MUSTANG BIO INC

Balance Sheets** (Unaudited)**

(in thousands, except share and per share amounts)

Statements of Operations** (Unaudited)**

(in thousands, except share and per share amounts)

Statements of Stockholders’ Equity (Unaudited)

(in thousands, except share amounts)

Statements of Cash Flows (Unaudited)

(in thousands)

The accompanying notes are an integral part of these unaudited financial statements

Notes to Unaudited Financial Statements

Note 1 - Organization, Description of Business and Liquidity and Capital Resources

Mustang Bio, Inc. (the “Company” or “Mustang”) was incorporated in Delaware on March 13, 2015. Mustang is a clinical-stage biopharmaceutical company focused on translating medical breakthroughs in cell therapy into potential treatments. The Company may acquire rights to these technologies by licensing the rights or otherwise acquiring an ownership interest in the technologies, funding their research and development and eventually either out-licensing or bringing the technologies to market.

The Company is a majority-controlled subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”).

Reverse Stock Split

On January 15, 2025,* the Company filed an amendment (the “Reverse Split Amendment”) to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the 1-for-50 reverse stock split of the Company's shares of common stock (the "Reverse Stock Split"). As a result of the Reverse Stock Split, every 50 shares of common stock outstanding immediately prior to effectiveness of the Reverse Stock Split were combined and converted intoone share of common stock without any change in the par value per share. The Reverse Stock Split became effective on January 15, 2025, and the common stock was quoted on the Nasdaq Capital Market on a post-split basis at the open of business on January 16, 2025. *No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would have otherwise been entitled to a fraction ofone share of common stock as a result of the Reverse Stock Split instead receiveda proportional cash payment.

All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.

Liquidity and Capital Resources

As of March 31, 2025, the Company had cash and cash equivalents of $14.2 million. The Company has funded its operations to date primarily with the proceeds from various public and private offerings of its common stock. It has incurred substantial operating losses and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of March 31, 2025, the Company had an accumulated deficit of $396.9 million.

The Company will require substantial additional financings through equity and/or debt offerings, collaborations and licensing arrangements or other sources to fully develop, prepare regulatory filings, obtain regulatory approvals and commercialize its existing product candidates. The continuation of our business as a going concern is dependent upon raising additional capital and eventually attaining and maintaining profitable operations.

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that these unaudited financial statements are issued. In performing its evaluation, management excluded certain elements of its operating plan that cannot be considered probable. Under ASC 205-40, the future receipt of potential funding from future equity or debt issuances cannot be considered probable at this time because these plans are not entirely within the Company’s control.

The Company's expectation to generate operating losses and negative operating cash flows in the future and the need for additional funding to support its planned operations raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date that these unaudited financial statements are issued. The Company made strategic decisions in 2024, including a significant reduction in its workforce and the termination of certain license agreements. In February 2025, the Company

terminated the operating lease of its Plantation Street Facility and sold its remaining equipment to preserve capital and prioritize the allocation of resources for clinical programs. The Company continues to pursue raising additional cash resources primarily through public or private equity financings. The Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of these unaudited financial statements.

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.

Note 2 - Significant Accounting Policies

Basis of Presentation

The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the interim unaudited financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Therefore, these financial statements should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended December 31, 2024, which were included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 28, 2025 (the “2024 Form 10-K”). The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

Use of Estimates

The Company’s unaudited financial statements include certain amounts that are based on management’s best estimates and judgments. The Company’s significant estimates include, but are not limited to, assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Due to the uncertainty inherent in such estimates, actual results could differ from those estimates.

Segment Reporting

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance. The Company views its operations and manages its business inone segment, which reflects the research and development of potential cures for difficult-to-treat cancers and autoimmune diseases. The Company’s chief operating decision maker (“CODM”) is its chief executive officer.

The CODM assesses performance for the research and development segment and decides how to allocate resources based on net loss, which is reported on the Unaudited Statements of Operations. The CODM uses net loss to evaluate costs to develop its pipeline. The accounting policies of the segment are the same as those described in this Note 2.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies previously disclosed in the 2024 Form 10-K.

Recently Issued Accounting Standards

As of March 31, 2025, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2024 Form 10-K that affect the Company’s present or future results of operations, overall financial condition, liquidity, or disclosures upon adoption.

Note 3 - Related Party Agreements

Founders Agreement and Management Services Agreement with Fortress

With respect to the Company’s Management Services Agreement (the “Management Services Agreement”) with Fortress for the three months ended March 31, 2025 and 2024, expenses related to the Management Services Agreement are recorded 50% in research and development expenses and 50% in general and administrative expenses in the Unaudited Statements of Operations. For the three months ended March 31, 2025 and 2024, the Company recorded expense of $0.1 million and $0.1 million, respectively, related to the Management Services Agreement.

Under the terms of the Second Amended and Restated Founders Agreement (the “Founders Agreement”), which became effective July 22, 2016, Fortress will receive a grant of shares of the Company’s common stock equal to two and one-half percent (2.5%) of the gross amount of any equity or debt financing. For the three months ended March 31, 2025, the Company issued 67,806 shares to Fortress in connection with the equity financings and recorded expense of approximately $0.2 million in general and administrative expenses related to these shares. For the three months ended March 31, 2024, no equity or debt financing occurred, andno shares were issued to Fortress pursuant to the Founders Agreement.

Annual Stock Dividend

Pursuant to the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), the Company issued 69,046 shares of common stock to Fortress as the Annual Stock Dividend on January 1, 2025, (as such term is defined in the Certificate of Incorporation), representing 2.5% of the fully-diluted outstanding equity of the Company on December 31, 2024. The value of these shares was recorded as Common stock issuable – Annual Stock Dividend to Fortress in the Statement of Stockholders’ Equity at December 31, 2024. The Company recorded an expense of approximately $0.6 million in research and development – licenses acquired related to these issuable shares during the year ended December 31, 2024.

Payables and Accrued Expenses Related Party

In the normal course of business Fortress pays for certain expenses on behalf of the Company. Such expenses are recorded as payables and accrued expenses - related party.

Note 4 – Property, Plant and Equipment, Net and Held for Sale

In February 2025, the Company terminated the lease of its Plantation Street Facility. The remaining lease liability of approximately $0.8 million was reversed, and the remaining leasehold improvements of approximately $0.3 million and right of use assets of approximately $0.1 million were written off, resulting in a net gain of $0.4 million recorded in research and development expense in the Unaudited Statements of Operations. In conjunction with the termination of the lease, the Company also completed the sale of the remaining equipment held for sale for approximately $1.2 million, which had been classified as held for sale at December 31, 2024.

Note 5 - Accounts Payable and Accrued Expenses

At March 31, 2025, and December 31, 2024, accounts payable and accrued expenses consisted of the following:

Note 6 - Stockholders’ Equity

Registration Statements

On May 31, 2024, the Company filed a shelf registration statement on Form S-3 (File No. 333-279891) (the “2024 S-3”), which was declared effective on June 12, 2024. Under the 2024 S-3, the Company may sell up to a total of $40.0 million of its securities. As of March 31, 2025, approximately $34.2 million of the 2024 S-3 remains available for sales of securities.

As of the filing of this Form 10-Q, the Company is subject to the General Instruction I.B.6 to Form S-3, known as the “baby shelf rules,” which limit the amount of securities it can sell under its registration statements on Form S-3 in any 12-month period.

February 2025 Equity Offering

On February 5, 2025, the Company commenced a best efforts public offering (the “February 2025 Offering”) of an aggregate of (i)495,000 shares (the “Shares”) of its common stock, par value $0.0001 per share, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 2,162,807 shares of common stock (the “Pre-Funded Warrant Shares”), (iii) Series C-1 warrants (the “Series C-1 Warrants”) to purchase up to an aggregate of 2,657,807 shares of common stock (the “Series C-1 Warrant Shares”), and (iv) Series C-2 warrants (the “Series C-2 Warrants,” and together with the Series C-1 Warrants, the “Warrants”) to purchase up to an aggregate of 2,657,807 shares of common stock (the “Series C-2 Warrant Shares,” and together with the Series C-1 Warrant Shares, the “Warrant Shares”). Each Share or Pre-Funded Warrant was sold together withone Series C-1 Warrant to purchaseone share of common stock and one Series C-2 Warrant to purchaseone share of common stock. The combined public offering price for each Share and accompanying Warrants was $3.01, and the combined public offering price for each Pre-Funded Warrant and accompanying Warrants was $3.0099. The Pre-Funded Warrants have an exercise price of $0.0001 per share, were exercisable immediately upon issuance and will expire when exercised in full. Each Warrant has an exercise price of $3.01 per share and became exercisable beginning on the effective date of stockholder approval of the issuance of the Warrant Shares (the “Warrant Stockholder Approval”). The Series C-1 warrants will expire five years from the Warrant Stockholder Approval and the Series C-2 warrants will expire twenty-four months from the Warrant Stockholder Approval.

The net proceeds of the February 2025 Offering, after deducting the fees and expenses of the Placement Agent (as defined below), described in more detail below, and other offering expenses payable by the Company, but excluding the net proceeds, if any, from the exercise of the Warrants, were approximately $6.8 million. The February 2025 Offering closed on February 10, 2025.

Pursuant to an Engagement Letter (the “Engagement Letter”) with H.C. Wainwright & Co., LLC (“Wainwright” or the “Placement Agent”), the Company agreed to pay the Placement Agent in connection with the February 2025 Offering (i) a cash fee equal to 7.0% of the aggregate gross proceeds raised in the February 2025 Offering, (ii) a management fee equal to 1.0% of the aggregate gross proceeds raised in the February 2025 Offering, (iii) up to $100,000 for fees and expenses of the Placement Agent’s counsel and other out of pocket expenses, (iv) a non-accountable expense allowance of $25,000, (v) up to $3,500 for road show expenses, and (vi) $15,950 for the clearing expenses.

Also pursuant to the Engagement Letter, the Company, in connection with the February 2025 Offering, agreed to issue to the Placement Agent or its designees warrants (the “Placement Agent Warrants”) to purchase up to an aggregate of 159,468 shares of common stock (the “Placement Agent Warrant Shares”) (which represented 6.0% of the Shares and Pre-Funded Warrants sold in the February 2025 Offering). The Placement Agent Warrants became exercisable beginning on the effective date of the Warrant Stockholder Approval, have an exercise price of $3.7625 (125% of the combined public offering price per share of common stock and accompanying Warrants) and will terminate on thefive-year anniversary of commencement of sales in the Offering.

At-the-Market Offering

On May 31, 2024, the Company entered into an At-the-Market Offering Agreement (the “ATM Agreement”) with Wainwright (the “Manager”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock through or to the Manager pursuant to the 2024 S-3. Under the ATM Agreement, the Company pays the Manager a commission of 3.0% of the gross proceeds from the sales of any shares of common stock. The Company will also reimburse the Manager for certain expenses incurred in connection with the ATM Agreement. The Company and the Manager may each terminate the ATM Agreement at any time upon specified prior written notice.

During the three months ended March 31, 2025, the Company issued approximately 54,000 shares of common stock at an average price of $11.55 for gross proceeds of $0.6 million under the ATM Agreement. In connection with these sales, the Company paid aggregate fees of approximately $27,000.

Warrants

A summary of warrant activities for the three months ended March 31, 2025, is presented below:

Upon the exercise of warrants, the Company will issue new shares of common stock. In connection with the February 2025 Offering on February 10, 2025, the Company issued pre-funded warrants to purchase up to 2,162,807 shares of common stock and issued two series of warrants to purchase up to 5,315,614 shares of common stock. In connection with this offering, Wainwright received Placement Agent Warrants to purchase up to 159,468 shares of common stock.

During the three months ended March 31, 2025,670,000 of the pre-funded warrants were exercised at an exercise price of$0.0001 per share. As of March 31, 2025,1,492,807 pre-funded warrants were outstanding.

Equity Incentive Plan

The Company has in effect the Mustang Bio, Inc. 2016 Incentive Plan (the “Incentive Plan”). The Incentive Plan was adopted in 2016 by the Company’s stockholders and the compensation committee of the Company’s board of directors and is authorized to grant stock-based awards to directors, officers, employees and consultants. The plan initially authorized grants to issue up to 2,666 shares of authorized but unissued common stock, expires 10 years from adoption, and limits the term of each option to no more than 10 years from the date of grant. In June 2018, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 4,000 shares, for a total of 6,666 shares. In June 2021, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 4,000 shares, for a total of 10,666 shares. In June 2022, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 4,000 shares, for a total of 14,666 shares.

As of March 31, 2025,6,958 shares were available for future issuance under the Incentive Plan.

Stock Options

The following table summarizes stock option activities for the three months ended March 31, 2025:

As of March 31, 2025, the Company hadno unrecognized stock-based compensation expense related to options. The Company accounts for forfeited awards as they occur.

Restricted Stock

The following table summarizes restricted stock award activities for the three months ended March 31, 2025:

As of March 31, 2025, the Company had unrecognized stock-based compensation expense related to restricted stock of $0.1 million, which is expected to be recognized over the remaining weighted average vesting period of approximately 0.8 years.

Restricted Stock Units

Certain employees and consultants have been awarded restricted stock units with time-based vesting. The following table summarizes restricted stock units’ activities for the three months ended March 31, 2025:

As of March 31, 2025, the Company had unrecognized stock-based compensation expense related to restricted stock units of approximately $13,000, which is expected to be recognized over the remaining weighted average vesting period of approximately 1.3 years.

The following table summarizes stock-based compensation expense for the three months ended March 31, 2025 and 2024 (in thousands):

(1) Credit reflects the forfeitures of restricted stock units and the reversal of previously incurred stock-based compensation expense.

Employee Stock Purchase Plan

Eligible employees can purchase the Company’s common stock at the end of a predetermined offering period at 85% of the lower of the fair market value at the beginning or end of the offering period.

As of March 31, 2025,2,662 shares have been purchased, and 6,671 shares are available for future sale under the Company’s ESPP.

Note 7 – Net Loss per Share

Basic and diluted net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding, including prefunded warrants and shares held in abeyance, during the period, without consideration of potential dilutive securities. For periods in which the Company generated a net loss, the Company does not include potential shares of common stock in diluted net loss per share when the impact of these items is anti-dilutive. The Company has generated a net loss for all periods presented; therefore diluted net loss per share is the same as basic net loss per share, since the inclusion of potentially dilutive securities would be anti-dilutive.

The table below summarizes potentially dilutive securities that were not considered in the computation of diluted net loss per share because they would be anti-dilutive.

The Company considers Class A common stock and Class A preferred stock to be additional classes of common stock for the purpose of calculating net loss per share, as they do not have preferential rights when compared to the Company’s common stock, and therefore losses are allocated to these additional classes using the two-class method. The two-class method is an earnings allocation formula that treats participating securities as having rights that would otherwise have been available to common stockholders. At March 31, 2025, the Class A common stock and Class A preferred stock have rights to convert to a total of 1,460 common shares.

Note 8 – Income Taxes

The Company incurred net operating losses and recorded a full valuation allowance against net deferred tax assets for all periods presented. Accordingly, the Company has not recorded a provision for federal or state income taxes.

The Company is subject to US federal and state income taxes. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of Management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.

Note 9 – Commitments and Contingencies

Indemnification

In accordance with its Certificate of Incorporation, amended and restated bylaws and indemnification agreements, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. The Company has director and officer insurance to address such claims. The Company also

provides indemnification of contractual counterparties in certain situations, including without limitation to clinical sites, service providers and licensors.

Leases

On February 7, 2025, the Company entered into the First Amendment to the Lease Agreement with WCS – 377 Plantation Street, Inc. (the “Landlord”), pursuant to which the Company’s lease of its Plantation Street Facility was terminated. Following the termination of the lease, the Company is no longer party to any leases for office space or equipment. Upon termination of the lease, the Company moved its headquarters to 95 Sawyer Road, Suite 110, Waltham, MA, which is office space leased by Fortress. Fortress allocates a small portion of its rent and office related costs to the Company on a monthly basis.

Upon termination of the lease, the Company wrote off the remaining right of use assets, operating lease liabilities, and associated leasehold improvements and recorded a net gain of approximately $0.4 million in research and development expenses in the Unaudited Statements of Operations. As of March 31, 2025, the Company hadno operating lease liabilities or right of use assets. At December 31, 2024, the Company had operating lease liabilities of $0.9 million and right of use assets of $0.1 million, which were included in the Unaudited Balance Sheet.

The following summarizes quantitative information about the Company’s operating leases:

Note 10 – Subsequent Events

In April 2025, certain investors from the February 2025 Offering exercised 1,004,355 pre-funded warrants. Upon the exercise of these pre-funded warrants, the Company issued shares of its common stock. As of the date hereof,488,452 pre-funded warrants from the February 2025 Offering remain outstanding.

In