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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025.

	or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number: 001-41934

FibroBiologics, Inc.

(Exact name of registrant as specified in its charter)


Delaware		86-3329066
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

455 E. Medical Center Blvd, Suite 300 Houston, TX 77598		77598
(Address of principal executive offices)		(Zip Code)

(281) 671-5150

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading symbol(s)	Name of each exchange on which registered:
Common Stock, $0.00001 par value	FBLG	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☒	Smaller reporting company ☒

	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On October 31, 2025, 51,456,077 shares of FibroBiologics, Inc.’s Common Stock, $0.00001 par value per share, were outstanding.

FibroBiologics, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2025

Table of Contents


PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	4

	Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024	4

	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024	5

	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity/(Deficit) for the three and nine months ended September 30, 2025 and 2024	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024	7

	Notes to the Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

Signature		34

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q, or Quarterly Report, and the documents incorporated by reference herein, if any, contain forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, planned research programs, preclinical studies and clinical trials, and market opportunities are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

•

the timing, progress and results of preclinical studies and clinical trials for our current and future product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our research and development programs;

•

the timing, scope or likelihood of regulatory submissions, filings, and approvals, including final regulatory approval of our product candidates;

•

our ability to develop and advance product candidates into, and successfully complete, clinical trials;

•

our expectations regarding the size of the patient populations for our product candidates, if approved for commercial use;

•

the implementation of our business model and our strategic plans for our business, product candidates and technology;

•

our commercialization, marketing and manufacturing capabilities and strategy;

•

the pricing and reimbursement of our product candidates, if approved;

•

the rate and degree of market acceptance and clinical utility of our product candidates, in particular, and cell therapy, in general;

•

our ability to establish or maintain collaborations or strategic relationships or obtain additional funding;

•

our competitive position;

•

the scope of protection we and/or our licensors are able to establish and maintain for intellectual property rights covering our product candidates;

•

developments and projections relating to our competitors and our industry;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements; and

•

the impact of laws and regulations.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2024, or the Annual Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. You should read this Quarterly Report, the documents that we reference in this Quarterly Report and the other documents that we file with the Securities and Exchange Commission, or the SEC, with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein until after we distribute this Quarterly Report, whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

FibroBiologics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except shares and per share data)


	September 30,			December 31,
	2025			2024
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	4,867		$	13,985
Prepaid expenses		373			225
Other current assets		—			18
Total current assets		5,240			14,228
Property and equipment, net		908			824
Operating lease right-of-use asset, net		2,548			1,393
Other assets		48			—
Total assets	$	8,744		$	16,445

Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued expenses	$	1,069		$	2,697
Operating lease liability, short-term		643			401
SEPA put option liability		437			460
Short-term convertible debt		4,573			9,168
Total current liabilities		6,722			12,726
Operating lease liability, long-term		1,897			984
Total liabilities		8,619			13,710

Stockholders’ equity
Preferred Stock, $0.00001 par value; 10,000,000 shares authorized as of September 30, 2025 and December 31, 2024		—			—
Preferred Stock, $0.00001 par value; 2,500 Series C Preferred shares authorized; 2,500 shares issued and outstanding as of September 30, 2025 and December 31, 2024		—			—
Voting Common Stock, $0.00001 par value; 300,000,000 shares and 100,000,000 shares authorized as of September 30, 2025 and December 31, 2024, respectively; 48,263,979 shares and 35,085,718 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		—			—
Additional paid-in capital		51,045			38,253
Accumulated deficit		(50,920	)		(35,518	)
Total stockholders’ equity		125			2,735
Total liabilities and stockholders’ equity	$	8,744		$	16,445

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

FibroBiologics, Inc.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except shares and per share data)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Operating expenses:
Research and development	$	2,789		$	1,213		$	6,610		$	3,148
General, administrative and other		2,249			2,139			7,449			6,877
Total operating expenses		5,038			3,352			14,059			10,025

Loss from operations		(5,038	)		(3,352	)		(14,059	)		(10,025	)
Other income/(expense):
Change in fair value of warrant liability		—			1,927			—			4,349
Change in fair value of forward contract liability		—			849			—			(650	)
Change in fair value of SEPA put option liability		33			—			23			—
Change in fair value of convertible debt		(846	)		—			(963	)		—
Commitment fee expenses		—			—			—			(1,941	)
Other income/(expense)		—			2			(625	)		31
Interest income		73			79			222			188
Interest expense		—			(5	)		—			(14	)
Total other income/(expense)		(740	)		2,852			(1,343	)		1,963
Net loss	$	(5,778	)	$	(500	)	$	(15,402	)	$	(8,062	)
Net loss per share, basic and diluted	$	(0.13	)	$	(0.01	)	$	(0.39	)	$	(0.25	)
Weighted-average shares outstanding, basic and diluted		43,072,542			33,516,656			39,487,728			32,457,473

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

FibroBiologics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity/(Deficit)

For the Three and Nine Months Ended September 30, 2025 and 2024

(unaudited, in thousands, except shares)


	Series A Preferred Stock				Series B Preferred Stock				Series B-1 Preferred Stock				Series C Preferred Stock				Non-voting Common Stock				Voting Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance – December 31, 2024		—	$	—		—	$	—		—	$	—		2,500	$	—		—	$	—		35,085,718	$	—	$	38,253	$	(35,518	)	$	2,735
Issuance of Voting Common Stock for commitment fee payable		—		—		—		—		—		—		—		—		—		—		118,991		—		250		—			250
Conversion of Short-term convertible debt into Voting Common Stock		—		—		—		—		—		—		—		—		—		—		2,530,591		—		3,780		—			3,780
Stock-based compensation expense		—		—		—		—		—		—		—		—		—		—		—		—		551		—			551
Net loss		—		—		—		—		—		—		—		—		—		—		—		—		—		(4,966	)		(4,966	)
Balance (Unaudited) – March 31, 2025		—	$	—		—	$	—		—	$	—		2,500	$	—		—	$	—		37,735,300	$	—	$	42,834	$	(40,484	)	$	2,350
Conversion of Short-term convertible debt into Voting Common Stock		—		—		—		—		—		—		—		—		—		—		3,127,156		—		2,439		—			2,439
Stock-based compensation expense		—		—		—		—		—		—		—		—		—		—		—		—		729		—			729
Net loss		—		—		—		—		—		—		—		—		—		—		—		—		—		(4,658	)		(4,658	)
Balance (Unaudited) – June 30, 2025		—	$	—		—	$	—		—	$	—		2,500	$	—		—	$	—		40,862,456	$	—	$	46,002	$	(45,142	)	$	860
Conversion of Short-term convertible debt into Voting Common Stock		—		—		—		—		—		—		—		—		—		—		7,401,523		—		4,339		—			4,339
Stock-based compensation expense		—		—		—		—		—		—		—		—		—		—		—		—		704		—			704
Net loss		—		—		—		—		—		—		—		—		—		—		—		—		—		(5,778	)		(5,778	)
Balance (Unaudited) – September 30, 2025		—	$	—		—	$	—		—	$	—		2,500	$	—		—	$	—		48,263,979	$	—	$	51,045	$	(50,920	)	$	125


	Series A Preferred Stock					Series B Preferred Stock					Series B-1 Preferred Stock					Series C Preferred Stock				Non-voting Common Stock						Voting Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares			Amount		Shares			Amount		Shares			Amount		Shares		Amount		Shares			Amount			Shares		Amount		Capital		Deficit			Equity/(Deficit)
Balance – December 31, 2023		8,750,000		$	—		4,171,445		$	—		89,781		$	—		—	$	—		28,230,842		$	1			—	$	—	$	25,609	$	(24,357	)	$	1,253
Issuance of Series C Preferred Stock		—			—		—			—		—			—		2,500		—		—			—			—		—		45		—			45
Conversion of Series B Preferred Stock, Series B-1 Preferred Stock and Non-voting common stock to Voting Common Stock		—			—		(4,171,445	)		—		(89,781	)		—		—		—		(28,230,842	)		(1	)		32,492,068		—		1		—			—
Cancellation of Series A Preferred Stock upon Direct Listing		(8,750,000	)		—		—			—		—			—		—		—		—			—			—		—		—		—			—
Sale of Voting Common Stock		—			—		—			—		—			—		—		—		—			—			227,057		—		2,819		—			2,819
Stock-based compensation expense		—			—		—			—		—			—		—		—		—			—			—		—		480		—			480
Net loss		—			—		—			—		—			—		—		—		—			—			—		—		—		(8,460	)		(8,460	)
Balance (Unaudited) – March 31, 2024		—		$	—		—		$	—		—		$	—		2,500	$	—		—		$	—			32,719,125	$	—	$	28,954	$	(32,817	)	$	(3,863	)
Stock-based compensation expense		—			—		—			—		—			—		—		—		—			—			—		—		578		—			578
Net income		—			—		—			—		—			—		—		—		—			—			—		—		—		898			898
Balance (Unaudited) – June 30, 2024		—		$	—		—		$	—		—		$	—		2,500	$	—		—		$	—			32,719,125	$	—	$	29,532	$	(31,919	)	$	(2,387	)
Sale of Common Stock		—			—		—			—		—			—		—		—		—			—			1,198,836	$	—		5,052		—			5,052
Stock-based compensation expense		—			—		—			—		—			—		—		—		—			—			—		—		572		—			572
Net loss		—			—		—			—		—			—		—		—		—			—			—		—		—		(500	)		(500	)
Balance (Unaudited) – September 30, 2024		—		$	—		—		$	—		—		$	—		2,500	$	—		—		$	—			33,917,961	$	—	$	35,156	$	(32,419	)	$	2,737

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

FibroBiologics, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)


	For the Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities
Net loss	$	(15,402	)	$	(8,062	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of warrant liability		—			(4,349	)
Change in fair value of forward contract liability		—			650
Change in fair value of SEPA put option liability		(23	)		—
Change in fair value of convertible debt		963			—
Non-cash original discount on convertible debt		625			—
Stock-based compensation expense		1,984			1,675
Amortization of operating lease right-of-use asset		420			310
Depreciation expense		178			110
Changes in operating assets and liabilities:
Prepaid expenses		(148	)		(317	)
Accounts payable and accrued expenses		(1,378	)		(265	)
Commitment fee payable		—			1,863
Other current assets		18			(2	)
Other assets		(48	)		—
Payable to Parent		—			(141	)
Operating lease liability		(420	)		(300	)
Net cash used in operating activities		(13,231	)		(8,828	)

Cash flows from investing activities
Purchases of property and equipment		(262	)		(85	)
Net cash used in investing activities		(262	)		(85	)

Cash flows from financing activities
Proceeds from short-term convertible debt		4,375			574
Repayments of short-term borrowing		—			(459	)
Proceeds from issuance of common stock, net of direct costs		—			7,462
Net cash provided by financing activities		4,375			7,577

Net decrease in cash and cash equivalents		(9,118	)		(1,336	)
Cash and cash equivalents, beginning of period		13,985			9,163
Cash and cash equivalents, end of period	$	4,867		$	7,827

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	—		$	—
Cash paid for interest	$	5		$	14

Supplemental disclosure of non-cash investing and financing activities:
Settlement of forward contract liability for sale of shares to GEM pursuant to Draw Down and Closing Notices	$	—		$	409
Right of use asset obtained in exchange for operating lease liability	$	1,575		$	—
Issuance of Voting Common Stock for commitment fee payable	$	250		$	—
Conversion of Short-term convertible debt into shares of common stock	$	10,558		$	—

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

FibroBiologics, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

September 30, 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, $0.00001 par value per share (“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 fund its operations. As of September 30, 2025, the Company had an accumulated deficit of $50.9 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 unaudited condensed consolidated financial statements. As further described in Note 7, the Company entered into a Standby Equity Purchase Agreement in December 2024 with a certain investor (the “SEPA”) and received net proceeds of $13.1 million for the issuance of $15.0 million of short-term convertible notes principal. Pursuant to the SEPA, and upon the satisfaction of the conditions to the investor's purchase obligations set forth therein, the Company may require the investor to purchase up to an additional $10.0 million of shares of Common Stock. While management has implemented plans to obtain additional funding, including through the SEPA, 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 unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Segments

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, its chief 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 condensed consolidated balance sheets as total assets. The CODM evaluates performance and allocates resources based on net income (loss) that also is reported on the condensed consolidated statements of operations as net loss, and cash used in operations as reported on the condensed consolidated statements of cash flows. The significant expenses regularly reviewed by the CODM are consistent with those reported on the Company’s condensed consolidated statements 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, commitment fees, placement agent costs and a gain on the termination of the Company’s share purchase agreement.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed consolidated balance sheet as of September 30, 2025, unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024, unaudited condensed consolidated statements of changes in stockholders’ equity/(deficit) for the three and nine months ended September 30, 2025 and 2024, and unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024, are unaudited. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 31, 2025, which contains the audited financial statements and notes thereto. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of September 30, 2025, the results of operations for the three and nine months ended September 30, 2025 and 2024, the unaudited condensed consolidated statements of changes in stockholders’ equity/(deficit) for the three and nine months ended September 30, 2025 and 2024, and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024. The December 31, 2024 condensed consolidated balance sheet included herein was derived from the audited financial statements, but it does not include all disclosures or notes required by GAAP for complete financial statements.

Interim results are not necessarily indicative of results for an entire year or for any future period.

Principles of Consolidation

The accompanying unaudited consolidated condensed 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 for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. All significant intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of the unaudited condensed 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 unaudited condensed 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 unaudited condensed consolidated financial statements; therefore, actual results could differ from those estimates and assumptions. The most significant estimates include the warrant liability, fair value of forward contract liability, SEPA put option liability, fair value of the short-term convertible debt, and stock-based compensation.

Fair Value Option of Accounting

The Company has elected the option under Accounting Standards Codification ("ASC") 825-10, Financial Instruments (“ASC 825”), to measure its short-term convertible debt issued pursuant to the SEPA (see Note 7) 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 condensed consolidated statements of operations at each subsequent reporting date. Up-front 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 condensed cosolidated 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 cash equivalents as of September 30, 2025 and December 31, 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 to five years, and includes laboratory equipment that is recorded at cost and depreciated using the straight-line method over the estimated useful lives of five 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 unaudited condensed consolidated 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 were no such losses for the three and nine months ended September 30, 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 unaudited condensed consolidated balance sheets.

The Company has elected in accordance with 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 unaudited condensed consolidated 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 unaudited condensed consolidated 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 unaudited condensed consolidated statements 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.

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 unaudited condensed 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 expenses were $0.3 million and $0.7 million for the three and nine months ended September 30, 2025, 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 unaudited condensed consolidated 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 unaudited condensed consolidated statements of operations.

In July 2025, the One Big Beautiful Bill Act (the "Tax Act") was enacted, introducing a series of corporate tax changes in the U.S., including 100% bonus depreciation on qualified property and full expensing for research and development expenditures. The impacts of the Tax Act are reflected in the Company's results for the fiscal quarter ended September 30, 2025, and there was no material impact to income tax expense or effective tax rate.

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:

•

Fair Value of Common Stock—The estimated fair value of Common Stock underlying stock-based awards has been determined by the board of directors as of each option grant date with input from management. Prior to completion of the Direct Listing in January 2024, the fair value of Common Stock was based upon most recently available third-party valuations of Common Stock and the board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the Practice Aid). After completion of the Direct Listing, a public trading market for Common Stock has been established so the fair value of Common Stock is based on the closing price as reported on The Nasdaq Stock Market on the date of grant.

•

Expected Term—The expected term represents the period that a stock-based award is expected to be outstanding. The Company uses the simplified method to determine the expected term, which is based on the average of the time-to-vesting and the contractual life of the option.

•

Expected Volatility— Due to the Company’s limited operating history and lack of company-specific historical and implied volatility data, the expected volatility is estimated based on the average historical volatilities of common stock of comparable publicly traded entities over a period of time commensurate with the expected term of the stock option grants. The comparable companies are chosen based on their size, stage in the product development cycle, or area of specialty. The Company will continue to apply this process until sufficient historical information regarding the volatility of its own stock price becomes available.

•

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the awards.

•

Expected Dividend—The Company has never paid dividends on its Common Stock and has no plans to pay dividends on its Common Stock. Therefore, the Company used an expected dividend yield of zero.

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 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 Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (“ASU 2023-09”), which is intended to improve the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company has determined that there is no impact that the adoption of ASU 2023-09 has had on its condensed consolidated financial statements.

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 financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is in the process of evaluating the impact of this new guidance on its condensed 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:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share amounts)	2025			2024			2025			2024
Numerator:
Net loss	$	(5,778	)	$	(500	)	$	(15,402	)	$	(8,062	)
Denominator:
Weighted-average number of common shares outstanding, basic and diluted		43,072,542			33,516,656			39,487,728			32,457,473
Net loss per common share attributable to common stockholders, basic and diluted	$	(0.13	)	$	(0.01	)	$	(0.39	)	$	(0.25	)

As further described in Note 7, during the nine months ended September 30, 2025, the Company issued 118,991 shares of Common Stock to satisfy the $250,000 commitment fee payable, and $9.7 million of short-term convertible notes were converted into 13,059,270 shares of Common Stock. As of September 30, 2025, the estimated number of shares of Common Stock that would have been issued upon conversion of the remaining $5.3 million of principal was 9,877,251 shares of Common Stock. For the three and nine months ended September 30, 2025 and 2024, the Company reported net losses and, accordingly, 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.

4. Property and Equipment

Property and equipment, net consist of the following:


	September 30,			December 31,
(in thousands)	2025			2024
Laboratory equipment	$	1,198		$	981
Computer equipment, software, and other		92			47
Total property and equipment at cost		1,290			1,028
Less: Accumulated depreciation		(382	)		(204	)
Property and equipment, net	$	908		$	824

The useful life of laboratory equipment is five years, and the useful life of computer equipment, software, and other is three years, for depreciation. Depreciation expense was $65,000 and $38,000 for the three months ended September 30, 2025 and 2024, respectively, and $178,000 and $110,000 for the nine months ended September 30, 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:


	Fair Value Measurement as of September 30, 2025
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	4,594	$	—	$	—	$	4,594
Total assets fair value	$	4,594	$	—	$	—	$	4,594

Liabilities:
SEPA put option liability	$	—	$	—	$	437	$	437
Short-term convertible debt		—		—		4,573		4,573
Total liabilities fair value	$	—	$	—	$	5,010	$	5,010


	Fair Value Measurement as of December 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	13,501	$	—	$	—	$	13,501
Total assets fair value	$	13,501	$	—	$	—	$	13,501

Liabilities:
SEPA put option liability	$	—	$	—	$	460	$	460
Short-term convertible debt		—		—		9,168		9,168
Total liabilities fair value	$	—	$	—	$	9,628	$	9,628

The following table summarizes the activity related to Level 3 financial liabilities for the nine months ended September 30, 2025:


(in thousands)	Short-term Convertible Debt			SEPA Put Option Liability
Fair value at December 31, 2024	$	9,168		$	460
Change in fair value of SEPA put option liability		—			(23	)
Addition of short-term convertible debt		5,000			—
Conversions of convertible debt into shares of common stock		(10,558	)		—
Change in fair value of convertible debt		963			—
Fair value at September 30, 2025	$	4,573		$	437

The following table summarizes the activity related to Level 3 financial liabilities for the nine months ended September 30, 2024:


(in thousands)	Liability Instrument			Forward Contract Liability			Warrant Liability
Fair value at December 31, 2023	$	7,236		$	—		$	—
Bifurcation of the liability instrument upon Direct Listing		(7,236	)		—			7,236
Increase in forward contract liability for Draw Down Notice on June 27, 2024		—			1,500			13,727
Change in fair value of Forward contract liability		—			(1,259	)		—
Increase in Warrant liability at issuance January 31, 2024		—			—			—
Change in fair value of Warrant liability		—			—			(18,076	)
Fair value at September 30, 2024	$	—		$	241		$	2,887

As further described in Note 7, 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. The total of the fair values of these notes at September 30, 2025 and December 31, 2024 was $4.6 million 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 of one 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 of one year, an annual risk-free rate of 4.3%, and a volatility of 60%. Assumptions used in the valuation model at September 30, 2025 for all notes included the closing bid price of $0.55, a term of 0.22 year, an annual risk free rate of 4.01%, and a volatility of 57%, and at December 31, 2024 for the notes included the closing bid price of $2.00, a term of one year, an annual risk free rate of 4.1%, and a volatility of 60%.

As further described in Note 7, 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 SEPA put 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 September 30, 2025, inputs used in the model included a stock price of $0.55 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 $5.0 million, a simulation term of 0.26 years, volatility of 103%, and a 3.97% 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 nine months ended September 30, 2025 and for the year ended December 31, 2024.

6. Stockholders’ Equity/(Deficit)

Authorized Capital - As of September 30, 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.

7. 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 nine months ended September 30, 2025.


Date	Tranche	Principal Amount		Shares Issued		Price Per Share
January 23, 2025	Second Note	$	900,000		552,113	$	1.6301
January 27, 2025	Second Note	$	500,000		317,238	$	1.5761
January 29, 2025	Second Note	$	500,000		334,336	$	1.4955
February 7, 2025	Second Note	$	1,100,000		732,941	$	1.5008
February 21, 2025	Second Note	$	250,000		232,169	$	1.0768
March 4, 2025	Second Note	$	350,000		361,794	$	0.9674
April 11, 2025	Second Note	$	200,000		263,643	$	0.7586
April 15, 2025	Second Note	$	200,000		263,643	$	0.7586
May 15, 2025	Second Note	$	300,000		388,450	$	0.7723
June 2, 2025	Second Note	$	100,000		147,579	$	0.6776
June 3, 2025	Second Note	$	300,000		442,739	$	0.6776
June 20, 2025	Second Note	$	100,000		144,216	$	0.6934
June 24, 2025	Second Note	$	200,000		295,377	$	0.6771
June 26, 2026	Third Note	$	300,000		443,066	$	0.6771
June 27, 2025	Third Note	$	500,000		738,443	$	0.6771
July 15, 2025	Third Note	$	300,000		533,428	$	0.5624
July 28, 2025	Third Note	$	300,000		493,258	$	0.6082
August 1, 2025	Third Note	$	600,000		1,035,911	$	0.5792
August 18, 2025	Third Note	$	300,000		571,537	$	0.5249
August 25, 2025	Third Note	$	300,000		544,959	$	0.5505
September 9, 2025	Third Note	$	300,000		566,572	$	0.5295
September 16, 2025	Third Note	$	300,000		597,133	$	0.5024
September 25, 2025	Third Note	$	400,000		815,660	$	0.4904
September 30, 2025	Third Note	$	1,100,000		2,243,065	$	0.4904

The Company recognized a net loss of $0.9 million during the nine months ended September 30, 2025 on these conversions into shares of Common Stock.

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, and at $0.4 million at September 30, 2025. The SEPA put option liability is recognized as a current liability on the condensed balance sheets as of September 30, 2025 and December 31, 2024, respectively. The change in estimated issuance date fair value is presented as a single line item within other income (expense) in the accompanying condensed 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 September 30, 2025 and December 31, 2024 because there were no notices for the sale of the Company’s Common Stock as of September 30, 2025 and December 31, 2024.

8. Income Taxes

The Company did not record any tax provision or benefit for the nine months ended September 30, 2025 and 2024. 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 September 30, 2025 and December 31, 2024.

9. 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 nine months ended September 30, 2025 and 2024 was $0.7 million and $0.5 million, respectively. As of September 30, 2025, noncancelable lease payments under operating leases were $2.9 million.

Maturities of operating lease liability as of September 30, 2025 were as follows:


(in thousands of dollars)
2026	$	795
2027		891
2028		440
2029		353
2030		361
Thereafter		61
Total lease payments		2,901
Less: Imputed interest		(361	)
Total lease liability		2,540
Less: Current lease liability		(643	)
Total non-current lease liability	$	1,897

10. Stock-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 September 30, 2025 and December 31, 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 condensed consolidated statements of operations as follows:

          
         For the Three Months Ended September 30,

FibroBiologics, Inc. 10-Q