30, 2026. The six-month amount includes approximately $0.7 million of cost of services incurred during the first quarter of 2026. The quarterly pattern reflects the timing and mix of project and service activity, and direct service costs did not vary proportionately with quarterly revenue. There was no cost of services in the comparable 2025 periods.

Research and Development Expense

Research and development expenses were approximately $8,000 for the three months ended June 30, 2026, compared with approximately $11,000 for the three months ended June 30, 2025. For the six months ended June 30, 2026, research and development expenses were approximately $0.6 million, compared with approximately $0.03 million for the six months ended June 30, 2025.

General and Administrative Expense

General and administrative expenses were approximately $3.0 million for the three months ended June 30, 2026, compared with approximately $0.6 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, general and administrative expenses were approximately $5.4 million, compared with approximately $1.4 million for the six months ended June 30, 2025. The increase was primarily attributable to costs associated with the acquisition and integration of Grid AI Corp. and AMPX, increased professional fees, public company expenses, financing activities, legal and accounting costs, compensation-related expenses and the operational and administrative infrastructure required to support the Company's expanded business activities.

Goodwill impairment

During the three months ended June 30, 2026, actual operating performance and updated near-term financial projections for the Grid AI business were significantly below the projections established at the acquisition date, primarily due to delays in commercialization and customer contract execution. These developments constituted a triggering event for impairment testing. The Company performed a quantitative goodwill impairment assessment and recognized a non-cash goodwill impairment charge of approximately $10.1 million. The impairment primarily reflects a delay in the timing of projected revenues and cash flows rather than a change in management's longer-term expectations regarding the commercial opportunity for the Grid AI business. While the timing of anticipated commercialization and revenue generation has been extended relative to the projections established at the acquisition date, management continues to believe that the Grid AI business has significant long-term commercial potential and remains central to the Company's go-forward strategy. The Company continues to pursue customer contracts and commercialization opportunities consistent with this strategy. However, the timing and extent of future commercialization and revenue generation remain subject to uncertainty, and further delays in customer contract execution, commercialization or deterioration in projected cash flows could result in additional impairment charges and could adversely affect the Company's business, financial condition and results of operations.

Goodwill impairment expense was approximately $10.1 million for both the three and six months ended June 30, 2026. No goodwill impairment expense was recognized in the comparable 2025 periods.

Total other Income (Expense)

For the three months ended June 30, 2026, total other income was approximately $0.01 million, compared with total other expense of approximately $0.04 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, total other expense was approximately $0.1 million, compared with approximately $0.2 million for the six months ended June 30, 2025. Other income (expense), net for the three and six months ended June 30, 2026 included a gain on settlement of approximately $389,301 recognized in connection with the May 2026 settlement with EGS. The six-month amount also included approximately $0.4 million of government grant income recognized during the first quarter of 2026.

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Loss from Continuing Operations

Loss from continuing operations was approximately $13.0 million for the three months ended June 30, 2026, compared with approximately $0.7 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, loss from continuing operations was approximately $16.5 million, compared with approximately $1.6 million for the six months ended June 30, 2025.

Loss from discontinued operations

There was no loss from discontinued operations for the three or six months ended June 30, 2026. Loss from discontinued operations was approximately $0.3 million for the three months ended June 30, 2025 and approximately $0.6 million for the six months ended June 30, 2025, related primarily to the ImmunogenX business, which was ultimately disposed of through the rescission transaction completed on December 31, 2025.

Income Tax Benefit

Income tax benefit was approximately $55,000 for the three months ended June 30, 2026 and approximately $0.4 million for the six months ended June 30, 2026. No income tax benefit or expense was recognized in the comparable 2025 periods.

Net income (loss)

As a result of the factors above, our net loss was approximately $13.0 million for the three months ended June 30, 2026, compared with approximately $1.0 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, our net loss was approximately $16.5 million, compared with approximately $2.3 million for the six months ended June 30, 2025.

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Cash Flows for the Six Months Ended June 30, 2026 and 2025

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

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Operating Activities

Net cash used in operating activities for the six months ended June 30, 2026 was approximately $3.3 million. The principal non-cash adjustments to the approximately $16.5 million net loss included approximately $10.1 million of goodwill impairment, approximately $1.1 million of intangible asset amortization, approximately $1.3 million of stock-based compensation and approximately $0.7 million of debt discount amortization. Working-capital changes included decreases in accounts payable and deferred tax liabilities, partially offset by increases in accrued expenses and other current liabilities, together with the net change in other operating assets and liabilities. The $100,000 interest portion of the revolving loan settlement is reflected in operating cash flows through accrued expenses.

Net cash used in operating activities for the six months ended June 30, 2025 was approximately $0.9 million, primarily attributable to a net loss of approximately $2.3 million, partially offset by changes in operating assets and liabilities and other non-cash adjustments.

Investing Activities

There was no net cash provided by or used in investing activities during the six months ended June 30, 2026 or 2025.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2026 was approximately $4.1 million. Financing cash flows included approximately $3.3 million of proceeds from the May 2026 private placements, approximately $0.6 million of cash proceeds from warrant exercises and approximately $1.0 million of proceeds from promissory notes, partially offset by a $0.7 million repayment of revolving loan principal. The $100,000 interest portion of the settlement is included in operating cash flows.

Net cash provided by financing activities for the six months ended June 30, 2025 was approximately $0.7 million, reflecting proceeds from the revolving loan arrangement.

On May 8, 2026, May 11, 2026 and May 12, 2026, the Company entered into securities purchase agreements with certain purchasers pursuant to which the Company agreed to sell in private placements an aggregate of (i) 74,000 shares of common stock, which shares have been issued as of the date of this Quarterly Report (ii) pre-funded warrants to purchase up to an aggregate of 1,196,001 shares of common stock and (iii) common stock purchase warrants to purchase up to an aggregate of 1,270,001 shares of common stock for aggregate gross proceeds of approximately $2.54 million. The combined purchase price for one share of common stock or pre-funded warrant in lieu thereof and one common warrant was $2.00. The Company intends to use the net proceeds for general corporate purposes, including working capital and repayment of certain outstanding liabilities. The transactions closed on May 18, 2026, subject to the satisfaction of customary closing conditions. The pre-funded warrants have an exercise price of $0.00001 per share and are exercisable immediately with no expiration date. The common warrants are exercisable beginning six months following issuance and expire five years from the earlier of the effectiveness of the related registration statement or the date the underlying securities may be resold pursuant to Rule 144 without restriction. The common warrants have exercise prices ranging from $2.56 to $2.89 per share, subject to adjustment. In connection with the securities purchase agreements, the Company entered into registration rights agreements pursuant to which the Company agreed to file a resale registration statement covering the shares issued and issuable in connection with the private placements within 15 days following the closing date.

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On May 11, 2026, the Company entered into an additional securities purchase agreement with certain purchasers pursuant to which the Company agreed to sell in a private placement an aggregate of (i) 87,260 shares of common stock, (ii) pre-funded warrants to purchase up to 1,745,199 shares of common stock and (iii) common stock purchase warrants to purchase up to 1,832,459 shares of common stock for aggregate gross proceeds of approximately $5.25 million. The combined purchase price for one share of common stock, or one pre-funded warrant in lieu thereof, together with one common warrant was $2.865 per unit. The closing occurred on May 18, 2026. Twenty percent (20%) of the gross proceeds was payable at closing, with the remaining 80% payable upon effectiveness of the related Form S-1 resale registration statement.

The pre-funded warrants issued in connection with the additional financing have an exercise price of $0.00001 per share and no expiration date. The common warrants are exercisable immediately and expire five years from the earlier of the effectiveness of the related registration statement or the date the underlying securities may be resold pursuant to Rule 144 without restriction. The common warrants have an exercise price of $2.865 per share, subject to adjustment.

Critical Accounting Policies and Estimates

Our accounting policies are essential to understanding and interpreting the financial results reported on the condensed consolidated financial statements. The significant accounting policies used in the preparation of our condensed consolidated financial statements are summarized in Note 2 to the condensed consolidated financial statements and notes thereto found in our Annual Report on Form 10-K for the year ended December 31, 2025. Certain of those policies are considered to be particularly important to the presentation of our financial results because they require us to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain.

During the six months ended June 30, 2026, we performed a quantitative goodwill impairment assessment related to the acquisition of Grid AI Corp. following lower-than-projected operating results and delays in anticipated commercialization and customer contract execution. The assessment involved significant estimates and assumptions, including projected revenues and cash flows, commercialization timing and discount rates. Based on this assessment, we recognized a goodwill impairment charge of approximately $10.1 million. Changes in actual results, projected cash flows, commercialization timelines or other key assumptions could materially affect future impairment assessments.

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