FibroBiologics, Inc.

December 31, 2025

1. Organization, Description of Business, and Liquidity

Organization and Business

FibroBiologics, Inc. (the “Company” or “FibroBiologics”) was originally formed as a limited liability company under the laws of the State of Texas on April 8, 2021 (“Inception”) and then converted to a Delaware corporation on December 14, 2021. FibroBiologics is an early stage, cell therapy company headquartered in Houston, Texas, developing innovative treatments for chronic diseases using fibroblast cells. The Company’s primary focus is the initiation and progression of preclinical studies and clinical-stage U.S. Food and Drug Administration trials related to fibroblast treatments for wound healing, multiple sclerosis, degenerative disc disease, psoriasis and certain cancers, and potential human longevity applications including thymic involution reversal. Prior to Inception, preclinical research and development related to these disease pathways took place under the parent company, SpinalCyte, LLC (the “Parent”).

Direct Listing

On January 31, 2024, the Company completed a direct listing of its common stock on Nasdaq (the “Direct Listing”). Upon completion of the Direct Listing, all outstanding shares of the Company’s Non-voting Common Stock, Series B Preferred Stock, and Series B-1 Preferred Stock automatically converted into shares of Voting Common Stock on a one-for-one basis, and all outstanding shares of the Company’s Series A Preferred Stock were canceled for no consideration.

Formation of Wholly-Owned Subsidiary

On June 12, 2025, the Company formed a wholly-owned subsidiary, FibroBiologics Australia Pty Ltd. This entity will act as the local sponsor for the Company's twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia.

Going Concern and Management’s Plan

The Company has incurred operating losses since Inception and expects such losses to continue in the future as it builds infrastructure, develops intellectual property, and conducts research and development activities. The Company has primarily relied on a combination of angel investors, private debt placements, convertible debt issuances, and sales of equity to funds its operations. As of December 31, 2025, the Company had an accumulated deficit of$54.2 million and cash and cash equivalents of$4.9 million. A transition to profitability will depend on the successful development, approval, and commercialization of product candidates and on the achievement of sufficient revenues to support the Company’s cost structure. The Company currently does not generate revenues and may never achieve profitability. Unless and until such time that revenue and net income are generated, the Company will need to continue to raise additional capital. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the consolidated financial statements. While management has implemented plans to obtain additional funding, these plans are not sufficient to alleviate the substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Segments

The Company adopted Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, as of January 1, 2024.

Operating segments are defined as components of an entity for which separate discrete financial information is made available and that is regularly evaluated by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company is a clinical-stage cell therapy company with a limited number of employees working on fibroblast-based targets. The Company’s operations are organized and reported as a single reportable segment, which includes all activities related to the discovery, development, and commercialization of its products. The Company’s CODM, itschief executive officer, reviews operating results on an aggregate basis and manages the operations as a single operating segment.

The accounting policies of the Company’s single operating and reportable segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported on the balance sheets as total assets. The CODM evaluates performance and allocates resources based on net income (loss) that also is reported on the statements of operations as net loss, and cash used in operations. The significant expenses regularly reviewed by the CODM are consistent with those reported on the Company’s statement of operations, and expenses are not regularly provided to or reviewed on a more disaggregated basis for purposes of assessing segment performance and deciding how to allocate resources. Other segment items included in net loss primarily include changes in the fair value of the Company’s financial instruments and other income and expenses.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial reporting.

Principles of Consolidation

The accompanying consolidated financial statements, which include the accounts of the Company and its wholly-owned subsidiary, FibroBiologics Australia Pty Ltd., have been prepared in accordance with GAAP. All intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates and assumptions. The most significant estimates include the SEPA put option liability, fair value of the short-term convertible note payable, and stock-based compensation.

Fair Value Option of Accounting

The Company has elected the option under ASC 825-10, Financial Instruments (“ASC 825”), to measure its Short-term convertible notes payable issued pursuant to a Standby Equity Purchase Agreement (see Note 8) at fair value. The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. When the fair value option is elected for an instrument, unrealized gains and losses for such instrument are reported in the Statements of Operations at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred. These amounts are included in Other income/(expense) in the Statements of Operations.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company has significant cash balances at financial institutions, which, throughout the year, regularly exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations and cash flows.

Risks and Uncertainties

The Company is subject to certain risks and uncertainties, including, but not limited to, changes in any of the following areas that the Company believes could have a material adverse effect on the future financial position or results of operations: the timing of, and the Company’s ability to advance its current and future product candidates into and through clinical development; costs and timelines associated with the manufacture of clinical supplies of the Company’s product candidates; regulatory approval and market acceptance of its product candidates; performance of third-party contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”); competition from pharmaceutical companies with greater financial resources or expertise; protection of the intellectual property, litigation or claims against the Company based on intellectual property, or other factors; the need to obtain additional funding; and its ability to attract and retain employees necessary to support its growth. Disruption from the operations of CROs, CMOs or suppliers would likely have a negative impact on the Company’s business, financial position, and results of operations.

Cash and Cash Equivalents

Cash and cash equivalents consist of unrestricted cash balances and short-term, liquid investments with an original maturity date of three months or less at the time of purchase. The Company had$4.9 million and$14.0 million of cash equivalents as of December 31, 2025 and 2024, respectively.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets, generally three tofive years, and includes laboratory equipment that is recorded at cost and depreciated using the straight-line method over the estimated useful lives offive years. Depreciation expense is classified in either research and development expense or in general and administrative expense, depending upon the nature of the asset, in the accompanying Statements of Operations. When property and equipment assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheets and the resulting gain or loss is recorded in other income (loss) in the period realized. Maintenance and repairs are expensed as incurred.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company will recognize an impairment loss only if the carrying amount is not recoverable through its undiscounted cash flows and measure any impairment loss based on the difference between the carrying amount and estimated fair value. There wereno such losses for the years ended December 31, 2025 and 2024.

Leases

The Company determines if an arrangement is a lease at inception. An arrangement is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If a lease is identified, classification is determined at lease commencement. Operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The Company’s leases do not provide an implicit interest rate and therefore the Company estimates its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the interest rate that the Company would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term. Operating lease right-of-use (“ROU”) assets are based on the corresponding lease liability adjusted for any lease payments made at or before commencement, initial direct costs, and lease incentives. Renewals or early terminations are not accounted for unless the Company is reasonably certain to exercise these options. Operating lease expense is recognized and the ROU asset is amortized on a straight-line basis over the lease term.

Operating leases are included in operating lease right-of-use asset, operating lease liability, short-term, and operating lease liability, long-term on the Company’s Balance Sheets.

The Company has elected in accordance with Accounting Standards Codification (“ASC”) 842-20-25-2 an accounting policy to not record short-term leases, defined as those with terms of 12 months or less, on the Balance Sheets. Rent expense recorded under leases, for financial statement purposes, is recognized on a straight-line basis over the lease term based on the most recent contractual terms available.

Fair Value Measurements

ASC 820, Fair Value Measurement, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the assets or liability and are developed based on the best information available in the circumstances. ASC 820 identifies fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tiered value hierarchy that distinguishes between the following:

Level 1 - Quoted market prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates, and yield curves.

Level 3 - Unobservable inputs for the asset or liability (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Derivatives

Derivative financial instruments are recorded at fair value on the Balance Sheets. Liability classified derivatives are remeasured at their fair value at each reporting date, with decreases or increases in the fair value recognized as other gain or loss, respectively, within the Statement of Operations. Equity classified derivatives are not remeasured at each reporting date. If a liability classified derivative becomes eligible for reclassification to an equity classified derivative, any gains or losses recognized up to the point of reclassification are not reversed. If an equity classified instrument is subsequently required to be reclassified as a liability, an amount reflective of that instruments fair value would be reclassified to a liability at that time.

Research and Development

Research and development costs are charged to expense as incurred. Research and development costs consist of costs incurred in performing research and development activities, including salaries and bonuses, scientist recruiting costs, employee benefits, facilities costs, laboratory supplies, manufacturing expenses, preclinical expenses, research materials, and consulting and other contracted services. Costs for certain research and development activities are recognized based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued research and development.

Marketing and Advertising Costs

Marketing and advertising costs to promote the company and its product candidates are expensed as incurred. Marketing and advertising costs were$0.7 million and$0.6 million for the years ended December 31, 2025 and 2024, respectively.

Patent Costs

As the Company continues to incur costs to obtain market approval of patented technology, patent costs are expensed as incurred in general, administrative and other expense in the Statements of Operations. Costs include fees to renew or extend the term of recognized intangible assets, patent defense costs, and patent application costs. Management will continue to expense such costs until market approval is obtained through regulatory approval by the appropriate governing body.

Income Taxes

The Company is a C corporation, and accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.

Under the provisions of ASC 740-10, Income Taxes, the Company evaluates uncertain tax positions by reviewing against applicable tax law all positions taken by the Company with respect to tax years for which the statute of limitations is still open. ASC 740-10 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The Company recognizes interest and penalties related to the liability for unrecognized tax benefits, if any, as a component of the income tax expense line in the accompanying Statements of Operations.

Stock-Based Compensation

The Company recognizes compensation costs related to stock options granted to employees and nonemployees based on the estimated fair value of the awards on the date of grant and recognizes expense on a straight-line basis over the requisite service period, which is generally the vesting period of the award. Forfeitures are recognized as they occur. The fair value of stock options is estimated on the date of grant using a Black-Scholes option pricing model which requires management to apply judgment and make estimates, including:

Emerging Growth Company

The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, an EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies; however, the Company may adopt new or revised accounting standards early if the standard allows for early adoption.

In addition, the Company will utilize other exemptions and reduced reporting requirements provided to EGCs by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, an EGC is not required to, among other things, (i) provide an auditor’s attestation report on the company’s system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, (ii) provide all of the compensation disclosure that may be required of non-EGC public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis), or (iv) disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which enhances the transparency and decision usefulness of income tax disclosures. Adjustments to the annual disclosure of income taxes include: a tabular rate reconciliation comprised of eight specific categories. Income taxes paid, disaggregated between significant federal, state, and foreign jurisdictions. Eliminating requirements to disclose the nature and estimate of reasonably possible changes to unrecognized tax benefits in the next 12 months or that an estimated range cannot be made. Adds a requirement to disclose income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations disaggregated between domestic and foreign. The ASU is effective for public business entities for fiscal years beginning on or after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-09 should be applied on a prospective basis. The Company adopted ASU 2023-09 on January 1, 2025 and there wasno material impact to the Company's consolidated financial statements as a result of adopting ASU 2023-09.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures(Subtopic 220-40) –Disaggregation of Income Statement Expenses (“ASU 2024-03”), which is intended to require more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain 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 reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the consolidated financial statements. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.

3. Net Loss per Share Attributable to Common Stockholders

The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company:

As further described in Note 8, during the year ended December 31, 2025, the Company issued 118,991 shares of Common Stock to satisfy the $250,000 commitment fee payable, and$11,600,000 of short-term convertible notes were converted into 18,070,124 shares of Common Stock. As further described in Note 6, the Company issued 13,244,889 shares of common stock in three registered direct offerings in November 2025 and December 2025. For the years ended December 31, 2025 and 2024, the Company reported net losses and, accordingly, other than 8,570,203 pre-funded warrants which were issued during the year ended December 31, 2025, potential common shares were not included since such inclusion would have been anti-dilutive. As a result, the Company’s basic and diluted net loss per share is the same in all periods presented.

The weighted average number of shares outstanding for the year ended December 31, 2024 is based upon the non-voting common stock shares issued on August 18, 2022, the conversion of all outstanding shares of non-voting common stock, Series B Preferred Stock and Series B-1 Preferred Stock into voting common stock upon completion of the Direct Listing on January 31, 2024, and the issuance of 2,593,650 shares of common stock to GEM Global Yield LLC SCS, or GEM, during the year ended December 31, 2024.

4. Property and Equipment

Property and equipment, net consist of the following:

The useful life of Laboratory equipment isfive years, and the useful life of Computer equipment, software, and other is three years, for deprecation. Depreciation expense was$0.2 million and$0.2 million for the years ended December 31, 2025 and 2024, respectively.

5. Fair Value of Financial Instruments

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy:

The following table summarizes the activity related to Level 3 financial liabilities for the year ended December 31, 2025:

The following table summarizes the activity related to Level 3 financial liabilities for the year ended December 31, 2024:

As further described in Note 8, the Company issued short-term convertible debt on December 20, 2024 and December 30, 2024 with a total principal balance of $10.0 million and recorded those notes at their initial fair values totaling $9.3 million. On June 16, 2025, the Company issued short-term convertible debt with a principal balance of $5.0 million and recorded those notes at their initial fair value of $4.5 million. In November 2025, the Company repaid the outstanding balance of the convertible notes which was $3.4 million. In connection with this payoff, the Company also paid a premium of $0.2 million which is recorded in interest expense and a $0.7 million loss on the fair value valuation. The total of the fair values of these notes at December 31, 2025 and 2024 was $0 and $9.2 million, respectively. The fair values of these notes were determined using a Monte Carlo simulation valuation model. Assumptions used in the valuation models at issuance on December 20, 2024 and December 30, 2024 included the closing bid price of $2.25 and $2.24, respectively, a term ofone year, an annual risk-free rate of 4.2% and 4.1%, respectively, and a volatility of 60%. Assumptions used in the valuation models at issuance on June 16, 2025 included the closing bid price of $0.80, a term ofone year, an annual risk-free rate of 4.3%, and a volatility of 60%.

As further described in Note 8, the Company entered into the SEPA on December 20, 2024 and recorded a put option liability for the Company’s right, subject to the satisfaction of the conditions to the investor's purchase obligations set forth therein, to require the investor to purchase up to an additional $10.0 million of shares of Common Stock by delivering written notice to the investor. As of December 20, 2024 and December 31, 2024, the fair value of the SEPA put option liability was $0.5 million and $0.5 million, respectively. The fair value of this SEPA put option liability was determined using a Monte Carlo simulation valuation model. For the valuations on December 20, 2024 and December 31, 2024, inputs used in the model included a stock price of $2.25 per share, a 96% purchase price, Company advance notice date of January 1, 2026, expected settlement date of January 4, 2026, expected advance amount of $5,000 thousand, a simulation term of 1.04 years, volatility of 120%, and a 4.23% risk-free rate. As of June 16, 2025, the fair value of the SEPAput option liability was $0.5 million. The fair value of this SEPA put option liability was determined using a Monte Carlo simulation valuation model. For the valuation on December 31, 2025, inputs used in the model included a stock price of $0.22 per share, a 96% purchase price, Company advance notice date of February 14, 2026, expected settlement date of February 17, 2026, expected advance amount of $1.2 million, a simulation term of 0.13 years, volatility of 107%, and a 3.69% risk-free rate.

The carrying amounts of cash, prepaid expenses, other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term maturities.

There were no transfers in or out of Level 1, Level 2 or Level 3 assets and liabilities for the years ended December 31, 2025 and 2024.

6. Stockholders’ Equity/(Deficit)

Authorized Capital

As of December 31, 2025, the Company authorized 300,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, of which 2,500 were shares of Series C preferred stock. As of December 31, 2024, the Company had authorized 100,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, of which 2,500 were shares of Series C preferred stock.

In January 2024, the Company issued 2,500 shares of Series C Preferred Stock to its chief executive officer, who in turn granted a proxy to the Board of Directors to vote these shares as outlined in the amended and restated certification of incorporation.

On January 31, 2024, the Company completed its Direct Listing, which qualified as an IPO transaction pursuant to the Company’s Amended and Restated Certificate of Incorporation. As a result of the Direct Listing, the outstanding shares of Series A Preferred Stock were canceled for no consideration and the outstanding shares of Series B Preferred Stock, Series B-1 Preferred Stock, and non-voting Common Stock were all converted 1:1 into shares of voting Common Stock. In addition, the Series C Preferred Stock voting rights increased from none to 13,000 votes per share and, if transferred, these shares will automatically convert 1:1 into Common Stock.

In August 2024, the Company amended and restated its certificate of incorporation with the State of Delaware to eliminate its non-voting Common Stock, Series A Preferred Stock, Series B Preferred Stock, and Series B-1 Preferred Stock, and to reduce to 10,000,000 shares its authorized preferred stock, par value $0.00001 per share, of which 2,500 shares are designated as Series C Preferred Stock.

In June 2025, the Company amended and restated its certificate of incorporation with the State of Delaware to increase its authorized Common Stock, par value $0.00001 per share, from 100,000,000 shares to 300,000,000 shares.

November 18, 2025 Registered Direct Offering

On November 18, 2025, the Company entered into a securities purchase agreement with a single investor, pursuant to which (i) the Company agreed to issue and sell to the investor, in a registered direct offering,3,540,000 shares of the Company’s common stock, $0.00001 par value per share and pre-funded warrants to purchase up to an aggregate of 8,570,203 shares of Common Stock. The price of each share of common stock in the registered direct offering was $0.3303 per share and the price of each pre-funded warrant was $0.33029.

Additionally, pursuant to the purchase agreement, the Company issued and sold to the investor, in a concurrent private placement, warrants to purchase one share of its common stock for each share of common stock or pre-funded warrant purchased in the registered direct offering, for an aggregate of 12,110,203 shares of Common Stock. The warrants are subject to stockholder approval. The exercise price of the warrants is $0.3303 per share.

The purchase price for the shares of common stock or pre-funded warrants were not in cash but with sovereign-issued 983 gold coins, with .9999 purity, valued at $4,069.18 per oz. based on the spot price of gold at the time of signing of the securities purchase agreement, delivered to the Company’s depository. The Company liquidated the gold into cash on November 20, 2025.

The gross proceeds to the Company from the registered direct offering were approximately $4.0 million, before deducting offering expenses payable by the Company.

On January 14, 2026, the investor exercised 1,075,000 pre-funded warrants for $17.50.

November 25, 2025 Registered Direct Offering

On November 24, 2025, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which (i) the Company agreed to issue and sell to the institutional investors, in a registered direct offering,4,477,614 shares of the Company’s common stock, $0.00001 par value per share. The price of each share of the Company's common stock in the Registered Direct Offering was $0.335.

Additionally, pursuant to the securities purchase agreement, the Company issued and sold to the institutional investors, ina concurrent private placement, warrants to purchase one share of its Common Stock for each share of Common Stock purchased in the registered direct offering for an aggregate of 4,477,614 shares of Common Stock. The exercisability of the warrants is subject to stockholder approval as described below. The exercise price of the warrants is $0.335 per share.

Additionally, the Company issued to the placement agent (or its designees) warrants to purchase 7.0% of the number of shares of Common Stock sold in this the registered direct offering, warrants to purchase up to 313,433 shares of Common Stock, at an exercise price of $0.4188 per share. The exercisability of the warrants is subject to stockholder approval.

The gross proceeds to the Company from the offerings were approximately $1.5 million, before deducting placement agent fees and offering expenses payable by the Company.

December 14, 2025 Registered Direct Offering

On November 24, 2025, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which (i) the Company agreed to issue and sell to the institutional investors, in a registered direct offering,5,227,275 shares of the Company’s common stock, $0.00001 par value per share. The price of each share of the Company's common stock in the Registered Direct Offering was $0.33.

Additionally, pursuant to the securities purchase agreement, the Company issued and sold to the institutional investors, in a concurrent private placement, warrants to purchase one share of its Common Stock for each share of Common Stock purchased in the registered direct offering for an aggregate of 5,227,275 shares of Common Stock. The exercisability of the warrants is subject to stockholder approval. The exercise price of the warrants is $0.33 per share.

Additionally, the Company issued to the placement agent (or its designees) warrants to purchase 7.0% of the number of shares of Common Stock sold in this registered direct offering, warrants to purchase up to 365,909 shares of Common Stock, at an exercise price of $0.4125 per share. The exercisability of the warrants is subject to stockholder approval.

The gross proceeds to the Company from the offerings were approximately $1.7 million, before deducting placement agent fees and offering expenses payable by the Company.

7. Share Subscription Agreement

On November 12, 2021, the Company entered into a Share Purchase Agreement with certain investors for the sale of up to $100 million of common stock (the “Aggregate Limit”). This agreement is contingent upon the Company achieving a public listing of its common stock. Major terms of the agreement include a commitment fee of 2% of the Aggregate Limit, which is due no later than one year after public listing even if no drawdowns are taken, and five-year warrants issued to the investors at the time of public listing to purchase common stock shares equal to 4% of the total equity interests of the Company at the lesser of a) the price per share at the time of the public listing or b) the quotient of $700 million divided by the total number of equity interests (fully diluted common shares). The Company may request a drawdown, or sale of common stock shares to the investors, over the five-year term of this agreement following the public listing unless terminated earlier. The amount of the drawdowns requested is limited by the trading volumes of the Company’s common stock shares over the 30-day period preceding the drawdown, and the price per share is equal to 90% of the average price per share over that same period. A 1% fee must be paid to the investors if the Company is sold in a private sale transaction rather than completing a public listing of its shares.

After completion of its public listing on January 31, 2024, and during the three months ended March 31, 2024, the Company sold a total of 227,057 shares of common stock for $2.8 million of net proceeds through the Share Purchase Agreement.

Upon completion of its public listing the Company recorded a payable of $2.0 million for the commitment fee obligation due under the Share Purchase Agreement within one year, and expensed the $1.9 million remaining amount of the commitment fee at March 31, 2024.

On June 27, 2024, the Company issued 3,000,000 shares of Common Stock to facilitate a Draw Down Notice under the Share Purchase Agreement. The Company recorded upon issuance a $1.4 million fair value of the forward contract liability for its requirement to sell up to 3,000,000 shares to the investor at 90% of the average closing price per share during the Draw Down Period based upon the number of shares, the closing price per share of $4.66 on June 27, 2024, and the 10% discount to be provided to the investor purchasing the shares from the Company. The fair value of the forward contract liability was remeasured to $0.6 million at July 11, 2024, upon receipt of the Closing Notice from GEM, based upon the 840,000 shares accepted, the $4.85 closing price per share, and a net purchase price per share of $4.09 after the 10% discount provided to the investor, and the forward contract liability was eliminated. GEM returned 560,000 shares to the Company, which canceled those shares, and the remaining 1,600,000 shares were retained by GEM to facilitate a subsequent Draw Down Notice.

On July 12, 2024, the Company issued a Draw Down Notice for 1,600,000 shares. The Company recorded upon issuance a $0.8 million fair value of the forward contract liability for its requirement to sell up to 1,600,000 shares to the investor at 90% of the average closing price per share during the Draw Down Period based upon the number of shares, the closing price per share of $4.74 on July 12, 2024, and the 10% discount to be provided to the investor purchasing the shares from the Company. The fair value of the forward contract liability was remeasured to a $0.3 million asset at August 26, 2024, upon receipt of the Closing Notice from GEM, based upon the 100,000 shares accepted, the $1.65 closing price per share, and a net price per share of $4.51 after the 10% discount provided to the investor, and the forward contract liability was eliminated. GEM returned 500,000 shares to the Company, which canceled those shares, and the remaining 1,000,000 shares were retained by GEM to facilitate a subsequent Draw Down Notice.

On September 12, 2024, the Company issued a Draw Down Notice for 1,000,000 shares. The Company recorded upon issuance a $0.3 million fair value of the forward contract liability for its requirement to sell up to 1,000,000 shares to the investor at 90% of the average closing price per share during the Draw Down Period based upon the number of shares, a price per share of $3.25, based on the floor price of $3.25 per share because the closing price was lower than the floor price on September 12, 2024, and the 10% discount to be provided to the investor purchasing the shares from the Company. Upon receipt of an initial Closing Notice from GEM on September 26, 2024, the fair value of the portion of the forward contract liability covered by the Closing Notice was remeasured to $0.1 million based upon the 258,836 shares accepted, the $3.14 price per share, and a net price per share of $2.93 after the 10% discount provided to the investor, and that portion of the forward contract liability was eliminated. The September 12, 2024, Draw Down Notice remained open for 741,164 shares. The fair value of the of the remaining portion of the forward contract liability was remeasured at September 30, 2024, based on the remaining 741,164 shares, a price per share of $3.25, based on the floor price of $3.25 per share because the closing price was lower than the floor price on September 30, 2024, and the 10% discount to be provided to the investor purchasing the shares from the Company.

On October 18, 2024, the Company received a Closing Notice from GEM for 15,683 shares and remeasured the fair value of the forward contract liability based upon the 15,683 shares accepted, the $3.23 price per share, and a net price per share of $2.91 after the 10% discount provided to the investor, and the forward contract liability was eliminated. GEM returned 700,000 shares to the Company, which canceled those shares, and the remaining 25,481 shares were retained by GEM to facilitate a subsequent Draw Down Notice.

On December 19, 2024, the Company entered into a side letter agreement to terminate this share subscription agreement, including termination of the remaining commitment fee liability and the warrant liability. The Company issued 1,152,074 shares of Common Stock, which included the remaining 25,481 shares held by GEM pursuant to the September 12, 2024 Draw Down Notice, at a fixed purchase price of $2.17 per share, for total consideration of $2.5 million for this termination and recorded a gain of $1.2 million, which is the amount by which the combined fair values of the commitment fee liability and warranty liability exceeded the fair value of the shares issued.

8. Standby Equity Purchase Agreement

On December 20, 2024, the Company entered into the Standby Equity Purchase Agreement (the "SEPA"). Pursuant to the SEPA, the investor will advance to the Company, subject to the satisfaction of certain conditions, a total principal amount of $15 million, which will be evidenced by short-term convertible notes, in three tranches. The short-term convertible notes will accrue interest on the outstanding principal balance at an annual rate equal to 0%, which will increase to an annual rate of 18%upon the occurrence of an event of default for so long as such event remains uncured. The short-term convertible notes will mature on December 20, 2025, which may be extended at the option of the Company to January 19, 2026 by paying an extension fee of $100,000, and to February 18, 2026 by paying an additional extension fee of $100,000. The maturity date may also be extended at the option of the investor.

The Company received net proceeds of $4.3 million on December 20, 2024 from the first tranche of short-term convertible notes with $5.0 million principal (the “First Note”). The Company received net proceeds of $4.4 million on December 30, 2024 from the second tranche of short-term convertible notes with $5.0 million principal (the “Second Note”). The Company received net proceeds of $4.4 million on June 16, 2025 from the third tranche of short-term convertible notes with $5.0 million principal (the “Third Note”). The Company has elected to account for the short-term convertible notes under the fair value option in accordance with ASC 825-10-15-4, and Note 5 includes further discussion of their fair values.

The First Note is convertible at a conversion price equal to the lower of (i) $2.41 per share or (ii)94% of the lowest daily volume-weighted average price (“VWAP”) during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, subject to adjustment from time to time).

The Second Note is convertible at a conversion price equal to the lower of (i) $2.84 per share or (ii)94% of the lowest daily VWAP during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, subject to adjustment from time to time).

The Third Note is convertible at a conversion price equal to the lower of (i) $0.98 per share or (ii)94% of the lowest daily VWAP during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, subject to adjustment from time to time).

Below is a summary of conversions during the year ended December 31, 2025.

The Company recognized a net loss of$0.9 million during the year ended December 31, 2025 on these conversions into shares of Common Stock.

In November 2025, the Company repaid the outstanding balance of the convertible notes which was $3.4 million. In connection with this payoff, the Company also paid a premium of $0.2 million which is recorded in interest expense and a $0.7 million loss on the fair value valuation.

Pursuant to the SEPA, and subject to certain conditions, the Company will have the right, from time to time, until December 20, 2026, to require the investor to purchase up to an additional $10.0 million of shares of Common Stock by delivering written notice to the investor.

The Company paid the investor a structuring fee of $25,000, which was expensed immediately, and agreed to pay the investor a commitment fee totaling $0.3 million (the “Commitment Fee”), which was expensed immediately and included in accrued liabilities at December 31, 2024. On January 7, 2025, the Company satisfied the Commitment Fee by issuing 118,991 shares of its Common Stock to the investor at a $2.1010 price per share.

The SEPA was accounted for as a liability under ASC 815 because it includes an embedded put option and an embedded forward option. The put option was recognized at inception and the forward option will be recognized upon the issuance of a notice for the sale of the Company’s Common Stock. The fair value of the derivative liability related to the embedded put option was estimated at $0.5 million at inception of the agreement on December 20, 2024, and at December 31, 2024, andat$0.1 million at December 31, 2025. The SEPA put option liability is recognized as a current liability on the consolidated balance sheets as of December 31, 2025 and 2024, respectively. The change in estimated issuance date fair value is presented as a single line item within other income (expense) in the accompanying consolidated statements of operations under the caption, Change in fair value of SEPA put option liability. The embedded forward option was deemed to have no value at December 31, 2025 and 2024 because there were no notices for the sale of the Company’s Common Stock as of December 31, 2025 and 2024.

9. Income Taxes

For the 2025 year, ASU 2023-09 presentation of the reconciliation of income tax expense is as follows:

The following table details the components of our deferred tax assets and liabilities:

As a result of generating net operating losses during the years ended December 31, 2025 and 2024, the Company hadno income tax expense for years ended December 31, 2025 and 2024. As of December 31, 2025, the Company had U.S. federal net operating loss (“NOL”) carryforw ards of $33.7 million and state NOL carryforwards of $4.5 million. The federal NOL carries forward indefinitely and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest. Section 382 of the Internal Revenue Code (“IRC”) imposes limits on the ability to use NOL carryforwards that existed prior to a change in control to offset future taxable income. Such limitations would reduce, potentially significantly, the gross deferred tax assets disclosed in the table above related to the NOL carryforwards. The Company continues to disclose the NOL carryforwards at their original amount in the table above as no potential limitation has been quantified. The Company has also established a full valuation allowance for all deferred tax assets,including the NOL carryforwards, since the Company could not conclude that it was more likely than not able to generate future taxable income to realize these assets.

Management has evaluated the positive and negative evidence bearing upon the realizability of the Company’s net deferred tax assets and has determined that it is more likely than not that the Company will not recognize the benefits of the net deferred tax assets. As a result, the Company has recorded a full valuation allowance at December 31, 2025 and 2024. The Company will continue to assess the realizability of its deferred tax assets going forward and will adjust the valuation allowance as needed.

As of December 31, 2025 and 2024, the Company hadno uncertain tax positions. The Company recognizes both interest and penalties associated with unrecognized tax benefits as a component of income tax expense. The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception, and no taxes are due.

The One Big Beautiful Bill Act (“OBBBA”), which was signed into law on July 4, 2025, extends and modifies certain key provisions of the U.S. Tax Cuts and Jobs Act of 2017. The OBBBA change most relevant to the Company is full expensing of domestic research and experimental expenditures and bonus depreciation of qualified property. Although OBBBA allows taxpayers to immediately expense qualified personal depreciable property, the Company has not elected to deduct 100% bonus depreciation for qualified property. The Company will continue to evaluate the impacts of OBBBA when future guidance is issued.

10. Leases, Commitments and Contingencies

In October 2022, the Company entered into a lease agreement for office space with a term of 62 months, which expires on November 30, 2027. This lease will be accounted for as an operating lease under the ASC 842 guidance for lease accounting. A right-of-use lease asset and lease liability of $2.3 million each were recorded at inception of the lease term using a discount rate of 7.5%.

In June 2023, the Company entered into a new lease for temporary lab and office space for its research operations. This lease had a term of 12 months and monthly rent of $6,000 and was accounted for as a short-term lease. This lease commenced in August 2023. In September 2023, the Company entered into an amendment of this lease for additional space, and the monthly rent increased to $7,000. In March 2024, the Company entered into a second amendment of this lease for additional space, and effective April 1, 2024, the monthly rent increased to $8,000. In July 2024, the Company signed an amendment of this lease, effective August 1, 2024, to extend the term for an additional 12 months, and the monthly rent decreased to $7,000. The Company terminated this lease effective April 30, 2025.

In March 2025, the Company executed a new lease for 10,693 square feet located in Houston, Texas, to be used in its research and development efforts. This lease commenced on April 1, 2025, terminates on May 31, 2031, and specifies initial base and additional rent totaling $32,000 per month. This lease will be accounted for as an operating lease under the ASC 842 guidance for lease accounting. A right-of-use lease asset and lease liability of $1.6 million each were recorded at inception of the lease term using a discount rate of 6.38%.

Rent expense for the years ended December 31, 2025 and 2024 was$0.8 million and$0.6 million, respectively. As of December 31, 2025, noncancelable lease payments under operating leases were$2.7 million.

Maturities of operating lease liability as of December 31, 2025 were as follows:

11. Related Party Transactions

During the years ended December 31, 2025 and 2024, the Company paid an aggregate of $66,950 and $0, respectively, to a member of its Board of Directors pursuant to a consulting agreement effective May 15, 2025. Under the terms of the agreement, the director provided strategic advisory services to the Company, including support for finance and capital raising activities. The statement of work under this agreement pursuant to which these services were provided has expired.

12. Share-Based Compensation

The Company adopted on August 10, 2022, and the stockholders approved on August 18, 2022, the 2022 Stock Plan (the “Plan”). The Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards.

As of December 31, 2025 and 2024, respectively, there were 6,783,761 and 7,934,836 shares available for future issuance under the Plan.

Stock-based compensation expense is recognized in the Statements of Operations as follows:

In addition to the $2.2 million stock-based compensation expense for stock options for the year ended December 31, 2024, a $45,000 stock-based compensation expense was recognized for the grant of 2,500 shares of Series C Preferred Stock to the CEO.

Unrecognized stock-based compensation costs related to unvested awards and the weighted-average period over which the costs are expected to be recognized as of December 31, 2025, are as follows:

A summary of the Company’s stock option activity is as follows:

The fair value of stock options granted to employees, directors, and consultants was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted-average assumptions:

The weighted-average grant date fair value of the options granted during the years ended December 31, 2025 and 2024 was$0.87 per share and $3.82 per share, respectively.

13. Warrants

As of December 31, 2025, the Company accounts for all issued and outstanding warrants to purchase common stock as equity-classified instruments based on the guidance in ASC 480 and ASC 815.

In addition to the common warrants listed above, the Company hadpre-funded warrants to purchase up to an aggregate of 8,570,203 shares of Common Stock outstanding at December 31, 2025.

14. Subsequent Events

Related Party Transaction

On January 14, 2026, the Company issued a $400,000 note receivable to Golden Knight Incorporated, LP (the "Note"). The Note is due on January 14, 2027 and has an interest rate of 3.63%.

On January 14, 2026, an investor exercised 1,075,000 pre-funded warrants for $17.50, and the Company issued 1,075,000 shares.