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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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


☐	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: 001-39871

SAB BIOTHERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	85-3899721
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
777 W 41st St, Suite 401 Miami Beach, Florida	33140
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (605) 679-6980

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, $0.0001 par value per share	SABS	The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Common Stock	SABSW	The Nasdaq Stock Market LLC

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, 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 ☒

As of November 10, 2025, the registrant had 47,606,851 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	2

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss	3
	Condensed Consolidated Statements of Changes In Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II.	OTHER INFORMATION	42

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
Signatures		46

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

SAB Biotherapeutics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	September 30, 2025			December 31, 2024

Assets
Current assets
Cash and cash equivalents	$	29,424,708		$	8,897,966
Short-term investments		81,455,925			11,862,746
Accrued interest receivable		559,954			54,955
Prepaid expenses and other current assets		1,836,160			2,976,562
Total current assets		113,276,747			23,792,229
Deferred issuance cost		—			261,105
Long-term prepaid assets		124,073			220,997
Long-term investments		50,608,587			—
Operating lease right-of-use assets		2,806,904			970,294
Financing lease right-of-use assets		3,517,718			3,582,835
Property, plant and equipment, net		13,114,339			15,368,009
Total assets	$	183,448,368		$	44,195,469
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable	$	—		$	275,849
Accounts payable		2,954,985			1,694,722
Accrued expenses and other current liabilities		6,850,015			5,473,036
Operating lease liabilities, current portion		837,286			393,430
Finance lease liabilities, current portion		151,033			142,563
Total current liabilities		10,793,319			7,979,600
Operating lease liabilities, noncurrent		2,037,461			581,148
Finance lease liabilities, noncurrent		3,161,562			3,275,919
Warrant liabilities		2,381,677			6,389,226
Total liabilities		18,374,019			18,225,893
Commitments and contingencies (Note 18)
Stockholders’ equity
Series A Preferred stock; $0.0001 par value; 10,000,000 shares authorized, 29,091 and 42,019 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		3			5
Series B Preferred stock; $0.0001 par value; 2,928,570 shares authorized, 638,558 shares issued and outstanding at September 30, 2025 and 0 shares issued and outstanding as of December 31, 2024		64			—
Common stock; $0.0001 par value; 800,000,000 shares authorized at September 30, 2025 and December 31, 2024; 47,548,659 and 9,343,533 shares issued at September 30, 2025 and December 31, 2024, respectively, and 47,493,994 and 9,288,868 outstanding at September 30, 2025 and December 31, 2024, respectively		4,756			935
Treasury stock, at cost; 54,665 shares held at September 30, 2025 and December 31, 2024, respectively		(5,521,246	)		(5,521,246	)
Additional paid-in capital		264,553,973			155,794,142
Accumulated other comprehensive income (loss)		71,223			(135,410	)
Accumulated deficit		(94,034,424	)		(124,168,850	)
Total stockholders’ equity		165,074,349			25,969,576
Total liabilities and stockholders’ equity	$	183,448,368		$	44,195,469

See accompanying notes to the condensed consolidated financial statements

SAB Biotherapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)


	For The Three Months Ended September 30,						For The Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue
Grant revenue	$	—		$	—		$	—		$	1,207,712
Total revenue		—			—			—			1,207,712
Operating expenses
Research and development		8,970,010			7,830,745			23,623,991			22,599,998
General and administrative		3,708,959			3,478,621			9,559,141			11,509,394
Total operating expenses		12,678,969			11,309,366			33,183,132			34,109,392
Loss from operations		(12,678,969	)		(11,309,366	)		(33,183,132	)		(32,901,680	)
Other income (expense)
Changes in fair value of warrant liabilities		61,598,908			6,171			66,007,621			7,691,363
Interest expense		(43,292	)		(78,036	)		(177,202	)		(247,525	)
Interest income		655,233			277,174			731,293			1,149,624
Other income		765,881			754,647			1,608,138			1,597,608
Warrant Issuance Cost		(4,852,292	)		—			(4,852,292	)		—
Total other income		58,124,438			959,956			63,317,558			10,191,070
Net income (loss)	$	45,445,469		$	(10,349,410	)	$	30,134,426		$	(22,710,610	)
Other comprehensive income (loss):
Unrealized gain, change in fair value of available-for-sale securities, net of tax	$	87,751		$	44,172		$	87,104		$	574
Foreign currency translation gain (loss)	$	(723	)	$	39,314			119,529			25,139
Total comprehensive income (loss)	$	45,532,497		$	(10,265,924	)	$	30,341,059		$	(22,684,897	)
Income (loss) per common share attributable to the Company’s shareholders
Basic income (loss) per common share	$	0.50		$	(1.12	)	$	0.73		$	(2.45	)
Diluted income (loss) per common share	$	(0.21	)	$	(1.12	)	$	(0.33	)	$	(2.45	)
Weighted-average common shares outstanding – basic		10,660,500			9,259,192			9,750,531			9,252,095
Weighted-average common shares outstanding – diluted		77,863,263			9,259,192			30,302,890			9,252,095

See accompanying notes to the condensed consolidated financial statements

SAB Biotherapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes In Stockholders’ Equity

(Unaudited)


					Mezzanine Equity
	Common stock				Series B Preferred Stock						Series B Preferred Stock						Series A Preferred Stock									Treasury Stock
	Shares		Amount		Shares			Amount			Shares			Amount			Shares			Amount			Additional Paid-In Capital			Shares			Amount			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at December 31, 2024		9,343,533	$	935		—		$	—			—		$	—			42,019		$	5		$	155,794,142			(54,665	)	$	(5,521,246	)	$	(124,168,850	)	$	(135,410	)	$	25,969,576
Stock-based compensation		—		—		—			—			—			—			—			—			612,951			—			—			—			—			612,951
Issuance of common stock pursuant to vesting of restricted stock units		2,829		1		—			—			—			—			—			—			(1	)		—			—			—			—			—
Payment of taxes withheld on issuance of restricted stock units		—		—		—			—			—			—			—			—			(2,072	)		—			—			—			—			(2,072	)
Net loss		—		—		—			—			—			—			—			—			—			—			—			(5,196,773	)		—			(5,196,773	)
Foreign currency translation		—		—		—			—			—			—			—			—			—			—			—			—			24,792			24,792
Unrealized loss, change in fair value of available-for-sale securities		—		—		—			—			—			—			—			—			—			—			—			—			(975	)		(975	)
Balance at March 31, 2025		9,346,362	$	936		—		$	—			—		$	—			42,019		$	5		$	156,405,020			(54,665	)	$	(5,521,246	)	$	(129,365,623	)	$	(111,593	)	$	21,407,499
Stock-based compensation		—		—		—			—			—			—			—			—			627,198			—			—			—			—			627,198
Net loss		—		—		—			—			—			—			—			—			—			—			—			(10,114,270	)		—			(10,114,270	)
Foreign currency translation		—		—		—			—			—			—			—			—			—			—			—			—			95,460			95,460
Unrealized gain, change in fair value of available-for-sale securities		—		—		—			—			—			—			—			—			—			—			—			—			328			328
Balance at June 30, 2025		9,346,362		936		—		$	—			—		$	—			42,019			5			157,032,218			(54,665	)		(5,521,246	)		(139,479,893	)		(15,805	)		12,016,215
Stock-based compensation		—		—		—			—			—			—			—			—			800,764			—			—			—			—			800,764
Conversion of Series A Preferred Stock into common shares		2,052,061		205		—			—			—			—			(12,928	)		(2	)		(203	)		—			—			—			—			—
Issuance of Series B Preferred Stock and warrants under private placement offering		—		—		1,000,000			100			—			—			—			—			—			—			—			—			—			—
Reclassification of Redeemable Preferred Stock to Permanent Equity upon Requisite Approval		—		—		(1,000,000	)		(100	)		1,000,000			100			—			—			16,038,560			—			—			—			—			16,038,660
Conversion of Series B Preferred Stock into common shares		36,144,200		3,614		—			—			(361,442	)		(36	)		—			—			(3,578	)		—			—			—			—			—
Reclassification of PIPE Warrants to Permanent Equity following shareholder approval		—		—		—			—			—			—			—			—			90,691,094			—			—			—			—			90,691,094
Issuance of common stock pursuant to vesting of restricted stock units		6,036		1		—			—			—			—			—			—			(1	)		—			—			—			—			—
Payment of taxes withheld on issuance of restricted stock units		—		—		—			—			—			—			—			—			(4,881	)		—			—			—			—			(4,881	)
Net income		—		—		—			—			—			—			—			—			—			—			—			45,445,469			—			45,445,469
Foreign currency translation		—		—		—			—			—			—			—			—			—			—			—			—			(723	)		(723	)
Unrealized gain, change in fair value of available-for-sale securities		—		—		—			—			—			—			—			—			—			—			—			—			87,751			87,751
Balance at September 30, 2025		47,548,659		4,756		—		$	—			638,558		$	64			29,091			3			264,553,973			(54,665	)		(5,521,246	)		(94,034,424	)		71,223			165,074,349

See accompanying notes to the condensed consolidated financial statements.

SAB Biotherapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes In Stockholders’ Equity

(Unaudited)


	Common stock				Preferred Stock						Treasury Stock
	Shares		Amount		Shares		Amount		Additional Paid-In Capital		Shares			Amount			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at December 31, 2023		9,280,159	$	929		42,236	$	5	$	152,856,874		(54,665	)	$	(5,521,246	)	$	(90,063,541	)	$	26,420		$	57,299,441
Stock-based compensation		—		—		—		—		617,445		—			—			—			—			617,445
Issuance of common stock for exercise of stock options		3,780		—		—		—		20,412		—			—			—			—			20,412
Net loss		—		—		—		—		—		—			—			(5,025,745	)		—			(5,025,745	)
Foreign currency translation		—		—		—		—		—		—			—			—			(33,807	)		(33,807	)
Unrealized gain (loss), change in fair value of available-for-sale securities		—		—		—		—		—		—			—			—			(56,061	)		(56,061	)
Balance at March 31, 2024		9,283,939		929		42,236		5		153,494,731		(54,665	)		(5,521,246	)		(95,089,286	)		(63,448	)		52,821,685
Stock-based compensation		—		—		—		—		601,433		—			—			—			—			601,433
Net loss		—		—		—		—		—		—			—			(7,335,455	)		—			(7,335,455	)
Foreign currency translation		—		—		—		—		—		—			—			—			19,632			19,632
Unrealized gain (loss), change in fair value of available-for-sale securities		—		—		—		—		—		—			—			—			12,463			12,463
Balance at June 30, 2024		9,283,939		929		42,236		5		154,096,164		(54,665	)		(5,521,246	)		(102,424,741	)		(31,353	)		46,119,758
Stock-based compensation		—		—		—		—		1,048,783		—			—			—			—			1,048,783
Net loss		—		—		—		—		—		—			—			(10,349,410	)		—			(10,349,410	)
Foreign currency translation		—		—		—		—		—		—			—			—			39,314			39,314
Unrealized gain, change in fair value of available-for-sale securities		—		—		—		—		—		—			—			—			44,172			44,172
Balance at September 30, 2024		9,283,939		929		42,236		5		155,144,947		(54,665	)		(5,521,246	)		(112,774,151	)		52,133			36,902,617

See accompanying notes to the condensed consolidated financial statements.

SAB Biotherapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	30,134,426		$	(22,710,610	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		2,253,170			3,941,764
Amortization of finance right-of-use assets		65,117			65,118
Stock-based compensation expense		2,040,913			2,267,661
Net realized and unrealized gain on equity securities		(64,038	)		—
Changes in fair value of warrant liabilities		(66,007,621	)		(7,691,363	)
Accretion of discounts on short-term investments		(51,767	)		(217,749	)
Changes in operating assets and liabilities
Accrued interest receivable		(504,999	)		(97,047	)
Prepaid expenses and other current assets		1,577,810			372,553
Operating lease right-of-use assets and liabilities, net		63,559			(24,476	)
Accounts payable		1,158,266			332,938
Deferred grant income	-				(1,207,712	)
Accrued expense and other current liabilities		1,336,380			209,102
Net cash used in operating activities		(27,998,784	)		(24,759,821	)

Cash flows from investing activities:
Proceeds from the sale of equipment		500			—
Purchases of equipment		—			(281,885	)
Purchases of investment securities		(129,991,839	)		(36,137,485	)
Sales and maturities of investments		9,991,364			15,126,337
Net cash used in investing activities		(119,999,975	)		(21,293,033	)

Cash flows from financing activities:
Proceeds from the 2025 PIPE, net of Series B issuance costs		168,729,827			—
Payment of deferred issuance costs		—			(261,105	)
Principal payments of notes payable		(275,849	)		(1,050,849	)
Principal payments on finance leases		(105,888	)		(98,045	)
Proceeds from exercise of stock options		—			20,412
Tax payments for share settlement of restricted stock units		(6,953	)		—
Net cash provided by (used in) financing activities		168,341,137			(1,389,587	)

Effect of exchange rate changes on cash and cash equivalents		184,364			47,550

Net increase (decrease) in cash and cash equivalents		20,526,742			(47,394,891	)
Cash and cash equivalents
Beginning of period		8,897,966			56,566,066
End of period	$	29,424,708		$	9,171,175
Supplemental cash flow information:
Cash paid for interest	$	178,333		$	303,309

Supplemental information on non-cash investing and finance activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	2,422,191		$	368,425
Reclassification of warrants from liability to equity		90,691,094			—
Reclassification of Redeemable Preferred Stock to Permanent Equity upon Requisite Approval	$	16,038,660			—

See accompanying notes to the condensed consolidated financial statements.

SAb Biotherapeutics, Inc. and subsidiaries

Notes to condensed consolidated FINANCIAL statements (Unaudited)

(1) Nature of Business

SAB Biotherapeutics, Inc., a Delaware corporation (“SAB” or “SAB Biotherapeutics”, and together with its subsidiaries, the “Company”), is a clinical-stage biopharmaceutical company focused on the development of human polyclonal immunotherapeutic antibodies, or human immunoglobulins (“hIgG”), to address immune system disorders and infectious diseases. The Company’s antibodies are both target-specific and polyclonal, meaning they are comprised of multiple hIgGs and can bind to multiple sites on specific immunogens, making them ideally suited to address the complexities associated with many immune-mediated disorders. The Company’s lead candidate, SAB-142 is a human anti-thymocyte globulin (“ATG”) focused on preventing or delaying the progression of type 1 diabetes (“T1D”).

Australian Research and Development Tax Credit

In June 2023, the Company formed a new subsidiary in Australia, SAB BIO PTY LTD, a proprietary limited company (“SAB Australia”), primarily to conduct preclinical and clinical activities for product candidates. SAB Australia’s research and development activities qualify for the Australian government’s tax credit program, which provides a 48.5% credit for qualifying research and development expenses. The Company recognized $0.4 million and $1.2 million in tax credit income for the three and nine months ended September 30, 2025, respectively, and $0.6 million and $1.3 million for the three and nine months ended September 30, 2024, respectively.

Liquidity

As of September 30, 2025, the Company had an accumulated deficit of $94.0 million. The Company anticipates that it will continue to generate losses for the foreseeable future and expects the losses to increase as the Company continues the development of, or seeks regulatory approvals for product candidates, and begins commercialization of products. As a result, the Company will require additional capital to fund operations in order to support long-term plans.

Based on the Company’s current level of operating expenses, existing resources will be sufficient to cover operating cash needs through the twelve months following the date of this report. In the future, the Company may seek additional funding through a combination of equity or debt financings, or other third-party financing, collaborative or other funding arrangements.

(2) Summary of Significant Accounting Policies

A summary of the significant accounting policies applied in preparation of the accompanying condensed consolidated financial statements is set forth below.

Basis of presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles accepted in the United States of America (“GAAP”) for interim financial statements and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit and should be read in conjunction with our audited consolidated financial statements, including the notes thereto, appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position, consolidated results of operations and other comprehensive loss and consolidated cash flows, for the periods indicated, have been made. The results of operations for the three months ended September 30, 2025 are not necessarily indicative of operating results that may be achieved over the course of the full year.

Emerging growth company status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain

exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Principles of consolidation

The accompanying condensed consolidated financial statements include the results of the Company and its wholly owned subsidiaries, SAB Sciences, Inc., Diversity Therapeutics, Inc., SAB LLC, SAB Capra, LLC, Aurochs, LLC, and SAB Australia. Intercompany balances and transactions have been eliminated in consolidation.

Significant risks and uncertainties

The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to, the results of research and development efforts, clinical trial activities of the Company’s product candidates, the Company’s ability to obtain regulatory approval to market its product candidates, competition from products manufactured and sold or being developed by other companies, and the Company’s ability to raise capital.

The Company currently has no commercially approved products and there can be no assurance that the Company’s research and development will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and obtaining and protecting intellectual property.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the financial statements. The Company has used significant estimates in its determination of stock-based compensation assumptions, determination of the fair value of the Private Placement Warrant liabilities, determination of the incremental borrowing rate (“IBR”) used in the calculation of the Company’s right of use assets and lease liabilities, estimation of clinical and other accruals and the valuation allowance on deferred tax assets. Actual amounts realized may differ from these estimates.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy classifies the inputs to valuation techniques that would be used to measure fair value into one of three levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to the short-term nature of their maturities, such as cash and cash equivalents, accrued interest receivable, accounts payable, notes payable, accrued expenses and other current liabilities.

The Company accounts for warrants to purchase its common stock par value of $0.0001 per share (its “common stock”) pursuant to Accounting Standards Codification (“ASC”) Topic 470, Debt (“ASC 470”), and ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), and classifies warrants for common stock as liabilities or equity. The warrants classified as liabilities are reported at their estimated fair value (see Note 13, Fair Value Measurements) and any changes in fair value are reflected in other income (expense). The warrants classified as equity are reported at their estimated relative fair value with no subsequent remeasurement. The Company’s outstanding warrants are discussed in more detail in Note 12, Warrants.

Deferred Issuance Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred issuance costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in shareholders’ equity as a reduction of additional paid-in capital generated as a result of the issuance.

The Company did not have any deferred issuance costs as of September 30, 2025. As of December 31, 2024, the Company had $261 thousand in deferred issuance costs related to the Company’s sales agreement with Cantor Fitzgerald & Co. The sales agreement is discussed further in Note 10, Stockholders’ Equity.

Cash, cash equivalents, and restricted cash

Cash and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase. Cash equivalents consist primarily of exchange-traded money market funds.

The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.

Short-term and long-term investments

The Company accounts for investments in accordance with ASC Topic 320, Investments - Debt and Equity Securities. Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each reporting period.

At September 30, 2025, the Company’s short-term and long-term investments consisted of U.S. treasury securities and corporate bonds with original maturity exceeding 90 days, and investments in exchange traded mutual funds. The Company classifies these securities as current and non-current. The Company considers all of its securities for which there is a determinable fair market value, and there are no restrictions on the Company’s ability to sell within the next twelve months, as available-for-sale securities.

The Company recognizes the change in fair value of available-for-sale equity securities within other income in the condensed consolidated statements of operations and comprehensive income (loss), and available-for-sale debt securities are measured at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) in the condensed consolidated balance sheets.

The Company reviews its investments at each reporting date to identify and evaluate whether a decline in fair value below the amortized cost basis of available-for-sale debt securities is due to credit-related factors and determines if such unrealized losses are the result of credit losses that require impairment. The Company records an allowance for credit losses on available-for-sale debt securities when a decline in fair value is determined to be credit-related, rather than recording a direct write-down of the investment's amortized cost. Factors considered in determining whether an unrealized loss is the result of credit-related factors include the extent to which the fair value is less than the cost basis, any changes to the rating of the security by a rating agency, the financial condition and near-term prospects of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic condition and the

Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

The Company did not recognize any credit losses on its short-term and long-term investments during the three and nine months ended September 30, 2025 and 2024.

Concentration of credit risk

The Company maintains its cash and cash equivalent balances in the form of business checking accounts and money market accounts, the balances of which, at times, may exceed federally insured limits. Although the Company currently believes that the financial institutions with whom it does business will be able to fulfill their commitments to the Company, there is no assurance that those institutions will be able to continue to do so. The Company has not experienced any credit losses associated with its balances in such accounts for the three and nine months ended September 30, 2025 and 2024.

Lease liabilities and right-of-use assets

The Company is party to certain contractual arrangements for equipment, lab space, and an animal facility, which meet the definition of leases under Financial Accounting Standards Board (“FASB”) ASC Topic 842, Leases (“ASC 842”). In accordance with ASC 842, the Company recorded right-of-use assets and related lease liabilities for the present value of the lease payments over the lease terms. The Company’s IBR was used in the calculation of its right-of-use assets and lease liabilities.

The Company elected not to apply the recognition requirements of ASC 842 to short-term leases, which are deemed to be leases with a lease term of twelve months or less. Instead, the Company recognized lease payments in the Condensed Consolidated Statements of Operations on a straight-line basis over the lease term and variable payments in the period in which the obligation for these payments was incurred. The Company elected this policy for all classes of underlying assets.

Research and development expenses

Expenses incurred in connection with research and development activities are expensed as incurred. These include licensing fees to use certain technology in the Company’s research and development projects, fees paid to consultants and various entities that perform certain research and testing on behalf of the Company, and expenses related to animal care, research-use equipment depreciation, salaries, benefits, and stock-based compensation granted to employees in research and development functions.

During the three and nine months ended September 30, 2025 and 2024, the Company had contracts with multiple contract research organizations (“CRO”) to complete studies as part of research grant agreements. These costs include upfront, milestone and monthly expenses as well as reimbursement for pass through costs. All research and development costs are expensed as incurred except when the Company is accounting for nonrefundable advance payments for goods or services to be used in future research and development activities. In these cases, these payments are capitalized at the time of payment and expensed in the period the research and development activity is performed. As actual costs become known, the Company will adjust the accrual; such changes in estimate may result in material changes in the Company’s clinical study accrual, which could also materially affect reported results of operations. For the three and nine months ended September 30, 2025 and 2024, there were no material adjustments to the Company’s prior period estimates of accrued expenses for clinical trials.

Property, Plant and Equipment

The Company records property, plant, and equipment at cost less depreciation and amortization. Depreciation is calculated using straight-line methods over the following estimated useful lives:


Animal facility equipment	7 years
Laboratory equipment	7 years
Leasehold improvements	Shorter of asset life or lease term
Office furniture and equipment	5 years
Vehicles	5 years

Repairs and maintenance expenses are expensed as incurred.

Impairment of long-lived assets

The Company reviews the recoverability of long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If necessary, the Company compares the estimated undiscounted future net cash flows to the related asset’s carrying value to determine whether there has been an impairment.

If an asset is considered impaired, the asset is written down to fair value, which is based either on discounted cash flows or appraised values in the period the impairment becomes known. The Company believes that long-lived assets are recoverable, and no impairment was deemed necessary, during the three and nine months ended September 30, 2025 and 2024.

Stock-based compensation

FASB ASC Topic 718, Compensation– Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. The Company recognizes compensation cost relating to stock-based payment transactions using a fair-value measurement method, which requires all stock-based payments to employees, directors, and non-employee consultants, including grants of stock options, to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards. The Company determines the fair value of common stock based on the closing market price at closing on the date of the grant.

In determining the fair value of stock-based awards, the Company utilizes the Black-Scholes option-pricing model, which uses both historical and current market data to estimate fair value. The Black-Scholes option-pricing model incorporates various assumptions, such as the value of the underlying common stock, the risk-free interest rate, expected volatility, expected dividend yield, and expected life of the options. For awards with performance-based vesting criteria, the Company estimates the probability of achievement of the performance criteria and recognizes compensation expense related to those awards expected to vest. No awards may have a term in excess of ten years. Forfeitures are recorded when they occur. Stock-based compensation expense is classified in the condensed consolidated statements of operations based on the function to which the related services are provided. The Company recognizes stock-based compensation expense over the vesting period.

Income taxes

Deferred income taxes reflect future tax effects of temporary differences between the tax and financial reporting basis of the Company’s assets and liabilities measured using enacted tax laws and statutory tax rates applicable to the periods when the temporary differences will affect taxable income. When necessary, deferred tax assets are reduced by a valuation allowance, to reflect realizable value, and all deferred tax balances are reported as long-term on the condensed consolidated balance sheets. Accruals are maintained for uncertain tax positions, as necessary.

The Company uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. The Company has elected to treat interest and penalties related to income taxes, to the extent they arise, as a component of income taxes.

Revenue recognition

The Company’s revenue is primarily generated through grants from government and other (non-government) organizations.

Grant revenue is recognized during the period that the research and development services occur, as qualifying expenses are incurred or conditions of the grants are met. The Company concluded that payments received under these grants represent conditional, nonreciprocal contributions, as described in ASC 958, Not-for-Profit Entities, and that the grants are not within the scope of ASC 606, Revenue from Contracts with Customers, as the organizations providing the grants do not meet the definition of a customer. Expenses for grants are tracked by using a project code specific to the grant, and the employees also track hours worked by using the project code.

Foreign Currency Translations and Transactions

Assets and liabilities of the Company's foreign subsidiary are translated at the year-end exchange rate. Operating results of the Company's foreign subsidiary are translated at average exchange rates during the period. Translation adjustments have no effect on net income (loss) and are included in “Accumulated other comprehensive income (loss)” in the accompanying Condensed Consolidated Balance Sheets.

Comprehensive income (loss)

Comprehensive income (loss) includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. The components of comprehensive income (loss) for the three and nine months ended September 30, 2025 and 2024 consist of net income (loss), foreign currency translation adjustments from its subsidiaries not using the U.S. dollar as their functional currency, and unrealized gains and losses on available-for-sale debt securities.

Litigation

From time to time, the Company is involved in legal proceedings, investigations and claims generally incidental to its normal business activities. In accordance with U.S. GAAP, the Company accrues for loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Legal costs in connection with loss contingencies are expensed as incurred.

Earnings per share

In accordance with ASC 260, Earnings per Share (“ASC 260”), basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding during the period. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding for the period including potential dilutive common shares such as stock options and convertible preferred stock. See Note 5, Earnings per share, for further details.

Segment reporting

In accordance with ASC 280, Segment Reporting, the Company’s business activities are organized into one reportable segment, as only the Company’s operating results in their entirety are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated and to assess performance.

Australian Research and Development Tax Credit

The Company recognizes other income from Australian research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured. The research and development incentive is one of the key elements of the Australian Government’s support for Australia’s innovation system and is supported by legislative law primarily in the form of the Australian Income Tax Assessment Act 1997, as long as eligibility criteria are met. Under the program, a percentage of eligible research and development expenses incurred by the Company through its subsidiary in Australia are reimbursed.

Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive regime described above. At each period end, management estimates the refundable tax offset available to the Company based on available information at the time and it is included in other income in the condensed consolidated statements of operations and comprehensive income (loss).

(3) New accounting standards

Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Topic 220)”. ASU 2024-03 requires additional disclosure in the notes to financial statements of specified information about certain expenses such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation and other expenses which are presented in the face of the income statement within continuing operations. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its condensed consolidated financial statements and disclosures.

(4) Revenue

Government grants

There was no revenue recognized for the three and nine months ended September 30, 2025. There was no revenue recognized from government grants for the three months ended September 30, 2024 and approximately $1.2 million recognized from government grants for the nine months ended September 30, 2024. The Company had various grants from the US Department of Defense that terminated in 2022. The Company satisfied all obligations under these arrangements as of December 31, 2024.

The Company computed basic earnings (loss) per share of common stock based on the weighted average number of shares of common stock utilizing the two-class method. The Company computed diluted earnings (loss) per share of common stock based on the weighted average number of shares of common stock outstanding plus potentially dilutive shares of common stock outstanding during the period, if applicable.

The following is a reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share for the three and nine months ended September 30, 2025 and 2024:


	For The Three Months Ended September 30,					For The Nine Months Ended September 30,
	2025		2024			2025		2024
Calculation of basic income (loss) per share attributable to the Company’s shareholders
Net income (loss)	$	45,445,469	$	(10,349,410	)	$	30,134,426

(1) Nature of Business

(2) Summary of Significant Accounting Policies

(3) New accounting standards

Accounting Pronouncements Not Yet Adopted

(4) Revenue

(5) Earnings per share

SAB Biotherapeutics, Inc. 10-Q