Organization, Nature of Business, and Liquidity

9 Months Ended

Sep. 30, 2023

Organization, Nature of Business, and Liquidity [Abstract]

Organization, Nature of Business, and Liquidity

(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 meeting significant unmet needs for women worldwide with a broad portfolio of in-office, accessible solutions, including a lead late-clinical stage product candidate and innovative therapeutic and diagnostic products. The Company currently operates as one segment with an initial focus 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. In June 2023 the Company received approval of its Investigational Device Exemption (IDE) from the U.S. Food and Drug Administration (FDA) for the pivotal clinical trial of FemBloc. In July 2023 the Company announced the notice of allowance for a new U.S. patent application covering use of FemBloc for female permanent birth control. In August 2023 the Company announced the initiation of enrollment for the pivotal clinical trial of FemBloc. FemaSeed® (FemaSeed), a solution which enables intratubal artificial insemination to provide a lower cost option to in vitro fertilization methods, received approval in April 2021 from the FDA on its IDE and the clinical trial was initiated in July 2021. An updated trial design received approval in October 2022 from the FDA and the trial enrollment is ongoing. In April 2023 the Company received approval to sell FemaSeed in Canada. In September 2023 the Company announced 510(k) clearance from the FDA for FemaSeed for intratubal insemination. FemVue® (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® (FemChec) allows for fallopian tube evaluation after a FemBloc procedure to confirm occlusion (or procedure success) and is being studied as part of the FemBloc pivotal trial. FemCath® (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. FemCerv® (FemCerv) is an alternative for the diagnosis of cervical cancer by obtaining a comprehensive tissue sample with minimal contamination of the endocervical canal, and is approved for sale in the U.S and Canada. In August 2023 the Company announced it had obtained a Medical Device Establishment License from Health Canada allowing the Company to directly sell its four products, FemaSeed®, FemVue®, FemCath® and FemCerv®, in Canada.

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, 2022 included in our Annual Report on Form 10K filed with the SEC on March 30, 2023 (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. The most significant estimates used in these financial statements include the valuation of stock options, warrants, useful lives of property and equipment and intangible assets. 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, 2023, the Company had cash and cash equivalents of $8,692,435. 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.

For the nine months ended September 30, 2023, the Company generated a net loss of $9,836,670. 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 in the United States.

The Company believes that its cash and cash equivalents as of September 30, 2023 and cash received subsequent to quarter end (see Note 13, Subsequent Events) will be sufficient to fund our ongoing operations at least 12 months from the date of filing these financial statements.

Recently Issued Accounting Pronouncements – Recently Adopted

On January 1, 2023, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which the Financial Accounting Standards Board (FASB) issued in June 2016. The new standard changes the accounting for credit losses for financial assets and certain other instruments, including trade receivables and contract assets, which 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. 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

No other new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company’s financial statements.