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, 2024

☐	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
(Address of principal executive offices)		(Zip Code)

(770) 500-3910
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

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 Nasdaq Capital Market

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 ☑

The Registrant had 22,220,718 shares of common stock, $0.001 par value, outstanding as of May 8, 2024.

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		Page

Part I. Financial Information
Item 1	Condensed Financial Statements	5
	Condensed Balance Sheets as of March 31, 2024 and December 31, 2023 (unaudited)	6
	Condensed Statements of Comprehensive Loss for the Three months ended March 31, 2024 and 2023 (unaudited)	7
	Condensed Statements of Stockholders’ Equity for the Three months ended March 31, 2024 and 2023 (unaudited)	8
	Condensed Statements of Cash Flows for the Three months ended March 31, 2024 and 2023 (unaudited)	9
	Condensed Notes to Financial Statements (unaudited)	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4	Controls and Procedures	22

Part II. Other Information
Item 1	Legal Proceedings	22
Item 1A	Risk Factors	23
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3	Defaults Upon Senior Securities	23
Item 4	Mine Safety Disclosures	23
Item 5	Other Information	23
Item 6	Exhibits	23
SIGNATURES		24

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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 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;

•

our ability to enroll subjects in the clinical trials for our product candidates in order to advance the development thereof on a timely basis;

•

our ability to successfully initiate and grow the commercial launch of FemaSeed®;

•

our ability to obtain additional financing to fund the clinical development and commercialization of our product candidate and products and fund our operations;

•

estimates regarding the total addressable market for our products and product candidate;

•

competitive companies and technologies in our industry;

•

our ability to obtain U.S. Food and Drug Administration (FDA) approval for our permanent birth control system, ability to establish and expand sales of our women-specific medical products and develop and commercialize additional products;

•

our ability to obtain regulatory approvals for and commercialize our product candidate, or the effect of delays in obtaining regulatory authorizations and commercialize;

•

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 FemaSeed, FemBloc® or any future product candidates, and our 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;

•

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 artificial insemination product, permanent birth control system, and women-specific medical product solutions in markets in and outside of the United States;

•

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 product candidates and our ability to avoid claims of infringement;

•

the volatility of the trading price of our common stock; and

•

our expectations about market trends.

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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 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.

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PART I. FINANCIAL INFORMATION

ITEM I.

Financial Statements

FEMASYS INC.

Condensed Balance Sheets

(unaudited)

Assets	March 31, 2024			December 31, 2023
Current assets:
Cash and cash equivalents	$	17,835,968			21,716,077
Accounts receivable, net		120,529			98,906
Inventory, net		971,297			667,118
Prepaid and other current assets		955,539			695,879
Total current assets		19,883,333			23,177,980
Property and equipment, at cost:
Leasehold improvements		1,212,417			1,212,417
Office equipment		47,308			47,308
Furniture and fixtures		417,654			414,303
Machinery and equipment		2,582,220			2,559,356
Construction in progress		569,723			423,077
		4,829,322			4,656,461
Less accumulated depreciation		(3,615,405	)		(3,545,422	)
Net property and equipment		1,213,917			1,111,039
Long-term assets:
Lease right-of-use assets, net		2,227,561			2,380,225
Intangible assets, net of accumulated amortization		33,115			—
Other long-term assets		1,013,034			1,086,581
Total long-term assets		3,273,710			3,466,806

Total assets	$	24,370,960			27,755,825

(continued)

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FEMASYS INC.

Condensed Balance Sheets

(unaudited)

Liabilities and Stockholders’ Equity	March 31, 2024			December 31, 2023
Current liabilities:
Accounts payable	$	1,095,730			1,137,823
Accrued expenses		673,457			1,444,296
Clinical holdback – current portion		93,376			65,300
Lease liabilities – current portion		494,967			406,636
Total current liabilities		2,357,530			3,054,055
Long-term liabilities:
Clinical holdback – long-term portion		30,389			54,935
Convertible notes payable, net (including related parties)		4,472,456			4,258,179
Lease liabilities – long-term portion		1,902,991			2,036,067
Total long-term liabilities		6,405,836			6,349,181
Total liabilities		8,763,366			9,403,236
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par, 200,000,000 authorized, 22,216,570 shares issued and 22,099,347 outstanding as of March 31, 2024; and 21,774,604 shares issued and 21,657,381 outstanding as of December 31, 2023		22,217			21,775
Treasury stock, 117,223 common shares		(60,000	)		(60,000	)
Warrants		2,631,838			2,787,137
Additional paid-in-capital		124,994,678			123,985,306
Accumulated deficit		(111,981,139	)		(108,381,629	)
Total stockholders’ equity		15,607,594			18,352,589

Total liabilities and stockholders’ equity	$	24,370,960			27,755,825

The accompanying notes are an integral part of these condensed unaudited financial statements.

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FEMASYS INC.

Condensed Statements of Comprehensive Loss

(unaudited)

	Three Months Ended March 31,
	2024			2023
Sales	$	271,140			293,984
Cost of sales (excluding depreciation expense)		88,532			105,120
Operating expenses:
Research and development		1,770,731			1,537,439
Sales and marketing		300,487			244,896
General and administrative		1,502,804			1,315,137
Depreciation and amortization		71,228			133,066
Total operating expenses		3,645,250			3,230,538
Loss from operations		(3,462,642	)		(3,041,674	)
Other income (expense):
Interest income		224,684			97,089
Interest expense		(361,552	)		(1,672	)
Total other income (expense)		(136,868	)		95,417

Net loss	$	(3,599,510	)		(2,946,257	)

Net loss attributable to common stockholders, basic and diluted	$	(3,599,510	)		(2,946,257	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.17	)		(0.25	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		21,775,357			11,872,255

The accompanying notes are an integral part of these condensed unaudited financial statements.

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FEMASYS INC.

Condensed Statements of Stockholders’ Equity

(unaudited)


																		Total
	Common stock				Treasury common stock								Additional		Accumulated			stockholders’
	Shares		Amount		Shares		Amount			Warrants			paid-in capital		deficit			equity
THREE MONTHS ENDED MARCH 31, 2024
Balance at December 31, 2023		21,774,604	$	21,775		117,223	$	(60,000	)	$	2,787,137		$	123,985,306	$	(108,381,629	)	$	18,352,589

Share-based compensation expense		—		—		—		—			—			77,585		—			77,585
Issuance of common stock in connection with at-the-market offering, net of issuance costs		441,966		442		—		—			—			776,488		—			776,930
Expiration of warrant											(155,299	)		155,299
Net loss		—		—		—		—			—			—		(3,599,510	)		(3,599,510	)
Balance at March 31, 2024		22,216,570	$	22,217		117,223	$	(60,000	)	$	2,631,838		$	124,994,678	$	(111,981,139	)	$	15,607,594

THREE MONTHS ENDED MARCH 31, 2023
Balance at December 31, 2022		11,986,927	$	11,987		117,223	$	(60,000	)	$	567,972		$	108,857,065	$	(94,134,505	)	$	15,242,519

Issuance of common stock in connection with at-the-market offering, net of issuance costs		2,869		3		—		—			—			3,365		—			3,368
Share-based compensation expense		—		—		—		—			—			56,954		—			56,954
Net loss		—		—		—		—			—			—		(2,946,257	)		(2,946,257	)
Balance at March 31, 2023		11,989,796	$	11,990		117,223	$	(60,000	)	$	567,972		$	108,917,384	$	(97,080,762	)	$	12,356,584

The accompanying notes are an integral part of these condensed unaudited financial statements.

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FEMASYS INC.

Condensed Statements of Cash Flows

(unaudited)

	Three Months ended March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(3,599,510	)		(2,946,257	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		69,983			131,653
Amortization		1,245			1,413
Amortization of right-of-use assets		152,664			75,635
Provision for bad debts		1,000			—
Inventory reserve write-off		1,240			300
Share-based compensation expense		77,585			56,954
Amortization of debt issuance costs and discount		258,802			—
Changes in operating assets and liabilities:
Accounts receivable		(22,623	)		(46,485	)
Inventory		(305,419	)		(64,318	)
Prepaid and other assets		(187,359	)		150,654
Accounts payable		(137,753	)		3,016
Accrued expenses		(792,239	)		78,703
Lease liabilities		(44,745	)		(91,211	)
Other liabilities		(40,995	)		2,306

Net cash used in operating activities		(4,568,124	)		(2,647,637	)
Cash flows from investing activities:
Acquisition of patents		(25,603	)		—
Purchases of property and equipment		(64,557	)		(8,901	)

Net cash used in investing activities		(90,160	)		(8,901	)
Cash flows from financing activities:
Proceeds from at-the-market sales of common stock		802,242			3,373
Issuance costs for at-the-market sales of common stock		(24,067	)		—
Repayment of note payable		—			(141,298	)
Payments under lease obligations		—			(6,135	)

Net cash provided by (used in) financing activities		778,175			(144,060	)

Net change in cash and cash equivalents		(3,880,109	)		(2,800,598	)
Cash and cash equivalents:
Beginning of period		21,716,077			12,961,936

End of period	$	17,835,968			10,161,338

Supplemental cash flow information
Cash paid for:
Interest	$	—			1,672
Non-cash investing and financing activities:
Property and equipment costs included in accounts payable and accrued expense	$	108,304			12,990
Acquisition of patents included in accounts payable	$	8,757
Commissions costs relating to certain proceeds from issuance of common stock	$	—			109
Deferred offering costs reclassified to additional paid-in-capital	$	1,245			—

The accompanying notes are an integral part of these condensed unaudited financial statements.

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FEMASYS INC.

Condensed Notes to Financial Statements

(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 company focused on addressing significant unmet needs for women worldwide with a broad portfolio of in-office, accessible, and innovative therapeutic and diagnostic products, including a lead revolutionary product candidate and FDA-cleared products. The Company’s mission is to provide women with superior minimally-invasive, non-surgical product technologies, accessible in the office, improving patient care and overall health economics focused on servicing the reproductive health needs for those seeking solutions for infertility issues (FemaSeed® and FemVue®) or permanent birth control (FemBloc®). The Company currently operates as one segment with an initial focus on servicing the reproductive health needs for those seeking solutions for infertility issues or permanent birth control.

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. FemaSeed, a solution which enables directed intratubal insemination to improve on traditional intrauterine insemination (IUI) and provides a lower cost and safer option to in vitro fertilization methods, received approval to sell FemaSeed in Canada in April 2023. In September 2023, the Company received 510(k) clearance from the FDA for FemaSeed for intratubal insemination to market in the United States. A pivotal clinical trial was still ongoing at the time of receiving regulatory clearance, however, enrollment was completed in November 2023. FemVue, a solution that enables fallopian tube assessment with ultrasound as an alternative to the radiologic approach (hysterosalpingogram) for the diagnosis of infertility, is approved for sale in the U.S., Japan, and Canada. FemChec® allows for fallopian tube evaluation after a FemBloc procedure to confirm occlusion (or procedure success). FemCerv® is a solution for complete tissue sampling with minimal contamination of the endocervical canal in a virtually pain-free procedure as an alternative to the single biopsy method and is approved for sale in the U.S. and Canada. FemCath®, allows for selective evaluation of an individual fallopian tube as an alternative to the traditional intrauterine catheter that is undirected, is approved for sale in the U.S. and Canada. FemBloc®, the Company’s solution for permanent birth control, is based on the Company’s platform technology for delivery and in June 2023 Femasys received FDA approval of our IDE to evaluate the safety and efficacy of FemBloc, our non-surgical, non-implant, non-hormonal in-office solution for permanent birth control in a pivotal clinical trial. In August 2023 Femasys announced the initiation of enrollment in the FINALE [Prospective Multi-Center Trial for FemBloc Intratubal Occlusion for TranscervicAL Permanent Birth Control] pivotal trial designed to evaluate the safety and efficacy of FemBloc. This prospective, multi-center, open-label, single-arm study design includes pregnancy rate as the primary endpoint, which will be analyzed once 401 women have relied on FemBloc for one year for permanent birth control. In addition, the study is designed as a roll-in beginning with enrollment of 50 women for a clinical readout primarily of preliminary safety data prior to enrolling the remaining subjects. An interim analysis of clinical data endpoints is planned once 300 women have used FemBloc for permanent birth control for one year. Follow-up will continue annually for five years post-market.

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, 2023 included in our Annual Report on Form 10K filed with the SEC on March 28, 2024 (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.

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. 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, 2024, the Company had cash and cash equivalents of $17,835,968. 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 the sale of FemVue and FemaSeed to support the Company’s research and development activities, largely in connection with 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.

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FEMASYS INC.

Condensed Notes to Financial Statements

(unaudited)

For the three months ended March 31, 2024, the Company generated a net loss of $3,599,510. The Company expects such losses to increase over the next few years as the Company advances FemBloc through clinical development until FDA approval is received and is available to be marketed.

The Company believes that its cash and cash equivalents as of March 31, 2024 and cash received subsequent to quarter end (see Note 16, Subsequent Events) will be sufficient to fund our ongoing operations at least 12 months from the date of filing these condensed financial statements.

Recently Issued Accounting Pronouncements – Recently Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 28): Improvements to Reportable Segment Disclosures. The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The ASU improves financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company will adopt the ASU for the fiscal year ended December 31, 2024 and interim periods in fiscal 2025. The adoption of the ASU will result in additional disclosures to the Company’s financial statements and footnote disclosures.

Recently Issued Accounting Pronouncements – Not Yet Adopted

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 is currently evaluating the effect that adoption of ASU 2023-09 will have on its financial statements and expects to adopt the ASU on January 1, 2025.

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

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 and cash equivalents, notes payable and other liabilities approximate their fair value because of the short‑term maturity of these financial instruments and are based on Level 1 inputs. The Company’s equity-classified warrants and stock options are measured at fair value upon grant using the Black-Scholes option pricing model, a Level 2 input. The Company uses unobservable inputs for the model’s assumptions, including management’s assumptions of the Company’s volatility and price of the underlying stock. The fair value of the Company’s convertible notes is disclosed at each reporting period based on a discounted cash flow analysis, a Level 3 input.

(3)	Cash and Cash Equivalents

As of March 31, 2024 and December 31, 2023, money market funds included in cash and cash equivalents on the balance sheets were $17,503,242 and $21,278,895, respectively, which represent level 1 within the fair value hierarchy where there are quoted prices in active markets for identical assets.

(4)	Inventories

Inventory stated at cost, net of reserve, consisted of the following:

	March 31,		December 31,
	2024		2023
Materials	$	574,199		367,934
Work in progress		131,657		128,993
Finished goods		265,441

SEC Form 10-Q filed by Femasys Inc.