Fibrobiologics Inc

This management proposal asks shareholders to approve under Nasdaq Listing Rule 5635(d) the issuance of up to 2,272,728 shares upon exercise of warrants issued in the March 2026 Offering and up to 159,091 shares upon exercise of placement-agent warrants. Management is seeking this shareholder approval because, without it, the exercise of those warrants could violate Nasdaq’s 20% issuance rule and the Company could be required to repay outstanding warrants in cash, which would strain liquidity given current cash needs. The March Offering closed April 2, 2026 and included common shares, pre-funded warrants and warrants (March Warrants) exercisable for one share each at $1.32, as well as placement-agent warrants exercisable at $1.65; the exercise of these instruments could generate gross proceeds (if fully exercised) of approximately $3.0 million and $263,000 respectively. The Board considered the Company’s cash position and liquidity needs, consulted management and advisors, and determined the March Offering and related issuance were in the Company’s best interests at the time; it now recommends shareholder approval to enable exercise and avoid operational and financial disruption. Approval would permit warrant holders to exercise (subject to beneficial ownership limits) but would also dilute existing shareholders and could depress the trading price if exercised and sold into the market. If the proposal is not approved, outstanding warrants in excess of Nasdaq limits must be repaid in cash, which could force the Company to seek emergency financing on unfavorable terms or reduce available cash for operations, potentially harming business prospects. The proposal does not seek shareholder approval to authorize the underlying agreements (the Company already executed the March SPA and Engagement Letter); rather, it seeks approval solely for Nasdaq compliance to permit issuance of the underlying shares. The Board’s recommendation reflects a judgment balancing short-term dilution against the need to preserve liquidity and execute the financing strategy adopted in March 2026.

This proposal asks shareholders to approve a new 2026 Equity and Incentive Compensation Plan that would replace the 2022 Stock Plan and initially add 2,000,000 new shares plus the remaining 339,199 shares available under the predecessor plan for an initial aggregate reserve of 2,339,199 shares as of April 24, 2026, with an annual evergreen increase of up to 4% of outstanding shares from 2027–2036. Management seeks approval to ensure it can continue to grant competitive equity awards to attract, motivate, and retain employees and non-employee directors while linking compensation to long-term stockholder value. The plan contains several investor-friendly features including prohibitions on liberal share recycling, a cap on non-employee director aggregate annual compensation ($800,000), and a repricing prohibition without shareholder approval; it also contemplates standard governance features like committee administration, clawback accommodation, and limitations on transferability. However, shareholder approval would materially increase potential dilution: company disclosures estimate fully-diluted overhang would rise from approximately 10.7% to 33.5% if the 2026 Plan were in effect as of April 24, 2026, and the initial 2,000,000-share request represents a significant grant reserve relative to ~5.2M shares outstanding. The Board justifies the increase by citing historical burn rates, projected multi-year runway for share usage (5–6 years under current practices), and the competitive necessity of equity compensation versus increased cash pay given limited cash resources. Key governance protections include no minimum vesting periods required by the plan (leaves discretion to the committee), anti-repricing without shareholder approval, and limits on share counting that avoid liberal recycling of exercised or withheld shares. Approving the plan would allow the Company to register the shares on Form S-8 and continue its equity grant program; if not approved the 2022 Plan would remain in effect and the Company might be forced to raise cash compensation or seek other retention tools. The Board recommends a FOR vote, arguing the operational and talent retention benefits outweigh dilution concerns, but shareholders should weigh the dilution risk, the evergreen feature, and the discretionary nature of future grants in evaluating the proposal.