GRDX 10-Q

GridAI Technologies Corp. (GRDX)

10-Q 2024-10-21 For: 2024-06-30

View Original

Added on April 11, 2026


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common stock, par value $0.0001 per share	ENTO	The Nasdaq Capital Market


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐


		Page

PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 3.	Defaults Upon Senior Securities	41

Item 4.	Mine Safety Disclosures	42

Item 5.	Other Information	42

Item 6.	Exhibits	42

SIGNATURES


	June 30,
	2024		December 31,
	(unaudited)		2023
ASSETS

Current Assets:
Cash and cash equivalents	$	662,479	$	3,711,770
Prepaid expenses		554,445		1,244,466
Assets of disposal group held for sale		83,170,009		—
Total Current Assets		84,386,933		4,956,236

Property, equipment, and leasehold improvements, net		1,335		14,565

Other Assets:
Restricted cash		21,516		21,522
Goodwill		1,684,182		1,684,182
Operating lease right-of-use assets		161,737		195,440
Deposits		31,750		11,250
Total Other Assets		1,899,185		1,912,394
Total Assets	$	86,287,453	$	6,883,195

LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable	$	2,014,049	$	554,277
Accrued expenses		1,822,473		825,290
Accrued dividend payable		1,173,818		1,069,616
Note payable		177,563		612,784
Operating lease liabilities		77,432		67,111
Other current liabilities		8,974		4,239
Liabilities of disposal group held for sale		10,110,414		—
Total Current Liabilities		15,384,723		3,133,317
Non-current operating lease liabilities		101,035		146,949
Total Liabilities		15,485,758		3,280,266

Mezzanine Equity:
Series G redeemable preferred stock- Par value $0.0001 per share; 13,000 shares designated; 12,373.226 and 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		61,681,100		—
Total Mezzanine Equity		61,681,100		—

Stockholders’ Equity:
Common stock - Par value $0.0001 per share; 100,000,000 shares authorized; 2,941,108 and 1,560,998 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		294		156
Series B preferred stock- Par value $0.0001 per share; 5,194.81 shares authorized; 484.52 and 514.96 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		—		—
Series C preferred stock- Par value $0.0001 per share; 75,000 shares authorized; 0 shares issued and outstanding at June 30, 2024 and December 31, 2023		—		—
Series D preferred stock- Par value $0.0001 per share; 150 shares designated; 0 shares issued and outstanding at June 30, 2024 and December 31, 2023		—		—
Series E preferred stock- Par value $0.0001 per share; 150 shares designated; 0 shares issued and outstanding at June 30, 2024 and December 31, 2023		—		—
Series F preferred stock- Par value $0.0001 per share; 7,000 shares designated; 0 shares issued and outstanding at June 30, 2024 and December 31, 2023		—		—
Additional paid-in capital		196,689,069		187,931,445
Accumulated deficit		(187,568,768)		(184,328,672)
Total Stockholders’ Equity		9,120,595		3,602,929
Total Liabilities, Mezzanine Equity and Stockholders’ Equity	$	86,287,453	$	6,883,195


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating expenses:
Research and development expenses	$	219,591	$	1,353,095	$	675,523	$	2,714,778
General and administrative expenses		3,206,517		2,828,549		11,849,633		5,529,291
Total operating expenses		3,426,108		4,181,644		12,525,156		8,244,069

Loss from operations		(3,426,108)		(4,181,644)		(12,525,156)		(8,244,069)

Other expenses:
Interest income (expense), net		218		(4,973)		446		(12,087)
Other expense, net		(4,332)		(2,615)		(4,985)		(3,729)
Total other expenses		(4,114)		(7,588)		(4,539)		(15,816)

Loss before income tax (expense) benefit	$	(3,430,222)	$	(4,189,232)	$	(12,529,695)	$	(8,259,885)

Income tax (expense) benefit		(4,255,247)		—		10,604,640		—
Net loss from continuing operations	$	(7,685,469)	$	(4,189,232)	$	(1,925,055)	$	(8,259,885)

Loss from discontinued operations		(1,122,233)		—		(1,315,041)		—
Net loss	$	(8,807,702)	$	(4,189,232)	$	(3,240,096)	$	(8,259,885)

Preferred stock dividends		(38,058)		(94,324)		(104,202)		(181,755)
Net loss applicable to common shareholders	$	(8,845,760)	$	(4,283,556)	$	(3,344,298)	$	(8,441,640)

Weighted average shares outstanding, basic and diluted		2,294,208		113,546		2,028,080		136,288
Loss per share, basic and diluted	$	(3.86)	$	(37.73)	$	(1.65)	$	(61.94)
Loss per share from discontinued operations, basic and diluted	$	(0.49)	$	—	$	(0.65)	$	—


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


☐	TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Series G Convertible			Series B Convertible						Additional				Total
	Preferred Stock			Preferred Stock			Common Stock			Paid In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balance, April 1, 2024	12,373	$	61,681,100	505	$	—	2,025,208	$	203	$	194,943,707	$	(178,761,066)	$	16,182,844
Issuance of common stock, pre-funded warrants and warrants in registered direct offering, net of issuance costs	—		—	—		—	275,000		27		890,563		—		890,590
Exercise of pre-funded warrants into common stock	—		—	—		—	360,000		36		—		—		36
Deemed dividend of Series B preferred stock	—		—	—		—	—		—		(38,058)		—		(38,058)
Conversion of Series B preferred shares into common stock	—		—	(20)		—	18		—		—		—		—
Common stock issued to consultants	—		—	—		—	250,000		25		760,970		—		760,995
Issuance of common stock from RSU vest	—		—	—		—	30,882		3		(3)		—		—
Stock-based compensation	—		—	—		—	—		—		131,890		—		131,890
Net loss	—		—	—		—	—		—		—		(8,807,702)		(8,807,702)
Balance, June 30, 2024	12,373	$	61,681,100	485	$	—	2,941,108	$	294	$	196,689,069	$	(187,568,768)	$	9,120,595


	Amount
Common stock issued to ImmunogenX stockholders	$	240,500
Replacement options		1,271,000
Replacement warrants		789,000
Preferred stock issued to ImmunogenX stockholders		57,790,474
Total consideration paid	$	60,090,974


Assets acquired:
Cash and cash equivalents	$	88,169
Prepaid expenses and other current assets		3,131,929
Property and equipment, net		18,963
Intangibles		63,370,000
Operating lease right-of-use assets		4,232
Total assets	$	66,613,293
Liabilities assumed:
Accounts payable		916,209
Accrued expenses and other current liabilities		2,131,439
Long term debt		6,397,889
Deferred tax liability		13,760,280
Total liabilities	$	23,205,817
Goodwill recorded:
Goodwill	$	16,683,498
Net assets acquired	$	60,090,974


	Estimated	Acquisition Date
Intangible Asset	Useful Life	Fair Value
Patents	2 years	$	140,000
Trade names and trademarks	6 years		230,000
IPR&D – Latiglutenase	Indefinite		54,000,000
IPR&D - CypCel	Indefinite	$	9,000,000


	Three Months		Six Months
	Ended June 30, 2024		Ended June 30, 2024
Operating expenses	$	3,426,108	$	12,525,156
Loss before income tax benefit		(3,430,222)		(12,529,695)
Loss from discontinued operations		(1,122,233)		(8,688,955)
Net loss applicable to common shareholders		(8,845,760)		(10,718,212)

Basic and diluted weighted average shares outstanding		2,294,208		2,028,080
Loss per share - basic and diluted	$	(3.86)	$	(5.28)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Operating expenses:
Research and development expenses	$	802,470	$	—	$	923,872	$	—
General and administrative expenses		70,012		—		75,216		—
Total operating expenses		872,482		—		999,088		—
Interest expense		(298,480)		—		(364,682)		—
Other income		48,729		—		48,729		—
Loss from discontinued operations	$	(1,122,233)	$	—	$	(1,315,041)	$	—


Assets held for sale:
Prepaid expenses and other current assets	$	3,131,929
Property and equipment, net		16,180
Goodwill and intangible assets		80,021,900
Total assets held for sale	$	83,170,009
Liabilities held for sale:
Accounts payable	$	201,031
Accrued expenses and other current liabilities		350,006
Debt		6,403,737
Deferred tax liability		3,155,640
Total liabilities held for sale	$	10,110,414


			Fair Value Measured at Reporting Date
			Using
	Carrying
	Amount		Level 1		Level 2		Level 3		Fair Value
June 30, 2024 (unaudited):
Money market funds	$	12,408	$	12,408	$	—	$	—	$	12,408
Note payable		177,563		—		177,563		—		177,563

December 31, 2023:
Money market funds	$	12,131	$	12,131	$	—	$	—	$	12,131
Note payable		612,784		—		612,784	$	—		612,784


	June 30,
	2024		December 31,
	(unaudited)		2023
Computer equipment and software	$	11,540	$	11,540
Office equipment		48,278		48,278
Leasehold improvements		28,000		28,000
Total property, equipment and leasehold improvements		87,818		87,818
Less accumulated depreciation		(86,483)		(73,253)
Property, equipment and leasehold improvements, net	$	1,335	$	14,565


	Goodwill
Balance on January 1, 2023	$	1,684,182
Balance on December 31, 2023		1,684,182
Goodwill associated with IMGX acquisition		16,683,498
Goodwill reclassified as held for sale	$	(16,683,498)
Balance on June 30, 2024 (unaudited)	$	1,684,182


		Weighted		Weighted
		Average		Average
	Number of	Exercise Price		Remaining
	Warrants	Per Share		Term in Years
Outstanding and exercisable on January 1, 2024	1,779,780	$	19.29	4.99
Issued	1,701,150		3.47	5.26
Assumed from IMGX	127,680		3.48	8.72
Exercised	(443,525)		—	4.93
Warrants outstanding and exercisable on June 30, 2024	3,165,085	$	12.85	5.01

Warrants outstanding and exercisable on January 1, 2023	108,797	$	383.20	5.50
Issued	319,293		35.80	4.85
Expired	(5)		15,475.80	—
Exercised	(152,441)		13.00	4.94
Warrants outstanding and exercisable on June 30, 2023	275,644	$	157.00	4.86


		Average		Remaining
	Number	Exercise		Contract	Intrinsic
	of Shares	Price		Life (Years)	Value
Outstanding at January 1, 2024	426	$	6,103.81	8.53	$	—
Assumed from ImmunogenX	200,652		0.81	7.31		84,274
Expired	(1)		—	—		—
Outstanding at June 30, 2024	201,077	$	13.37	7.31	$	84,274
Exercisable at June 30, 2024	201,053	$	11.62	7.31	$	84,278

Outstanding at January 1, 2023	176	$	15,956.72	8.22	$	—
Granted	250		74.60	9.91		—
Outstanding at June 30, 2023	426	$	7,946.60	8.93	$	—
Exercisable at June 30, 2023	264	$	11,489.80	8.69	$	—


	2024		2023
Contractual term (in years)	7.6		6.5
Expected Volatility	110.35	%	98.80	%
Risk-free interest rate	4.20	%	4.08	%
Expected Dividend yield	0	%	0	%


		Weighted-Average		Weighted-Average
	Number	Grant Date		Remaining Recognition
	of Shares	Fair Value		Period (Years)
Non-vested Outstanding at January 1, 2024	52,271	$	4.31	9.96
Awarded	150,421		3.57	—
Vested	(83,153)		4.13	—
Non-vested Outstanding at June 30, 2024	119,539	$	3.50	0.65

Non-vested Outstanding at January 1, 2023	—		—	—
Awarded	8,012	$	124.00	—
Vested	(3,855)		124.00	—
Canceled	(454)		124.00	—
Non-vested Outstanding at June 30, 2023	3,703	$	124.00	0.50


	June 30,
	2024
Lease term and discount rate
Weighted-average remaining lease term (years)	2.2
Weighted-average discount rate	7.00	%


2024 (remainder of year)	$	43,630
2025		88,788
2026		60,593
Total lease payments		193,011
Less imputed interest		(14,544)
Present value of lease liabilities	$	178,467


			Related				Directors
			party				and Officer’s
	Revolving		promissory				Liability
	line of credit		notes		EIDL loan		Insurance		Total
Principal balance as of January 1, 2024	$	—	$	—	$	—	$	612,784	$	612,784
Additions		5,359,860		1,000,000		500,000		31,798		6,891,658
Payments		—		—		—		(467,019)		(467,019)
Debt discount		—		—		(456,123)		—		(456,123)
Reclassification to liabilities held for sale		(5,359,860)		(1,000,000)		(43,877)		—		(6,403,737)
Total debt as of June 30, 2024	$	—	$	—	$	—	$	177,563	$	177,563

Current portion	$	—	$	—	$	—	$	177,563	$	177,563
Long-term portion, net	$	—	$	—	$	—	$	—	$	—


	June 30, 2024	June 30, 2023
	(unaudited)	(unaudited)
Series G convertible preferred stock	12,373,226	—
Common stock warrants	3,165,085	275,644
Stock options	201,077	426
RSUs not yet issued	119,539	3,703
Series B convertible preferred stock (1)	135	157
Restricted stock not yet issued	4	8
Total shares of common stock issuable	15,859,066	279,938


	Three Months Ended
	June 30,				Increase
	2024		2023		(Decrease)
Operating expenses:
Research and development expenses	$	219,591	$	1,353,095	$	(1,133,504)
General and administrative expenses		3,206,517		2,828,549		377,968
Total operating expenses		3,426,108		4,181,644		(755,536)
Other expenses		4,114		7,588		(3,474)
Loss before income tax expense	$	(3,430,222)	$	(4,189,232)	$	(759,010)
Income tax expense		(4,255,247)		—		4,255,247
Loss from continuing operations	$	(7,685,469)	$	(4,189,232)	$	3,496,237
Loss from discontinued operations		(1,122,233)		—		1,122,233
Net loss	$	(8,807,702)	$	(4,189,232)	$	4,618,470

Exhibit No.		Description
3.1*		Amended and Restated Certificate of Incorporation of the Registrant, as amended.
3.2		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2022).
4.1		Form of Pre - Funded Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8 - K filed with the SEC on May 13, 2024).
4.2		Form of Common Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8 - K filed with the SEC on May 13, 2024).
4.3		Form of Inducement Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 11, 2024).
10.1		Form of Placement Agency Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 13, 2024).
10.2		Form of Purchase Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8 - K filed with the SEC on May13, 2024).
10.3		Form of Inducement Letter (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 11, 2024).
10.4†		Consulting Agreement, dated August 2, 2024, by and between the Company and James Sapirstein (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 7, 2024).
31.1*		Certification of the Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

	ENTERO THERAPEUTICS, INC.

	By	/s/ James Sapirstein
		James Sapirstein
		Chief Executive Officer and Chairman
		(Principal Executive Officer)

	By	/s/ Sarah Romano
		Sarah Romano
		Chief Financial Officer
Date: October 21, 2024		(Principal Financial and Accounting Officer)