Matinas BioPharma Holdings, Inc. 10-Q

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2025 and in other reports we file with the Securities and Exchange Commission (the “SEC”), particularly those under “Risk Factors.” Dollars in tabular format are presented in thousands, except per share data, or as otherwise indicated. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future. There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to: ● our ability to satisfy the conditions to the closing of the Business Combination (as defined below) and the Stock Sale (as defined below), including obtaining the stockholder approval required to complete such transactions; ● our ability to meet expectations regarding the timing and completion of the Business Combination and Stock Sale; ● the timing and costs of consummating the Business Combination and Stock Sale; ● our ability to complete the Business Combination, the Stock Sale, or one or more other strategic transactions, that will maximize our assets or otherwise provide value to stockholders; ● our ability to raise capital when needed; ● our ability to maintain or protect the validity of our patents and other intellectual property; ● our ability to regain and maintain compliance with the continued listing requirements of the NYSE American LLC (the “NYSE American”); and ● the factors listed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, elsewhere in this report and other reports that we file with the SEC. 20 All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished. Overview We are a clinical-stage biopharmaceutical company focused on delivering groundbreaking therapies using our lipid nanocrystal (LNC) platform delivery technology (LNC Platform). Our lead product candidate is MAT2203 (oral amphotericin B), a highly potent antifungal drug which, by virtue of LNC delivery, has been made oral, safe, and well-tolerated for prolonged administration in patients with life-threatening invasive fungal infections. Following the successful EnACT Phase 2 trial in the treatment of cryptococcal meningitis, MAT2203 is now positioned for a single, Phase 3 registration trial (the “ORALTO trial”) in support of a New Drug Application (NDA) for the treatment of invasive aspergillosis in patients with limited treatment options. In July 2026, we entered into the Business Combination Agreement with GH Power and the Stock Purchase Agreement with Azurity described below under “Business Combination” and “Stock Purchase Agreement.” Following the completion of the Business Combination, the current business of GH Power is expected to become the primary business of the combined company, and we do not expect to continue our historical LNC Platform development activities as an independent, publicly traded company. For the six-month periods ended June 30, 2026 and 2025, our net loss was $3,247 and $6,901, respectively. We have incurred losses for each period from our inception and expect to incur additional losses for the foreseeable future. We will seek to fund our operations through public or private equity offerings, debt financing, government or other third-party funding, collaborations and licensing arrangements. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy and continue as a going concern. We will need to generate significant revenues to achieve profitability, and we may never do so. Business Combination On July 10, 2026, we, GH Power Inc., a corporation organized under the laws of Ontario (“GH Power”), 1001550000 Ontario Inc., a corporation organized under the laws of Ontario (“Pubco”), 1001550002 Ontario Inc., a corporation organized under the laws of Ontario and a wholly owned subsidiary of Pubco (“GH Power Merger Sub”) and MBH Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Pubco (“Matinas Merger Sub”), entered into a Business Combination Agreement (the “Business Combination Agreement”) pursuant to which, subject to the terms and conditions contained in the Business Combination Agreement, (i) GH Power Merger Sub and GH Power will amalgamate to form one corporate entity and wholly owned subsidiary of Pubco by way of a plan of arrangement (the “Plan of Arrangement”) under the Business Corporations Act (Ontario) (the “Amalgamation”) and (ii) immediately following the effectiveness of the Amalgamation, Matinas Merger Sub will merge with and into us (the “Company Merger” and together with the Amalgamation, the “Business Combination”), with us surviving the Company Merger as a direct wholly owned subsidiary of Pubco. 21 Stock Purchase Agreement On July 10, 2026, we and Azurity Pharmaceuticals, Inc., a Delaware corporation (“Azurity”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which Azurity will purchase and acquire from us all of the issued and outstanding equity interests (the “Stock Sale”) of Matinas BioPharma Nanotechnologies, Inc. (f/k/a Aquarius Biotechnologies Inc.), a Delaware corporation and our wholly owned subsidiary (“Nanotechnologies”). As consideration for the Stock Sale, Azurity agreed to pay us cash consideration of up to $21,500, with $4,000 due to us at the closing of the Stock Sale, subject to downward adjustment by the amount of Indebtedness (as defined in the Stock Purchase Agreement), and up to an additional $17,500 due upon the achievement of certain milestone events set forth in the Stock Purchase Agreement. We will also be eligible to receive a mid-single-digit royalty on Net Sales (as defined in the Stock Purchase Agreement) and Licensing Proceeds (as defined in the Stock Purchase Agreement) generated on MAT2203 (as defined in the Stock Purchase Agreement). Pursuant to the terms of royalty rights certificates held by the former holders of the Company’s Series A Preferred Stock, the holders thereof are entitled to receive, in the aggregate, 7.5% of the amounts the Company receives from Azurity in connection with the Stock Sale, including the initial purchase price, milestone payments and royalty amounts described above. Additional information about the Business Combination Agreement and the Stock Purchase Agreement is set forth in our Current Report on Form 8-K filed with the SEC on July 13, 2026, and “Note 11 - Subsequent Events” in the accompanying unaudited Consolidated Financial Statements. Financial Operations Overview General and Administrative Expenses General and administrative expenses for the six months ended June 30, 2026 and 2025 were $3,490 and $3,698, respectively. General and administrative expenses consist principally of salaries and related costs for personnel in executive and finance functions. Other general and administrative expenses include facility costs, insurance, investor relations expenses, professional fees for legal, patent review, consulting and accounting/audit services. We anticipate that our general and administrative expenses during 2026 will increase slightly compared to expenses incurred during 2025 as the corporate strategy continues to evolve. Change in fair value of warrant liability On February 13, 2025, and April 8, 2025, we issued shares of Series C Preferred Stock (as defined below) and 2025 Warrants (as defined below) to purchase shares of common stock in a private placement. The 2025 Warrants were initially classified as a liability upon each issuance date with the fair value estimated using a Monte Carlo simulation model. The terms of the 2025 Warrants were amended after issuance enabling the reclassification of the 2025 Warrants as equity. A loss of $3,161 was recognized for the six months ended June 30, 2025, representing the change in fair value of the warrant liability between the issuance dates of February 13, 2025 and April 8, 2025 and the amendment date of June 26, 2025. There was no warrant liability at June 30, 2026. (Loss)/gain on disposal of assets, net During the six months ended June 30, 2026 and 2025, we recognized a loss on disposal of assets of $138 and a gain on disposal of assets of $110, respectively. In 2026, assets with a net book value of $138 were written off in connection with the termination of the Bridgewater lease in April 2026. In 2025, we sold equipment with a net book value of $210 for proceeds of $320, resulting in a gain on disposal of $110. 22 Other income/(expense), net Other income/(expense), net was $13 for the six months ended June 30, 2026, compared with $(67) for the six months ended June 30, 2025. The increase in other income/(expense), net from the prior-year period was primarily due to the absence of warrant liability transaction fees incurred in the current period, partially offset by the employee retention credit payment received and interest income recognized during the six months ended June 30, 2025. Application of Critical Accounting Policies and Accounting Estimates A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our significant accounting policies, refer to “Note 3 – Summary of Significant Accounting Policies ” in our 2025 Form 10-K. Of these policies, the following are considered critical to an understanding of our Unaudited Condensed Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments: (i) Other intangible assets, and (ii) Warrants. Recent Accounting Pronouncements Refer to “Note 3 – Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements and their expected impact on our financial positions and results of operations. Current Operating Trends Currently we are focused on consummating the Business Combination with GH Power Inc. and the Stock Purchase Agreement with Azurity Pharmaceuticals, Inc. while conserving our cash until such transactions are completed. Results of Operations Comparison of the three months ended June 30, 2026 to the three months ended June 30, 2025 The following tables summarize our revenues and operating expenses for the periods presented: Three Months Ended June 30, 2026 2025 Expenses: Research and development $ — $ — General and administrative 1,555 1,837 Operating Expenses $ 1,555 $ 1,837 Research and Development expenses. We did not have any Research and Development expenses for the three months ended June 30, 2026 and 2025. 23 General and Administrative expenses. General and Administrative (G&A) expenses for the three months ended June 30, 2026 and 2025 were $1,555 and $1,837, respectively. The decrease in G&A expenses was primarily attributable to lower personnel-related costs resulting from reduced headcount and lower operating lease expense following the termination of our Bridgewater lease, partially offset by higher legal and consulting fees primarily related to corporate strategic initiatives. Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025 The following tables summarize our revenues and operating expenses for the periods presented: Six Months Ended June 30, 2026 2025 Expenses: Research and development $ — $ 85 General and administrative 3,490 3,698 Operating Expenses $ 3,490 $ 3,783 Research and Development expenses. R&D expenses for the six months ended June 30, 2026 and 2025 were $0 and $85, respectively. The decrease in R&D expenses was primarily attributable to the decrease in clinical trial consulting costs related to the pause of our MAT2203 development program and in headcount costs resulting from our reduction in force. General and Administrative expenses. G&A expenses for the six months ended June 30, 2026 and 2025 were $3,490 and $3,698, respectively. The decrease in G&A expenses was primarily attributable to lower personnel-related costs resulting from reduced headcount and lower operating lease expense following the termination of our Bridgewater lease, partially offset by higher legal and consulting fees primarily related to corporate strategic initiatives. Liquidity and capital resources Sources of Liquidity We have funded our operations since inception primarily through private placements of our preferred stock and our common stock and common stock warrants. As of June 30, 2026, we have raised a total of $170,336 in gross proceeds and $156,594, net proceeds, from sales of our equity securities. As of June 30, 2026, we had cash and cash equivalents, excluding restricted cash, totaling $761. Subsequent to June 30, 2026, we received net proceeds of approximately $575 from the Series D Financing and approximately $2,323 from the Warrant Inducement. 2025 Private Placement On February 13, 2025, we entered into a securities purchase agreement (the “February 2025 Agreement”) with a certain group of investors (the “February 2025 Investors”), pursuant to which we agreed to issue and sell, in a private placement, an aggregate of 3,300 shares of our Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”), initially convertible into up to 5,631,404 shares of our common stock, with a stated value of $1,000 per share, and 2025 Warrants to purchase up to an aggregate of 200% of the shares of common stock into which the shares of Series C Preferred Stock are initially convertible, or 11,262,808 shares of common stock, for an offering price of $1,000 per share of Series C Preferred Stock and accompanying 2025 Warrants. 24 Pursuant to the February 2025 Agreement, on February 13, 2025, we issued and sold in an initial closing 1,650 shares of Series C Preferred Stock, initially convertible into up to 2,815,702 shares of common stock, and accompanying 2025 Warrants, initially exercisable for up to 5,631,404 shares of common stock, for gross proceeds of $1.65 million. On April 4, 2025, we obtained stockholder approval for the issuance of the Series C Preferred Stock and 2025 Warrants, as required by the rules and regulations of NYSE American, including Section 713 of the NYSE American Company Guide, and issued and sold, in a second closing, an additional 1,650 shares of Series C Preferred Stock, initially convertible into up to 2,815,702 shares of common stock, and accompanying 2025 Warrants, initially exercisable for up to 5,631,404 shares of common stock, for gross proceeds of $1.65 million. 2024 Registered Direct Offering On April 5, 2024, we closed a registered direct offering of 666,667 shares of our 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. We generated gross proceeds of approximately $10,000 and net proceeds of approximately $9,179, after deducting underwriting discounts and commissions and other offering expenses. On August 15, 2025, we entered into Warrant Exchange Agreements (the “Exchange Agreements”) with certain holders (the “Exchanging Holders”) of warrants at an exercise price of $17.50 per share (the “2024 Warrants”) to purchase an aggregate of 466,666 shares of common stock. Pursuant to the Exchange Agreements, on August 15, 2025, we issued to the Exchanging Holders one share of common stock for each 2024 Warrant, for an aggregate of 466,666 shares of common stock. 2020 At-The-Market Sales Agreement On July 2, 2020, we entered into an At-The-Market Sales Agreement (the “Sales Agreement”) with BTIG, LLC (“BTIG”), pursuant to which we may offer and sell, from time to time, through BTIG, as sales agent and/or principal, shares of our common stock having an aggregate offering price of up to $50 million, subject to certain limitations on the amount of common stock that may be offered and sold by us set forth in the Sales Agreement. BTIG will be paid a 3% commission on the gross proceeds from each sale. We may terminate the Sales Agreement at any time; BTIG may terminate the Sales Agreement in certain limited circumstances. We did not sell any shares under the Sales Agreement during the six months ended June 30, 2026 and 2025. As of June 30, 2026, the Sales Agreement’s available capacity was $44,191. On July 23, 2026, pursuant to and in accordance with Section 12(a) of the Sales Agreement, BTIG notified us that BTIG is terminating the Sales Agreement, effective immediately. We are not subject to any termination penalties or other expenses related to the termination of the Sales Agreement. Series D Financing On July 10, 2026, we entered into a Securities Purchase Agreement (the “Series D Purchase Agreement”) with certain investors, pursuant to which we agreed to issue and sell, in a private placement (the “Series D Financing”), an aggregate of 575 shares of our Series D Convertible Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”), initially convertible into up to 1,642,856 shares of common stock, with a stated value of $1,000 per share, together with warrants (the “Series D Warrants”) to purchase up to an aggregate of 100% of the shares of common stock into which the shares of Series D Preferred Stock are initially convertible, or 1,642,856 shares of common stock, for aggregate gross proceeds of up to $575, at an offering price of $1,000 per share of Series D Preferred Stock and accompanying Series D Warrant. The Series D Financing closed on July 10, 2026. 25 As a result of the Series D Financing, the exercise price of the 2025 Warrants (as defined below) was adjusted from $0.6446 to $0.35 pursuant to the terms of the anti-dilution provisions contained therein and previously approved by our stockholders. In addition, the conversion price of our Series C Convertible Preferred Stock, issued on February 13, 2025 and April 8, 2025, was adjusted from $0.586 to $0.35 pursuant to the terms of the anti-dilution provisions contained therein and previously approved by our stockholders. Warrant Inducement On July 10, 2026, we entered into inducement offer letter agreements (the “Inducement Letters”) with certain holders (the “Warrant Holders”) of our 2025 warrants to purchase up to an aggregate of 7,486,605 shares of common stock, issued to the Warrant Holders on February 13, 2025 and April 8, 2025 (the “2025 Warrants”). Pursuant to the Inducement Letters, the Warrant Holders agreed to exercise for cash all or a portion of their 2025 Warrants at the current exercise price of $0.35 per share in consideration for our agreement to issue, in a private placement, new unregistered common stock purchase warrants (the “New Warrants”) to purchase up to 7,486,605 shares of common stock (100% of the number of shares of common stock issued pursuant to each such exercise of 2025 Warrants) (such transaction, the “Warrant Inducement”). The Warrant Inducement closed on July 10, 2026 and 2025 Warrants to purchase the 7,486,605 shares were exercised. As a result, we received net proceeds of $2,323 from the Warrant Inducement. We engaged ThinkEquity LLC (the “Solicitation Agent”) to act as our exclusive warrant solicitation agent in connection with the transactions described above pursuant to that certain Warrant Solicitation Agent Agreement, by and between us and the Solicitation Agent, dated as of July 10 25, 2026 (the “Warrant Solicitation Agent Agreement”). Pursuant to the Warrant Solicitation Agent Agreement, we agreed to pay the Solicitation Agent a fee consisting of (i) a cash payment equal to 10% of the aggregate gross cash proceeds received by us from the Warrant Holders’ exercise of the 2025 Warrants and (ii) warrants (the “Solicitation Agent Warrants”) to purchase 374,330 shares of common stock at an exercise price of $0.35 per share (5% of the aggregate number of shares underlying the New Warrants issued to the Warrant Holders in connection with the transactions contemplated by the Inducement Letters). The Solicitation Agent Warrants have terms substantially similar to the New Warrants. Pursuant to the Warrant Solicitation Agent Agreement, we also agreed to reimburse the Solicitation Agent for its reasonable legal and other expenses up to $50. Cash Flows The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for each of the periods set forth below: Six Months Ended June 30, 2026 2025 Cash used in operating activities $ (3,437 ) $ (4,028 ) Cash provided by (used in) investing activities — — Cash provided by (used in) financing activities (1 ) 3,269 Net decrease in cash and cash equivalents and restricted cash $ (3,438 ) $ (759 ) 26 Operating Activities Net cash used in operating activities was $3,437 and $4,028 for the six month periods ended June 30, 2026 and 2025, respectively. Net losses of $3,247 and $6,901 for the six-month periods ended June 30, 2026 and 2025, respectively, were partially offset by working capital adjustments due to the timing of receipts and payments in the ordinary course of business, adjustments for non-cash stock-based compensation expense and change in fair value of the warrant liability. Investing Activities Net cash provided by (used in) investing activities was $0 for each of the six-month periods ended June 30, 2026 and 2025. Financing Activities Net cash used in financing activities was $1 and net cash provided by financing activities was $3,269 for the six month periods ended June 30, 2026 and 2025, respectively. The decrease in cash provided by financing activities is primarily due to the net proceeds from the sale of our Series C preferred stock of $3,271 during the six months ended June 30, 2025. Funding Requirements and Other Liquidity Matters We do not believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital requirements for a period of at least the next twelve months from the filing date of this Quarterly Report. As a result, substantial doubt exists about our ability to continue as a going concern. As more fully described in Note 11 of the footnotes to the financial statements, on July 10, 2026 we entered into a Business Combination Agreement with GH Power, Inc., and a Stock Purchase Agreement for the sale of Nanotechnologies, the owner of MAT2203. Additionally, we received net proceeds of approximately $575 from the Series D Financing and approximately $2,323 from the Warrant Inducement. There can be no assurance that the sale of Nanotechnologies and Business Combination with GH Power will be consummated. If such transactions are not consummated, the Company will need to secure substantial additional funding from other sources to continue its operations, and there can be no assurance that such funding will be available on acceptable terms, or at all. In such a case, the Board of Directors may decide to pursue a winddown, dissolution or other liquidation process. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable.