EVOFEM BIOSCIENC(EVFM) - 2025 Q2 - Quarterly Report

FORM 10-Q Cover Page Provides basic filing information for the Form 10-Q, identifying the registrant and outstanding common stock shares - Registrant: Evofem Biosciences, Inc.[1] - Filing Period: Quarterly period ended June 30, 2025[1] Registrant Status | Status | Indication | | :--- | :--- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☐ | - Common stock outstanding as of August 9, 2025: 118,656,354 shares[5] Table of Contents Indexes the various parts and items of the Form 10-Q, including financial information and other disclosures - The report is structured into Part I (Financial Information) and Part II (Other Information)[7] - Part I includes Financial Statements, Management's Discussion and Analysis, Quantitative and Qualitative Disclosures About Market Risk, and Controls and Procedures[7] - Part II includes Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, Mine Safety Disclosures, Other Information, and Exhibits[7] FORWARD-LOOKING STATEMENTS Outlines forward-looking statements, primarily in MD&A, with a cautionary note on potential material differences in actual results - Forward-looking statements are primarily found in "Management's Discussion and Analysis of Financial Condition and Results of Operations"[9] - Key areas of forward-looking statements include the consummation of the Merger Agreement, ability to continue as a going concern, commercialization of SOLOSEC and PHEXXI, remediation of internal control weaknesses, ability to raise capital, achieve profitability, and comply with debt arrangements[10][15] - Cautionary statement: Actual results may differ materially from projections due to known and unknown risks and uncertainties. The company does not assume any obligation to update forward-looking statements, except as required by applicable law[12] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows Condensed Consolidated Balance Sheets Condensed balance sheets reflect changes in total assets, liabilities, and stockholders' deficit for the period Condensed Consolidated Balance Sheet Highlights (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total current assets | $8,970 | $13,609 | $(4,639) | | Total assets | $14,382 | $23,789 | $(9,407) | | Total current liabilities | $73,893 | $80,448 | $(6,555) | | Total liabilities | $79,212 | $90,264 | $(11,052) | | Total stockholders' deficit | $(69,616) | $(71,257) | $1,641 | Condensed Consolidated Statements of Operations Statements of operations show net income/loss and product sales trends for the three and six months ended June 30 Condensed Consolidated Statements of Operations Highlights (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $4,825 | $4,160 | $5,670 | $7,763 | | Total operating expenses | $6,076 | $5,549 | $6,594 | $11,996 | | Loss from operations | $(1,251) | $(1,389) | $(924) | $(4,233) | | Net income (loss) | $(1,784) | $1,351 | $(828) | $(3,458) | | Net income (loss) attributable to common stockholders | $(1,785) | $1,304 | $(832) | $(3,552) | | Basic EPS | $(0.02) | $0.02 | $(0.01) | $(0.07) | | Diluted EPS | $(0.02) | $(0.00) | $(0.01) | $(0.07) | - Product sales, net, increased by 16% for the three months ended June 30, 2025, compared to the prior year, but decreased by 27% for the six months ended June 30, 2025, primarily due to lower PHEXXI sales volume, partially offset by SOLOSEC addition and increased WAC[19][258][265] Condensed Consolidated Statements of Comprehensive Operations Statements of comprehensive operations detail comprehensive income/loss for the three and six months ended June 30 Condensed Consolidated Statements of Comprehensive Operations Highlights (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(1,784) | $1,351 | $(828) | $(3,458) | | Change in fair value of financial instruments attributed to credit risk change | $(573) | $(256) | $74 | $68 | | Comprehensive income (loss) | $(2,357) | $1,095 | $(754) | $(3,390) | Condensed Consolidated Statements of Convertible and Redeemable Preferred Stock and Stockholders' Deficit Details changes in convertible and redeemable preferred stock and stockholders' deficit, including stock-based compensation and net income/loss Stockholders' Deficit Changes (in thousands) | Item | Balance as of Dec 31, 2024 | Stock-based compensation | Change in fair value of financial instruments | Series E-1 Shares dividends | Net income (loss) | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Stockholders' Deficit | $(71,257) | $101 | $74 | $(4) | $(828) | $(69,616) | - Issuance of common stock upon noncash exercise of purchase rights added $1 thousand to common stock and $1 thousand to additional paid-in capital for the six months ended June 30, 2025[25] - Issuance of Aditxt Notes – Related Party added $2,296 thousand to additional paid-in capital for the six months ended June 30, 2025[25] Condensed Consolidated Statements of Cash Flows Statements of cash flows show net cash used in operating activities and provided by financing activities for the six months ended June 30 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(2,359) | $(1,018) | $(1,341) | | Net cash used in investing activities | $(59) | $(14) | $(45) | | Net cash provided by financing activities | $2,425 | $1,144 | $1,281 | | Net change in cash, cash equivalents and restricted cash | $7 | $112 | $(105) | | Cash, cash equivalents and restricted cash, end of period | $748 | $692 | $56 | - Primary sources of cash from financing activities for the six months ended June 30, 2025, included $2.4 million from Aditxt Notes – Related Party and $383 thousand from short-term debt and Notes[29][284] - Primary uses of cash from operating activities for the six months ended June 30, 2025, included payments of routine trade payables ($0.7 million), contingent liabilities ($0.4 million), and inventory purchases ($0.5 million)[282] Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and disclosures for the unaudited financial statements, including going concern risk and accounting policies 1. Description of Business and Basis of Presentation Describes the company's business, commercialized products, and going concern risk, along with management's liquidity plans - Evofem commercializes PHEXXI (non-hormonal contraceptive vaginal gel, FDA approved May 2020) and SOLOSEC (single-dose oral antimicrobial for BV and trichomoniasis, global rights acquired July 2024, relaunched November 2024)[30][31][32] - The company's strategy includes global commercialization through partnerships, with PHEXXI and SOLOSEC licensed in MENA to Pharma 1 Drug Store. PHEXXI was approved in Nigeria and submitted for approval in Mexico, Ethiopia, and Ghana[33][34][35] - The company has incurred operating losses and negative cash flows since inception, with a working capital deficit of $64.9 million and an accumulated deficit of $898.5 million as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern[42][48] - Management's plans to meet cash flow needs include generating product revenue, earning milestone payments from Pharma 1, restructuring payables, and obtaining additional funding through the A&R Merger Agreement with Aditxt, non-dilutive financings, or other partnerships[46][48] - The company's common stock was moved from OTCQB to OTC Pink Current on April 23, 2025, and then to Over-the-Counter Integrated Disclosure (OTCID) on July 1, 2025, due to non-compliance with minimum bid price requirements[43][44][45] 2. Summary of Significant Accounting Policies Details significant accounting policies, including segment reporting, credit risk, EPS calculations, and recently issued accounting pronouncements - The company operates and manages its business as one operating segment, with the CEO as the chief operating decision-maker[52] - Significant estimates are made for revenue variable consideration, expected credit losses, fair value of financial instruments, inventory valuation, and deferred tax assets[51] - The company is subject to credit risk from trade accounts receivable, with its three largest customers accounting for approximately 80% of gross product sales and 90% of trade accounts receivable as of June 30, 2025[55][57] Potentially Dilutive Securities Excluded from Diluted EPS (in thousands) | Security Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Options to purchase common stock | 3,372 | 3,713 | | Warrants to purchase common stock | 263,062,099 | 20,807,539 | | Purchase rights to purchase common stock | 1,513,848,899 | 1,546,948,899 | | Convertible debt | 2,969,614,658 | 2,528,800,006 | | Series E-1 Shares | 149,350,650 | 127,801,537 | | Series F-1 Shares | 1,706,493,507 | 1,446,753,247 | | Total | 6,602,373,185 | 5,671,114,941 | - No significant new accounting standards were adopted during the six months ended June 30, 2025. Several ASUs (2023-06, 2023-09, 2024-03, 2025-01, 2024-04, 2025-05) are issued but not yet effective, and the company is evaluating their potential impact[65][67][68][69][70][71] 3. Revenue Explains revenue recognition from product sales, adjusted for various variable considerations based on historical data and market information - Revenue is recognized when control of PHEXXI and SOLOSEC is transferred to the customer, typically upon receipt[74] - Revenue is recorded net of reserves for variable consideration, including distribution service fees, prompt pay and other discounts, product returns, chargebacks, rebates, and patient support programs[76][84] Variable Consideration Recorded (in millions) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contra trade accounts receivable | $0.1 | $0.3 | | Other current liabilities | $7.4 | $7.2 | 4. Debt Details various debt instruments, including Baker Notes, Adjuvant Notes, SSNs, and Aditxt Notes, and related default situations - Baker Notes (originally $25.0 million principal) are now held by Future Pak, LLC, and are subject to a Notice of Event of Default from September 2024, claiming acceleration of repayment of the outstanding balance (approximately $107.0 million). The company disputes this claim[87][106][108][109][111][112] - Adjuvant Notes ($25.0 million principal) are unsecured convertible promissory notes with a 7.5% annual interest rate, convertible into common stock. The company was in default as of September 30, 2023, but Adjuvant forbore the default[114][115][116][119][121][122] - The company issued Senior Subordinated Notes (SSNs) and Aditxt Notes (total principal $3.7 million from April-June 2025) with warrants, which are unsecured senior subordinated notes with an 8% interest rate (subject to increase to 12% upon default) and a three-year maturity[124][125][129][130][131][132] Summary of SSNs and Aditxt Notes at Issuance (in thousands) | Notes | Principal At Issuance | Net Proceeds Before Issuance costs | Common Warrants | Maturity Date | Conversion Price At Issuance | Conversion Price At 6/30/2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | December 2022 Notes | $2,308 | $1,500 | 369,230 | 12/21/2025 | $6.25 | $0.0154 | | February 2023 Notes | $1,385 | $900 | 653,538 | 2/17/2026 | $2.50 | $0.0154 | | March 2023 Notes | $600 | $390 | 240,000 | 3/17/2026 | $2.50 | $0.0154 | | March 2023 Notes | $538 | $350 | 258,584 | 3/20/2026 | $2.50 | $0.0154 | | April 2023 Notes | $769 | $500 | 615,384 | 3/6/2026 | $1.25 | $0.0154 | | July 2023 Notes | $1,500 | $975 | 1,200,000 | 3/6/2026 | $1.25 | $0.0154 | | August 2023 Notes | $1,000 | $650 | 799,999 | 8/4/2026 | $1.25 | $0.0154 | | September 2023 Notes | $2,885 | $1,875 | 26,997,041 | 9/26/2026 | $0.13 | $0.0154 | | Aditxt April Note | $2,308 | $1,500 | 149,850,150 | 4/8/2028 | $0.0154 | $0.0154 | | Aditxt June Note | $1,423 | $925 | 92,407,592 | 6/26/2028 | $0.0154 | $0.0154 | - The company entered into an insurance premium finance agreement in June 2025 for $0.4 million at 7.82% annual interest, recorded as short-term debt[137] 5. Balance Sheet Details Provides a breakdown of specific balance sheet accounts, including inventories, prepaid assets, intangible assets, and accrued expenses Inventories (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials | $111 | $350 | | Work in process | $752 | $982 | | Finished goods | $1,043 | $245 | | Total | $1,906 | $1,577 | Prepaid and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Insurance | $868 | $391 | | PDUFA fees | $202 | $606 | | Outside service retainers | $90 | $160 | | Short-term deposits | $125 | $127 | | Other | $97 | $175 | | Total | $1,382 | $1,459 | Intangible Asset, Net (in thousands) | Item | Useful Life | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | :--- | | Intellectual property | 16 years | $5,688 | $10,216 | | Less: accumulated amortization | | $(950) | $(619) | | Total, net | | $4,738 | $9,597 | - The intangible asset, related to the SOLOSEC acquisition, decreased by $4.5 million for the six months ended June 30, 2025, due to fair value adjustments[142] Accrued Expenses (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Clinical trial related costs | $- | $2,498 | | Accrued royalty | $1,962 | $1,976 | | Accrued compensation for non-employee directors | $627 | $505 | | Other | $738 | $530 | | Total | $3,327 | $5,509 | 6. Fair Value of Financial Instruments Details fair value measurements of financial liabilities, including convertible debt and derivative liabilities, primarily classified as Level 3 Fair Value of Convertible Debt Instruments (in thousands) | Debt Instrument | Fair Value (June 30, 2025) | Fair Value (December 31, 2024) | Leveling | | :--- | :--- | :--- | :--- | | Baker Notes | $14,609 | $13,801 | Level 3 | | December 2022 Notes | $14 | $118 | Level 3 | | February 2023 Notes | $14 | $120 | Level 3 | | March 2023 Notes | $17 | $147 | Level 3 | | April 2023 Notes | $12 | $108 | Level 3 | | July 2023 Notes | $19 | $161 | Level 3 | | August 2023 Notes | $16 | $136 | Level 3 | | September 2023 Notes | $45 | $383 | Level 3 | | Aditxt Notes | $35 | $- | Level 3 | | Total Fair Value | $14,781 | $14,974 | N/A | Derivative Liabilities (in thousands) | Item | Fair Value (June 30, 2025) | Fair Value (December 31, 2024) | Leveling | | :--- | :--- | :--- | :--- | | Purchase rights | $3 | $1,359 | Level 3 | | Total derivative liabilities | $3 | $1,359 | N/A | - The fair value of Baker Notes increased by $1.0 million for the six months ended June 30, 2025, while total SSNs and Aditxt Notes decreased by $1.1 million[146] - Derivative liabilities (purchase rights) decreased significantly from $1.359 million at December 31, 2024, to $3 thousand at June 30, 2025, primarily due to a change in fair value presented in the condensed consolidated statements of operations[146][148] - Valuation methodologies for Baker Notes, SSNs, Aditxt Notes, and Purchase Rights involve Monte Carlo simulations and Option-Pricing Models (OPM) using Level 3 assumptions, including future revenues, discount rates, and expected volatility[149][150][151] - The SOLOSEC asset acquisition intangible asset and contingent liabilities are valued using a Monte Carlo simulation model, with changes in fair value recorded as adjustments to both the contingent liabilities and the SOLOSEC IP intangible asset[153][154][155][156] 7. Commitments and Contingencies Outlines various commitments and contingencies, including SOLOSEC acquisition obligations, leases, and legal proceedings - The SOLOSEC acquisition was accounted for as an asset acquisition, with future sales-based payments recorded as contingent liabilities and total consideration as an intangible asset[157] - Commitments related to SOLOSEC include purchasing finished goods inventory from the seller through November 2026 (expected $3.5 million total, $0.4 million in H1 2025) and quarterly royalty payments based on net revenue (immaterial in H1 2025)[158][159] SOLOSEC Contingent Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contingent liabilities – current | $100 | $700 | | Contingent liabilities – noncurrent | $4,900 | $9,700 | - The company leases 20 vehicles under operating leases, with a weighted average remaining lease term of 1.83 years and a weighted average discount rate of 12% as of June 30, 2025[161][164] - A supply and manufacturing agreement for PHEXXI resulted in $0.8 million in purchases for the six months ended June 30, 2025[165] - The company entered into a License and Supply Agreement with Windtree Therapeutics, Inc. (a related party) to manufacture PHEXXI, expecting to significantly reduce COGS. No transactions have occurred yet[166] - The company is involved in a trademark dispute with TherapeuticsMD, Inc., requiring a PHEXXI name change. The company failed to meet the original settlement timeline but received FDA approval for a new name in April 2025. Accrued settlement amounts are $0.4 million as of June 30, 2025[171] - The company received multiple notices of default from Future Pak, LLC (holder of Baker Notes) claiming events of default and acceleration of repayment, which the company strongly disputes[173][174][175] - The U.S. patent licensed from Rush University for PHEXXI expired on March 6, 2025, ending royalty obligations to Rush University. PHEXXI remains protected by four additional Orange Book patents solely owned by Evofem[176][177] 8. Convertible and Redeemable Preferred Stock and Stockholders' Deficit Details outstanding warrants, preferred stock, common stock, and purchase rights, including changes in authorized shares - As of June 30, 2025, 263,062,099 warrants to purchase common stock remain outstanding at a weighted average exercise price of $0.18 per share[183] - The A&R E-1 Certificate of Designations, effective September 30, 2025, increases authorized Series E-1 Preferred Stock from 2,300 to 10,000 shares to allow for in-kind dividend payments. Series E-1 shares are convertible at $0.0154 per share as of June 30, 2025[185][186] - Series F-1 Preferred Stock (26,280 shares outstanding) is convertible at $0.0154 per share and is held by Aditxt[187][188] - The number of authorized common stock shares was increased to 3,000,000,000 effective September 14, 2023[190] - Purchase Rights for 1,513,848,899 shares of common stock remain outstanding as of June 30, 2025, expiring June 28, 2027[192] Common Stock Reserved for Future Issuance (as of June 30, 2025) | Item | Common Equivalent Shares | | :--- | :--- | | Common stock issuable upon the exercise of stock options outstanding | 3,372 | | Common stock issuable upon the exercise of common stock warrants | 10,595,019 | | Common stock available for future issuance under the 2019 ESPP | 509 | | Common stock available for future issuance under the Amended and Restated 2014 Plan | 5,789 | | Common stock available for future issuance under the Amended Inducement Plan | 609 | | Common stock reserved for the exercise of purchase rights | 741,490,642 | | Common stock reserved for the conversion of convertible notes | 413,458,756 | | Common stock reserved for the conversion of series E-1 preferred stock | 59,319,137 | | Total common stock reserved for future issuance | 1,224,873,833 | 9. Stock-based Compensation Reports stock-based compensation expense for the three and six months ended June 30, and unrecognized compensation for employee stock options Stock-based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $- | $10 | $1 | $26 | | Selling and marketing | $2 | $24 | $5 | $59 | | General and administrative | $29 | $185 | $95 | $371 | | Total | $31 | $219 | $101 | $456 | - Unrecognized stock-based compensation expense for employee stock options was approximately $0.1 million as of June 30, 2025, with a weighted-average remaining recognition period of 0.2 years[196] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on financial condition, operations, commercial strategies, and liquidity challenges, including the Aditxt merger Overview Provides an overview of Evofem's commercial-stage focus on women's health products, PHEXXI and SOLOSEC, and global expansion strategies - Evofem commercializes PHEXXI, the first and only non-hormonal prescription contraceptive vaginal gel, and SOLOSEC, an FDA-approved single-dose oral antimicrobial for bacterial vaginosis (BV) and trichomoniasis[199][200][202] - PHEXXI has achieved net sales growth in each consecutive year since its September 2020 launch, with 2025 growth drivers including social media campaigns, medical conferences, and expanding use with GLP-1 prescription medications[201] - The company acquired global rights to SOLOSEC in July 2024 and relaunched the brand in November 2024, leveraging existing commercial infrastructure[202] - Global expansion is pursued through ex-U.S. partnerships, with PHEXXI and SOLOSEC licensed to Pharma 1 in MENA, and PHEXXI approved in Nigeria and submitted for approval in Mexico, Ethiopia, and Ghana[203][204][205][206] - A Phase 4 clinical trial for SOLOSEC, funded by NIH, is underway to evaluate its efficacy and cost-effectiveness against metronidazole for trichomoniasis in men and women[207][208] Recent Developments Highlights recent developments including stock market tier changes, preferred stock adjustments, Aditxt Notes issuance, and merger agreement amendments - Company's common stock began trading on the Over-the-Counter Integrated Disclosure (OTCID) market tier on July 1, 2025[209] - Authorized shares of Series E-1 Preferred Stock increased from 2,300 to 10,000, effective September 30, 2025, to allow for in-kind dividend payments[210] - Issued Aditxt April Note ($2.3 million principal) and Aditxt June Note ($1.4 million principal) with warrants, generating approximately $2.4 million in net proceeds[211][212][213] - The A&R Merger Agreement with Aditxt has been amended five times, with the latest amendment (March 22, 2025) extending the consummation date to September 30, 2025, and including a $1.5 million Fifth Parent Investment[215][216][225] - A condition of the merger closing is the full payment of the Baker Notes outstanding balance, not to exceed the Repurchase Price[226] PHEXXI as a Contraceptive; Commercial Strategies Details PHEXXI's promotion, commercial strategies for 2025, and efforts to increase access through pharmacy partnerships and government programs - PHEXXI is a non-hormonal prescription contraceptive vaginal gel, launched in September 2020, promoted to HCPs and available via telehealth[228] - Key growth drivers for 2025 include social media campaigns, strategic medical conferences, and expanding use in women taking GLP-1 medications (e.g., Ozempic, Mounjaro, Zepbound) where oral birth control may be less effective[201][231] - The company is focusing on pharmacy partnerships to increase access, having expanded its network with a major national chain and two regional partners[233] - PHEXXI is covered by a major PBM (46 million lives) and the U.S. Department of Veterans Affairs (13.7 million lives). The company participates in Medicaid and 340B programs, with approximately 83% of commercial and Medicaid PHEXXI prescriptions approved by payers[234][235][236] - Effective January 1, 2023, most insurers and PBMs must provide $0 out-of-pocket coverage for FDA-approved contraceptives like PHEXXI[236] SOLOSEC Describes SOLOSEC as an FDA-approved single-dose antimicrobial for BV and trichomoniasis, emphasizing its efficacy and compliance benefits - SOLOSEC is an FDA-approved single-dose oral antimicrobial for bacterial vaginosis (BV) and Trichomonas vaginalis (trichomoniasis) in individuals 12 years and older[238][248] - BV affects an estimated 21 million women in the U.S. and is associated with increased risk of STIs and other health complications if untreated[239][240] - SOLOSEC demonstrated clinically and statistically significant efficacy for BV (68% did not require additional treatment) and a 92.2% cure rate for trichomoniasis in women in clinical trials[242][245] - A single-dose regimen is a significant differentiator for SOLOSEC, addressing non-compliance issues common with multi-day treatments for BV and trichomoniasis[241][245] - An investigator-led Phase 4 clinical trial, funded by NIH, is evaluating SOLOSEC's efficacy and cost-effectiveness for trichomoniasis in men and women against multi-dose metronidazole[246] Financial Operations Overview Outlines revenue recognition, operating expenses (COGS, R&D, S&M, G&A), and other income/expense components of the company's financial operations - Revenue is recognized from unit shipments of PHEXXI and SOLOSEC, adjusted for variable consideration like patient support programs[249] - Cost of goods sold includes purchased materials, direct labor, and manufacturing overhead. Rush royalty payments ended due to patent expiration, but quarterly royalties are now paid under the SOLOSEC Asset Purchase Agreement[250][251] - Research and development expenses focus on continuous improvements, product characterization, and raw material evaluation, with no significant investment in clinical development anticipated for the foreseeable future[253] - Selling and marketing expenses cover PHEXXI and SOLOSEC commercialization, telehealth platform, training, and PDUFA fees. General and administrative expenses include salaries, benefits, business development, investor relations, and professional fees[254][255] - Other income (expense) primarily consists of interest expense and fair value adjustments of financial instruments[256] Results of Operations Provides a comparative analysis of financial performance for the three and six months ended June 30, detailing changes in sales and expenses Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Compares financial performance for the three months ended June 30, 2025, versus 2024, highlighting changes in sales, expenses, and other income Financial Performance (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $4,825 | $4,160 | $665 | 16% | | Cost of goods sold | $755 | $769 | $(14) | (2)% | | Research and development, net | $746 | $270 | $476 | 176% | | Selling and marketing | $2,625 | $2,243 | $382 | 17% | | General and administrative | $1,843 | $2,267 | $(424) | (19)% | | Total other income (expense), net | $(526) | $2,748 | $(3,274) | (119)% | - Increase in R&D expenses primarily due to a $0.3 million increase in outside services and a $0.1 million increase in facilities costs[260] - Increase in S&M expenses primarily due to a $0.3 million increase related to the PDUFA fee for SOLOSEC[261] Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 Compares financial performance for the six months ended June 30, 2025, versus 2024, detailing changes in sales, expenses, and other income Financial Performance (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $5,670 | $7,763 | $(2,093) | (27)% | | Cost of goods sold | $1,120 | $1,453 | $(333) | (23)% | | Research and development, net | $(4,289) | $864 | $(5,153) | (596)% | | Selling and marketing | $5,225 | $4,588 | $637 | 14% | | General and administrative | $4,208 | $5,091 | $(883) | (17)% | | Total other income, net | $103 | $783 | $(680) | (87)% | - Decrease in R&D expenses primarily due to a $5.6 million reduction from trade payable negotiations and a $0.2 million decrease in personnel costs, partially offset by a $0.6 million increase in facilities and outside services[267] - Decrease in total other income, net, due to a lower gain on the change in fair value of financial instruments ($1.4 million in 2025 vs. $4.1 million in 2024) and the absence of a $1.1 million gain on debt extinguishment in 2025[271][272] Liquidity and Capital Resources Discusses the company's working capital deficit, accumulated deficit, cash position, and management's plans to address going concern risk - As of June 30, 2025, the company had a working capital deficit of $64.9 million and an accumulated deficit of $898.5 million[274] - Cash and cash equivalents were $0.7 million as of June 30, 2025, all of which is restricted cash, deemed insufficient to fund operations for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern[274][278] - Management's plans to meet cash flow needs include generating revenue from PHEXXI and SOLOSEC, restructuring current payables, and obtaining additional funding through capital stock issuance, non-dilutive financings, collaborations, or business combinations (e.g., Aditxt merger)[277] - The company's independent registered public accounting firm's opinion on 2024 and 2023 audited financial statements includes an explanatory paragraph regarding substantial doubt about its ability to continue as a going concern[281] Summary Statement of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(2,359) | $(1,018) | $(1,341) | (132)% | | Net cash used in investing activities | $(59) | $(14) | $(45) | (321)% | | Net cash provided by financing activities | $2,425 | $1,144 | $1,281 | 112% | | Net change in cash, cash equivalents and restricted cash | $7 | $112 | $(105) | (94)% | Contractual Obligations and Commitments Outlines the company's contractual obligations, including operating leases, PHEXXI supply agreements, and SOLOSEC acquisition commitments - Operating lease right-of-use assets and lease liabilities were $0.2 million as of June 30, 2025[286] - Purchases under the PHEXXI supply and manufacturing agreement were $0.8 million for the six months ended June 30, 2025[287] - Commitments related to the SOLOSEC asset acquisition include inventory purchases through November 2026 and contingent liabilities and quarterly royalties based on SOLOSEC net revenue[288] - Royalty costs to Rush University for PHEXXI ended for the three and six months ended June 30, 2025, due to the expiration of the Rush patent[289] Other Matters Refers to Note 2 for accounting pronouncements and confirms no material changes to critical accounting policies since the 2024 Form 10-K - Information on recently issued accounting pronouncements is provided in Note 2[290] - No material changes to critical accounting policies since the 2024 Form 10-K[291] Item 3. Quantitative and Qualitative Disclosures About Market Risk States that no quantitative and qualitative disclosures about market risk are applicable for the reporting period - Not applicable for this reporting period[292] Item 4. Controls and Procedures Concludes that disclosure controls and procedures were ineffective due to material weaknesses, with ongoing remediation efforts - CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[294] - Management believes the condensed consolidated financial statements fairly present the financial condition, results of operations, and cash flows in all material respects, despite the ineffective controls[295] - Remediation activities for identified material weaknesses are ongoing, but there is no assurance of completion or prevention of future weaknesses[296] - No material changes in internal control over financial reporting occurred during the latest fiscal quarter, apart from ongoing remediation activities[297] PART II. OTHER INFORMATION Item 1. Legal Proceedings Refers to Note 7 for disclosures regarding legal proceedings, indicating relevant information is provided within the financial statement notes - Refer to Note 7 - Commitments and Contingencies for disclosures on legal proceedings[300] Item 1A. Risk Factors States that there have been no material changes to the risk factors disclosed in the company's Form 10-K for the year ended December 31, 2024 - No material changes to risk factors since the Form 10-K for the year ended December 31, 2024[301] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - None to report[302] Item 3. Defaults Upon Senior Securities Confirms that the company does not have any defaults on any Senior Securities as of the filing date - No defaults on any Senior Securities as of the filing date[303] Item 4. Mine Safety Disclosures States that mine safety disclosures are not applicable to the company - Not applicable[304] Item 5. Other Information Reports no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers during the three months ended June 30, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were entered into, modified, or terminated by directors or officers during the three months ended June 30, 2025[305] Item 6. Exhibits Lists the exhibits filed as part of the Form 10-Q, including merger amendments, agreements, and certifications - The exhibit index includes amendments to the Amended and Restated Plan of Merger, License and Supply Agreements, Securities Purchase Agreements, and certifications (e.g., 31.1, 31.2, 32.1)[308][310] - Financial information in XBRL format is furnished electronically[311] Signatures Contains the required signatures for the Form 10-Q, certifying its submission pursuant to the Securities Exchange Act of 1934 - Report signed by Ivy Zhang, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) on August 14, 2025[316]