Matinas BioPharma Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except for share and per share data)

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except for share data)

Condensed Consolidated Statements of Cash Flow

(in thousands)

Notes to Unaudited Condensed Consolidated Financial Statements

(Tabular dollars and shares in thousands, except per share data)

Note 1 –Description of Business

Matinas BioPharma Holdings Inc. (“Holdings”) is a Delaware corporation formed in 2013. Holdings is the parent company of Matinas BioPharma, Inc. (“BioPharma”), and Matinas BioPharma Nanotechnologies, Inc. (“Nanotechnologies,” formerly known as Aquarius Biotechnologies, Inc.), its operating subsidiaries (“Nanotechnologies”, and together with “Holdings” and “BioPharma”, “the Company”). The Company is a clinical-stage biopharmaceutical company focused on delivering groundbreaking therapies using its lipid nanocrystal (LNC) platform delivery technology (LNC Platform).

Note 2 –Liquidity, Plan of Operations and Going Concern

The Company has experienced net losses and negative cash flows from operations each period since its inception. Through June 30, 2025, the Company had an accumulated deficit of $206,725. The Company’s net loss for the six months ended June 30, 2025 and 2024 was $6,901 and $11,543, respectively.

The Company expects operating expenses to be lower in the near term compared to recent years until such time as additional funding is secured to support initiation of the Phase 3 registration trial for MAT2203 and advancement of the LNC platform delivery technology. The Company expects that its research and development expenses will increase if it moves forward with additional clinical studies for its current product candidates and development of additional product candidates. If the Company obtains U.S. Food and Drug Administration (“FDA”) approval for one or more of its product candidates, the Company expects that its expenses will continue to increase once the Company reaches commercial launch. As a result, the Company expects to continue to incur substantial losses for the foreseeable future, and that these losses will be increasing.

As of June 30, 2025, the Company had cash and cash equivalents of $6,525 and restricted cash of $250. The Company does not believe the cash and cash equivalents on hand are sufficient to fund planned operations beyond the next twelve months from the filing date of these financial statements. As a result, substantial doubt exists about the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent upon securing one or more partners to monetize the value of MAT2203, the ability to control its operating expenses, future sales of common stock through the At-The-Market Sales Agreement (“Sales Agreement”) with BTIG, LLC and securing additional financing. While the Company believes in the viability of this strategy and believes the actions presently being taken by the Company provide the opportunity for it to continue as a going concern, there can be no assurance the Company will be successful in its implementation. In particular, utilization of the Sales Agreement may not be viable due to market conditions and new financing may not be available on acceptable terms, or at all. Moreover, under the terms of the Preferred Stock sales agreement, the Company is prohibited, subject to certain exceptions, from issuing, entering into any agreement to issue, or announcing the issuance or proposed issuance of any shares of common stock or common stock equivalents until November 2025. These consolidated financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.

Note 3 –Summary of Significant Accounting Policies

Basis of presentation and principles of consolidation

The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of Holdings and its wholly owned subsidiaries, BioPharma, and Nanotechnologies. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and reflect the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Other than the policies listed below, there have been no material changes to the Company’s significant accounting policies are described in Note 3 within the Company’s Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

In August 2020, the FASB issued Accounting Standard Update No. 2020-06 –Debt: Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted the ASU on January 1, 2025. This update permits the use of either the modified retrospective or fully retrospective method of transition.

The Company’s management has considered all recent accounting pronouncements issued and believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. Warrants classified as equity are recorded at fair value as of the date of issuance on the Company’s condensed consolidated balance sheets and no further adjustments to their initial valuation are subsequently made. Warrants that require separate accounting as liabilities are recorded on the Company’s condensed consolidated balance sheets at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expired, with any changes in the fair value between reporting periods recorded on the condensed consolidated statement of operations. The assessment of whether the warrants are accounted for as equity-classified or liability-classified instruments is re-evaluated on a periodic basis. See Note 9 -Stockholders’ Equity for a discussion on the Company’s warrants.

Note 4 –Cash, Cash Equivalents, Restricted Cash and Marketable Debt Securities

The Company considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash and cash equivalents and all investments with maturities of greater than three months from date of purchase are classified as marketable debt securities. Cash and cash equivalents consist of cash in bank checking and savings accounts, money market funds and short-term U.S. treasury bonds that mature within three months of settlement date.

Cash, Cash Equivalents and Restricted Cash

The Company presents restricted cash with cash and cash equivalents in the Condensed Consolidated Statements of Cash Flows. Restricted cash at both June 30, 2025 and December 31, 2024 of $250 represents funds the Company is required to set aside as collateral, primarily for one of the Company’s operating leases.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the total of the amounts in the Condensed Consolidated Statements of Cash Flows as of June 30, 2025, December 31, 2024, June 30, 2024 and December 31, 2023:

Marketable Debt Securities

The Company has classified its investments in marketable debt securities as available-for-sale and as a current asset. The Company’s investments in marketable debt securities are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Unrealized losses and gains are classified as other comprehensive (loss)/income and costs are determined on a specific identification basis. Realized gains and losses from our marketable debt securities are recorded in other income, net. The Company did not incur any realized gains and losses during the six months ended June 30, 2025 and 2024. For the six months ended June 30, 2025 and 2024, the Company recorded unrealized gains of $0 and $170, respectively.

Note 5 -Fair Value Measurements

The Company uses the fair value hierarchy to measure the value of its financial instruments. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as counterparty credit risk in its assessment of fair value.

The carrying amounts of cash equivalents, current portion of restricted cash, prepaid expenses and other current assets, accounts payable, current portion of lease liabilities and accrued expenses approximate fair value due to the short-term nature of these instruments.

The Company did not have any financial assets or liabilities that were carried at fair value using the hierarchy as of either June 30, 2025 or December 31, 2024.

The table below presents a summary of changes in fair value of the warrant liability that was measured at fair value on a recurring basis:

On February 13, 2025, the Company entered into a securities purchase agreement with certain investors and, pursuant to an initial and second closing under the agreement, issued and sold to the investors an aggregate of (i)3,300 shares of convertible preferred stock and (ii) warrants (the “Warrants”) to purchase up to 11,262,808 shares of the Company’s common stock (see Note 9).

The Company classified the Warrants as a liability upon issuance. Accordingly, proceeds from the transaction were first allocated to the Warrants which were recorded at fair value at issuance, and any residual value allocated to preferred stock. Subsequent changes in fair value of the Warrants were recognized in the Company’s condensed consolidated statements of operations and comprehensive loss.

On June 26, 2025, the terms of the Warrants were amended to remove the provision that provided for a potential adjustment to the Warrants that did not meet the indexation requirements. The Company determined that the Warrants now satisfy the conditions to be accounted for as equity instruments. The change in fair value of the Warrants until June 26, 2025 was recorded in the income statement and fair value of the Warrants on June 26, 2025, was reclassified to equity. There will be no subsequent measurement for the equity classified Warrants as long as the indexation and equity classification criteria continue to be met.

For each reporting period during which the Warrants were classified as a liability, the Company’s warrant liability was measured at fair value utilizing a Monte Carlo simulation model, which required assumptions including the value of the stock on the measurement date, exercise price, expected term, expected volatility, and the risk-free interest rate. Certain assumptions, including the expected term and expected volatility, were subjective and require judgment to develop.

The warrant liabilities were valued on the various measurement dates during the six months ended June 30, 2025 using the following range of assumptions:

Note 6 –Leasehold Improvements and Equipment

Leasehold improvements and equipment, summarized by major category, consist of the following as of June 30, 2025 and December 31, 2024:

Depreciation and amortization expense for the three and six months ended June 30, 2025 and 2024 was $12 and $30, respectively. Depreciation and amortization expense for the three and six months ended June 30, 2024 was $90 and $184, respectively.

Assets held for sale, net

On April 19, 2025, the Company initiated a process to sell certain unused laboratory equipment that was previously impaired and carried a net book value of $280. During the three months ended June 30, 2025, the Company sold $210 of the equipment, generating proceeds of $320 and a gain of $110. As of June 30, 2025, the remaining $70 of equipment is classified as held for sale on the Company’s balance sheet. We expect the remaining equipment to be sold prior to December 31, 2025.

Note 7 –Accrued Expenses and Other Liabilities

Accrued expenses, summarized by major category, as of June 30, 2025 and December 31, 2024 consist of the following:

Note 8 –Leases

The Company has various lease agreements, including leases of office space, a laboratory and manufacturing facility, and various equipment. Some leases include purchase, termination or extension options for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

The assets and liabilities from operating and finance leases are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet. The Company’s operating leases do not provide implicit rates, therefore the Company utilized a discount rate based on its incremental borrowing rate to record the lease obligations. The Company’s finance leases provide readily determinable implicit rates.

Operating lease obligations

The Company incurred lease expense for its operating leases of $171 and $226 for the three months ended June 30, 2025 and 2025, respectively, and $345 and $452 for the six months ended June 30, 2025 and 2024, respectively. The Company incurred amortization expense on its operating lease right-of-use assets of $111 and $149 for the three months ended June 30, 2025 and 2024, respectively, and $218 and $294 for the six months ended June 30, 2025 and 2024, respectively.

Finance Leases

The Company incurred interest expense on its finance leases of $0 for the three months ended June 30, 2025 and 2024 and $0 and $1 for the six months ended June 30, 2025 and 2024, respectively. The Company incurred amortization expense on its finance lease right-of-use assets of $1 and $2 for the three months ended June 30, 2025 and 2024, respectively, and $2 and $3 for the six months ended June 30, 2025 and 2024, respectively.

The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of June 30, 2025:

The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of December 31, 2024:

Note 9 –Stockholders’ Equity

As of June 30, 2025, in accordance with the Certificate of Incorporation, the Company was authorized to issue 250,000,000 shares of common stock and 10,000,000 shares of preferred stock, each share having a par value of $0.0001.

Common Stock

On June 23, 2025, the Company received shareholder approval to increase the number of shares of common stock authorized for issuance to 500,000,000. On August 6, 2025, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Company’s Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to increase the number of authorized shares of the Company’s common stock from 250,000,000 shares to 500,000,000 shares. The Certificate of Amendment became effective upon filing.

April 2024 Purchase Agreement

On April 5, 2024, the Company closed a registered direct offering of 666,667 shares of its common stock and warrants to purchase up to an aggregate of 666,667 additional shares of common stock, at a combined purchase price of $15.00 per share and accompanying warrant. The Company generated gross proceeds of $10,000 and net proceeds of $9,125, after deducting underwriting discounts and commissions and other offering expenses.

At-The-Market Equity Offering

On July 2, 2020, the Company entered into an At-The-Market Sales Agreement (the “Sales Agreement”) with BTIG, LLC (“BTIG”), pursuant to which the Company may offer and sell, from time to time, through BTIG, as sales agent and/or principal, shares of its common stock having an aggregate offering price of up to $50,000, subject to certain limitations on the amount of common stock that may be offered and sold by the Company set forth in the Sales Agreement. BTIG will be paid a 3% commission on the gross proceeds from each sale. The Company may terminate the Sales Agreement at any time; BTIG may terminate the Sales Agreement in certain limited circumstances. The Company didnot sell any shares under the Sales Agreement during the six months ended June 30, 2025. During the six months ended June 30, 2024, the Company sold 4,366 shares of its common stock generating net proceeds of $54. As of June 30, 2025, the Sales Agreement’s available capacity is $44,191.

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 number of securities it can sell under the Sales Agreement and its registration statement on Form S-3.

Preferred Stock

On February 13, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Purchasers”), pursuant to which the Company sold, in a private placement (the “Offering”), an aggregate of 3,300 shares of the Company’s Series C Convertible Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), initially convertible into up to 5,631,404 shares of the Company’s common stock with a stated value of $1,000 per share (the “Stated Value”), and warrants (the “Warrants”) to purchase up to an aggregate of 200% of the shares of Common Stock into which the shares of Preferred Stock are initially convertible, or 11,262,808 shares of Common Stock, for an offering price of $1,000 per share of Preferred Stock and accompanying Warrants in two equal tranches, the second of which closed on April 8, 2025.

Pursuant to the Purchase Agreement, on February 13, 2025, the Company issued and sold in an initial closing of the Offering (the “Initial Closing”),1,650 shares of Preferred Stock, initially convertible into up to 2,815,702 shares of Common Stock, and accompanying Warrants, initially exercisable for up to 5,631,404 shares of Common Stock, for gross proceeds to the Company of $1.65 million. On April 4, 2025, the Company obtained shareholder approval (“Shareholder Approval”) for the issuance of the Preferred Stock and Warrants, as required by the rules and regulations of NYSE American LLC (the “ NYSE”), including Section 713 of the NYSE American Company Guide, and issued and sold, in a second closing of the Offering (the “Second Closing”), an additional 1,650 shares of Preferred Stock, initially convertible into up to 2,815,702 shares of Common Stock, and accompanying Warrants, initially exercisable for up to 5,631,404 shares of Common Stock, for gross proceeds to the Company of $1.65 million.

Under the terms of the Purchase Agreement, the Company is prohibited, subject to certain exceptions, from issuing, entering into any agreement to issue, or announcing the issuance or proposed issuance of any shares of common stock or common stock equivalents until November 2025.

Warrants

On April 5, 2024, the Company issued warrants to purchase 666,667 shares of the Company’s common stock at an exercise price of $17.50 per share.

On February 13, 2025, the Company issued the Warrants to purchase 5,631,404 shares of the Company’s common stock in the Initial Closing. Warrants to purchase an additional 5,631,404 shares of the Company’s common stock were issued on April 8, 2025, in the Second Closing. The exercise price is $0.64 per share, subject to adjustment in accordance with the terms of the Warrants agreement. The Warrants expire on April 4, 2030. The Warrants include anti-dilution protection provisions. The Company determined that the Warrants did not satisfy the conditions to be accounted for as equity instruments as the Warrants were not considered indexed to the Company’s own stock and were classified as a liability upon issuance. The Warrants were recorded at fair value with changes in fair value recognized in the Company’s condensed consolidated statements of operations and comprehensive loss. The valuation of the Warrants was considered under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that were both significant to the fair value measurement and unobservable (see Note 5). On June 26, 2025, the terms of the Warrants were amended to remove the provision that provided for a potential adjustment to the Warrants that did not meet the indexation requirements. As a result of the amendment, the Company determined that the Warrants satisfy the conditions to be accounted for as equity instruments and the fair value of the Warrants was reclassified to equity. There will be no subsequent measurement for the equity classified Warrants as long as the indexation and equity classification criteria continue to be met.

The following table summarizes the changes in warrants outstanding for the six months ended June 30, 2025:

The following table summarizes the changes in warrants outstanding for the six months ended June 30, 2024:

Basic and diluted net loss per common share

The Company had two classes of stock outstanding during the six months ended June 30, 2025, common stock and preferred stock, and had only common stock outstanding during the six months ended June 30, 2024. The Company computes net loss per share using the two-class method, as the Preferred Stock participates in distributions with the Company’s common stock. The two-class method of computing net loss per share is an earnings allocation formula that determines net loss for common stock and any participating securities according to dividends declared and participation rights in undistributed earnings.

Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to common stockholders is computed using the more dilutive of (1) the two-class method or (2) the if-converted method.

During the three and six months ended June 30, 2025 and 2024, diluted loss per common share is the same as basic loss per common share because, as the Company incurred a net loss during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options, warrants and preferred stock, would have an anti-dilutive effect. The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive as of June 30, 2025 and 2024:

Note 10 –Stock-based Compensation

2013 Plan

The Company’s Amended and Restated 2013 Equity Compensation Plan (the “2013 Plan”), which expired on May 7, 2024, provided for the granting of incentive stock options, nonqualified stock options, restricted stock units, performance units, and stock purchase rights. The term of the 2013 Plan was for 10 years.

As of June 30, 2025, there were 577,104 awards, including both restricted stock grants and option grants, issued and exercised under the 2013 Plan and no remaining shares available for grant under the 2013 Plan.

2025 Plan

On April 30, 2025, the Company’s board of directors (the “Board”), subject to the approval of its stockholders which was received on June 23, 2025, adopted a new 2025 Equity Incentive Plan (the “2025 Plan”) to succeed the 2013 Plan.

As of June 30, 2025, there were 116,500 option grant awards issued and outstanding under the 2025 Plan and 646,548 awards available for grant under the 2025 Plan.

The Company recognized stock-based compensation expense (options and restricted share grants) in its condensed consolidated statements of operations as follows:

As of June 30, 2025, total compensation costs related to unvested awards not yet recognized was $1,243 and the weighted-average periods over which the awards are expected to be recognized was 1.8 years.

Stock Options

The following table summarizes the activity for the Company’s stock options for the six months ended June 30, 2025:

Note 11 –Subsequent Events

On August 6, 2025, the Company filed the Certificate of Amendment to increase the number of authorized shares of the Company’s common stock from 250,000,000 shares to 500,000,000 shares. The Certificate of Amendment was approved by the Company’s stockholders at the 2025 annual meeting on June 23, 2025 and became effective upon filing.