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| PART I. FINANCIAL INFORMATION | |
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| Item 1. | Unaudited Condensed Consolidated Financial Statements | 1 |
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 34 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 45 |
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| Item 4. | Controls and Procedures | 45 |
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| PART II. OTHER INFORMATION | | |
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| Item 1. | Legal Proceedings | 46 |
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| Item 1A. | Risk Factors | 46 |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 47 |
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| Item 3. | Defaults Upon Senior Securities | 47 |
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| Item 4. | Mine Safety Disclosures | 47 |
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| Item 5. | Other Information | 47 |
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| Item 6. | Exhibits | 48 |
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| SIGNATURES | | |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “target”, “potential”, “will”, “would”, “could”, “should”, “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:
| ● | our ability to maintain compliance with the applicable listing requirements of The Nasdaq Capital Market; |
| ● | our ability to satisfy our existing payment obligations and other payment obligations as they become due, including those related to the acquisition of First Wave Bio, Inc. and the Grid AI acquisition, as well as risks and uncertainties associated with integrating Grid AI’s operations and meeting related financial commitments; |
| ● | statements regarding the impact of geopolitical events, including the war in Ukraine and the Middle East, and their effects on our operations, access to capital, research and development and clinical trials and potential disruption in the operations and business of third-party vendors, contract research organizations (“CROs”), contract development and manufacturing organizations (“CDMOs”), other service providers, and collaborators with whom we conduct business; |
| ● | the availability of capital to satisfy our working capital requirements; |
| ● | our ability to execute definitive customer, project, development, software, licensing and other commercial agreements on the timing and terms anticipated; |
| ● | our ability to successfully commercialize, deploy and scale the technologies and platforms of Grid AI Corp.; |
| ● | our ability to convert existing and prospective customer and project opportunities into binding commercial agreements and ultimately into revenue; |
| ● | our ability to achieve our projected revenue, margins, profitability, cash flows and other financial and operating results, including the timing and magnitude of the anticipated ramp-up in revenue from our AI Segment; |
| ● | the accuracy of our assumptions and estimates regarding future customer demand, market opportunities, project capacity, commercialization timelines and the expected scale and economics of our AI and energy technology business; |
| ● | our current and future capital requirements and our ability to raise additional funds to satisfy our capital needs; |
| ● | the effects of the completed rescission of the IMGX transaction and the liabilities retained by the Company in connection therewith; |
| ● | the accuracy of our estimates regarding expense, future revenue and capital requirements; |
| ● | our ability to continue operating as a going concern; |
| ● | our plans to develop and commercialize our product candidates, including Adrulipase, |
| ● | our ability to initiate and complete our clinical trials and to advance our principal product candidates into additional clinical trials, including pivotal clinical trials, and successfully complete such clinical trials; |
| ● | regulatory developments in the U.S. and foreign countries; |
| ● | the performance of our third-party vendor(s), CROs, CDMOs and other third-party non-clinical and clinical development collaborators and regulatory service providers; |
| ● | our ability to obtain and maintain intellectual property protection for our core assets; |
| ● | the size of the potential markets for our product candidates and our ability to serve those markets; |
| ● | the rate and degree of market acceptance of our product candidates for any indication once approved; |
| ● | the success of competing products and product candidates in development by others that are or become available for the indications that we are pursuing; |
| ● | the loss of key scientific, clinical and nonclinical development, and/or management personnel, internally or from one of our third-party collaborators; and |
| ● | other risks and uncertainties, including those listed under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K. |
Factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, industry and future growth. Given these uncertainties, you should not rely on these forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our businesses and the markets in which we operate, including the markets for certain drugs and consumer products and the artificial intelligence, energy technology, data center infrastructure and grid optimization markets in which Grid AI Corp. and our AI Segment operate. Such information includes, among other things, data and assumptions regarding estimated market sizes and projected growth rates, the incidence of certain medical conditions, anticipated customer demand and adoption, commercialization opportunities, project development and deployment timelines, expected market opportunities, and other industry and market trends.
Certain information relating to our AI Segment and Grid AI Corp. also includes estimates, forecasts, projections and assumptions regarding the commercialization and deployment of our technology platforms and related software, energy optimization and data center infrastructure opportunities.
Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to significant uncertainties, risks and assumptions, and actual events, results or circumstances may differ materially from the events, results and circumstances reflected in such information. Unless otherwise expressly stated, we obtained industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources, as well as, where applicable, information provided by customers, prospective customers, project counterparties and other third parties. We have not independently verified data obtained from third-party sources. In some cases, we do not expressly refer to the sources from which these data are derived.
In this Quarterly Report on Form 10-Q, unless otherwise stated or as the context otherwise requires, references to “GridAI,” the “Company,” “we,” “us,” “our” and similar references are to GridAI Technologies Corp. and its subsidiaries on a consolidated basis.
