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
March 31, 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:
001-40492
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(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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(Registrant’s telephone number, including area code)
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N/A
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(Former name, former address and former fiscal year, if changed since last report)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading symbol
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Name of each exchange on which
Registered
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The
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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
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No
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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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
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No
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Smaller reporting company
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Emerging growth company
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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.
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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No
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The Registrant had
27,239,885
shares of common stock, $0.001 par value, outstanding as of May 7, 2025.
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TABLE OF CONTENTS
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| Page | ||
| Part I. Financial Information | ||
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Item 1
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5 | |
| 5 | ||
| 7 | ||
| 8 | ||
| 9 | ||
| 10 | ||
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Item 2
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20 | |
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Item 3
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25 | |
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Item 4
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26 | |
| Part II. Other Information | ||
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Item 1
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26 | |
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Item 1A
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26 | |
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Item 2
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27 | |
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Item 3
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Item 4
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Item 5
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Item 6
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28 | |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements include, but are not limited to, statements concerning:
• our ability to obtain additional financing to fund the clinical development and commercialization of our product candidate FemBloc® permanent birth control, if approved for sale, approved products and fund our operations;
• our ability to pay our convertible notes due November 2025, if not converted into common stock;
• our ability to obtain U.S. Food and Drug Administration (FDA) approval for our product candidate, FemBloc, for permanent birth control;
• our ability to successfully grow sales of FemaSeed® intratubal insemination;
• estimates regarding the total addressable market for our products and product candidate;
• competitive companies and technologies in our industry;
• our business model and strategic plans for our products, product candidate, technologies and business, including our implementation thereof;
• commercial success and market acceptance of our products and product candidate;
• our ability to achieve and maintain adequate levels of coverage or reimbursement for FemBloc or any future product candidates, and our products we seek to commercialize;
• our ability to accurately forecast customer demand for our products and product candidate, and manage our inventory;
• our ability to build, manage, and maintain our direct sales and marketing organization, and to market and sell our FemaSeed artificial insemination product, FemBloc permanent birth control system (if approved for sale), and women-specific medical product solutions in markets in and outside of the United States;
• our ability to establish, maintain, grow or increase sales and revenues;
• our expectations about market trends;
• our ability to continue operating as a going concern;
• our ability to develop and advance our product candidate, FemBloc, and successfully initiate and complete clinical trials;
• the ability of our clinical trials to demonstrate safety and effectiveness of our product candidate, FemBloc, and other positive results;
• our ability to enroll subjects in the clinical trial for our product candidate, FemBloc, in order to advance the development thereof on a timely basis;
• our ability to manufacture our products and product candidate, if approved, in compliance with applicable laws, regulations, and requirements and to oversee third-party suppliers, service providers and vendors in the performance of any contracted activities in accordance with applicable laws, regulations, and requirements;
• our ability to hire and retain our senior management and other highly qualified personnel;
• FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry generally, including healthcare reform measures in the United States and international markets;
• the timing or likelihood of regulatory filings and approvals or clearances;
• our ability to establish and maintain intellectual property protection for our products and product candidate and our ability to avoid claims of infringement; and
• the volatility of the trading price of our common stock.
The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described under the sections in this Quarterly Report on Form 10-Q entitled “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, 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. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission as exhibits hereto completely and 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, whether as a result of any new information, future events, changed circumstances or otherwise. The forward-looking statements contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended.
PART I. FINANCIAL INFORMATION
FEMASYS INC.
(unaudited)
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Assets
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March 31,
2025
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December 31,
2024
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||||||
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Current assets:
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Cash and cash equivalents
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$
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Accounts receivable, net
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Inventory
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Prepaid and other current assets
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Total current assets
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Property and equipment, at cost:
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Leasehold improvements
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Office equipment
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Furniture and fixtures
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Machinery and equipment
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Construction in progress
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Less accumulated depreciation
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(
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(
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Net property and equipment
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Long-term assets:
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Lease right-of-use assets, net
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Intangible assets, net of accumulated amortization
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Other long-term assets
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Total long-term assets
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Total assets
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$
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(continued)
FEMASYS INC.
Condensed Balance Sheets
(unaudited)
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Liabilities and Stockholders’ Equity
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March 31,
2025
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December 31,
2024
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Current liabilities:
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Accounts payable
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$ |
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Accrued expenses
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Convertible notes payable, net (including related parties)
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Clinical holdback – current portion
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Operating lease liabilities – current portion
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Total current liabilities
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Long-term liabilities:
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Clinical holdback – long-term portion
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Operating lease liabilities – long-term portion
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Total long-term liabilities
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Total liabilities
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Commitments and contingencies
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Stockholders’ equity:
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Common stock, $
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Treasury stock,
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Warrants
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Additional paid-in-capital
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Accumulated deficit
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(
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(
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Total stockholders’ equity
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Total liabilities and stockholders’ equity
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$ |
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The accompanying notes are an integral part of these condensed unaudited financial statements.
FEMASYS INC.
(unaudited)
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Three Months Ended March 31,
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2025
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2024
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Sales
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$ |
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Cost of sales (excluding depreciation expense)
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Operating expenses:
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Research and development
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Sales and marketing
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General and administrative
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Depreciation and amortization
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Total operating expenses
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Loss from operations
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Other (expense) income:
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Interest income
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Interest expense
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Total other (expense) income, net
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Loss before income taxes
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Income tax (benefit)
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Net loss
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$ |
(
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Net loss attributable to common stockholders, basic and diluted
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$ |
(
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Net loss per share attributable to common stockholders, basic and diluted
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$ |
(
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(
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Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
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The accompanying notes are an integral part of these condensed unaudited financial statements.
FEMASYS INC.
(unaudited)
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Total
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||||||||||||||||||||||||||||||||
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Common stock
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Treasury common stock
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Additional
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Accumulated
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stockholders’
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||||||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Warrants
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paid-in capital
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deficit
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equity
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THREE MONTHS ENDED MARCH 31, 2025
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||||||||||||||||||||||||||||||||
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Balance at December 31, 2024
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$
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$
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(
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)
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$
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$
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$
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(
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)
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$
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Share-based compensation expense
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—
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—
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Issuance of common stock in connection with at-the-market offering, net of issuance costs
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Net loss
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—
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—
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(
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(
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||||||||||||||||||||||
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Balance at March 31, 2025
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$
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$
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(
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)
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$
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$
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$
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(
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)
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$
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||||||||||||||||
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THREE MONTHS ENDED MARCH 31, 2024
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||||||||||||||||||||||||||||||||
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Balance at December 31, 2023
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$
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$
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(
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)
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$
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$
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$
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(
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)
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$
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||||||||||||||||
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Issuance of common stock in connection with at-the-market offering, net of issuance costs
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||||||||||||||||||||||||
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Share-based compensation expense
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—
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—
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Expiration of warrant
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(
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)
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Net loss
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—
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—
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(
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)
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(
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)
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||||||||||||||||||||||
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Balance at March 31, 2024
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$
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$
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(
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)
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$
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$
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$
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(
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)
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$
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||||||||||||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
FEMASYS INC.
(unaudited)
|
Three months ended March 31
|
||||||||
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2025
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2024
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|||||||
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Cash flows from operating activities:
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Net loss
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$ |
(
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(
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation
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Amortization
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Amortization of right-of-use assets
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Accounts receivable reserve
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(
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Loss on property and equipment dispositions
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Share-based compensation expense
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Amortization of debt issuance costs and discount
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Changes in operating assets and liabilities:
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Accounts receivable
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(
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Inventory
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(
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(
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Prepaid and other assets
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(
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(
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Accounts payable
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(
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Accrued expenses
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(
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Lease liabilities
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(
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(
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Other liabilities
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(
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) |
(
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Net cash used in operating activities
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(
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) |
(
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Cash flows from investing activities:
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Acquisition of patents
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(
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Purchases of property and equipment
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(
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(
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Net cash used in investing activities
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(
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(
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Cash flows from financing activities:
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Proceeds from at-the-market sales of common stock
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Issuance costs for at-the-market sales of common stock
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(
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) |
(
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Net cash provided by financing activities
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Net change in cash and cash equivalents
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(
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) | |||||
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Cash and cash equivalents:
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Beginning of period
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End of period
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$ |
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Supplemental cash flow information
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Non-cash investing and financing activities:
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Property and equipment costs included in accounts payable and accrued expense
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$ |
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Acquisition of patents included in accounts payable
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Deferred offering costs reclassified to additional paid-in-capital
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The accompanying notes are an integral part of these condensed unaudited financial statements.
FEMASYS
INC.
(unaudited)
(1)
Organization,
Nature of Business, and Liquidity
Organization and Nature
of Business
Femasys
Inc. (the Company or Femasys) was incorporated in Delaware on February 19, 2004
and is headquartered in Suwanee, Georgia. The Company is a leading biomedical
innovator, addressing significant unmet needs in women’s health worldwide, with
a broad patent-protected portfolio of disruptive, accessible, in-office
therapeutic and diagnostic products. The Company is a U.S. manufacturer that
has received global regulatory approvals for its product portfolio, which is
currently being commercialized in the U.S. and select countries. FemaSeed®
Intratubal Insemination, a groundbreaking infertility treatment delivering
sperm directly to the site of conception, is U.S. FDA-cleared and approved in
Europe, United Kingdom (UK), Canada and Israel. Peer-reviewed publication of
positive data from its pivotal clinical trial of FemaSeed demonstrated
effectiveness and safety. FemVue®, a companion diagnostic for fallopian tube
assessment via ultrasound, is U.S. FDA-cleared and approved in Europe, UK,
Canada, Japan and Israel. FemCerv®, an endocervical tissue sampler for cervical
cancer diagnosis, is U.S. FDA-cleared and approved in Europe, UK, Canada and
Israel. FemBloc® permanent birth control is a revolutionary first-in-class
non-surgical solution, that involves the minimally-invasive placement of a
patented delivery system for precise delivery of our proprietary synthetic
tissue adhesive (blended polymer) into both fallopian tubes simultaneously.
Over time, the blended polymer fully degrades and produces nonfunctional scar
tissue to permanently block the fallopian tubes in the safest most natural
approach. This is in stark contrast to centuries-old surgical sterilization
with reported risks that include infection, minor or major bleeding, injury to
nearby organs, anesthesia-related events, and even death. Along with the
various surgical risks, some patients may not qualify as good surgical
candidates due to obesity or medical comorbidities. The FemBloc non-surgical
approach has the potential to offer a safer, more accessible in-office
alternative with fewer risks, contraindications, and substantially lower cost.
Peer-reviewed publication of positive data from its initial clinical trials of
FemBloc demonstrated compelling effectiveness and five-year safety. In March
2025, the Company announced CE mark certification under European Union Medical
Device Regulation (EU MDR) as the first regulatory approval in the world for
the FemBloc delivery system for non-surgical female permanent birth control.
For the FemBloc blended polymer, an integral part of the FemBloc permanent
birth control, the Company has successfully completed an expedited G12 Special
MDR Audit for Class III devices and the Notified Body has recommended for CE
mark approval pending the final stages of European Medical Agency (EMA) review,
with potential approval expected mid-2025.
In March 2025, we
announced strategic distribution partnerships for FemBloc in Spain.
The pivotal clinical trial (clinicaltrials.gov:
NCT05977751) is enrolling participants for U.S. approval. FemChec®, U.S.
FDA-cleared and approved in Europe and Canada, is a companion diagnostic
product for FemBloc’s ultrasound-based confirmation test. FemCath® is U.S.
FDA-cleared and approved in Europe, Canada and Israel for selective fallopian
tube evaluation. The Company is a woman-founded and led company with an expansive,
internally created intellectual property portfolio with over
200
issued patents
globally, in-house chemistry, manufacturing, and controls (CMC) and device
manufacturing capabilities and proven ability to develop products with
commercialization efforts underway.
Our suite of products and product
candidate address what we believe are multi-billion dollar global market
segments in which there has been little advancement for many years, helping
women avoid pharmaceutical solutions, implants and surgery that can be
expensive and expose women to harm.
Basis of Presentation
The
Company has prepared the accompanying condensed financial statements pursuant
to the rules and regulations of the
U.S. Securities and Exchange Commission (SEC). Certain information and footnote
disclosures normally included in the annual financial statements prepared in
accordance with accounting principles generally accepted in the
United States of America (U.S. GAAP) have been condensed or omitted pursuant to
these rules and regulations. These condensed financial statements should be
read in conjunction with the Company’s audited financial statements and
footnotes related thereto for the year ended December 31, 2024 included in our
Annual Report on
Form 10-K filed with the SEC on March 27, 2025
(the Annual Report). There have been no material changes to the Company’s
significant accounting policies described in Note 2 to the financial statements
included in the Annual Report.
FEMASYS INC.
Condensed
Notes to Financial Statements
(unaudited)
In the opinion of
management, the unaudited financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the Company’s financial position and the results of its operations and cash
flows at the dates for the periods presented. The results of operations for such
interim periods are not necessarily indicative of the results expected
for the full year.
Use of Estimates
The
preparation of financial statements in
conformity with U.S. GAAP requires the Company 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 financial
statements, and the reported amounts of revenue and expense during the
reporting periods. Estimates for these and other items are subject to change
and are reassessed by management in accordance with U.S. GAAP. Actual results
could differ from those estimates.
Liquidity
As of March 31, 2025,
the Company had cash and cash equivalents of $
3,820,208
. The Company plans to
finance its operations and development needs with its existing cash and cash
equivalents, additional equity and/or debt financing arrangements, and revenue
primarily anticipated from domestic sales of FemaSeed and FemVue and
international sales of FemaSeed, FemVue and FemBloc to support the Company’s
commercial efforts and research and development activities, primarily focused
on FemBloc. There can be no assurance that the Company will be able to obtain
additional financing on terms acceptable to the Company, on a timely basis, or
at all. If the Company is not able to obtain sufficient funds on acceptable
terms when needed, the Company’s business, results of operations, and financial
condition could be materially adversely impacted.
For the three months
ended March 31, 2025, the Company generated a net loss of $
5,896,839
. The
Company expects such losses to increase over the next few years as the Company commercializes
FemaSeed and its other products and advances FemBloc through clinical
development if and until FDA approval is received and is available to be
marketed in the U.S.
The
financial
statements
have
been
prepared
on
a
going-concern
basis,
which
contemplates
the
realization
of
assets
and
the
satisfaction
of
liabilities
in
the
normal
course
of
business.
The
Company
has
incurred
net
operating
losses
in
every
year
since
inception
and
has
an
accumulated
deficit
as
of
March
31,
2025
of
$
133,095,096
and
expects
to
incur
additional
losses
and
negative
operating
cash
flows
for
at
least
the
next
twelve
months.
The
Company’s
ability
to
meet
its
obligations
is
dependent
upon
its
ability
to
generate
sufficient
cash
flows
from
operations
and
future
financing
transactions.
Although
management
expects
the
Company
will
continue
as
a
going
concern,
there
is
no
assurance
that
management’s
plans
will
be
successful
because
the
availability
and
amount
of
such
funding
are
not
certain.
Accordingly,
substantial
doubt
exists
about
the
Company’s
ability
to
continue
as
a
going
concern
for
at
least
one
year
from
the
issuance
of
these
financial
statements.
The
accompanying
financial
statements
do
not
include
any
adjustments
to
reflect
the
possible
future
effects
on
the
recoverability
of
assets
or
the
amounts
and
classifications
of
liabilities
that
may
result
from
the
possible
inability
of
the
Company
to
continue
as
a
going
concern.
FEMASYS
INC.
Condensed
Notes to Financial Statements
(unaudited)
Recently Issued Accounting Pronouncements
In
December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740):
Improvements to Income Tax Disclosures
. The ASU requires the annual
financial statements to include consistent categories and greater
disaggregation of information in the rate reconciliation, and income taxes paid
disaggregated by jurisdiction. ASU 2023-09 is effective for the Company’s annual
reporting periods beginning after December 15, 2024. Adoption is either with a
prospective method or a fully retrospective method of transition. Early
adoption is permitted. The Company adopted the ASU on January 1, 2025, and it
did not have a material impact on the Company’s financial statements.
Recently Issued
Accounting Pronouncements – Not Yet Adopted
No
other new accounting pronouncement issued or effective
has had, or is expected to have, a material impact on the Company’s financial
statements.
(2)
Fair
Value of Financial Instruments
The Company applies a
fair value hierarchy that requires the use of observable market data, when
available, and prioritizes the inputs to valuation techniques used to measure
fair value in the following categories:
Level 1 – Valuation is
based upon quoted prices for identical instruments traded in active markets.
Level 2 – Valuation is
based upon quoted prices for similar instruments in active markets, quoted
prices for identical or similar instruments in markets that are not active, and
model‑based valuation techniques for which all significant assumptions are
observable in the market.
Level 3 – Valuation is
generated from model‑based techniques that use significant assumptions not
observable in the market. These unobservable assumptions reflect the Company’s
own estimates of assumptions market participants would use in pricing the asset
or liability.
Certain of the Company’s
financial instruments, including cash, accounts receivable and other
liabilities approximate their fair value because of the short‑term maturity of
these financial instruments.
(3)
Cash
and Cash Equivalents
As of March 31, 2025 and
December 31, 2024, money market funds included in cash and cash equivalents on
the balance sheets were $
2,877,844
and $
3,451,761
, respectively, which
represent level 1 within the fair value hierarchy. The Company considers all
highly liquid investments with an initial maturity of three months or less
when purchased to be cash equivalents. Cash equivalents consist of amounts
invested in money market mutual funds and are stated at fair value.
FEMASYS
INC.
Condensed
Notes to Financial Statements
(unaudited)
(4)
Inventories
Inventory, stated at cost, consisted of the following:
|
March 31,
|
December 31,
|
|||||||
|
2025
|
2024
|
|||||||
|
Materials
|
$
|
|
|
|||||
|
Work in progress
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
Inventory, net
|
$
|
|
|
|||||
(5)
Accrued
Expenses
Accrued
expenses included the following:
|
March 31,
|
December 31,
|
|||||||
|
2025
|
2024
|
|||||||
|
Incentive and other compensation costs
|
$ |
|
|
|||||
|
Clinical trial costs
|
|
|
||||||
|
Accrued interest
|
|
|
||||||
|
Director fees
|
|
|
||||||
|
Other
|
|
|
||||||
|
Accrued expenses
|
$
|
|
|
|||||
(6)
Revenue
Recognition
Revenue is recognized upon shipment of our goods based upon contractually stated pricing at standard payment terms ranging from
30
to
60
days. All revenue is recognized at a point in time. For the three months ended March 31, 2025 and 2024, there were
no
unsatisfied performance obligations.
The majority of products
sold directly to U.S customers are shipped via common carrier, and the customer
pays for shipping and handling and assumes control Free on Board (FOB) shipping
point. Products shipped to our international distributors are in accordance
with their respective agreements; however, the shipping terms are generally
EX-Works, reflecting that control is assumed by the distributor at the shipping
point. Returns are only accepted with prior authorization from the Company.
Items to be returned must be in original unopened cartons and are
subject to a
30
% restocking fee. Throughout the periods presented, the Company
has not had a history of significant returns.
The
Company’s sales for the quarters ended March 31, 2025 and 2024 were exclusively
in the United States.
FEMASYS
INC.
Condensed
Notes to Financial Statements
(unaudited)
(7)
Commitments and Contingencies
Legal
Claims
Occasionally,
the Company may be a party to legal claims or proceedings, the outcomes
of which are subject to significant uncertainty. In accordance with Accounting Standards Codification (ASC) 450,
Contingencies
,
the Company will assess the likelihood of an adverse judgment for any
outstanding claim as well as ranges of probable losses. When it has been
determined that a loss is probable and the amount can be reasonably estimated,
the Company will record a liability. For both periods presented, there were no
material legal contingencies requiring accrual or disclosure.
The
Company, as permitted under Delaware law and in accordance with its bylaws,
indemnifies its officers and directors for certain events or occurrences,
subject to certain limits, while the officer or director is or was serving at
the Company’s request in such capacity. The Company entered into employment
agreements with its officers, which provide for indemnification protection in
the executive’s capacity as an officer for actions taken within the scope of
employment. The maximum amount of potential future indemnification is
unlimited; however, the Company has obtained directors’ and officers’ insurance
that limits its exposure. The Company believes the fair value for these
indemnification obligations is minimal. Accordingly, the Company has not
recognized any liabilities relating to these obligations as of March 31, 2025
and December 31, 2024.
(8)
Convertible Notes with Warrants
(November 2023 Financing)
On November 21, 2023,
the Company issued (i) senior unsecured convertible notes in an aggregate
principal amount of $
6,850,000
, convertible into shares of common stock at a
conversion price of $
1.18
per share, (ii) Series A Warrants to purchase up to
an aggregate of
5,805,083
shares of common stock at an exercise price of $
1.18
per share, and (iii) Series
B Warrants, together with the Series A Warrants, and, together with the
convertible notes, to purchase up to an aggregate of
5,805,083
shares of common
stock at an exercise price of $
1.475
per share. The financing
resulted in aggregate gross proceeds of $
6,850,000
, before $
525,144
of
transaction costs.
The
Notes accrue interest at a rate of
6.0
% per annum, payable annually, in cash or
shares of common stock at the Company’s option, and mature on
November 21,
2025
, unless earlier converted or redeemed. In November 2024, the Company paid
$
111,000
of accrued interest in cash and $
300,000
accrued interest in common
stock, comprising
315,790
shares.
The
Notes are convertible into shares of common stock at the election of the holder
at any time at an initial conversion price of $
1.18
. The Company has agreed not
to issue or sell any equity securities of the Company at a price below the
then-current conversion price for a period of
18
months after closing, subject
to certain exceptions. Beginning six months after issuance, the Company may
require holders to convert their Notes into conversion shares if the closing
price of the common stock exceeds $
2.36
per share for
10
consecutive trading
days and the daily dollar trading volume of the common stock exceeds $
1,000,000
per day during the same period and certain equity conditions described in the
Notes are satisfied. The Notes provide for certain events of default, whereby
each holder of Notes will be able to require the Company to redeem in cash any
or all of the holder’s Notes at a premium of
115
%. The conversion feature did
not meet the requirements for separate accounting and is not accounted for as a
derivative instrument.
The
Warrants
The
Series A Warrants are exercisable immediately and expire
five years
from the
date of issuance. The Company has the right to call the exercise of the Series
A Warrants if the closing price of the common stock exceeds
200
% of the Series
A Exercise Price for
10
consecutive trading days and the daily dollar trading
volume of the common stock exceeds $
1,000,000
per day during the same period and certain equity conditions are satisfied.
FEMASYS
INC.
Condensed
Notes to Financial Statements
(unaudited)
The Series B Warrants expired
in
.
The
Series A Warrants and Series B Warrants are classified as components of
permanent equity because they are freestanding financial instruments that are
legally detachable and separately exercisable from the shares of common stock
from which they are issued, are immediately exercisable, do not embody an
obligation for the Company to repurchase its shares, and permit the holders to
receive a fixed number of shares of common stock upon exercise.
For the three months ended
March 31, 2025, the Company recognized total interest expense of $
459,449
, including
coupon interest expense of $
102,750
and amortization of debt discount and
issuance costs of $
356,699
. For the three months ended March 31, 2024, the
Company recognized total interest expense of $
361,522
, including coupon
interest expense of $
102,750
and amortization of debt discount and issuance
costs of $
258,802
. The Notes, net of unamortized discount costs was $
5,762,927
and $
5,406,228
as of March 31, 2025 and December 31, 2024, respectively. The
fair value of the convertible notes on March 31, 2025 and December 31, 2024,
calculated using a discounted cash flow analysis using level 3 inputs, was $
6,589,007
and $
6,493,720
, respectively.
(9)
Stockholders’ Equity
On July 1, 2022, the
Company filed a shelf registration statement to sell up to $
150
million in
common and preferred stock, debt securities and warrants. Additionally, the
Company entered into an Equity Distribution Agreement (the “Equity Distribution
Agreement”) with Piper Sandler & Co. (“Piper Sandler” or the “Sales Agent”)
and filed a related prospectus establishing an “at-the-market” facility,
pursuant to which the Company may offer and sell shares of common stock from
time to time through the Sales Agent. In October 2023, the Sales Agent was authorized to sell
shares for aggregate proceeds up to $
16.7
million at current market prices
until all shares are sold.
During the quarter ended
March 31, 2025, approximately
3.7
million shares of common stock have been sold
for aggregate proceeds of approximately $
5.4
million, and as of March 31, 2025,
approximately $
1.6
million remains available for sale pursuant to the
prospectus. As of March 31, 2025, the amount the Company is authorized to sell is
subject to baby-shelf limitations.
As
of March 31, 2025, the Company had
27,087,886
shares of common stock
outstanding, and
no
dividends have been declared or paid.
FEMASYS
INC.
Condensed
Notes to Financial Statements
(unaudited)
(10)
Equity
Incentive Plans and Warrants
Stock-Based Awards
(a)
Stock
Option Plans
Activity under the
Company’s stock option plans for the three months ended March 31, 2025 was as
follows:
|
Number of
options
|
Weighted
average
exercise
price
|
Aggregate
Intrinsic Value
|
||||||||||
|
Outstanding at December 31, 2024
|
|
$
|
|
|||||||||
|
Granted
|
|
|
||||||||||
|
Forfeited
|
(
|
)
|
|
|||||||||
|
Outstanding at March 31, 2025
|
|
$
|
|
|
||||||||
|
Vested and exercisable at March 31, 2025
|
|
$
|
|
|
||||||||
The
intrinsic value represents the amount by which the market price of the
underlying stock at March 31, 2025 exceeds the exercise price of an option.
Options granted under the
2021 Stock Option Plan for the three months ended March 31, 2025 to employees
were
1,466,515
, and the weighted average exercise prices were $
1.09
. The
weighted-average fair values of the options granted to employees was $
0.84
and
were estimated using the following Black-Scholes assumptions:
|
Employees
|
||||
|
Expected term (in years)
|
|
|||
|
Risk‑free interest rate
|
|
|||
|
Dividend yield
|
|
|||
|
Expected volatility
|
|
|||
As of March
31, 2025, the total number of shares of common stock reserved for future awards
under the 2021 Stock Option Plan was
144,058
.
(b)
Inducement Grants
Since 2023, the Company has granted
250,000
inducement grants, a stock option grant to certain employees for the right to
purchase shares, which were approved by the Compensation Committee. The
inducement grants vest in equal installments over
four years
provided the
employee remains employed by the Company on the vesting date. In the first
quarter of 2025, there were forfeitures of
100,000
options.
FEMASYS
INC.
Condensed
Notes to Financial Statements
(unaudited)
The inducement grants
are summarized as follows:
|
Weighted
|
Weighted
|
|||||||||||
|
average
|
average
|
|||||||||||
|
Number of
|
exercise
|
remaining
|
||||||||||
|
options
|
price
|
life years
|
||||||||||
|
Outstanding at December 31, 2024
|
|
$
|
|
|
||||||||
|
Forfeited
|
(
|
)
|
|
—
|
||||||||
|
Outstanding at March 31, 2025
|
|
$
|
|
|
||||||||
|
Vested and exercisable at March 31, 2025
|
|
$
|
|
|
||||||||
(c)
Share-Based Compensation Expense
The following table
shows the share-based compensation expense related to vested stock option
grants to employees and nonemployees by financial statement line item on the
accompanying condensed statement of comprehensive loss:
|
Three Months Ended March 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Research and development
|
$
|
|
|
|||||
|
Sales and marketing
|
(
|
)
|
|
|||||
|
General and administrative
|
|
|
||||||
|
Total share-based compensation expense
|
$
|
|
|
|||||
As of March 31
, 2025
, the remaining share-based compensation
expense that is expected to be recognized in future periods for employees and
nonemployees is $
2,034,357
, which includes $
155,222
of compensation expense to
be recognized upon achieving certain performance conditions. For service-based
awards, the $
1,879,135
of unrecognized expense is expected to be recognized
over a weighted average period of
3.1
years.
(d)
Employee
Stock Purchase Plan (ESPP)
For the three months
ended
March 31, 2025
,
no
shares of common
stock were issued under the Company’s ESPP Plan. As of
March 31, 2025
, the total number of shares of common stock
reserved for future awards under the ESPP Plan was
768,915
.
(11)
Related‑Party
Transactions
In November 2023, the
Company issued unsecured convertible notes and accompanying Series A and Series
B Warrants (see Note 8).
The transaction included the issuance of a $
5
million convertible note and
Series A and Series B Warrants to PharmaCyte Biotech, Inc. The interim CEO,
President and Director of PharmaCyte Biotech, Inc., Joshua Silverman, serves on
the Company’s board of directors. The Series B Warrants expired in
. In November 2024, the Company paid PharmaCyte accrued interest on the
convertible note of $
300,000
in equity
comprising
315,790
common
shares.
FEMASYS
INC.
Condensed
Notes to Financial Statements
(unaudited)
In addition, during the
year ended December 31, 2024 and three months ended March 31, 2025, a family
member of the CEO was employed by the Company.
(12)
Net
Loss per Share Attributable to Common Stockholders
The
following table sets forth the computation of the basic and diluted net loss
per share:
|
|
Three Months Ended March 31,
|
|||||||
|
2025
|
2024
|
|||||||
|
Net loss attributable to common stockholders, basic & diluted
|
$
|
(
|
)
|
(
|
)
|
|||
|
Weighted average number of shares used in computing net loss per share attributable to common stockholders,
basic and diluted
|
|
|
||||||
|
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(
|
)
|
(
|
)
|
|||
The following
potentially dilutive securities have been excluded from the computations of
diluted weighted average shares outstanding because they would be
anti-dilutive:
|
March 31,
2025
|
March 31,
2024
|
|||||||
|
Options to purchase common stock
|
|
|
||||||
|
Warrants to purchase common stock, in connection with April 2023 financing
|
|
|
||||||
|
Warrants to purchase common stock, in connection with November 2023 financing
|
|
|
||||||
|
Warrants to purchase common stock
|
|
|
||||||
|
Total potential shares
|
|
|
||||||
(13)
Income
Taxes
The effective tax rate
of
0
% for the three months ended March 31, 2025 and 2024 was lower than the
statutory rate due to the Company remaining in a full valuation allowance
position.
(14) Segment Reporting
In accordance with FASB ASC Topic 280, Segment Reporting , the Company has determined that it operates as a business segment, which is the development and commercialization of therapeutic and diagnostic products that service women’s reproductive health needs (infertility and permanent birth control).
The determination of a business segment is consistent with the financial information regularly provided to the Company’s chief operating decision maker (“CODM”). As a reportable segment entity, the Company’s segment performance measure is net loss attributable to shareholders. The measurement of segment assets is reported on the balance sheet as total assets. The Company’s CODM is its Chief Executive Officer and Chief Financial Officer, who together review and evaluate net income for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.
Significant segment expenses, as provided to the CODM are as follows:
|
|
||||||||
|
Three Months
Ended March 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Sales
|
$ |
|
|
|||||
|
Cost of sales (excluding depreciation expense)
|
|
|
||||||
|
Research and development expense
|
|
|
||||||
|
Other research and development expenses
1
|
|
|
||||||
|
Total research and development expense
|
|
|
||||||
|
Sales and marketing
|
|
|
||||||
|
General and administrative
|
|
|
||||||
|
Depreciation and amortization expense
|
|
|
||||||
|
Total operating expenses
|
|
|
||||||
|
Total other (expense) income, net
|
(
|
) |
(
|
) | ||||
|
Loss before income taxes
|
(
|
) |
(
|
) | ||||
|
Income tax (benefit)
|
(
|
) |
|
|||||
|
Net loss
|
$ |
(
|
) |
(
|
) | |||
1
Other
research and development expenses include clinical affairs, regulatory,
manufacturing and quality assurance expenses.
The following discussion
and analysis of our financial condition and results of operations should be
read in conjunction with our financial statements and related notes included
elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form
10-K filed with the U.S. Securities and Exchange Commission, or the SEC, on
March 27, 2025. This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which are subject to the “safe harbor” created by those sections.
Forward-looking statements are based on our management’s beliefs and
assumptions and on information currently available to our management. In some
cases, you can identify forward-looking statements by terms such as “may,”
“will,” “should,” “could,” “goal,” “would,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “project,” “predict,” “potential” and similar
expressions intended to identify forward-looking statements and reflect our
beliefs and opinions on the relevant subject. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to these differences include those discussed below
and elsewhere in this Quarterly Report on Form 10-Q. The forward-looking
statements included in this Quarterly Report on Form 10-Q are made only as of
the date hereof. These statements are based upon information available to us as
of the filing date of this Quarterly Report on Form 10-Q, 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 investors are cautioned not to unduly rely upon these
statements.
Overview
We are a leading
biomedical innovator, addressing significant unmet needs in women’s health
worldwide, with a broad patent-protected portfolio of disruptive, accessible,
in-office therapeutic and diagnostic products. The Company is a U.S.
manufacturer that has received global regulatory approvals for its product
portfolio worldwide, and they are currently being commercialized in the U.S.
and key international markets. FemaSeed® Intratubal Insemination, a
groundbreaking infertility treatment delivering sperm directly to the site of
conception, is U.S. FDA-cleared and approved in Europe, United Kingdom (UK),
Canada and Israel. A peer-reviewed publication of positive data from its
pivotal clinical trial of FemaSeed demonstrated effectiveness and safety with
high satisfaction from both patients and practitioners. FemVue®, a
companion diagnostic for fallopian tube assessment via ultrasound, is U.S.
FDA-cleared and approved in Europe, UK, Canada, Japan and Israel. FemCerv®, an
endocervical tissue sampler for cervical cancer diagnosis, is U.S. FDA-cleared
and approved in Europe, UK, Canada and Israel. FemBloc® permanent birth control
is a revolutionary first-in-class non-surgical solution, that involves
minimally-invasive placement of a patented delivery system for precise delivery
of our proprietary synthetic tissue adhesive (blended polymer) into both
fallopian tubes simultaneously. Over time, the blended polymer fully degrades
and produces nonfunctional scar tissue to permanently block the fallopian tubes
in the safest most natural approach. This is in stark contrast to centuries-old
surgical sterilization with reported risks that include infection, minor or
major bleeding, injury to nearby organs, anesthesia-related events, and even
death. Along with the various surgical risks, some patients may not qualify as
good surgical candidates due to obesity or medical comorbidities. The FemBloc
non-surgical approach has the potential to offer a safer, more accessible
in-office alternative with fewer risks, contraindications, and substantially
lower cost. A peer-reviewed publication of positive data from its initial
clinical trials of FemBloc has demonstrated compelling effectiveness and
five-year safety with high satisfaction from both patients and practitioners.
In March 2025, we announced CE mark certification under EU MDR as the first
regulatory approval in the world for the FemBloc delivery system for
non-surgical female permanent birth control. For the FemBloc blended polymer,
an integral part of the FemBloc permanent birth control, we have successfully
completed an expedited G12 Special MDR Audit for Class III devices and the
Notified Body has recommended for CE mark approval pending the final stages of
EMA review, with potential approval expected mid-2025. In March 2025, we
announced strategic distribution partnerships for FemBloc in Spain. The pivotal
clinical trial (clinicaltrials.gov: NCT05977751) is now enrolling participants
for U.S. approval. FemChec®, U.S. FDA-cleared and approved in Europe and Canada,
is a companion diagnostic product for FemBloc’s ultrasound-based confirmation
test. FemCath® is U.S. FDA-cleared and approved in Europe, Canada and Israel
for selective fallopian tube evaluation. We are a woman-founded and led company
with an expansive, internally created intellectual property portfolio with over
200 issued patents globally, in-house chemistry, manufacturing, and controls
(CMC) and device manufacturing capabilities and proven ability to develop
products with commercialization efforts underway. Our suite of products and
product candidate address what we believe are multi-billion dollar global
market segments in which there has been little advancement for many years,
helping women avoid pharmaceutical solutions, implants and surgery that can be
expensive and expose women to harm.
Corporate Update
On
January 16, 2025, we announced notice of allowance for a new U.S. patent
application for FemaSeed.
On
January 30, 2025, we announced notices of intention to grant two new European
patent applications for FemBloc.
On
February 4, 2025, we announced Israeli regulatory approvals for FemaSeed and
two diagnostic devices.
On
February 11, 2025, we announced United Kingdom regulatory approvals for
FemaSeed and two diagnostic devices.
On
February 25, 2025, we announced peer-reviewed publication of positive safety
and efficacy results from FemBloc clinical trials.
On
March 13, 2025, we announced FemBloc permanent birth control delivery system
approval in Europe; FemBloc blended polymer component successfully completed an
expedited G12 Special MDR Audit for Class III devices, and the Notified Body
has recommended for CE mark approval pending the final stages of European
Medical Agency (EMA) review.
On
March 18, we announced distribution partnerships for FemBloc in Spain.
On March 19, 2025, we announced
a partnership with CNY Fertility, a national conglomerate of 11 fertility
centers, to offer FemaSeed.
Results of Operations
Comparison of the
Three Months Ended March 31, 2025 and 2024
The following table
shows our results of operations for the three months ended March 31, 2025 and
2024:
|
Three
Months Ended March 31,
|
|||||||||||||||||||
|
2025
|
2024
|
Change
|
%
Change
|
||||||||||||||||
|
Sales
|
$ | 341,264 | 271,140 | 70,124 | 25.9 | % | |||||||||||||
|
Cost of sales (excluding depreciation expense)
|
117,266 | 88,532 | 28,734 | 32.5 | % | ||||||||||||||
|
Operating expenses:
|
|||||||||||||||||||
|
Research and development
|
2,968,472 | 1,770,731 | 1,197,741 | 67.6 | % | ||||||||||||||
|
Sales and marketing
|
908,567 | 300,487 | 608,080 | 202.4 | % | ||||||||||||||
|
General and administrative
|
1,722,713 | 1,502,804 | 219,909 | 14.6 | % | ||||||||||||||
|
Depreciation and amortization
|
84,853 | 71,228 | 13,625 | 19.1 | % | ||||||||||||||
|
Total operating expenses
|
5,684,605 | 3,645,250 | 2,039,355 | 55.9 | % | ||||||||||||||
|
Loss from operations
|
(5,460,607 | ) | (3,462,642 | ) | (1,997,965 | ) | 57.7 | % | |||||||||||
|
Other (expense) income:
|
|||||||||||||||||||
|
Interest income
|
19,029 | 224,684 | (205,655 | ) | (91.5 | )% | |||||||||||||
|
Interest expense
|
(459,449 | ) | (361,552 | ) | (97,897 | ) | 27.1 | % | |||||||||||
|
Other (expense) income, net
|
(440,420 | ) | (136,868 | ) | (303,552 | ) | 221.8 | % | |||||||||||
|
Loss before income taxes
|
(5,901,027 | ) | (3,599,510 | ) | (2,301,517 | ) | 63.9 | % | |||||||||||
|
Income tax (benefit)
|
(4,188 | ) | — | (4,188 | ) | 100.0 | % | ||||||||||||
|
Net loss
|
$ | (5,896,839 | ) | (3,599,510 | ) | (2,297,329 | ) | 63.8 | % | ||||||||||
Sales
Sales
increased by $70,124, or 25.9%, to $341,264 for the three months ended March 31,
2025, from $271,140 for the three months ended March 31, 2024, primarily due to
increased sales of FemaSeed.
Cost of sales
Cost of sales increased
by $28,734 or 32.5%, to $117,266 for the three months ended March 31, 2025, from
$88,532 for the three months ended March 31, 2024, and is attributed to
increased sales.
Research and
development
The following table
summarizes our R&D expenses incurred during the periods presented:
|
|
Three
Months Ended March 31,
|
|
||||||
|
|
2025
|
|
|
2024
|
|
|||
|
Compensation and related personnel costs
|
|
$
|
1,305,659
|
|
|
|
989,057
|
|
|
Clinical-related costs
|
|
|
393,975
|
|
|
|
438,775
|
|
|
Material and development costs
|
|
|
541,499
|
|
|
|
143,699
|
|
|
Professional and outside consultant costs
|
|
|
192,196
|
|
|
|
168,182
|
|
|
Regulatory and other costs
|
|
|
535,143
|
|
|
|
31,018
|
|
|
Total research and development expenses
|
|
$
|
2,968,472
|
|
|
|
1,770,731
|
|
R
&D expenses increased by $1,197,741 or 67.6%, to $2,968,472 for the three months ended March 31, 2025 from
$1,770,731 for the three
months ended March 31, 2024. The increase relates primarily to increased regulatory
costs, material and development costs and compensation costs.
Sales and marketing
Sales
and marketing expenses increased by $608,080 or 202.4%, to $908,567 for the
three months ended March 31, 2025 from $300,487 for the three months ended March
31, 2024. The increase relates primarily to compensation and travel costs as we
began recruitment of a commercial team to promote our available products.
General and
administrative
General and
administrative expenses increased by $219,909, or 14.6%, to $1,722,713 for the
three months ended March 31, 2025 from $1,502,804 for the three months ended March
31, 2024. The increase relates primarily to increased compensation costs and
professional fees.
Depreciation and
amortization
Depreciation and
amortization expenses increased by $13,625, or 19.1%, to $84,853 for the three
months ended March 31, 2025 from $71,228 for the three months ended March 31,
2024. The increase relates to additional fixed assets and intangible assets in
service.
Other (expense) income,
net
Other (expense) income,
net increased by $303,552, or 221.8%, to $440,420 for the three months ended March
31, 2025 from $136,868 for the three months ended March 31, 2024. The increase
relates to reduced interest income and increased non-cash discount amortization
related to the convertible notes payable.
Income tax (benefit)
expense
Income tax benefit
increased by $4,188 or 100%, to $4,188 for the three months ended March 31,
2025 from $0 for the three months ended March 31, 2024 due to a decrease in the
state minimum taxes we are required to pay.
Liquidity and Capital
Resources
Sources of
liquidity
Since our inception
through March 31, 2025, our operations have been financed primarily by net
proceeds from the sale of our common stock and convertible preferred stock,
indebtedness and, to a lesser extent, product revenue. As of March 31, 2025, we
had $3,820,208 of cash and cash equivalents and an accumulated deficit of $133,095,096.
In July 2022, we entered
into an Equity Distribution Agreement (the “Equity Distribution Agreement”)
with Piper Sandler & Co. (the “Sales Agent”) and filed a related prospectus
establishing an “at-the-market” facility, pursuant to which we may offer and
sell shares of our common stock from time to time through the Sales Agent. As
of October 2023, the Sales Agent was authorized to sell shares of common stock
for an aggregate price up to $16.7 million pursuant to the prospectus. As of March
31, 2025, approximately 8.3 million shares of common stock have been sold to
date for aggregate proceeds of approximately $15.1 million. As of March 31,
2025, the amount we are authorized to sell is subject to baby-shelf
limitations. As of March 31, 2025, the available amount pursuant to the
prospectus was $1.6 million.
In November 2023, we
entered into a securities purchase agreement with certain accredited investors
pursuant to which we sold (i) senior unsecured convertible notes in an
aggregate principal amount of $6,850,000, convertible into shares of common
stock at a conversion price of $1.18 per share, (ii) Series A Warrants to
purchase up to an aggregate of 5,805,083 shares of common stock at an exercise
price of $1.18 per share, and (iii) Series B Warrants to purchase up to an
aggregate of 5,805,083 shares of common stock at an exercise price of $1.475
per share (collectively, the “November 2023 Financing”). Net proceeds from the
November 2023 Financing were $6.3 million. The Series B Warrants expired in
November 2024 unexercised. If exercised for cash, the Series A Warrants issued
in the November 2023 Financing could result in proceeds up to an additional
$6.8 million. The Series A Warrants expire in November 2028.
Funding
requirements
Based on our current operating plan, our current cash and cash equivalents and anticipated revenues from product sales are expected to be sufficient to fund our ongoing operations into early third quarter of 2025. However, it is not sufficient to fund our ongoing operations for twelve months from the date of these financial statements and we will need to obtain additional financing to fund our ongoing operations. Our estimate as to how long we expect our existing cash and cash equivalents to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate. As a result of our current limited financial liquidity, we have concluded that substantial doubt exists about our ability to continue as a going concern.
Our cash and cash
equivalents as of March 31, 2025 will not be sufficient to sustain our
operations, including funding our product candidate, FemBloc through regulatory
approval, and we anticipate needing to raise additional capital to complete the
development and commercialization of our product candidate. However, we can
give no assurances that we will be able to secure additional sources of funds to
support our operations, or if such funds will be available to us, that such
additional financing will be sufficient to meet our needs or be on terms
acceptable to us. This risk may increase if economic and market conditions
deteriorate. If we are unable to obtain additional financing when needed, we
may need to terminate, significantly modify, or delay the development of our
product candidate, or we may need to obtain funds through collaborations or
otherwise on terms that may require us to relinquish rights to our technologies
or product candidates that we might otherwise seek to develop or commercialize
independently. If we are unable to raise adequate additional capital as and
when required in the future, we could be forced to cease development activities
and terminate our operations, and you could experience a complete loss of your
investment.
We expect to continue to
make substantial investments in our ongoing pivotal trial that is designed to
provide clinical evidence of the safety and effectiveness of our product
candidate, FemBloc. We also expect to continue to make investments in research
and development to develop future products, manufacturing, regulatory affairs
and post-market clinical trials. We will additionally need to make investments
in our sales and marketing organization for FemaSeed, and if approved, FemBloc.
Because of these and other factors, we expect to continue to incur substantial
net losses and negative cash flows from operations for the foreseeable future.
Our future capital
requirements will depend on many factors, including:
●
the cost, timing and
results of our clinical trials and regulatory reviews;
●
the cost and timing of
establishing sales, marketing, and distribution capabilities;
●
the timing, receipt,
and amount of sales from our current and potential products;
●
our ability to continue manufacturing our
products and product candidate and to secure the components, services, and
supplies needed in their production;
●
the degree of success
we experience in commercializing our products;
●
the emergence of
competing or complementary technologies;
●
the cost of preparing, filing, prosecuting,
maintaining, defending, and enforcing any patent claims and other intellectual
property rights; and
●
the extent to which we
acquire or invest in businesses, products, or technologies, although we
currently have no commitments or agreements relating to any of these types of
transactions.
Cash Flows
Comparison of the
Three months ended March 30, 2025 and 2024
The following table
summarizes our cash flows for the three months ended March 31, 2025 and 2024:
|
|
Three
Months Ended March 31,
|
|
||||||
|
|
2025
|
|
|
2024
|
|
|||
|
Net cash used in operating activities
|
|
$
|
(4,765,214
|
)
|
|
|
(4,568,124
|
)
|
|
Net cash used in investing activities
|
|
|
(96,605
|
)
|
|
|
(90,160
|
)
|
|
Net cash provided by financing activities
|
|
|
5,230,266
|
|
|
|
778,175
|
|
|
Net change in cash and cash equivalents
|
|
$
|
368,447
|
|
|
(3,880,109
|
)
|
|
Operating
activities
For the three months ended March 31, 2025, cash used in operating activities was $4,765,214, attributable to a net loss of $5,896,839, partially offset by non-cash charges of $979,503 and a net change in our net operating assets and liabilities of $152,122. Non-cash charges primarily consisted of $367,237 in share-based compensation, $356,699 in amortization of the discount on convertible notes, $132,207 in right-of-use asset amortization and $84,853 in depreciation and amortization. The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $259,775 an increase in accounts payable and accrued expenses of $909,917, partially offset by an increase in inventory of $815,865, a decrease in lease liabilities of $133,076 and increase in prepaid and other assets of $53,523. The Company intends to meet future operating cash requirements through increased sales of commercial products and fundraising, as discussed in
Funding requirements
.
For the three months ended March 31, 2024, cash used in operating activities was $4,568,124, attributable to a net loss of $3,599,510 and a net change in our net operating assets and liabilities of $1,529,893, partially offset by non-cash charges of $561,279. Non-cash charges primarily consisted of $258,802 in amortization of the discount on convertible notes, $152,664 in right-of-use amortization, $77,585 in share-based compensation and $71,228 in depreciation and amortization. The change in our net operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $929,992, increases in accounts receivable and prepaid and other assets of $209,982 and inventory of $304,179.
Investing
activities
For the three months
ended March 31, 2025, cash used in investing activities for the purchase of
property and equipment was $96,605.
For the three months
ended March 31, 2024, cash used in investing activities for the purchase of
property and equipment and acquisition of patents was $90,160.
Financing
activities
For the three months
ended March 31, 2025, cash provided by financing activities was $5,230,266,
attributable to proceeds from sales under the at-the-market facility, net of
issuance costs.
For the three months
ended March 31, 2024, cash provided by financing activities was $778,175,
attributable to proceeds from sales under the at-the-market facility, net of
issuance costs.
Critical
Accounting Estimates
Management’s discussion
and analysis of our financial condition and results of operations is based on
our financial statements, which have been prepared in accordance with U.S.
generally accepted accounting principles, or GAAP. The preparation of these financial
statements requires us to make estimates and assumptions for the reported
amounts of assets, liabilities, revenue, expenses and related disclosures. Our
estimates are based on our historical experience and on various other factors
that we believe are reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions and
any such differences may be material.
While our significant
accounting policies are more fully described in Note 2 to our financial
statements appearing in
the Annual
Report on Form 10-K for the year ended December 31, 2024 as filed on March 27,
2025, we believe the following discussion addresses our most critical
accounting policies, which are those that are most important to our financial
condition and results of operations and require our most difficult, subjective
and complex judgments.
Revenue
recognition
Our policy is to
recognize revenue when a customer obtains control of the promised goods under
Accounting Standards Update (ASU) 2020-05,
Revenue from Contracts with
Customers
(Topic 606), which we adopted effective January 1, 2018. The
amount of revenue recognized reflects the consideration to which we expect to
be entitled to receive in exchange for these goods, and we have elected to
exclude amounts collected from customers for all sales (and other similar)
taxes from the transaction price. We do not have multiple performance
obligations in our customer orders, so revenue is recognized upon shipment of
our goods based upon contractually stated pricing at standard payment terms
ranging from 30 to 60 days. All revenue is recognized at a point in time.
The majority of products
sold directly to U.S. customers are shipped via common carrier, and the
customer pays for shipping and handling and assumes control at Free on Board (FOB)
shipping point. Products shipped to our international distributors are in accordance
with their respective agreements; however, the shipping terms are generally
EX-Works, reflecting that control is assumed by the distributor at the shipping
point. Returns are only accepted with prior authorization from the Company.
Items to be returned must be in original unopened cartons and are subject to a
30% restocking fee. As of March 31, 2025, we have not had a history of
significant returns.
Not applicable.
Evaluation of Disclosure
Controls and Procedures
We maintain disclosure
controls and procedures that are designed to ensure that information required
to be disclosed in the reports that we file or submit under the Exchange Act is
(1) recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and (2) accumulated and communicated to
our management, including to our principal executive officer and principal
financial officer, to allow timely decisions regarding required disclosure. Our
management, with the participation of our Chief Executive Officer (principal
executive officer) and Chief Financial Officer (principal financial and
accounting officer), has evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended) as of the end of the period
covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our
management has concluded that our disclosure controls and procedures were
effective at a reasonable assurance level as of March 31, 2025.
Changes in Internal
Control over Financial Reporting
There were no changes in
our internal control over financial reporting identified in connection with the
evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that
occurred during the quarter ended March 31, 2025 that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
Inherent Limitations on
Effectiveness of Controls
Our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer), does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
PART
II OTHER INFORMATION
From time to time we may
be involved in legal proceedings arising in connection with our business. As of
March 31, 2025, we have not had a history of significant legal proceedings and
there are no currently pending actions against us. We believe that any amount,
or range, of reasonably possible losses in connection with any potential actions
against us in excess of established reserves, in the aggregate, will not be material
to our financial condition or cash flows. However, losses may be material to
our operating results for any particular future period, depending on the level
of income for such period and the significance of any actions against us.
As of the date of this
report, there are no material changes to our risk factors as previously
disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year
ended December 31, 2024 except as noted below.
Disruptions at
the FDA and other government agencies caused by funding shortages, staffing
limitations, or global health concerns could hinder their ability to hire,
retain or deploy key leadership and other personnel, or otherwise prevent new
products from being developed, approved or commercialized in a timely manner or
at all, which could negatively impact our business.
The ability of the FDA and
comparable foreign regulatory authorities to review and approve new products
can be affected by a variety of factors, including government budget and
funding levels, statutory, regulatory, and policy changes, the FDA’s or foreign
regulatory authorities’ ability to hire and retain key personnel and accept the
payment of user fees, and other events that may otherwise affect the FDA’s or
foreign regulatory authorities’ ability to perform routine functions. Average
review times at the FDA and foreign regulatory authorities have fluctuated in
recent years as a result. In addition, government funding of other government
agencies that fund research and development activities is subject to the
political process, which is inherently fluid and unpredictable. Disruptions at
the FDA and other agencies may also slow the time necessary for new products to
be reviewed and/ or approved by necessary government agencies, which would
adversely affect our business. For example, in recent years, the U.S.
government has shut down several times and certain regulatory agencies, such as
the FDA, have had to furlough critical FDA employees and stop critical
activities. In addition, the current U.S. Presidential administration has
issued certain policies and Executive Orders directed towards reducing the
employee headcount and costs associated with U.S. administrative agencies,
including the FDA, and it remains unclear the degree to which these efforts may
limit or otherwise adversely affect the FDA’s ability to conduct routine
activities.
Separately, in response
to the COVID-19 pandemic, the FDA postponed most inspections at domestic and
foreign manufacturing facilities at various points. If a prolonged government
shutdown occurs, or if funding shortages, staffing limitations, or renewed global
health concerns otherwise hinder or prevent the FDA or other regulatory
authorities from conducting their regular inspections, reviews, or other
regulatory activities, it could significantly impact our manufacturing facility
and the ability of the FDA or other regulatory authorities to timely review and
process our regulatory submissions, which could have a material adverse effect
on our business.
Item
2.
Unregistered Sales of Equity
Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
None.
None.
Not applicable.
During the period
covered by this Quarterly Report,
none
of the Company’s directors or executive
officers have adopted or terminated a Rule 10b5-1 trading arrangement or a
non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation
S-K under the Securities Exchange Act of 1934, as amended).
|
Incorporated
by Reference
|
|||||
|
Exhibit
|
|||||
|
Number
|
Description of
Document
|
Schedule/Form
|
File
Number |
Exhibit
|
Filing
Date |
|
Eleventh Amended and
Restated Certificate of Incorporation of Femasys Inc.
|
Form
8-K
|
001-40492
|
3.1
|
June
22, 2021
|
|
|
Amended and Restated
Bylaws of Femasys Inc.
|
Form
8-K
|
001-40492
|
3.2
|
June
22, 2021
|
|
|
First Amendment to the
Amended and Restated Bylaws of Femasys Inc.
|
Form
8-K
|
001-40492
|
3.1
|
March
30, 2023
|
|
|
Certification of
Principal Executive Officer Pursuant to Securities Exchange Act Rules
13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|||||
|
Certification of
Principal Financial Officer Pursuant to Securities Exchange Act Rules
13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|||||
|
Certification of
Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|||||
|
Certification of
Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|||||
|
101.INS*
|
Inline XBRL Instance
Document (the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document)
|
||||
|
101.SCH*
|
Inline XBRL Taxonomy
Extension Schema Document
|
||||
|
101.CAL
|
Inline XBRL Taxonomy
Extension Calculation Linkbase Document
|
||||
|
101.DEF*
|
Inline XBRL Taxonomy
Definition Linkbase Document
|
||||
|
101.LAB*
|
Inline XBRL Taxonomy
Extension Label Linkbase Document
|
||||
|
101.PRE*
|
Inline XBRL Taxonomy
Extension Presentation Linkbase Document
|
||||
|
104*
|
Cover Page Interactive
Data File (formatted as inline XBRL and contained in Exhibit 101)
|
||||
*Filed
herewith
Pursuant to the
requirements of the Securities Act, the registrant has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Suwanee, State of Georgia, on this 8
th
day of May 2025.
| FEMASYS INC. | ||
|
Dated: May 8, 2025
|
By: /s/ Kathy
Lee-Sepsick
|
|
|
Kathy Lee-Sepsick
|
||
|
Chief Executive
Officer and President
|
|
Dated: May 8, 2025
|
|
|
|
|
By: /s/ Dov Elefant
|
|
|
|
Dov Elefant
|
|
|
|
Chief Financial
Officer
|
|
TABLE OF CONTENTS
Part I. Financial InformationItem I.financial StatementsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities, Use Of Proceeds, and Issuer Purchases Of Equity SecuritiesItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits