FEMASYS INC - Quarter Report: 2021 September (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2021
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
Femasys Inc.
|
||
(Exact Name of Registrant as Specified in its Charter)
|
Delaware
|
11-3713499
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
|
3950 Johns Creek Court, Suite 100
|
||
Suwanee, GA 30024
|
(770) 500-3910
|
|
(Address of principal executive offices, including zip code)
|
(Registrant’s telephone number, including area code)
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☑
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☑ | Smaller reporting company ☑ |
Emerging growth company ☑ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
|
Trading symbol
|
Name of each exchange on which
registered
|
|||
Common stock, $0.001 par value
|
FEMY
|
The
|
The Registrant had 11,799,720 shares of common stock, $0.001 par value, outstanding as of November 9, 2021.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on 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 develop and advance our current product candidates and programs into, and successfully initiate and complete, clinical trials;
|
• |
the ability of our clinical trials to demonstrate safety and effectiveness of our product candidates and other positive results;
|
• |
estimates regarding the total addressable market for our product candidates;
|
• |
competitive companies and technologies in our industry;
|
• |
our ability to obtain FDA approval for our permanent birth control system, ability to gain FDA grant of a de novo classification request for our intrauterine insemination system, expand sales of our
women-specific medical products and develop and commercialize additional products;
|
• |
our ability to commercialize or obtain regulatory approvals, grants of de novo classification requests or 510(k) clearance for our product candidates, or the effect of delays in commercializing or obtaining
regulatory authorizations;
|
• |
our business model and strategic plans for our products, technologies and business, including our implementation thereof;
|
• |
commercial success and market acceptance of our product candidates;
|
• |
our ability to achieve and maintain adequate levels of coverage or reimbursement for our FemBloc system or any future products we may seek to commercialize;
|
• |
our ability to manufacture our products and product candidates 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;
|
• |
the impact of the COVID-19 pandemic on our business, financial condition, results of operations, and prospects;
|
• |
our ability to accurately forecast customer demand for our product candidates, and manage our inventory;
|
• |
our ability to build, manage and maintain our direct sales and marketing organization, and to market and sell our permanent birth control system, artificial insemination system and women-specific medical
products in markets in and outside of the United States;
|
• |
our ability to hire and retain our senior management and other highly qualified personnel;
|
• |
our ability to obtain additional financing in future offerings;
|
• |
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 product candidates and our ability to avoid claims of infringement;
|
• |
the volatility of the trading price of our common stock;
|
• |
our expectations regarding the use of proceeds from this offering; and
|
• |
our expectations about market trends.
|
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 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
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 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
ITEM 1. |
Financial Statements
|
FEMASYS INC.
(unaudited)
Assets
|
September 30,
2021
|
December 31,
2020
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
27,280,309
|
3,322,226
|
|||||
Accounts receivable, net
|
143,459
|
125,790
|
||||||
Inventory, net
|
150,336
|
131,378
|
||||||
Other current assets
|
759,453
|
284,115
|
||||||
Total current assets
|
28,333,557
|
3,863,509
|
||||||
Property and equipment, at cost:
|
||||||||
Leasehold improvements
|
1,155,332
|
1,155,332
|
||||||
Office equipment
|
99,344
|
64,145
|
||||||
Furniture and fixtures
|
424,947
|
424,947
|
||||||
Machinery and equipment
|
2,262,908
|
2,242,088
|
||||||
Construction in progress
|
268,226
|
139,150
|
||||||
4,210,757
|
4,025,662
|
|||||||
Less accumulated depreciation
|
(2,600,787
|
)
|
(2,197,868
|
)
|
||||
Net property and equipment
|
1,609,970
|
1,827,794
|
||||||
Long-term assets:
|
||||||||
Lease right-of-use assets, net
|
759,018
|
1,057,506
|
||||||
Intangible assets, net of accumulated amortization
|
33,046
|
65,069
|
||||||
Other long-term assets
|
428,933
|
792,440
|
||||||
Total long-term assets
|
1,220,997
|
1,915,015
|
||||||
Total assets
|
$
|
31,164,524
|
7,606,318
|
(continued)
FEMASYS INC.
Balance Sheets
(unaudited)
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity (Deficit)
|
September 30,
2021
|
December 31,
2020
|
||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
436,890
|
674,333
|
|||||
Accrued expenses
|
597,856
|
1,117,601
|
||||||
Clinical holdback – current portion
|
18,947
|
—
|
||||||
Notes payable – current portion
|
320,866
|
630,010
|
||||||
Lease liabilities – current portion
|
412,911
|
434,072
|
||||||
Other – current
|
32,895
|
32,895
|
||||||
Total current liabilities
|
1,820,365
|
2,888,911
|
||||||
Long-term liabilities:
|
||||||||
Clinical holdback – long-term portion
|
155,960
|
164,972
|
||||||
Note payable – long-term portion
|
—
|
182,490
|
||||||
Lease liabilities – long-term portion
|
501,912
|
809,092
|
||||||
Other – long-term
|
32,895
|
32,895
|
||||||
Total long-term liabilities
|
690,767
|
1,189,449
|
||||||
Total liabilities
|
2,511,132
|
4,078,360
|
||||||
Commitments and contingencies
|
||||||||
Redeemable convertible preferred stock:
|
||||||||
Preferred stock, Series B, $0.001 par, none authorized, issued
and outstanding as of September 30, 2021; 13,344,349 shares
authorized, issued and outstanding as of December 31, 2020
|
—
|
10,748,873
|
||||||
Preferred stock, Series C, $0.001 par, none authorized, issued
and outstanding as of September 30, 2021; 42,491,484 shares
authorized, issued and outstanding as of December 31, 2020
|
—
|
44,594,813
|
||||||
Stockholders’ equity (deficit):
|
||||||||
Common stock, $0.001 par, 200,000,000 authorized,
11,916,943 shares issued and 11,799,720 outstanding as of
September 30, 2021; and 95,583,558 authorized, 1,110,347
shares
issued and 993,124 outstanding as of December 31, 2020
|
11,916
|
1,110
|
||||||
Treasury stock, 117,223 shares
|
(60,000
|
)
|
(60,000
|
)
|
||||
Preferred stock, Series A, $0.001 par, none authorized, issued
and outstanding as of September 30, 2021; 17,310,609 shares
authorized, and 17,210,609 shares issued and
outstanding
as of December 31, 2020
|
—
|
17,211
|
||||||
Warrants
|
702,492
|
702,492
|
||||||
Additional paid-in-capital
|
108,374,466
|
22,725,949
|
||||||
Accumulated deficit
|
(80,375,482
|
)
|
(75,202,490
|
)
|
||||
Total stockholders’ equity (deficit)
|
28,653,392
|
(51,815,728
|
)
|
|||||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)
|
$
|
31,164,524
|
7,606,318
|
The accompanying notes are an integral part of these unaudited financial statements.
FEMASYS INC.
(unaudited)
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Sales
|
$
|
269,581
|
313,208
|
925,362
|
756,954
|
|||||||||||
Cost of sales
|
105,403
|
90,435
|
306,072
|
218,898
|
||||||||||||
Gross margin
|
164,178
|
222,773
|
619,290
|
538,056
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
1,140,577
|
995,620
|
3,030,467
|
3,235,022
|
||||||||||||
Sales and marketing
|
43,284
|
31,010
|
87,931
|
281,583
|
||||||||||||
General and administrative
|
1,087,363
|
596,778
|
3,030,749
|
1,790,595
|
||||||||||||
Depreciation and amortization
|
144,399
|
164,242
|
449,211
|
499,534
|
||||||||||||
Total operating expenses
|
2,415,623
|
1,787,650
|
6,598,358
|
5,806,734
|
||||||||||||
Loss from operations
|
(2,251,445
|
)
|
(1,564,877
|
)
|
(5,979,068
|
)
|
(5,268,678
|
)
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest income, net
|
1,649
|
342
|
1,957
|
22,298
|
||||||||||||
Other income
|
—
|
—
|
821,515
|
—
|
||||||||||||
Interest expense
|
(7,055
|
)
|
(3,760
|
)
|
(14,546
|
)
|
(9,093
|
)
|
||||||||
Other expense | (2,850 | ) | — | (2,850 | ) | — | ||||||||||
Total other income (expense)
|
(8,256
|
)
|
(3,418
|
)
|
806,076
|
13,205
|
||||||||||
Loss before income taxes
|
(2,259,701
|
)
|
(1,568,295
|
)
|
(5,172,992
|
)
|
(5,255,473
|
)
|
||||||||
Income tax expense
|
—
|
—
|
—
|
—
|
||||||||||||
Net loss
|
$
|
(2,259,701
|
)
|
(1,568,295
|
)
|
(5,172,992
|
)
|
(5,255,473
|
)
|
|||||||
Comprehensive loss:
|
||||||||||||||||
Net loss
|
$
|
(2,259,701
|
)
|
(1,568,295
|
)
|
(5,172,992
|
)
|
(5,255,473
|
)
|
|||||||
Change in fair value of available for sale investments
|
—
|
—
|
—
|
(20
|
)
|
|||||||||||
Total comprehensive loss
|
$
|
(2,259,701
|
)
|
(1,568,295
|
)
|
(5,172,992
|
)
|
(5,255,493
|
)
|
|||||||
Net loss attributable to common stockholders, basic and diluted
|
$
|
(2,259,701
|
)
|
(1,568,295
|
)
|
(5,172,992
|
)
|
(5,255,473
|
)
|
|||||||
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.19
|
)
|
(1.64
|
)
|
(1.04
|
)
|
(5.50
|
)
|
|||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
11,799,720
|
955,649
|
4,996,680
|
955,402
|
The accompanying notes are an integral part of these unaudited financial statements.
FEMASYS INC.
(unaudited)
Series B and Series C Redeemable Convertible
|
Additional |
Accumulated
other
|
Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock
|
Common stock
|
Treasury stock
|
Preferred stock
|
paid-in |
comprehensive
|
Accumulated | stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount | Shares | Amount | Shares |
Amount |
Warrants | capital | loss, net of tax | deficit | equity (deficit) | ||||||||||||||||||||||||||||||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2021
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021
|
—
|
$
|
—
|
11,916,943
|
$
|
11,916
|
117,223
|
$
|
(60,000
|
)
|
—
|
$
|
—
|
$
|
702,492
|
$
|
108,341,078
|
$
|
—
|
$
|
(78,115,781
|
)
|
$
|
30,879,705
|
||||||||||||||||||||||||||||
Issuance of common stock for cash upon exercise of options
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with IPO,net
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
Automatic conversion of preferred stock in connection with IPO
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
33,388
|
—
|
—
|
33,388
|
|||||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(2,259,701
|
)
|
(2,259,701
|
)
|
|||||||||||||||||||||||||||||||||||||
Other comprehensive income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021
|
—
|
$
|
—
|
11,916,943
|
$
|
11,916
|
117,223
|
$
|
(60,000
|
)
|
—
|
$
|
—
|
$
|
702,492
|
$
|
108,374,466
|
$
|
—
|
$
|
(80,375,482
|
)
|
$
|
28,653,392
|
||||||||||||||||||||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2021
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020
|
55,835,833
|
$
|
55,343,686
|
1,110,347
|
$
|
1,110
|
117,223
|
$
|
(60,000
|
)
|
17,210,609
|
$
|
17,211
|
$
|
702,492
|
$
|
22,725,949
|
$
|
—
|
$
|
(75,202,490
|
)
|
$
|
(51,815,728
|
)
|
|||||||||||||||||||||||||||
Issuance of common stock for cash upon exercise of options
|
—
|
—
|
40,253
|
40
|
—
|
—
|
—
|
—
|
—
|
112,105
|
—
|
—
|
112,145
|
|||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with IPO,net
|
—
|
—
|
2,650,000
|
2,650
|
—
|
—
|
—
|
—
|
—
|
30,019,707
|
—
|
—
|
30,022,357
|
|||||||||||||||||||||||||||||||||||||||
Automatic conversion of preferred stock in connection with IPO
|
(55,835,833
|
)
|
(55,343,686
|
)
|
8,116,343
|
8,116
|
—
|
—
|
(17,210,609
|
)
|
(17,211
|
)
|
—
|
55,352,781
|
—
|
—
|
55,343,686
|
|||||||||||||||||||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
163,924
|
—
|
—
|
163,924
|
|||||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,172,992
|
)
|
(5,172,992
|
)
|
|||||||||||||||||||||||||||||||||||||
Other comprehensive income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021
|
—
|
$
|
—
|
11,916,943
|
$
|
11,916
|
117,223
|
$
|
(60,000
|
)
|
—
|
$
|
—
|
$
|
702,492
|
$
|
108,374,466
|
$
|
—
|
$
|
(80,375,482
|
)
|
$
|
28,653,392
|
The accompanying notes are an integral part of these unaudited financial statements.
FEMASYS INC.
(unaudited)
Series B and Series C
Redeemable Convertible
|
Additional | Accumulated other |
Total
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock
|
Common stock
|
Treasury stock
|
Preferred stock
|
paid-in |
comprehensive
|
Accumulated | stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Warrants
|
capital
|
loss, net of tax
|
deficit
|
equity (deficit)
|
||||||||||||||||||||||||||||||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2020
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020
|
55,835,833
|
$
|
55,343,686
|
1,072,569
|
$
|
1,072
|
117,223
|
$
|
(60,000
|
)
|
17,210,609
|
$
|
17,211
|
$
|
702,492
|
$
|
22,465,251
|
$
|
—
|
$
|
(71,974,676
|
)
|
$
|
(48,848,650
|
)
|
|||||||||||||||||||||||||||
Issuance of common stock for cash upon exercise of options
|
—
|
—
|
556
|
1
|
—
|
—
|
—
|
—
|
—
|
2,749
|
—
|
—
|
2,750
|
|||||||||||||||||||||||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
80,771
|
—
|
—
|
80,771
|
|||||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,568,295
|
)
|
(1,568,295
|
)
|
|||||||||||||||||||||||||||||||||||||
Other comprehensive income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020
|
55,835,833
|
$
|
55,343,686
|
1,073,125
|
$
|
1,073
|
117,223
|
$
|
(60,000
|
)
|
17,210,609
|
$
|
17,211
|
$
|
702,492
|
$
|
22,548,771
|
$
|
—
|
$
|
(73,542,971
|
)
|
$
|
(50,333,424
|
)
|
|||||||||||||||||||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2020
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019
|
55,835,833
|
$
|
55,343,686
|
1,057,291
|
$
|
1,057
|
117,223
|
$
|
(60,000
|
)
|
17,210,609
|
$
|
17,211
|
$
|
702,492
|
$
|
22,254,162
|
$
|
20
|
$
|
(68,287,498
|
)
|
$
|
(45,372,556
|
)
|
|||||||||||||||||||||||||||
Issuance of common stock for cash upon exercise of options
|
—
|
—
|
15,834
|
16
|
—
|
—
|
—
|
—
|
—
|
55,534
|
—
|
—
|
55,550
|
|||||||||||||||||||||||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
239,075
|
—
|
—
|
239,075
|
|||||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,255,473
|
)
|
(5,255,473
|
)
|
|||||||||||||||||||||||||||||||||||||
Other comprehensive income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(20
|
)
|
—
|
(20
|
)
|
|||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020
|
55,835,833
|
$
|
55,343,686
|
1,073,125
|
$
|
1,073
|
117,223
|
$
|
(60,000
|
)
|
17,210,609
|
$
|
17,211
|
$
|
702,492
|
$
|
22,548,771
|
$
|
—
|
$
|
(73,542,971
|
)
|
$
|
(50,333,424
|
)
|
The accompanying notes are an integral part of these unaudited financial statements.
FEMASYS INC.
(unaudited)
Nine Months Ending September 30,
|
||||||||
2021
|
2020
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(5,172,992
|
)
|
(5,255,473
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
|
417,188
|
419,435
|
||||||
Amortization
|
32,023
|
80,099
|
||||||
Amortization of discount on investments
|
—
|
(1,189
|
)
|
|||||
Amortization of right-of-use assets
|
284,519
|
320,184
|
||||||
Share-based compensation expense
|
163,924
|
239,075
|
||||||
Loan and accrued interest forgiveness on note payable
|
(821,515
|
)
|
—
|
|||||
Loss on disposal of fixed asset
|
2,850 | — | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(17,669
|
)
|
(37,105
|
)
|
||||
Inventory
|
(18,958
|
)
|
15,549
|
|||||
Other assets
|
498,878
|
205,839
|
||||||
Accounts payable
|
(237,443
|
)
|
4,426
|
|||||
Accrued expenses and other
|
(510,730
|
)
|
634,621
|
|||||
Lease liabilites
|
(312,893
|
)
|
(337,074
|
)
|
||||
Other liabilities
|
9,935
|
49,606
|
||||||
Net cash used in operating activities
|
(5,682,883
|
)
|
(3,662,007
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Maturities of short-term investments
|
—
|
1,000,000
|
||||||
Purchases of property and equipment
|
(188,245
|
)
|
(8,352
|
)
|
||||
Payments for patents and other intangible assets
|
—
|
(42,995
|
)
|
|||||
Net cash (used in) provided by investing activities
|
(188,245
|
)
|
948,653
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of common stock
|
31,725,645
|
55,550
|
||||||
Payments of offering costs
|
(1,578,643
|
)
|
—
|
|||||
Proceeds from note payable and advance
|
—
|
822,500
|
||||||
Repayment of note payable
|
(302,343
|
)
|
—
|
|||||
Payments under lease obligations
|
(15,448
|
)
|
(13,977
|
)
|
||||
Net cash provided by financing activities
|
29,829,211
|
864,073
|
||||||
Net change in cash and cash equivalents
|
23,958,083
|
(1,849,281
|
)
|
|||||
Cash and cash equivalents:
|
||||||||
Beginning of the period
|
3,322,226
|
6,415,274
|
||||||
End of the period
|
$
|
27,280,309
|
4,565,993
|
(continued)
FEMASYS INC.
Statements of Cash Flows
(unaudited)
Nine Months Ended September 30,
|
||||||||
2021
|
2020
|
|||||||
Supplemental cash flow information
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
11,155
|
5,487
|
|||||
Income taxes
|
$
|
800
|
2,000
|
|||||
Non-cash investing and financing activities:
|
||||||||
Prepaid insurance financed with promissory notes
|
$
|
320,866
|
—
|
|||||
Conversion of convertible preferred stock to common stock
|
$
|
55,360,897
|
—
|
The accompanying notes are an integral part of these unaudited financial statements.
(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 biomedical company focused on transforming women’s healthcare by developing novel solutions and next-generation advancements providing significant clinical impact to address severely
underserved areas. Our mission is to provide women worldwide with superior minimally-invasive, non-surgical product technologies, accessible in the office, improving patient care and overall health economics. The Company currently operates as one segment and is focused on servicing the reproductive health needs for those seeking permanent birth control or solutions for infertility issues.
Femasys has an expansive intellectual property portfolio which covers both design
and utility patents in the U.S. and significant ex-U.S. markets for each product initiative. Femasys has taken concepts internally conceived and protected through development, including domestic and foreign regulatory approvals, and production,
through in-house manufacturing. FemBloc® (FemBloc), the Company’s solution for permanent birth control, is based on the Company’s non-surgical platform technology and is presently completing a validation study under an approved Investigational Device
Exemption (IDE) from the U.S. Food and Drug Administration (FDA). FemaSeed® (FemaSeed), a solution which enables directed intrauterine insemination to improve on traditional intrauterine insemination (IUI) and provide a lower cost option to in vitro
fertilization methods, received approval in April 2021 from the FDA on its IDE and the clinical study was initiated in July 2021. FemVue® Saline-Air Device (FemVue) is a product approved for sale in the U.S., Europe, Japan, and Canada for the
diagnosis of infertility. FemChec® Pressure Management Device (FemChec) evaluates the women’s fallopian tubes after a FemBloc procedure and is part of the FemBloc validation study. FemCerv® Endocervical Sampler (FemCerv) is designed to collect a
complete, non-contaminated cervical tissue sample.
Initial Public Offering
On June 22, 2021, the Company closed its initial public offering (the IPO) in
which it issued and sold 2,650,000 shares of its authorized common stock. The price per share in the IPO was $13.00. Net proceeds received by the Company,
after deducting underwriting discounts, commissions, and legal expenses, were $31,613,500. Offering costs incurred by the Company were $1,591,144, which excludes legal expenses incurred by our underwriters of $425,000. Immediately prior to the closing of the IPO, all our shares of our convertible Series A preferred stock and our redeemable convertible Series B and Series C preferred stock
automatically converted into 8,116,343 shares of common stock.
Basis of Presentation
The Company has prepared the accompanying 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 financial statements should be read in conjunction with the Company’s audited financial statements and footnotes related thereto for the year
ended December 31, 2020 included in our final prospectus (Prospectus) dated June 17, 2021 and filed with the SEC, pursuant to Rule 424(b) under the Securities Act of 1933, as amended, or the Securities Act, on June 21, 2021 (Registration No.
333-256156). Except as noted below, there have been no material changes to the Company’s significant accounting policies described in Note 2 to the financial statements included in the Prospectus.
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 periods presented. The results of operations for such interim
periods are not necessarily indicative of the results to be 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. The most significant estimates used in these financial statements include the valuation of stock options, warrants, useful lives of property and equipment, intangible assets, and the pre-IPO valuation of our common stock and preferred stock.
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 September 30, 2021, the Company has cash and cash equivalents of $27,280,309. The Company plans to finance its operations and development needs with its existing cash and cash equivalents, in the future with additional
equity and/or debt financing arrangements, and revenue from the sale of FemVue to support the Company’s research and development activities, largely in connection with FemBloc and FemaSeed. 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 nine months ended September 30, 2021, the Company generated a net loss of $5,172,992. The Company expects such losses to increase over the next few years as the Company advances FemBloc and FemaSeed through clinical development
until FDA approval is received and the products are available to be marketed.
The Company believes that its cash and cash equivalents as of September 30, 2021 will be sufficient to
fund its operating expenses and research & development expenditure requirements through at least one year after the issuance date of the financial statements for the nine months ended September 30, 2021.
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.
Recently Issued Accounting Pronouncements – Recently Adopted
On January 1, 2021, the Company adopted Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which the Financial Accounting Standards Board (FASB) issued in December 2019. This guidance
eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance was effective for annual periods after December 15, 2020, including
interim periods within those annual periods. The Company’s adoption of this new guidance did not have a material impact on the Company’s financial statements and footnote disclosures (unaudited).
Recently Issued Accounting Pronouncements – Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard changes the accounting for credit losses for financial assets and certain other
instruments, including trade receivables and contract assets, that are not measured at fair value through net income. Under legacy standards, we recognize an impairment of receivables when it was probable that a loss had been incurred. Under the new
standard, we are required to recognize estimated credit losses expected to occur over the estimated life or remaining contractual life of an asset (which includes losses that may be incurred in future periods) using a broader range of information
including reasonable and supportable forecasts about future economic conditions. The guidance is effective for smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2022, including interim periods within
those fiscal years with early adoption permitted. We do not expect the adoption of the standard to have a significant impact on our results of operations, financial position, or cash flows as credit losses are not expected to be significant based on
historical collection trends, the financial condition of payment partners, and external market factors.
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)
|
Cash and Cash Equivalents
|
As of September 30, 2021 and December 31,
2020, money market funds included in cash and cash equivalents on the balance sheets were $0 and $3,038,612, respectively, which represent level 1 within the fair value hierarchy where there are quoted prices in active markets for identical assets.
(3)
|
Inventories
|
Inventory stated at cost,
net of reserve, consisted of the following:
September 30,
2021
|
December 31,
2020
|
|||||||
Materials
|
$
|
85,655
|
61,270
|
|||||
Work in progress
|
39,879
|
49,650
|
||||||
Finished goods
|
24,802
|
20,458
|
||||||
Inventory, net
|
$
|
150,336
|
131,378
|
The reserve for expired inventories pertaining
to FemVue was $358 and $896
as of September 30, 2021 and December 31, 2020, respectively.
(4)
|
Deferred Offering Costs
|
Deferred offering costs, which consisted
mainly of legal, consulting, and accounting fees directly attributable to a strategic financing transaction, were capitalized in accordance with Staff Accounting Bulletin (SAB) Topic 5.A, codified in Accounting Standards Codification (ASC)
340-10-S99-1. In May 2021, the Company expensed $188,544 of deferred offering costs in connection with another financing transaction to
focus on the IPO transaction. In June 2021, upon the closing of the IPO, total deferred offering costs of $1,591,144 were offset against
the proceeds of the IPO offering.
As of September 30, 2021, no amounts of deferred offering costs were capitalized. As of December 31, 2020, deferred offering costs capitalized were $202,479 and are included in other long-term assets in the accompanying balance sheets.
(5)
|
Accrued Expenses
|
Accrued expenses consisted of the following:
September 30,
2021
|
December 31,
2020
|
|||||||
Clinical trial costs
|
$
|
261,885
|
289,180
|
|||||
Compensation costs
|
146,034
|
796,864
|
||||||
Other
|
189,937
|
31,557
|
||||||
Accrued expenses
|
$
|
597,856
|
1,117,601
|
(6)
|
Clinical Holdback
|
The following table shows the activity
within the clinical holdback liability accounts for the nine months ended September 30, 2021:
Balance at December 31, 2020 (long-term portion)
|
$
|
164,972
|
||
Clinical holdback retained
|
15,016
|
|||
Clinical holdback paid
|
(5,081
|
)
|
||
Balance at September 30, 2021
|
$
|
174,907
|
||
Less: clinical holdback - current portion
|
(18,947
|
)
|
||
Clinical holdback - long-term portion
|
$
|
155,960
|
(7)
|
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 point in time and no revenue is recognized over time. For the three and nine months ended September 30, 2021 and 2020, there was no revenue recognized from performance obligations satisfied or partially satisfied in prior periods, nor were there any unsatisfied performance
obligations as of September 30, 2021 and December 31, 2020.
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 following table summarizes our FemVue
sales by geographic region as follows:
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Primary geographical markets
|
||||||||||||||||
U.S.
|
$
|
211,536
|
255,163
|
751,285
|
638,672
|
|||||||||||
International
|
58,045
|
58,045
|
174,077
|
118,282
|
||||||||||||
Total
|
$
|
269,581
|
313,208
|
925,362
|
756,954
|
(8)
|
Other Income
|
In June 2021, the Company was notified by
Georgia Primary Bank that the Paycheck Protection Program (PPP) loan in the amount of $812,500 and accrued interest of $9,015 was fully forgiven. For the nine months ended September 30, 2021, the Company recorded $821,515 in other income in connection with the Small Business Administration (SBA) PPP loan forgiveness program, and no other income was recorded for the three months ended September 30, 2021. For the three and nine months ended September 30, 2020, there was no other income recorded.
(9)
|
Commitments and Contingencies
|
Legal Claims
Occasionally, the Company may be a party to legal claims or
proceedings of which the outcomes are subject to significant uncertainty. In accordance with 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 the 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 provides 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 director and officer 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 September 30, 2021 and December 31, 2020.
(10)
|
Notes Payable
|
Paycheck Protection
Program Loan
In April 2020, the Company executed a promissory note (Note) with
Georgia Primary Bank (the Lender) evidencing an unsecured loan in the amount of $812,500, which was made pursuant to the PPP. The PPP was
established under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which was enacted on March 27, 2020, and is administered by the SBA. All the funds under the PPP loan were disbursed to the Company in April 2020 and was recognized
as debt on the Company’s financial statements.
The Note provided for a fixed interest rate of one percent per year, and the Company was not imputing any additional interest at a market rate because this was a government-guaranteed obligation. Monthly principal and interest payments of $45,717
on the PPP loan were due beginning
and the final payment was due in (Maturity Date). The Note contained customary event of default provisions. Under the terms of the CARES Act, PPP loan recipients can apply
for and be granted forgiveness for all or a portion of the loans granted under the PPP. Such forgiveness is subject to approval by the SBA and the Lender and determined, subject to limitations, based on factors set forth in the CARES Act, including
verification of the use of loan proceeds for payment of payroll costs and payment of mortgage interest, rent, and utilities. In the event the PPP loan, or any portion thereof, is forgiven, it is applied to outstanding principal. As of September 30,
2020, the Company had used all the proceeds from the PPP loan to retain employees, maintain payroll, and make lease and utility payments.
In October 2020, the Company submitted the
loan forgiveness application to the Lender requesting forgiveness for the full amount of the loan. The Lender had 60 days from receipt of the loan forgiveness application to issue a decision to the SBA, and the SBA, subject to its review, would remit
funds within 90 days after the Lender issues its decision to the SBA.
In June 2021, the Company was notified by the
Lender that the PPP Loan in the amount of $812,500 and accrued interest of $9,015 was fully forgiven; and, as a result, the entire amount was derecognized on the Company’s financial statements, which was included as other income for the nine months ended September 30,
2021 on the accompanying statements of comprehensive loss. The SBA reserves the right to audit our fully forgiven PPP loan for an indefinite time.
As of September 30, 2021, no amounts were outstanding under the PPP loan. As of December 31, 2020, the PPP loan balance consisted of $630,010 payable in 2021 and $182,490 in 2022, and interest expense
accrued in connection with this PPP loan was $5,654 and was included in accrued expenses on the accompanying balance sheets. For the three
months ended September 30, 2021 and 2020, interest expense on the PPP loan was $0 and $2,048, respectively. For the nine months ended September 30, 2021 and 2020, interest expense on the PPP loan was $3,361 and $3,606, respectively.
Economic Injury
Disaster Loan advance
In April 2020, the Company received the SBA
Economic Injury Disaster Loan advance (EIDL advance) of $10,000. This EIDL advance was originally included in notes payable since the SBA
was required to deduct the amount of any EIDL advance received by a PPP borrower from the PPP forgiveness payment remitted by SBA to the lender. In December 2020, the Economic Aid to Hard-Hit Small Business, Nonprofits and Venues Act (Economic Aid
Act) was signed into law, which repealed the SBA requirement to deduct the amount of any EIDL advance received by a PPP borrower from the PPP forgiveness payment. As a result of the Economic Aid Act, the Company recognized the EIDL advance as other
income in December 2020.
As of September 30, 2021 and December 31, 2020
no amounts were outstanding under the EIDL advance. For the three and nine months ending September 30, 2021 and 2020, no amounts were recognized as EIDL other income.
AFCO Credit Corporation
(AFCO)
In the first quarter of 2021, the Company
executed two Promissory Notes with AFCO (AFCO notes) to finance certain insurance premiums totaling $64,842, requiring the Company to pay $16,210
in down payments and make monthly installment payments. The annual interest rate is 10.5% and the current monthly installment payments total $6,094,
which represents principal and interest. The final installment payments were paid on October 12, 2021.
In the second quarter of 2021, the Company
executed another Promissory Note with AFCO (AFCO note) to finance certain insurance premiums totaling $558,367, requiring the Company to
pay $111,673 in a down payment and make monthly installment payments. The annual interest rate is 5.25% and the monthly installment payment is $45,751, which represents principal and interest. The final installment payment is due April 18, 2022.
As of September 30, 2021, the principal
balance on all the AFCO promissory notes was $320,866 and is included in Notes payable – current portion in the accompanying balance
sheets. Interest expense in connection with the three AFCO promissory notes was $5,846 and $0 for the three months ended September 30, 2021 and
2020, respectively; and interest expense in connection with the three AFCO promissory notes was $7,170 and $0 for the nine months ended
September 30, 2021 and 2020, respectively.
(11)
|
Redeemable Convertible Preferred Stock and Stockholders’ Equity
|
On June 22, 2021, the Company issued 2,650,000 shares of common stock in connection with the Company’s IPO of its common stock at $13.00 per share. Net proceeds to the Company, after deducting underwriting discounts, commissions, and legal expenses, was $31,613,500. Offering costs incurred by the company were $1,591,144. Immediately
prior to the closing of the IPO, all our shares of our convertible Series A preferred stock and our redeemable convertible Series B and Series C preferred stock automatically converted into 8,116,343 shares of common stock.
The Company filed an eleventh amended and
restated certificate of incorporation (the “Amended and Restated Certificate”) with the Secretary of State of the State of Delaware in connection with the completion of the IPO on June 22, 2021. The Amended and Restated Certificate amends and
restates the Company’s existing certificate of incorporation in its entirety to, among other things: (i) authorize 200,000,000 shares of
common stock; (ii) eliminate all references to the previously-existing series of preferred stock (Series A, B and C); and (iii) authorize 10,000,000
shares of undesignated preferred stock that may be issued from time to time by the Board in one or more series.
(a) |
Common Stock
|
The
holders of the common stock shall have the exclusive right to vote for the election of directors and on all other matters requiring stockholder action, each outstanding share entitling the holder thereof to one vote on each matter properly submitted to the stockholders of the Company for their vote; provided, however, that, except as otherwise required by law, holders of common
stock, as such, shall not be entitled to vote on any amendment to the Amended and Restated Certificate (or on any amendment to a certificate of designations of any series of preferred stock) that alters or changes the powers, preferences, rights or
other terms of one or more outstanding series of preferred stock if the holders of such affected series of preferred stock are entitled to vote, either separately or together with the holders of one or more other such series, on such amendment
pursuant to this Amended and Restated Certificate (or pursuant to a certificate of designations of any series of preferred stock).
Dividends
may be declared and paid or set apart for payment upon the common stock out of any assets or funds of the Company legally available for the payment of dividends, but only when and as declared by the Board of Directors or any authorized committee
thereof.
Upon
the voluntary or involuntary liquidation, dissolution or winding up of the Company, the net assets of the Company shall be distributed pro rata to the holders of the common stock.
(b) |
Preferred Stock
|
The
Board of Directors is authorized to direct the Company to issue shares of preferred stock in one or more series without stockholder approval. Our Board of Directors has the discretion to determine the rights, preferences, privileges, and
restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.
As of September 30, 2021, the Company had 11,799,720 shares of common stock outstanding, and no
dividends have been declared or paid.
(12)
|
Equity Incentive Plans
|
Stock Option Plans
In June 2021, in connection with the IPO, our 2021 Equity
Incentive Plan (“2021 Plan”) became effective, which was adopted by our Board of Directors in February 2021 and our stockholders approved the 2021 Plan in March 2021. The 2021 Plan is administered by our compensation committee. Upon the effectiveness
of the 2021 Plan, no new grants will be awarded under our 2015 Stock-Based Incentive Compensation Plan.
Under the 2021 Plan, the Company may grant awards in respect of
our shares of common stock to our employees, consultants, and our non-employee directors pursuant to option awards, stock appreciation right, or SAR, awards, restricted stock awards, restricted stock unit, or RSU, awards, performance stock awards,
performance stock unit, or PSU, awards, and other stock-based awards.
The total number of shares of common stock available for awards
under the 2021 Plan is 1,111,111, provided that such number shall be automatically increased on each January 1, beginning on January 1,
2022, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of
shares as determined by our Board of Directors. The aggregate number of shares of our common stock that will be available for issuance under awards granted pursuant to the 2021 Plan shall also be increased by the number of shares underlying the
portion of an award granted under our 2015 Plan that is cancelled, terminated or forfeited or lapses after the effective date of the 2021 Plan. No more than 1,111,111
shares of common stock issued under the 2021 Plan may be issued pursuant to the exercise of incentive stock options (ISO), provided that such number shall be automatically increased on each January 1, beginning on January 1, 2022, by the lesser of 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or 555,555 shares of common stock. Shares of common stock issued by us in connection with the assumption or substitution of outstanding grants or under certain stockholder approved
plans from an acquired company shall not reduce the number of shares of common stock available for awards under the 2021 Plan. Shares of common stock underlying the portion of an award that is forfeited or otherwise terminated for any reason
whatsoever, in any case, without the issuance of shares of common stock, will be added back to the number of shares of common stock available for grant under the 2021 Plan. No non-employee director may be granted awards under the 2021 Plan in any one
calendar year covering a number of shares of common stock that have a fair market value on the grant date in excess of $350,000 in the
first calendar year of such non-employee director’s initial service as a non-employee director and $200,000 in any other calendar year of
such non-employee director’s service as a non-employee director.
Options granted under the 2021 Plan may be
either ISOs, or nonqualified stock options. The price at which shares of common stock may be purchased upon exercise shall be determined by the compensation committee but shall not be less than the fair market value of one share of common stock on
the date of grant, or, in the case of an ISO granted to a
stockholder, less than 110% of the fair market value of a share of common stock on the date of grant. The compensation committee may grant options that have a term of up to 10 years, or, in the case of an ISO granted to a ten-percent stockholder, five years. The award agreement shall specify the exercise price, term, vesting requirements, including any performance goals, and any other terms and conditions applicable to the granted option. Unless otherwise
provided in an award agreement or an effective employment, consulting, severance or similar agreement with us or a subsidiary, upon a participant’s termination of service for any reason, the unvested portion of each award of options granted generally
will be forfeited with no compensation due the participant.Activity under the stock option plans was as
follows:
Number of
Options
|
Weighted
Average
Exercise Price
|
|||||||
Balances at December 31, 2020
|
743,627
|
$
|
3.60
|
|||||
Granted
|
—
|
—
|
||||||
Exercised
|
(40,253
|
)
|
2.79
|
|||||
Cancelled
|
(7,211
|
)
|
7.07
|
|||||
Balances at September 30, 2021
|
696,163
|
$
|
3.58
|
The intrinsic value of options exercised
during the nine months ended September 30, 2021 was $145,053. The intrinsic values represent the dollar value of the exercised stock
options whereby the fair market value of the underlying common stock exceeded the exercise price of the stock option as of the exercise date.
The options outstanding and vested and currently exercisable by exercise
prices as of September 30, 2021 were as follows:
Option outstanding
|
Options vested and exercisable
|
|||||||||||||||||||||
Exercise
price
|
Outstanding
(in shares)
|
Weighted
average
remaining
life years
|
Number of
options
vested
|
Exercise
price
|
Weighted
average
remaining
life years
|
|||||||||||||||||
$
|
1.71
|
227,780
|
4.46
|
116,669
|
$
|
1.71
|
4.46
|
|||||||||||||||
3.24
|
284,282
|
5.75
|
284,282
|
3.24
|
5.75
|
|||||||||||||||||
3.96
|
67,422
|
6.46
|
54,645
|
3.96
|
6.45
|
|||||||||||||||||
4.50
|
1,667
|
7.12
|
834
|
4.50
|
7.12 |
|||||||||||||||||
4.95
|
44,445
|
7.49
|
22,223
|
4.95
|
7.49
|
|||||||||||||||||
6.12
|
58,342
|
8.20
|
17,091
|
6.12
|
8.20
|
|||||||||||||||||
27.00
|
12,225
|
0.82
|
12,225
|
27.00
|
0.82
|
|||||||||||||||||
696,163
|
5.63
|
507,969
|
5.57
|
For the three months ended September 30, 2021
and 2020, stock-based compensation expense was $33,388 and $80,771, respectively. For the nine months ended September 30, 2021 and 2020, stock-based compensation expense was $163,924
and $239,075, respectively.
As of September 30, 2021, the remaining
stock-based compensation expense that is expected to be recognized in future periods for employees and nonemployees is $320,193, which
includes $155,222 of compensation expense to be recognized upon achieving a certain performance condition. For service based awards, the $164,971 of unrecognized expense is expected to be recognized over a weighted average period of 1.7 years.
Employee Stock Purchase
Plan (“ESPP”)
In June 2021, in connection with the IPO, our
ESPP became effective which was adopted by our Board of Directors in February 2021 and our stockholders approved the 2021 ESPP Plan in March 2021. The ESPP is administered by our compensation committee.
The total number of shares of our common stock
available for purchase under the ESPP is 166,666, provided that such number is automatically increased on January 1 of each calendar year,
from January 1, 2022 through January 1, 2031 by the least of (i) 1.0% of the total number of shares of our common stock outstanding on
December 31 of the immediately preceding calendar year, (ii) 222,222 shares of our common stock or (iii) a number determined by our board
of directors that is less than the foregoing clauses (i) and (ii).
Under the ESPP, the Company may specify
offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. Each offering will have
one or more purchase dates on which shares of our common stock will be purchased for employees participating in the offering. An offering
may be terminated under certain circumstances. No employee may purchase more than 12,254 shares of our common stock under the ESPP during
any offering period. Unless otherwise determined by our board of directors, shares of common stock will be purchased for accounts of employees participating in the ESPP at a price per share equal to the lower of (i) 85% of the fair market value of a share of our common stock on the last date of an offering period or (ii) 85% of the fair market value of a share of our common stock on the first day of such offering period.
As September 30, 2021, no shares of our common stock have been purchased under the ESPP.
(13)
|
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 September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net loss attributable to common stockholders, basic & diluted
|
$
|
(2,259,701
|
)
|
(1,568,295
|
)
|
(5,172,992
|
)
|
(5,255,473
|
)
|
|||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic & diluted
|
11,799,720
|
955,649
|
4,996,680
|
955,402
|
||||||||||||
Net loss per share attributable to common stockholders, basic & diluted
|
$
|
(0.19
|
)
|
(1.64
|
)
|
(1.04
|
)
|
(5.50
|
)
|
The following potentially
dilutive securities have been excluded from the computations of diluted weighted average shares outstanding because they would be anti-dilutive:
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Convertible preferred stock outstanding
|
—
|
8,116,343
|
—
|
8,116,343
|
||||||||||||
Options to purchase common stock
|
696,163
|
780,862
|
696,163
|
780,862
|
||||||||||||
Warrants to purchase common stock
|
244,572
|
244,572
|
244,572
|
244,572
|
||||||||||||
Total potential shares
|
940,735
|
9,141,777
|
940,735
|
9,141,777
|
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 in this Quarterly Report on Form 10-Q and our final prospectus, or Prospectus, dated June 17, 2021 and filed with the U.S. Securities and Exchange Commission, or the SEC, pursuant to Rule 424(b)
under the Securities Act of 1933, as amended, or the Securities Act, on June 21, 2021 (Registration No. 333-256156). 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 biomedical company focused on transforming women’s healthcare by developing novel solutions and next-generation advancements providing significant clinical impact to
address severely underserved areas. Our mission is to provide women worldwide with superior minimally-invasive, non-surgical product technologies, accessible in the office, improving patient care and overall health economics. As a
woman-founded and led company with an expansive, internally created intellectual property portfolio with over 100 patents globally, in-house CMC and device manufacturing capabilities and proven ability to develop and commercialize products,
we believe that we are well-positioned to become a leading company in the women’s healthcare space with solutions to address multi-billion dollar global opportunities. Our suite of products and product candidates address several large 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. With an initial focus in the area of reproductive
health, our two lead product candidates offer solutions for two ends of the spectrum: FemBloc for permanent birth control and FemaSeed as an artificial insemination infertility treatment. We believe our solutions have the potential to disrupt
and grow the market segments that they address with few or no current direct competitors.
Results of Operations
Comparison of the Three Months Ended September 30, 2021 and 2020
The following table shows our results of operations for the three months ended September 30, 2021 and 2020:
Three Months Ended September 30,
|
||||||||||||||||
2021
|
2020
|
Change
|
% Change
|
|||||||||||||
Sales
|
$
|
269,581
|
313,208
|
(43,627
|
)
|
-13.9
|
%
|
|||||||||
Cost of sales
|
105,403
|
90,435
|
14,968
|
16.6
|
%
|
|||||||||||
Gross margin
|
164,178
|
222,773
|
(58,595
|
)
|
-26.3
|
%
|
||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
1,140,577
|
995,620
|
144,957
|
14.6
|
%
|
|||||||||||
Sales and marketing
|
43,284
|
31,010
|
12,274
|
39.6
|
%
|
|||||||||||
General and administrative
|
1,087,363
|
596,778
|
490,585
|
82.2
|
%
|
|||||||||||
Depreciation and amortization
|
144,399
|
164,242
|
(19,843
|
)
|
-12.1
|
%
|
||||||||||
Total operating expenses
|
2,415,623
|
1,787,650
|
627,973
|
35.1
|
%
|
|||||||||||
Loss from operations
|
(2,251,445
|
)
|
(1,564,877
|
)
|
(686,568
|
)
|
43.9
|
%
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest income, net
|
1,649
|
342
|
1,307
|
382.2
|
%
|
|||||||||||
Other income
|
—
|
—
|
—
|
|
*
|
|||||||||||
Interest expense
|
(7,055
|
)
|
(3,760
|
)
|
(3,295
|
)
|
87.6
|
%
|
||||||||
Other expense
|
(2,850
|
)
|
—
|
(2,850
|
)
|
100.0
|
%
|
|||||||||
Total other income (expense)
|
(8,256
|
)
|
(3,418
|
)
|
(4,838
|
)
|
141.5
|
%
|
||||||||
Loss before income taxes
|
(2,259,701
|
)
|
(1,568,295
|
)
|
(691,406
|
)
|
44.1
|
%
|
||||||||
Income tax expense
|
—
|
—
|
—
|
|
*
|
|||||||||||
Net loss
|
$
|
(2,259,701
|
)
|
(1,568,295
|
)
|
(691,406
|
)
|
44.1
|
%
|
*Percentage calculated is not meaningful
Sales
Sales decreased by $43,627, or 13.9%, to $269,581 for the three months ended September 30, 2021 from $313,208 for the three months ended September 30, 2020. The decrease was
attributable to a $43,627 decrease in U.S. sales for the three months ended September 30, 2021 as compared to the same period last year due to a 19.9% decline in units sold largely due to a rebound of sales in the third quarter of 2020 from
the heavily impacted second quarter of 2020 due to the COVID-19 pandemic and, to a lesser extent, the seasonality of our sales. International sales were $58,045 for the three months ended September 30, 2021 and 2020.
Cost of sales and gross margin percentage
Cost of sales increased by $14,968, or 16.6%, to $105,403 for the three months ended September 30, 2021 from $90,435 for the three months ended September 30, 2020. The increase
in cost of sales was largely due to additional labor and overhead costs applied to our cost of sales for the three months ended September 30, 2021 as compared to the same period last year due to recently hired production personnel taking
longer to build our FemVue product than originally planned. As a result, gross margin percentage was 60.9% for the three months ended September 30, 2021 as compared to 71.1% for the three months ended September 30, 2020. We expect to see
improvement in our gross margin in the future as our new production personnel become more efficient with the manufacturing process and as we invest in equipment which will allow us to automate certain manufacturing processes.
Research and development
The following table summarizes our R&D expenses incurred during the periods presented:
Three Months Ended September 30,
|
||||||||
2021
|
2020
|
|||||||
Compensation and related personnel costs
|
$
|
643,007
|
634,314
|
|||||
Clinical-related costs
|
279,285
|
275,209
|
||||||
Material and development costs
|
148,435
|
57,159
|
||||||
Other costs
|
69,850
|
28,938
|
||||||
Total research and development expenses
|
$
|
1,140,577
|
995,620
|
R&D expenses increased by $144,957 or 14.6%, to $1,140,577 for the three months ended September 30, 2021 from $995,620 for the three months ended September 30, 2020. The net
increase of $144,957 consists of the $8,693 increase in compensation and related personnel costs primarily due to a slight increase in headcount, an increase of $4,076 in clinical-related costs, an increase of $91,276 in material and
development costs due to increased spending in R&D projects largely to support our clinical trials, and an increase of $40,912 in other costs which are largely attributable to additional consulting costs to support our clinical trials.
Sales and marketing
Sales and marketing expenses increased by $12,274 or 39.6%, to $43,284 for the three months ended September 30, 2021 from $31,010 for the three months ended September 30, 2020
largely due to additional marketing costs associated with our FemVue social media campaign to increase our commercial presence.
General and administrative
General and administrative expenses increased by $490,585, or 82.2%, to $1,087,363 for the three months ended September 30, 2021 from $596,778 for the three months ended
September 30, 2020. The increase was largely due to an increase of $309,749 in professional costs associated with being a public company.
Depreciation and amortization
Depreciation and amortization expenses decreased by $19,843, or 12.1%, to $144,399 for the three months ended September 30, 2021 from $164,242 for the three months ended
September 30, 2020 primarily due to reduction of amortization expense associated with the Company’s intangible assets.
Other income (expense)
Total other income (expense) or net expense increased by $4,838 for the three months ended September 30, 2021 from the same period last year largely due to interest expense.
Comparison of the Nine Months Ended September 30, 2021 and 2020
The following table shows our results of operations for the nine months ended September 30, 2021 and 2020:
Nine Months Ended September 30,
|
||||||||||||||||
2021
|
2020
|
Change
|
% Change
|
|||||||||||||
Sales
|
$
|
925,362
|
756,954
|
168,408
|
22.2
|
%
|
||||||||||
Cost of sales
|
306,072
|
218,898
|
87,174
|
39.8
|
%
|
|||||||||||
Gross margin
|
619,290
|
538,056
|
81,234
|
15.1
|
%
|
|||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
3,030,467
|
3,235,022
|
(204,555
|
)
|
-6.3
|
%
|
||||||||||
Sales and marketing
|
87,931
|
281,583
|
(193,652
|
)
|
-68.8
|
%
|
||||||||||
General and administrative
|
3,030,749
|
1,790,595
|
1,240,154
|
69.3
|
%
|
|||||||||||
Depreciation and amortization
|
449,211
|
499,534
|
(50,323
|
)
|
-10.1
|
%
|
||||||||||
Total operating expenses
|
6,598,358
|
5,806,734
|
791,624
|
13.6
|
%
|
|||||||||||
Loss from operations
|
(5,979,068
|
)
|
(5,268,678
|
)
|
(710,390
|
)
|
13.5
|
%
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest income, net
|
1,957
|
22,298
|
(20,341
|
)
|
-91.2
|
%
|
||||||||||
Other income
|
821,515
|
—
|
821,515
|
|
*
|
|||||||||||
Interest expense
|
(14,546
|
)
|
(9,093
|
)
|
(5,453
|
)
|
60.0
|
%
|
||||||||
Other expense
|
(2,850
|
)
|
—
|
(2,850
|
)
|
100.0
|
%*
|
|||||||||
Total other income (expense)
|
806,076
|
13,205
|
792,871
|
6004.3
|
%
|
|||||||||||
Loss before income taxes
|
(5,172,992
|
)
|
(5,255,473
|
)
|
82,481
|
-1.6
|
%
|
|||||||||
Income tax expense
|
—
|
—
|
—
|
|
*
|
|||||||||||
Net loss
|
$
|
(5,172,992
|
)
|
(5,255,473
|
)
|
82,481
|
-1.6
|
%
|
*Percentage calculated is not meaningful
Sales
Sales increased by $168,408, or 22.2%, to $925,362 for the nine months ended September 30, 2021 from $756,954 for the nine months ended September 30, 2020. The increase was
attributable to a $112,613 increase in U.S. sales and a $55,795 increase in international sales. The increase in sales was largely attributable to the lower sales for the nine months ended September 30, 2020 primarily due to the impact of the
COVID-19 pandemic. U.S sales increased by 17.6% for the nine months ended September 30, 2021 as compared to the same period last year and were $751,285 for the nine months ended September 30, 2021 as compared to $638,672 for the nine months
ended September 30, 2020, representing a 14.2% increase in units sold. International sales increased by 47.2% for the nine months ended September 30, 2021 as compared to the same period last year and were $174,077 for the nine months ended
September 30, 2021 as compared to $118,282 for the nine months ended September 30, 2020, representing a 45.3% increase in units sold.
Cost of sales and gross margin percentage
Cost of sales increased by $87,174, or 39.8%, to $306,072 for the nine months ended September 30, 2021 from $218,898 for the nine months ended September 30, 2020. The increase
was primarily due to the increase in sales along with the sales mix between US and international sales for the nine months ended September 30, 2021 compared to the same period last year as our international sales have a lower gross margin,
along with an increase in labor and overhead being applied to our cost of sales due to recently hired production personnel taking longer to build our FemVue product than originally planned. As a result, gross margin percentage was 66.9% for
the nine months ended September 30, 2021 as compared to 71.1% for the nine months ended September 30, 2020. We expect to see improvement in our gross margin in the future as our new production personnel become more efficient with the
manufacturing process and as we invest in equipment which will allow us to automate certain manufacturing processes.
Research and development
The following table summarizes our R&D expenses incurred during the periods presented:
Nine Months Ended September 30,
|
||||||||
2021
|
2020
|
|||||||
Compensation and related personnel costs
|
$
|
1,967,702
|
2,129,257
|
|||||
Clinical-related costs
|
596,143
|
652,802
|
||||||
Material and development costs
|
349,825
|
378,539
|
||||||
Other costs
|
116,797
|
74,424
|
||||||
Total research and development expenses
|
$
|
3,030,467
|
3,235,022
|
R&D expenses decreased by $204,555 or 6.3%, to $3,030,467 for the nine months ended September 30, 2021 from $3,235,022 for the nine months ended September 30, 2020. The
decrease was primarily due to the decrease of $161,555 in compensation and related personnel costs due to the reduction in staff in March 2020, a decrease of $56,659 in clinical-related trial costs, a decrease of $28,714 in material and
development costs due to deferring certain R&D projects in the first half of 2021 to preserve cash, and partially offset by an increase in other costs of $42,373 largely related to additional consulting costs to support our clinical
trials.
Sales and marketing
Sales and marketing expenses decreased by $193,652 or 68.8%, to $87,931 for the nine months ended September 30, 2021 from $281,583 for the nine months ended September 30, 2020.
The decrease was primarily due to a decrease of $192,304 in compensation and related personnel costs due to the reduction in staff in March 2020.
General and administrative
General and administrative expenses increased by $1,240,154, or 69.3%, to $3,030,749 for the nine months ended September 30, 2021 from $1,790,595 for the nine months ended
September 30, 2020. The increase was largely due to an increase of $1,050,483 in professional costs largely associated with our financing transactions and additional costs associated with being a public company.
Depreciation and amortization
Depreciation and amortization expenses decreased by $50,323, or 10.1%, to $449,211 for the nine months ended September 30, 2021 from $499,534 for the nine months ended September
30, 2020 primarily due to reduction of amortization expense associated with the Company’s intangible assets.
Other income (expense)
Total other income (expense) or net income increased by $792,871 for the nine months ended September 30, 2021 from the same period last year largely from the $821,515 in other
income recognized due to the SBA approval of our PPP loan forgiveness.
Liquidity and Capital Resources
Sources of liquidity
Since our inception through September 30, 2021, 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 September 30, 2021, we had $27,280,309 of cash and cash equivalents and an accumulated deficit of $80,375,482.
On June 14, 2021, we were notified by Georgia Primary Bank that the Paycheck Protection Program (PPP) loan in the amount of $812,500 and accrued interest of $9,015 was fully forgiven; and, as a result,
we recognized $821,515 in other income in June 2021.
On June 22, 2021, we closed our initial public offering (the IPO) in which we issued and sold 2,650,000 shares of our authorized common stock. The
price per share in the IPO was $13.00. Net proceeds received, after deducting underwriting discounts, commissions, and legal expenses, were $31,613,500. Offering costs incurred by the Company were $1,591,144, which excludes legal
expenses incurred by our underwriters of $425,000. Immediately prior to the closing of the IPO, all our shares of our convertible Series A preferred stock and our redeemable convertible Series B and Series C preferred stock automatically
converted into 8,116,343 shares of common stock.
Funding requirements
Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations at least through 2022. Our estimate as to
how long we expect the net proceeds from this offering, together with 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, and we may need to seek additional funds
sooner than planned.
Our cash and cash equivalents as of September 30, 2021 will not be sufficient to fund all of our product candidates through regulatory approval, and we anticipate needing to raise additional capital to
complete the development and commercialization of our product candidates. 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 candidates, 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.
Cash Flows
Comparison of the Nine Months Ended September 30, 2021 and 2020
The following table summarizes our cash flows for the nine months ended September 30, 2021 and 2020:
Nine Months Ended September 30,
|
||||||||
2021
|
2020
|
|||||||
Net cash used in operating activities
|
$
|
(5,682,883
|
)
|
(3,662,007
|
)
|
|||
Net cash (used in) provided by investing activities
|
(188,245
|
)
|
948,653
|
|||||
Net cash provided by financing activies
|
29,829,211
|
864,073
|
||||||
Net change in cash and cash equivalents
|
$
|
23,958,083
|
(1,849,281
|
)
|
Operating activities
For the nine months ending September 30, 2021, cash used in operating activities was $5,682,883, attributable to a net loss of $5,172,992, a net change in our net operating
assets and liabilities of $588,880, and non-cash charges of $78,989. Net non-cash charges largely consisted of $821,515 in PPP loan forgiveness offset by $163,924 in stock-based compensation, $449,211 in depreciation and amortization, and
$284,519 in right-of-use amortization. The change in our net operating assets and liabilities was primarily due to a net decrease in accounts payable and accrued expenses of $748,173, a decrease of $312,893 in lease liabilities, and offset by
a decrease in other assets of $498,878.
For the nine months ending September 30, 2020, cash used in operating activities was $3,662,007, attributable to a net loss of $5,255,473, and offset by a net change in our net
operating assets and liabilities of $535,862 and non-cash charges of $1,057,604. Non-cash charges primarily consisted of $239,075 in stock-based compensation, $499,534 in depreciation and amortization, and $320,184 in right-of-use
amortization. The change in our net operating assets and liabilities was primarily due to a net increase in accounts payable and accrued expenses of $639,047, a decrease in other assets of $205,839, and offset by a decrease in lease
liabilities of $337,074.
Investing activities
For the nine months ended September 30, 2021, cash used in investing activities for the purchase of equipment was $188,245.
For the nine months ended September 30, 2020, cash provided by investing activities was $948,653, attributable to maturities of short-term investments of $1,000,000, offset by
payments for patents and other intangible assets of $42,995 and equipment of $8,352.
Financing activities
For the nine months ended September 30, 2021, cash provided by financing activities was $29,829,211, attributable to net proceeds from our IPO of $30,034,857, exercise of stock
options totaling $112,145, and offset by repayments on notes payable of $302,343 and payments under lease obligations of $15,448.
For the nine months ended September 30, 2020, cash provided from financing activities was $864,073, consisting of proceeds from the PPP loan of $812,500, the Economic Injury
Disaster Loan Advance of $10,000, and proceeds from the exercise of stock options of $55,550, offset partially by payments under lease obligations of $13,977.
Not applicable.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (principal executive officer) and Vice President, Finance and Administration (principal financial 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 September 30, 2021.
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 September 30, 2021 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 and Vice President, Financial and Administration (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. Based on information currently available, we believe that the amount, or range, of reasonably possible
losses in connection with any pending actions against us in excess of established reserves, in the aggregate, is not material to our consolidated 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.
You should carefully review and consider the information regarding certain risks and uncertainties facing us that could have a material adverse effect on our business prospects,
financial condition, results of operations, liquidity and available capital resources set forth in Part I, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Unregistered Sales of Equity Securities
Not applicable.
Use of Proceeds
On June 17, 2021, our Registration Statement on Form S-1, as amended (Reg. No. 333-256156), was declared effective in connection with the IPO.
There has been no material change in the planned use of proceeds from our IPO as described in the Prospectus relating to that offering dated June 21, 2021.
Item 3. |
Defaults Upon Senior Securities
|
Not applicable.
Item 4. |
Mine Safety Disclosures
|
Not applicable.
Item 5. |
Other Information
|
Not applicable.
Exhibit
|
Incorporated by Reference
|
||||||||
File
|
|||||||||
Number
|
Description of Document |
Schedule/Form
|
Number
|
Exhibit
|
Filing Date
|
||||
10.1* |
Master Services Agreement and Statement of Work for consulting services, effective August 12, 2021, by and between Femasys Inc. and BEspoke
Medical Affairs Solutions, LLC. |
||||||||
31.1* |
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
|
||||||||
31.2* |
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
|
||||||||
32.1* |
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
|
||||||||
32.2* |
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 Extension 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 12 day of November 2021.
FEMASYS INC.
Dated: November 12, 2021
|
By: /s/ Kathy Lee-Sepsick
|
|
Kathy Lee-Sepsick
|
||
Chief Executive Officer and President
|
By: /s/ Gary Thompson
|
||
Gary Thompson
|
||
Vice President, Finance & Administration
|
||
(Principal financial and accounting officer)
|
27