Dare Bioscience, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on an evaluation, performed under the supervision and with the participation of our management, including our principal executive and financial officer, of the effectiveness of our disclosure controls and procedures, our principal executive and financial officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective as of December 31, 2024 at the reasonable assurance level. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act). Our internal control over financial reporting 131 is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. In addition, 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. Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2024 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Under SEC rules, because we are a non-accelerated filer, we are not required to provide an auditor attestation report on internal control over financial reporting, nor did we engage our independent registered public accounting firm to perform an audit of our internal control over financial reporting. Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fourth quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION (a) None. (b) During the period from October 1, 2024 to December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any Rule 10b5-1 trading arrangement (as defined in Item 408(a)(1)(i) of Regulation S-K) or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 132 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item will be included in the Company's 2025 Proxy Statement and is incorporated in this report by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this item will be included in the Company's 2025 Proxy Statement and is incorporated in this report by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item will be included in the Company's 2025 Proxy Statement and is incorporated in this report by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item will be included in the Company's 2025 Proxy Statement and is incorporated in this report by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item will be included in the Company's 2025 Proxy Statement and is incorporated in this report by reference. 133 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this annual report on Form 10-K: (1) Financial Statements See “Index to Consolidated Financial Statements” on page F-1. (2) Financial Statement Schedules All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto included in this report. (3) Exhibits Exhibits not filed or furnished herewith are incorporated by reference to exhibits previously filed with the SEC, as reflected in the table below. We will furnish a copy of any exhibit to stockholders, without charge upon written request to Daré Bioscience, Inc., 3655 Nobel Drive, Suite 260, San Diego, CA 92122, or by calling 858-926-7655. Incorporated by Reference Exhibit Number Description of Exhibit Form File No. Filing Date Exhibit No. Filed Herewith PLANS OF ACQUISITION 2.1§ Δ Agreement and Plan of Merger, dated as of April 30, 2018, by and among Daré Bioscience, Inc., Daré Merger Sub, Inc., Pear Tree Pharmaceuticals, Inc., and Fred Mermelstein and Stephen C. Rocamboli, as Holders' Representatives 10-Q 001-36395 8/13/2018 10.10 2.2+ Agreement and Plan of Merger, dated November 10, 2019, Dare Bioscience, Inc., MC Merger Sub, Inc., Microchips Biotech, Inc., and Shareholder Representative Services LLC, as the stockholders' representative 8-K 001-36395 11/12/2019 2.1 ARTICLES OF INCORPORATION AND BYLAWS 3.1(a) Restated Certificate of Incorporation, as amended to date 10-Q 001-36395 08/12/2024 3.1 3.1(b) Certificate of Correction of the Certificate of Amendment of Restated Certificate of Incorporation dated June 21, 2024 8-K 001-36395 06/27/2024 3.2 3.2 Third Amended and Restated By-Laws (as amended through January 24, 2023) 10-Q 001-36395 5/14/2024 3.1 INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS 4.1 Specimen stock certificate evidencing the shares of common stock 10-K 001-36395 03/28/2018 4.1 134 4.2 Warrant Agreement to purchase shares of common stock of the registrant with Aquilo Partners, L.P., entered into as of October 16, 2016. 10-K 001-36395 03/31/2022 4.2 4.3 Form of common stock purchase warrants issued on September 1, 2023 8-K 0001-36395 08/30/2023 4.1 4.4 Form of common stock purchase warrants issued on December 21, 2023 10-K 001-36395 03/28/2024 4.4 4.5 Description of securities of the registrant 10-K 001-36395 03/27/2020 4.6 COMMERCIAL AGREEMENTS 10.1(a)+ Exclusive License Agreement dated March 31, 2022 between Organon International GmbH and Dare Bioscience, Inc., effective as of June 30, 2022 10-Q 001-36395 05/12/2022 10.1 10.1(b)+ First Amendment to License Agreement by and between Organon International GmbH and Dare Bioscience, Inc. entered into as of July 4, 2023 10-Q 001-36395 11/09/2023 10.2 10.2+ Consent, Waiver and Stand-By License Agreement, dated March 30, 2022, by and among TriLogic Pharma, LLC, and MilanaPharm LLC, Dare Bioscience, Inc., and Organon International GmbH. 10-Q 001-36395 05/12/2022 10.2 10.3Δ License and Collaboration Agreement dated February 11, 2018 between Daré Bioscience, Inc., Strategic Science and Technologies-D, LLC and Strategic Science Technologies, LLC 10-K/A 001-36395 04/30/2018 10.1 10.4Δ License Agreement dated March 19, 2017, between Daré Bioscience Operations, Inc. and ADVA-Tec, Inc. 10-Q 001-36395 11/13/2017 10.1 10.5Δ Exclusive License Agreement made as April 24, 2018 by and between Catalent JNP, Inc. (fka Juniper Pharmaceuticals, Inc.), and Daré Bioscience, Inc. 10-Q 001-36395 8/13/2018 10.1 10.6(a)Δ Amended and Restated Exclusive License Agreement for Atrophic Vaginitis Technology, effective as of July 14, 2006, dated August 15, 2007, by and between Fred Mermelstein, Ph.D., and Janet Chollet, M.D., and Pear Tree Women’s Health Care, Inc. 10-Q 001-36395 8/13/2018 10.5 135 10.6(b)Δ Amendment No. 1 to the Amended and Restated Exclusive License Agreement, dated as of October 10, 2007, by and among Fred Mermelstein, Ph.D. and Janet Chollet, M.D., and Pear Tree Pharmaceuticals, Inc. 10-Q 001-36395 8/13/2018 10.6 10.6(c)Δ Amendment No. 2 to the Amended and Restated Exclusive License Agreement, dated as of February 13, 2017, by and among Fred Mermelstein, Ph.D., and Janet Chollet, M.D., Pear Tree Pharmaceuticals, Inc. and Bernadette Klamerus 10-Q 001-36395 8/13/2018 10.7 10.6(d)+ Amendment No. 3 to the Amended and Restated Exclusive License Agreement, effective as of February 13, 2017, by and among Fred Mermelstein, Ph.D., and Janet Chollet, M.D., Pear Tree Pharmaceuticals, Inc. and Bernadette Klamerus 10-K 001-36395 3/30/2023 10.6(d) 10.6(e)Δ Exclusive License Agreement, dated as of February 13, 2017, by and between GYN Holdings, Inc., a wholly-owned subsidiary of Pear Tree Pharmaceuticals, Inc. and Bernadette Klamerus 10-Q 001-36395 8/13/2018 10.8 10.6(f)Δ Exclusive License Agreement, effective as of September 15, 2017, by and between Fred Mermelstein, Ph.D., Janet Chollet, M.D., Pear Tree Pharmaceuticals, Inc., and Stephen C. Rocamboli 10-Q 001-36395 8/13/2018 10.9 10.7(a)Δ Assignment Agreement by and between Daré Bioscience, Inc. and Hammock Pharmaceuticals, Inc. effective as of December 5, 2018 10-K 001-36395 04/01/2019 10.10(a) 10.7(b)Δ First Amendment to the License Agreement effective as of December 5, 2018 by and among Daré Bioscience, Inc., TriLogic Pharma, LLC and MilanaPharm LLC 10-K 001-36395 04/01/2019 10.10(b) 10.7(c) Amendment No. 1 to Assignment Agreement entered into as of December 4, 2019 between Daré Bioscience, Inc. and Hammock Pharmaceuticals, Inc. 10-K 001-36395 03/27/2020 10.10(c) 10.7(d) Amendment No. 2 to the License Agreement entered into as of December 3, 2019 between Daré Bioscience, Inc., TriLogic Pharma, LLC and MilanaPharm LLC 10-K 001-36395 03/27/2020 10.10(d) 136 10.7(e) Amendment to License Agreement effective as of September 21, 2021 by and among Daré Bioscience, Inc., TriLogic Pharma, LLC and MilanaPharm LLC 10-Q 001-36395 11/10/2021 10.1 10.8+ License Agreement dated as of January 10, 2020 between Bayer HealthCare LLC and Daré Bioscience, Inc. 10-K 001-36395 03/27/2020 10.16 10.9+ Cooperative Research and Development Agreement entered into as of July 8, 2021 between Daré Bioscience, Inc. and the Eunice Kennedy Shriver National Institutes of Child Health and Human Development Institute 10-Q 001-36395 11/10/2021 10.2 10.10+ L icense Agreement dated as of August 12, 2023 b etween Douglas Pharmaceuticals Limited and Daré Bioscience, Inc. X 10.11+ Grant Agreement between Daré Bioscience, Inc. and the Bill & Melinda Gates Foundation effective as of June 30, 2021 , as amended to date X 10.12+ Grant Agreement between Daré Bioscience, Inc. and the Bill & Melinda Gates Foundation effective as of November 11, 2024 , as amended to date X 10.13+ Subaward Agreement between the Consortium Management Firm, National Collegiate Inventor s and Innovators Alliance, Inc. d/b/a/ VentureWell and Daré Bioscience, I nc ., effective as of October 12, 2024 X 10.14 Royalty Interest Financing Agreement entered into as of December 21, 2023 between Dare Bioscience, Inc. and United in Endeavor, LLC 10-K 001-36395 03/28/2024 10.12 10.15 Purchase Agreement, dated October 21, 2024, by and between Daré Bioscience, Inc. and Lincoln Park Capital Fund, LLC 8-K 001-36395 10/21/2024 10.1 10.16 Registration Rights Agreement, dated October 21, 2024, by and between Daré Bioscience, Inc. and Lincoln Park Capital Fund, LLC 8-K 001-36395 10/21/2024 10.2 137 10.17+ Traditional Royalty Purchase Agreement between Daré Bioscience, Inc. and XOMA (US) LLC, dated as of April 29, 2024 10-Q 001-36395 08/12/2024 10.1 10.18+ Synthetic Royalty Purchase Agreement between Daré Bioscience, Inc. and XOMA (US) LLC, dated as of April 29, 2024 10-Q 001-36395 08/12/2024 10.2 MANAGEMENT CONTRACTS AND COMPENSATORY PLANS 10.13(a)* Daré Bioscience, Inc. Amended and Restated 2014 Stock Incentive Plan 8-K 001-36395 7/12/2018 10.1 10.13(b)* Form of Incentive Stock Option Agreement for grants under the Daré Bioscience, Inc. Amended and Restated 2014 Stock Incentive Plan 10-Q 001-36395 8/13/2018 10.3 10.13(c)* Form of Nonstatutory Stock Option Agreement for grants under the Daré Bioscience, Inc. Amended and Restated 2014 Stock Incentive Plan 10-Q 001-36395 8/13/2018 10.4 10.14* 2014 Employee Stock Purchase Plan S-1/A 333-194442 3/31/2014 10.26 10.15(a)* Daré Bioscience, Inc. 2022 Stock Incentive Plan 10-Q 001-36395 8/12/2024 10.7 10.15(b)* Form of Incentive Stock Option Agreement for Grants under the Daré Bioscience, Inc. 2022 Stock Incentive Plan 8-K 001-36395 6/24/2022 10.1(b) 10.15(c)* Form of Nonstatutory Stock Option Agreement for Grants under the Daré Bioscience, Inc. 2022 Stock Incentive Plan 8-K 001-36395 6/24/2022 10.2(c) 10.16* Daré Bioscience, Inc. Performance Bonus Plan, as amended 10-Q 001-36395 11/9/2023 10.3 10.17* Form of indemnification agreement between the registrant and each of its executive officers and directors S-1 333-194442 03/10/2014 10.16 10.18* Amended and Restated Non-Employee Director Compensation Policy (as amended on April 2024) 10-Q 001-36395 8/12/2024 10.4 10.19(a)* Employment Agreement by and between Daré Bioscience, Inc. and Sabrina Martucci Johnson dated as of August 15, 2017 8-K 001-36395 08/18/2017 10.1 138 10.19(b)* Amendment No. 1 to Employment Agreement between Daré Bioscience, Inc. and Sabrina Martucci Johnson dated as of March 9, 2020 10-Q 001-36395 05/14/2020 10.13(b) 10.19(c)* Amendment No. 2 to Employment Agreement between Daré Bioscience, Inc. and Sabrina Martucci Johnson, dated as of May 20, 2024 10-Q 001-36395 08/12/2024 10.5 10.20(a)* Employment Agreement by and between Daré Bioscience, Inc. and Lisa Walters-Hoffert dated as of August 15, 2017 8-K 001-36395 08/18/2017 10.2 10.20(b)* Amendment No. 1 to Employment Agreement between Daré Bioscience, Inc. and Lisa Walters-Hoffert dated as of March 9, 2020 10-Q 001-36395 05/14/2020 10.14(b) 10.21* Daré Bioscience, Inc. Change in Control Policy (as amended on April 29, 2024) 10-Q 333-251599 08/12/2024 10.6 OTHER EXHIBITS 19.1 Daré Bioscience, Inc. Amended and Restated I nsider Trading Policy (October 22, 2024) X 21.1 Subsidiaries of the registrant X 23.1 Consent of Haskell & White LLP X 31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended X 32.1# Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 97* Dare Bioscience, Inc. Policy on Recovery of Erroneously Awarded Compensation 10-K 101.INS XBRL Instance Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.CAL XBRL Taxonomy Calculation Linkbase Document X 139 101.DEF XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB XBRL Taxonomy Label Linkbase Document X 101.PRE XBRL Taxonomy Presentation Linkbase Document X 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) X § All schedules (or similar attachments) have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish copies of any schedules to the Securities and Exchange Commission upon request. Δ Confidential treatment has been requested or granted to certain confidential information contained in this exhibit. + Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10). The omitted information is not material and would likely cause competitive harm to the Company if publicly disclosed. * Management contract or compensatory plan or arrangement # Furnished herewith. This certification is being furnished solely to accompany this report pursuant to U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated herein by reference into any filing of the registrant whether made before or after the date hereof, regardless of any general incorporation language in such filing. ITEM 16. FORM 10-K SUMMARY None. 140 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Daré Bioscience, Inc. By: /s/ SABRINA MARTUCCI JOHNSON Date: March 31, 2025 President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ SABRINA MARTUCCI JOHNSON President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) and Director March 31, 2025 Sabrina Martucci Johnson /s/ MARDEE HARING-LAYTON Chief Accounting Officer March 31, 2025 MarDee Haring-Layton (Principal Accounting Officer) /s/ WILLIAM H. RASTETTER Chairman of the Board and Director March 31, 2025 William H. Rastetter, Ph.D. /s/ JESSICA D. GROSSMAN Director March 31, 2025 Jessica D. Grossman, M.D. /s/ SUSAN L. KELLEY Director March 31, 2025 Susan L. Kelley, M.D. /s/ GREGORY W. MATZ Director March 31, 2025 Gregory W. Matz, CPA /s/ ROBIN STEELE Director March 31, 2025 Robin Steele, J.D., L.L.M. 141 DARÉ BIOSCIENCE, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 200 ) F- 2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F- 4 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023 F- 5 Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2024 and 2023 F- 6 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F- 7 Notes to Consolidated Financial Statements F- 8 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Daré Bioscience, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Daré Bioscience, Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. The Company's Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has recurring losses from operations and is dependent on additional financing to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued) Critical Audit Matter – Estimating the Allocation of Transaction Price in Other Income Recognition The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Description of the Critical Audit Matter During the year ended December 31, 2024, the Company entered into a traditional royalty purchase agreement and a synthetic royalty purchase agreement with XOMA (US) LLC (“XOMA”). The Company received $22.0 million from XOMA in connection with entering into the royalty purchase agreements, which was determined as the transaction price. As described in Note 2 to the consolidated financial statements, the Company recognized other income in accordance with the principles outlined in ASC 610-20, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets, which requires the allocation of the transaction price to each performance obligation based on their relative standalone selling prices. The observable standalone selling prices were not available, and therefore the Company estimated these prices using the adjusted market assessment approach. This fair value approach requires management to make significant estimates and judgments, including the timing and amounts of projected net sales, probabilities of success in product development and regulatory approvals, and appropriate discount and royalty rates. Estimating probabilities of success for early-stage assets is inherently uncertain. We identified the estimation of the allocation of the transaction price to multiple performance obligations in the Company’s contract with XOMA as a critical audit matter due to the complexity involved in determining the standalone selling price of each performance obligation, which directly affects the amount of other income recognized in each period. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the reasonableness of management’s significant estimates and assumptions, several of which extend many years into the future. How the Critical Audit Matter Was Addressed in the Audit Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. We obtained an understanding of the marketing status of the underlying commercialized product and an understanding of the development status and development plan for the two underlying product candidates, which included estimated timelines and milestones. We evaluated management’s development of the market assessment approach, which includes the identification of key inputs and assumptions to the fair value model. We evaluated the sufficiency and appropriateness of the audit evidence supporting key inputs and assumptions to the fair value model. We also evaluated the appropriateness of the discount rate used by management in the fair value model and evaluated the expected future royalty rates. We performed independent mathematical accuracy tests of the Company’s fair value model. We also performed substantive testing by recalculating the allocated transaction price using alternative assumptions, comparing the results to the Company’s estimates, and assessing whether the other income recognized was consistent with the performance obligations completed during the period. /s/ Haskell & White LLP HASKELL & WHITE LLP We have served as the Company's auditor since 2023. Irvine, California March 31, 2025 F-3 Daré Bioscience, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2024 2023 Assets Current Assets Cash and cash equivalents $ 15,698,174 $ 10,476,056 Other receivables 229,982 949,211 Prepaid expenses 2,519,707 6,118,272 Total current assets 18,447,863 17,543,539 Property and equipment, net 1,335,732 655,975 Deposits 12,027 1,163,477 Operating lease right-of-use assets 1,206,942 1,319,630 Other non-current assets 1,098,567 599,594 Total assets $ 22,101,131 $ 21,282,215 Liabilities and stockholders’ deficit Current Liabilities Accounts payable $ 1,455,832 $ 3,385,551 Accrued expenses 3,042,918 2,889,005 Deferred grant funding 16,561,625 13,737,154 Current portion of lease liabilities 548,638 468,726 Total current liabilities 21,609,013 20,480,436 Deferred revenue, non-current 1,000,000 1,000,000 Liability related to the sale of future royalties, net 4,749,824 3,913,676 Lease liabilities, non-current 754,383 935,743 Total liabilities 28,113,220 26,329,855 Commitments and contingencies (Note 14) Stockholders' deficit Preferred stock, $ 0.01 par value, 5,000,000 shares authorized None issued and outstanding — — Common stock, $ 0.0001 par value, 240,000,000 shares authorized, 8,700,386 and 8,331,161 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively 870 833 Additional paid-in capital 169,705,480 166,548,454 Accumulated other comprehensive loss ( 428,809 ) ( 360,896 ) Accumulated deficit ( 175,289,630 ) ( 171,236,031 ) Total stockholders' deficit ( 6,012,089 ) ( 5,047,640 ) Total liabilities and stockholders' deficit $ 22,101,131 $ 21,282,215 See accompanying notes. F-4 Daré Bioscience, Inc. and Subsidiaries Consolidated Statements of Operations and Comprehensive Loss Years Ended December 31, 2024 2023 Revenue License fee revenue $ — $ 1,000,000 Milestone revenue — 1,800,000 Royalty revenue 9,784 7,885 Total revenue 9,784 2,807,885 Operating expenses General and administrative 9,156,061 12,109,691 Research and development 14,205,208 21,538,074 License fee expense 100,000 100,000 Total operating expenses 23,461,269 33,747,765 Loss from operations ( 23,451,485 ) ( 30,939,880 ) Other income (expense) Sale of royalty and milestone rights, net of transaction costs (Note 13) 20,379,376 — Other (expense) income ( 981,490 ) 778,489 Net loss $ ( 4,053,599 ) $ ( 30,161,391 ) Net loss to common stockholders $ ( 4,053,599 ) $ ( 30,161,391 ) Foreign currency translation adjustments ( 67,913 ) ( 9,585 ) Comprehensive loss $ ( 4,121,512 ) $ ( 30,170,976 ) Loss per common share - basic and diluted $ ( 0.48 ) $ ( 4.15 ) Weighted average number of common shares outstanding: Basic and diluted 8,497,459 7,275,308 See accompanying notes. F-5 Daré Bioscience, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Equity (Deficit) Additional Accumulated other Total Common stock paid-in comprehensive Accumulated stockholders' Shares Amount capital loss deficit equity (deficit) Balance at December 31, 2022 7,068,790 $ 707 $ 152,537,354 $ ( 351,311 ) $ ( 141,074,640 ) $ 11,112,110 Stock-based compensation — — 2,530,684 — — 2,530,684 Issuance of common stock from the exercise of warrants 112,793 11 1,299,365 — — 1,299,376 Issuance of common stock, net of issuance costs 1,149,578 115 9,346,541 — — 9,346,656 Issuance of common stock warrants, net of issuance costs — — 834,510 — — 834,510 Net loss — — — — ( 30,161,391 ) ( 30,161,391 ) Foreign currency translation adjustments — — — ( 9,585 ) — ( 9,585 ) Balance at December 31, 2023 8,331,161 $ 833 $ 166,548,454 $ ( 360,896 ) $ ( 171,236,031 ) $ ( 5,047,640 ) Stock-based compensation — — 2,203,257 — — 2,203,257 Issuance cost on equity line paid in common stock 137,614 14 500,213 — — 500,227 Issuance of common stock, net of issuance costs 109,655 11 453,568 — — 453,579 Reverse stock split adjustment 121,956 12 ( 12 ) — Net loss — — — — ( 4,053,599 ) ( 4,053,599 ) Foreign currency translation adjustments — — — ( 67,913 ) — ( 67,913 ) Balance at December 31, 2024 8,700,386 $ 870 $ 169,705,480 $ ( 428,809 ) $ ( 175,289,630 ) $ ( 6,012,089 ) See accompanying notes. F-6 Daré Bioscience, Inc. and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2024 2023 Cash flows from operating activities Net loss $ ( 4,053,599 ) $ ( 30,161,391 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation expense 42,325 38,363 Right of use asset - operating lease 471,003 ( 861,706 ) Stock-based compensation expense 2,203,256 2,530,684 Loss on disposal of property and equipment 600,000 — Non-cash royalty revenue related to sale of future royalties 202 — Non-cash interest expense on liability related to sale of future royalties 317,318 24,289 Changes in operating assets and liabilities: Other receivables 719,229 753,948 Prepaid expenses 3,598,565 547,714 Deposits 402,414 ( 1,152,974 ) Other non-current assets ( 33,746 ) ( 10,300 ) Operating lease liability ( 459,763 ) 915,732 Accounts payable ( 1,929,717 ) 1,357,601 Accrued expenses 171,473 ( 8,272,201 ) Interest payable 520,816 — Deferred grant funding 2,824,471 ( 4,566,413 ) Net cash provided by (used in) operating activities 5,394,247 ( 38,856,654 ) Cash flows from investing activities Purchases of property and equipment ( 573,046 ) ( 629,430 ) Net cash used in investing activities ( 573,046 ) ( 629,430 ) Cash flows from financing activities Net proceeds from issuance of common stock 453,579 9,346,656 Proceeds from the exercise of common stock warrants — 1,299,376 Proceeds from the sale of future royalties, net — 4,723,899 Repayment of liability on sale of future royalties ( 2,189 ) — Issuance of note payable 561,663 601,174 Payments on note payable ( 579,223 ) ( 333,985 ) Net cash provided by financing activities 433,830 15,637,120 Effect of exchange rate changes on cash and cash equivalents and restricted cash ( 67,913 ) ( 9,585 ) Net change in cash, cash equivalents and restricted cash 5,187,119 ( 23,858,549 ) Cash, cash equivalents and restricted cash, beginning of year 10,811,056 34,669,605 Cash, cash equivalents and restricted cash, end of year $ 15,998,174 $ 10,811,056 Reconciliation of cash, cash equivalents and restricted cash to amounts reported in the consolidated balance sheets: Cash and cash equivalents $ 15,698,174 $ 10,476,056 Restricted cash included in other non-current assets 300,000 335,000 Total cash, cash equivalents and restricted cash $ 15,998,174 $ 10,811,056 Supplemental disclosure of non-cash investing and financing activities: Operating right-of-use assets obtained in exchange for new operating lease liabilities $ 358,315 $ 1,291,425 Issuance cost on equity paid in common stock $ 500,227 $ — Additions to property and equipment and reduction of deposits $ 749,036 $ — Issuance cost recorded under additional-paid-in-capital $ — $ 834,510 See accompanying notes. F-7 Daré Bioscience, Inc. and Subsidiaries Notes to Consolidated Financial Statements 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Daré Bioscience, Inc. is a biopharmaceutical company driven by a mission to challenge the status quo, making women's health a priority. Daré Bioscience, Inc. and its wholly-owned subsidiaries operate one segment. In this report, the “Company” refers collectively to Daré Bioscience, Inc. and its wholly-owned subsidiaries, unless otherwise stated or the context otherwise requires. The Company began assembling its diverse portfolio of assets in 2017 through acquisitions, exclusive in-licenses and other collaborations. The Company's programs target unmet needs in women's health, primarily in the areas of contraception, sexual health, pelvic pain, fertility, infectious disease, vaginal health and menopause, and aim to enhance outcomes and convenience. The Company’s primary operations have consisted of, and are expected to continue to consist primarily of, research and development activities to advance its product candidates through clinical development and regulatory approval. The Company's portfolio of product candidates includes drug and drug/device product candidates and potential product candidates in various stages of development. The first U.S. Food and Drug Administration (FDA)-approved product to emerge from the Company's portfolio is XACIATO™ (clindamycin phosphate) vaginal gel 2%, or XACIATO. In March 2022, the Company entered into an exclusive global license agreement with an affiliate of Organon & Co., Organon International GmbH, or Organon, to commercialize XACIATO. Under the license agreement, Organon (and/or its affiliates, agents or sublicensees) is solely responsible for the marketing, distribution and sale of XACIATO in the United States (and outside the U.S. if approved in non-U.S. jurisdictions in the future). In January 2024, Organon announced that XACIATO was available across the U.S. As described below, to provide funding for the development of the product candidates in the Company's pipeline, in April 2024, the Company entered into an agreement with XOMA (US) LLC (“XOMA”) whereby the Company sold its rights to all royalty and potential milestone payments based on net sales of XACIATO under its agreement with Organon, net of the Company's obligations to certain third parties, until XOMA receives a specified return on its investment, after which the Company will share equally in the royalty and milestone payments earned on net sales of XACIATO from Organon. 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, or U.S. GAAP, as defined by the Financial Accounting Standards Board, or FASB. Going Concern The Company prepared its consolidated financial statements on a going concern basis, which assumes that the Company will realize its assets and satisfy its liabilities in the normal course of business. The Company has a history of losses from operations, net losses and negative cash flows from operations and expects significant losses from operations, net losses and negative cash flows from operations for at least the next several years as it develops and seeks to bring to market its existing product candidates and seeks to potentially acquire, license and develop additional product candidates. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of the Company's ability to continue as a going concern. At December 31, 2024, the Company had an accumulated deficit of approximately $ 175.3 million, unrestricted cash and cash equivalents of approximately $ 15.7 million, and a working capital deficit of approximately $ 3.2 million. The Company's unrestricted cash and cash equivalents at December 31, 2024 represented funds received under grant agreements that generally may be applied solely toward direct costs for carrying out the respective projects under those grant agreements. See Note 15, Grant Awards. For the year ended December 31, 2024, the Company incurred a net loss of $ 4.1 million and had positive cash flow from operations of approximately $ 5.4 million. The Company's net loss and cash flow from operations for the year ended December 31, 2024 were positively impacted F-8 by the approximately $ 20.4 million of net proceeds the Company received from the sale in April 2024 of its rights to future royalty and milestone payments and revenue. See below and Note 13, Royalty Purchase Agreements. Based on the Company's current operating plan estimates, the Company does not have sufficient cash to satisfy its working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying consolidated financial statements. The Company will need to raise substantial additional capital to continue to fund its operations and to successfully execute its current strategy. There can be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to the Company and its stockholders. If the Company cannot raise capital when needed, on favorable terms or at all, the Company will not be able to continue development of its product candidates, will need to reevaluate its planned operations and may need to delay, scale back or eliminate some or all of its development programs, reduce expenses, file for bankruptcy, reorganize, merge with another entity, or cease operations. If the Company becomes unable to continue as a going concern, the Company may have to liquidate its assets, and might realize significantly less than the values at which they are carried on its consolidated financial statements, and stockholders may lose all or part of their investment in the Company's common stock. The Company's consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. Segment Information Operating segments are defined as components of an enterprise about which discrete financial information is available for evaluation the Chief Operating Decision Maker, or CODM, or decision-making group in making decisions on how to allocate resources and assess performance. The Company's CODM is the Chief Executive Officer, or CEO. The CEO views the Company's operations and manages its business as one reportable and operating segment, Women's Health. See Note 16, "Segment Information," for additional information. Reverse Stock Split The Company effected a 1-for-12 reverse split of its issued common stock on July 1, 2024. At the effective time of the reverse stock split, every 12 shares of the Company’s common stock was automatically reclassified and combined into one share of common stock. No fractional shares were issued as a result of the reverse stock split. Stockholders who would have otherwise been entitled to receive a fractional share instead automatically had their fractional interests rounded up to the next whole share. The reverse stock split did not change the number of authorized shares or the par value per share of the Company’s common stock. See Note 9, Stockholders' Equity, for additional information regarding the reverse stock split. All common stock share and per share data presented in the accompanying consolidated financial statements have been retroactively adjusted to reflect the impact of the reverse stock split for all periods presented, without giving effect to whole shares issued in lieu of fractional shares. In addition, proportionate adjustments were made in accordance with the applicable terms of outstanding stock options and warrants, the Company’s stock incentive plans and an existing agreement to the (a) per share exercise prices of, and the number of shares underlying, the Company’s outstanding stock options, (b) number of shares available for the grant of awards under the Company’s stock incentive plans, and (c) per share exercise prices of, and the number of shares underlying, outstanding warrants to purchase shares of the Company’s common stock and warrants potentially issuable by the Company in its sole discretion pursuant to an existing agreement. Cash, Cash Equivalents and Restricted Cash The Company considers cash and all highly liquid investments with an original maturity of three months or less to be cash and cash equivalents. The Company has an aggregate of approximately $ 0.3 million in restricted cash as of December 31, 2024 and 2023 related to (i) letters of credit established under real property leases for the Company's wholly-owned subsidiary, Dare MB Inc., that serve as security for potential future default of lease payments, and (ii) collateralized cash for the Company's credit cards. The restricted cash is unavailable for withdrawal or for general obligations and is included in other non-current assets on the Company's consolidated balance sheets. Principles of Consolidation The consolidated financial statements of the Company are stated in U.S. dollars. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. One wholly-owned subsidiary, Daré Bioscience Australia Pty LTD, operates primarily in Australia. The financial statements of the Company’s wholly-owned subsidiaries are recorded in their functional currency and translated into the reporting currency. The cumulative effect of changes in exchange rates between the foreign entity’s functional currency and the reporting currency is F-9 reported in Accumulated Other Comprehensive Loss. All intercompany transactions and accounts have been eliminated in consolidation. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, generally five years . Repair and maintenance costs are charged to expense as incurred. Impairment of Long-Lived Assets Long-lived assets consist primarily of property and equipment and right-of-use assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future undiscounted net cash flows which the asset or asset group are expected to generate, including its eventual residual value. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds its fair value. The Company did not recognize any impairment losses for either of the years ended December 31, 2024 or 2023. The Company recorded a loss on the disposal of a fixed asset of $ 0.6 million for the year ended December 31, 2024. No such losses were recorded during the year ended December 31, 2023. Grant Funding The Company receives certain research and development funding through grants issued by a division of the National Institutes of Health and the Gates Foundation, or the Foundation. Under the Foundation grant, which the Company considers to be a research and development contract under FASB Accounting Standards Codification, or ASC, Topic 730 Research and Development , the Company granted the Foundation a Humanitarian License which gives the Foundation the right to make the funded developments accessible at an affordable price to people within developing countries. Grants received by the Company that do not require the transfer of goods or services to a customer are accounted for by analogy to International Accounting Standards 20, Accounting for Grants and Disclosure of Government Assistance , or IAS 20. Under IAS 20, the Company recognizes grant funding in the statements of operations as a reduction to research and development expense as the related costs are incurred to meet those obligations over the grant period. The Company adopted this policy in 2018. For the years ended December 31, 2024 and December 31, 2023, the Company recognized approximately $ 8.8 million and $ 9.3 million, respectively, in the statements of operations as a reduction to research and development expense. Grant funding payments received in advance of research and development expenses incurred are recorded as deferred grant funding liability in the Company's consolidated balance sheets. Use of Estimates The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, management's judgments with respect to its revenue arrangement, liability related to the sale of future royalties, valuation of stock-based awards and the accrual of research and development expenses. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from those estimates and could materially affect the reported amounts of assets, liabilities and future operating results. Sale of Future Payments On April 29, 2024, the Company entered into and closed a traditional royalty purchase agreement and a synthetic royalty purchase agreement with XOMA pursuant to which the Company sold its right, title and interest in the following to XOMA (i) all future net royalty and potential net milestone payments the Company would otherwise receive from Organon based on net sales of XACIATO, (ii) a portion of future net sales of Ovaprene and a portion of a potential future milestone payment the Company may receive under its license agreement with Bayer related to F-10 Ovaprene, and (iii) a portion of future net sales of Sildenafil Cream. The Company received $ 22.0 million from XOMA in connection with entering into the royalty purchase agreements. Under the terms of the royalty purchase agreements, if XOMA receives total payments under the royalty purchase agreements equal to an amount that exceeds $ 88.0 million, XOMA will pay $ 11.0 million to the Company for each successive $ 22.0 million XOMA receives under the royalty purchase agreements. If the Company earns any such payments, they will be accounted for as variable consideration under ASC 606, Revenue Recognition, and will be recorded as income when such payments are received. See Note 13, Royalty Purchase Agreements, for additional information regarding the terms of the royalty purchase agreements. The Company evaluated the expected cash flows to XOMA from royalties and milestone payments expected to be earned on XACIATO, Ovaprene and Sildenafil Cream over the period that the Company expects it will take for XOMA to receive total payments of $ 88.0 million under the royalty purchase agreements, and determined to allocate the $ 22.0 million it received from XOMA in connection with entering into the royalty purchase agreements, net of transaction costs of approximately $ 1.6 million, to the traditional royalty purchase agreement for XACIATO, and none of it to the synthetic royalty purchase agreement for Ovaprene and Sildenafil Cream. The cash flows to XOMA from royalties and milestone payments expected to be earned on Ovaprene and Sildenafil Cream are expected to be de minimis over the period that the Company expects it will take for XOMA to receive total payments of $ 88.0 million under the royalty purchase agreements because, unlike XACIATO, Ovaprene and Sildenafil Cream are still in development stage and not commercial assets. The Company determined that the traditional royalty purchase agreement represents a complete sale of a nonfinancial asset (the Company's right, title and interest in and to future payments related to commercial sales of XACIATO) for which XOMA bears all benefit and for which the Company has no obligations or involvement going forward, and therefore should be accounted for within the scope of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets . The $ 22.0 million net of transaction costs of approximately $ 1.6 million, was recorded as other income on the Company's consolidated statements of operations and comprehensive loss. Liability Related to the Sale of Future Royalties In December 2023, the Company entered into a royalty interest financing agreement with United in Endeavor, or United, pursuant to which the Company sold to United an interest in royalty and milestone payments the Company receives based on net sales of XACIATO. The Company received $ 5.0 million from United in connection with entering into the royalty interest financing agreement. The Company evaluated the terms of the royalty interest financing agreement and concluded that its features were similar to those of a debt instrument. The Company recognized the $ 5.0 million it received as a liability on its consolidated balance sheet because the Company agreed to make payments to United until such time that United has received aggregate payments equaling a 12 % internal rate of return on the $ 5.0 million. Interest expense for the liability related to the sale of future royalties is recognized using the effective interest rate method over the expected term of the royalty interest financing agreement. The liability related to the sale of future royalties and related interest expense are based on current estimates of future royalties, which estimates are based on forecasts of XACIATO net sales. The Company periodically assesses the forecasted net sales and to the extent the amount or timing of estimated royalty payments are materially different than previous estimates, the Company will account for any such change by adjusting the liability related to the sale of future royalties and prospectively recognizing the related non-cash interest expense. In connection with the royalty investment financing agreement the Company entered into, the Company issued a warrant to purchase up to an aggregate of 5.0 million shares of the Company's common stock. The warrant was allocated a relative fair value of approximately $ 0.8 million using a Black-Scholes option pricing model. The $ 0.8 million relative fair value of the warrant was recorded as a debt discount with an offset to additional paid in capital on the Company's 2023 consolidated balance sheets as the warrants were deemed to be equity classified. Risks and Uncertainties The Company will require approvals from the FDA, or foreign regulatory agencies prior to being able to sell any products. The Company received approval from the FDA for XACIATO in December 2021. There can be no assurance that the Company’s current or future product candidates will receive the necessary approvals. If the Company is denied regulatory approval of its product candidates, or if approval is delayed, it may have a material adverse impact on the Company’s business, results of operations and financial position. The Company is subject to a number of risks similar to other life science companies, including, but not limited to, risks related to the ability to license product candidates, successfully develop product candidates, successfully commercialize approved products or enter into strategic relationships with third parties who are able to successfully F-11 commercialize approved products, raise additional capital, compete with other products, and protect proprietary technology. As a result of these and other factors and the related uncertainties, there can be no assurance of the Company’s future success. Concentration of Credit Risk The Company maintains cash balances at various financial institutions and such balances commonly exceed the $ 250,000 amount insured by the Federal Deposit Insurance Corporation. The Company also maintains money market funds at various financial institutions which are not federally insured although are invested primarily in the U.S. The Company has not experienced any losses in such accounts and management believes that the Company does not have significant risk with respect to such cash and cash equivalents. Fair Value of Financial Instruments GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: • Level 1: inputs are unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities. • Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following tables present the classification within the fair value hierarchy of financial assets and liabilities that are remeasured on a recurring basis as of December 31, 2024 and December 31, 2023. There were no financial assets or liabilities that were remeasured using a quoted price in active markets for identical assets (Level 2) or using unobservable inputs (Level 3) as of December 31, 2024 or December 31, 2023. Fair Value Measurements Level 1 Level 2 Level 3 Total Balance at December 31, 2024 Current assets: Cash equivalents (1) $ 15,283,784 $ — $ — $ 15,283,784 Balance at December 31, 2023 Current assets: Cash equivalents (1) $ 9,982,079 $ — $ — $ 9,982,079 (1) Represents cash held in money market funds. F-12 Recently Adopted Accounting Pronouncements In November 2023, the FASB issued Accounting Standard Update, or ASU, 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, or ASU 2023-07, which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures. The guidance in this update is effective for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024. The Company adopted ASU 2023-07 on December 31, 2024, which adoption only impacted the Company's segment reporting disclosures. See Note 16, Segment Information, for disclosures related to the adoption of ASU 2023-07. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-3, Disaggregation of Income Statement Expenses. ASU 2024-3 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense captions. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses, which includes purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. The Company is assessing the guidance, noting the adoption impacts disclosure only. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid. ASU 2023-09 will be effective for annual periods beginning January 1, 2025 and will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is evaluating the disclosure impact of ASU 2023-09 on its consolidated financial statements. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial statements. Revenue Recognition Under Accounting Standards Codification Topic 606, or ASC 606, the Company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligations. At contract inception, the Company assesses the goods or services agreed upon within each contract, assesses whether each good or service is distinct, and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price allocated to the respective performance obligation when (or as) the performance obligation is satisfied. In a contract with multiple performance obligations, the Company develops estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price(s) may include estimates regarding forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if it can be satisfied at a point in time or over time. Any change made to estimated progress towards completion of a performance obligation and, therefore, revenue recognized will be recorded as a change in estimate. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price. Collaboration Revenues . The Company enters into collaboration and licensing agreements under which it out-licenses certain rights to its products or product candidates to third parties. The terms of these arrangements typically include payment of one or more of the following to the Company: non-refundable, up-front license fees; development, regulatory and/or commercial milestone payments; and royalties on net sales of licensed products. To date, the Company has not recognized any collaboration revenues. F-13 License Fee Revenue. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in a contract, the Company recognizes revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. To date, the Company has recognized $ 11.0 million in license fee revenue, $ 10.0 million of which represents the upfront payment under its license agreement for XACIATO and $ 1.0 million of which represents the payment required by the first amendment to such license agreement entered into in July 2023. Royalties. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has recognized approximately $ 18,000 in royalty revenue. Product Supply. Arrangements that include a promise for future supply of product for commercial supply at the licensee’s discretion are generally considered as options. The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. The Company evaluates whether it is the principal or agent in the arrangement. The evaluation is based on the degree the Company controls the specified product at any time before transfer to the customer. Revenues are recognized on a gross basis if the Company is in the capacity of principal and on a net basis if the Company is in the capacity of an agent. To date, the Company has recognized approximately $ 205,000 in revenue along with $ 201,000 in other expense attributed to the cost of revenue associated with its product supply arrangement for XACIATO, which is recorded in other income in the Company's 2023 consolidated statement of operations and comprehensive loss. That arrangement was terminated effective December 14, 2023 and the Company will not recognize product supply revenue associated with that agreement in the future. Bayer License . In 2020, the Company entered into a license agreement with Bayer Healthcare LLC, or Bayer, regarding the further development and commercialization of Ovaprene in the U.S. and received a $ 1.0 million upfront non-refundable license fee payment from Bayer (See Note 3, Strategic Agreements). The $ 1.0 million upfront payment is recorded as deferred license revenue in the Company's consolidated balance sheets at December 31, 2024 and 2023. Bayer, in its sole discretion, has the right to make the license effective by paying the Company an additional $ 20.0 million. The Company concluded that there was one significant performance obligation related to the $ 1.0 million upfront payment: a distinct license to commercialize Ovaprene effective upon the receipt of the $ 20.0 million fee. The $ 1.0 million upfront payment will be recorded as license revenue at the earlier of (i) the point in time the Company receives the $ 20.0 million fee, the license is transferred to Bayer and Bayer is able to use and benefit from the license and (ii) the termination of the agreement. To date, neither of the foregoing has occurred. Under its license agreement with Bayer, the Company will also be entitled to receive (a) milestone payments totaling up to $ 310.0 million related to the commercial sales of Ovaprene, if all such milestones are achieved, (b) tiered royalties starting in the low double digits based on annual net sales of Ovaprene during a calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue. Milestone Payments. At the inception of each arrangement in which the Company is a licensor and that includes developmental, regulatory or commercial milestones, the Company evaluates whether achieving the milestones is considered probable and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Potential future milestone payments not within the Company's control, such as where achievement of the specified milestone depends on activities of a third party or regulatory approval, are not considered probable of being achieved until the specified milestone occurs. As of December 31, 2024, the Company has recognized $ 1.8 million of milestone payment revenues. Potential future payments for variable consideration, such as commercial milestones, will be recognized when it is probable that, if recorded, a significant reversal will not take place. Potential future royalty payments will be recorded as revenue when the associated sales occur (See Note 3, Strategic Agreements). F-14 Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in other non-current assets as right-of-use, or ROU, lease assets, current portion of lease liabilities, and long-term lease liabilities on the Company's consolidated balance sheets. ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. If the lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease and the related payments are only included in the lease liability when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term (See Note 11, Leased Properties). Australian Research and Development Tax Incentive Program The Company is eligible under the Australian Research and Development Tax Incentive Program, or the Tax Incentive, to receive a cash refund from the Australian Taxation Office for eligible research and development expenditures. To be eligible, the Company must have revenue of less than AUD $ 20.0 million during the reimbursable period and cannot be controlled by income tax exempt entities. Grants received by the Company that do not require the transfer of goods or services to a customer are accounted for by analogy to IAS 20. Under IAS 20, the Company recognizes the Tax Incentive as a reduction to research and development expense when there is reasonable assurance that the Tax Incentive will be received, the relevant expenditure has been incurred, and the amount can be reliably measured. The Company classifies its estimate for the Tax Incentive as other current assets on its consolidated balance sheets. For the years ended December 31, 2024 and 2023, the Company recognized approximately $ 46,000 and approximately $ 0.6 million, respectively, as a reduction to research and development expense for expenses incurred that it believes are eligible for the Tax Incentive. At December 31, 2024 and 2023, the Company recorded a receivable for the estimated Tax Incentive of approximately $ 46,000 and $ 0.6 million, respectively, in other receivables on the accompanying consolidated balance sheets. Research and Development Costs Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, an allocation of facilities expenses, overhead expenses, manufacturing process-development and scale-up activities, fees paid to clinical and regulatory consultants, clinical trial and related clinical trial manufacturing expenses, fees paid to contract research organizations, or CROs, and investigative sites, transaction expenses incurred in connection with the expansion of the product portfolio through acquisitions and license and option agreements, milestone payments incurred or probable to be incurred for the Company's in-licensing arrangements, payments to universities under the Company’s license agreements and other outside expenses. Research and development costs are expensed as incurred. Nonrefundable advance payments, if any, for goods and services used in research and development are recognized as an expense as the related goods are delivered or services are performed. Patent Costs The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses in the consolidated statements of operations. Net Loss Per Share Basic net loss attributable to common stockholders per share is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding during the period without consideration of common stock equivalents. Since the Company was in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods presented as the inclusion of all potential dilutive securities would have been antidilutive. There were stock options exercisable into 883,334 and 788,569 shares of common stock outstanding at December 31, 2024 and 2023, respectively. There were warrants exercisable into 1,268,572 shares of common stock outstanding at each of the years ended December 31, 2024 and 2023. These securities were not included in the F-15 computation of diluted loss per share because they are antidilutive, but they could potentially dilute earnings (loss) per share in future years. Stock-Based Compensation The Company records compensation expense for all stock-based awards granted based on the fair value of the award at the time of grant. Compensation expense is recognized in the consolidated statements of operations and comprehensive loss on a straight-line basis over the requisite service period of the award. The Company uses the Black-Scholes Pricing Model to determine the fair value of each of the awards which considers factors such as expected term, the volatility of the Company's common stock, risk free interest rate, and dividend yield. Due to the limited history of the Company, the simplified method was utilized in order to determine the expected term of the awards. The Company compared U.S. Treasury Bills in determining the risk-free interest rate appropriate given the expected term. The Company has not established and has no plans to establish, a dividend policy, and the Company has not declared, and has no plans to declare dividends in the foreseeable future and thus no dividend yield was determined necessary in the calculation of fair value. Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with FASB ASC 740, Income Taxes. Under this method, deferred income taxes are provided to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company follows the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At each of December 31, 2024 and 2023, the Company did not record any liabilities for uncertain tax positions. During each of 2024 and 2023, the Company recorded no provision for income taxes. Management evaluated the Company’s tax positions and, as of December 31, 2024 and 2023, the Company had approximately $ 2.8 million and $ 2.6 million of unrecognized benefits, respectively. The tax years 2021 to 2023 and 2020 to 2023 remain open to examination by federal and state taxing authorities, respectively, while the statute of limitations for U.S. net operating losses generated remain open beginning in the year of utilization. Indemnification Obligations As permitted under Delaware law, the Company has entered into indemnification agreements with its officers and directors that provide that the Company will indemnify its directors and officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by such director or officer in any action or proceeding arising out of their service as a director and/or officer. The term of the indemnification is for the officer’s or director’s lifetime. During the year ended December 31, 2024, the Company did not experience any losses related to those indemnification obligations. The Company does not expect significant claims related to these indemnification obligations, and consequently, has concluded the fair value of the obligations is not material. Accordingly, as of December 31, 2024 and 2023, no amounts have been accrued related to such indemnification provisions. 3. STRATEGIC AGREEMENTS Strategic Agreements for Product Commercialization Organon Exclusive License Agreement In March 2022, the Company entered into an exclusive license agreement with Organon which became effective in June 2022, whereby Organon licensed exclusive worldwide rights to develop, manufacture and commercialize XACIATO and other future intravaginal or urological products for human use formulated with clindamycin that rely on intellectual property controlled by the Company. In July 2022, the Company received a $ 10.0 million non-refundable and non-creditable payment from Organon, which was recorded as license fee revenue. In July 2023, the Company received a $ 1.0 million payment from Organon in connection with the amendment to the F-16 license agreement the parties entered into, which was also recorded as license fee revenue. In the fourth quarter of 2023, in connection with the first commercial sale in the U.S. of XACIATO in accordance with the license agreement, as amended, the Company received the $ 1.8 million milestone payment from Organon. Under the terms of the license agreement, as amended, the Company is entitled to receive tiered double-digit royalties based on net sales and up to $ 180.0 million in tiered commercial sales milestones and regulatory milestones. Royalty payments will be subject to customary reductions and offsets. At the inception of the license agreement, the Company concluded that the transaction price was $ 10.0 million and should not include the variable consideration related to unachieved development, regulatory, commercial milestones and future sales-based royalty payments. This consideration was determined to be constrained as it is probable that the inclusion of such variable consideration could result in a significant reversal in cumulative revenue. The Company re-evaluates the transaction price at each reporting period as uncertain events are resolved and other changes in circumstances occur. As a result of the $ 1.0 million payment in connection with the license agreement amendment and the $ 1.8 million milestone payment noted above, the transaction price was $ 12.8 million as of December 31, 2024. The Company will recognize any consideration related to sales-based payments, including milestones and royalties which relate predominantly to the license granted, at the later of (i) when or as the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Refer to Note 13, Royalty Purchase Agreements, regarding the Company's sale to XOMA of all the Company's right, title and interest in and to, from and after April 1, 2024, all net royalty and potential net milestone payments from Organon based on net sales of XACIATO. The Company was responsible for regulatory interactions and for providing product supply on an interim basis until Organon assumed such responsibilities, which occurred in December 2023. Prior to that time, Organon purchased all of its product requirements of XACIATO from the Company at a transfer price equal to the Company's manufacturing costs plus a single-digit percentage markup. Unless terminated earlier, the agreement will expire on a product-by-product and country-by-country basis upon expiration of the applicable royalty period for each licensed product. In addition to customary termination rights for both parties, Organon may terminate the agreement in its entirety or on a country-by-country basis at any time in Organon's sole discretion on 120 days' advance written notice. Bayer HealthCare License Agreement In January 2020, the Company entered into a license agreement with Bayer, regarding the further development and commercialization of Ovaprene in the U.S. The Company received a $ 1.0 million upfront non-refundable license fee payment from Bayer and Bayer agreed to support the Company in development and regulatory activities by providing the equivalent of two experts to advise the Company in clinical, regulatory, preclinical, commercial, CMC and product supply matters. The Company is responsible for the pivotal trial for Ovaprene and for its development and regulatory activities and has product supply obligations. Bayer, in its sole discretion, has the right to make the license effective by paying the Company an additional $ 20.0 million, referred to as the $ 20.0 million fee. After payment of the $ 20.0 million fee, Bayer will be responsible for the commercialization of Ovaprene for human contraception in the U.S. Such license would be exclusive as to the commercialization of Ovaprene for human contraception in the U.S. and co-exclusive with the Company with regard to development. The Company concluded there was one significant performance obligation related to the $ 1.0 million upfront payment: a distinct license to commercialize Ovaprene effective upon the receipt of the $ 20.0 million fee. The $ 1.0 million upfront payment will be recorded as license revenue at the earlier of (i) the point in time the Company receives the $ 20.0 million fee, the license is transferred to Bayer and Bayer is able to use and benefit from the license and (ii) the termination of the agreement. As of December 31, 2024, neither of the foregoing had occurred. The $ 1.0 million payment is recorded as non-current deferred license revenue in the Company's consolidated balance sheets at December 31, 2024 and 2023. If Bayer elects to make the license effective, the Company will be entitled to receive (a) a milestone payment in the low double-digit millions upon the first commercial sale of Ovaprene in the U.S. and escalating milestone payments based on annual net sales of Ovaprene during a calendar year, totaling up to $ 310.0 million if all such milestones, including the first commercial sale, are achieved, (b) tiered royalties starting in the low double digits based F-17 on annual net sales of Ovaprene during a calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue. Refer to Note 13, Royalty Purchase Agreements, regarding XOMA's rights to a portion of potential future payments from Bayer under the Company's license agreement with Bayer. The initial term of the agreement, which is subject to automatic renewal terms, continues until the later of the expiration of any valid claim covering the manufacture, use, sale or import of Ovaprene in the U.S. or 15 years from the first commercial sale of Ovaprene in the U.S. In addition to customary termination rights for both parties, Bayer may terminate the agreement at any time on 90 days' notice and the agreement will automatically terminate if the Company does not receive the $ 20.0 million fee if and when due. Strategic Agreements for Pipeline Development Theramex Co-Development and Licensing Agreement In February 2025, the Company entered into a co-development and licensing agreement with Theramex for a potential first-in-category biodegradable contraceptive implant called Casea S recently acquired by Theramex. Under the agreement, the Company received a royalty-free, exclusive, fully paid up, sublicensable license to the U.S. patents Theramex recently acquired for Casea S. Given that the product is in an ongoing Phase 1 study that is funded by a grant, there are no development costs for the Company or Theramex at this time. If the Company determines that the results from the study are positive, it would be responsible for conducting a Phase II study in the U.S., and funding for such study and for a future Phase III study in the U.S. will be shared by the Company and Theramex on terms to be agreed upon by the parties, taking into account the size of the opportunity for Casea S in the respective markets. Douglas License Agreement / The University of Manchester Stand-by Direct License Arrangement In August 2023, the Company entered into a license agreement with Douglas Pharmaceuticals Limited, or Douglas, under which the Company acquired the exclusive rights to develop and commercialize a lopinavir and ritonavir combination soft gel vaginal insert for the treatment of cervical intraepithelial neoplasia and other HPV-related pathologies, and an agreement with The University of Manchester, pursuant to which The University of Manchester consented to Douglas' sublicense to the Company of certain rights it previously granted to Douglas and agreed to grant the Company a direct license to such rights if its license agreement with Douglas is terminated. Under the Company's agreement with Douglas, it received an exclusive, royalty-bearing license to research, develop and commercialize the licensed intellectual property in the United States for the treatment or prevention of all indications for women in female reproductive health. As a result of this license, the Company commenced its DARE-HPV program. The Company is entitled to sublicense the rights granted to it under the agreement. Under the terms of the Douglas agreement, the Company agreed to make potential future payments of up to $ 5.25 million in the aggregate upon achievement of certain development and regulatory milestones, and of up to $ 64.0 million in the aggregate upon achievement of certain commercial sales milestones for each product covered by the licenses granted under the agreement. The development and regulatory milestones may be paid in shares of the Company’s common stock, in the Company's sole discretion subject to specified limitations. Additionally, Douglas is eligible to receive tiered royalties in low single-digit to low double-digit percentages based on annual net sales of products and processes covered by the licenses granted under the agreement. As of December 31, 2024, no payments had been made under the Douglas agreement. Hennepin License Agreement In August 2022, the Company entered into a license agreement with Hennepin Life Sciences LLC, or Hennepin, under which the Company acquired the exclusive global rights to develop and commercialize treatments delivering the novel antimicrobial glycerol monolaurate (GML) intravaginally for a variety of health conditions including bacterial, fungal, and viral infections. As a result of this license, the Company commenced its DARE-GML program. Under the agreement, the Company received an exclusive, worldwide, royalty-bearing license to research, develop and commercialize the licensed technology. The Company is entitled to sublicense the rights granted to it under the agreement. Under the terms of the license agreement, the Company agreed to make potential future payments of up to $ 6.25 million in the aggregate upon achievement of certain development and regulatory milestones, and up to $ 45.0 million in the aggregate upon achievement of certain commercial sales milestones for each product covered by F-18 the licenses granted under the agreement, which may be paid, in the Company’s sole discretion, in cash or shares of the Company’s common stock. Additionally, Hennepin is eligible to receive tiered royalties in low single-digit to low double-digit percentages based on worldwide net sales of products and processes covered by the licenses granted under the agreement. As of December 31, 2024, no payments have been made under this agreement. MBI Acquisition In November 2019, the Company acquired Dare MB Inc., or MBI, to secure the rights to develop a long-acting reversible contraception method, that a woman can turn on or off herself, according to her own needs. This candidate is now known as DARE-LARC1. Under the terms of the merger agreement, the Company agreed to pay former MBI stockholders: (a) up to $ 46.5 million contingent upon the achievement of specified funding, product development and regulatory milestones; (b) up to $ 55.0 million contingent upon the achievement of specified amounts of aggregate net sales of products incorporating the intellectual property the Company acquired in the merger; and (c) tiered royalty payments ranging from low single-digit to low double-digit percentages based on annual net sales of such products sold by the Company (but not by sublicensee) and a percentage of sublicense revenue related to such products. In June 2021, a total of $ 1.25 million of the contingent consideration became payable upon the achievement of certain of the funding and product development milestone events. In accordance with the terms of the merger agreement, the Company’s board of directors elected to pay a portion of these milestone payments in shares of the Company’s common stock, and in September 2021, the Company issued approximately 58,334 shares of its common stock to former stockholders of MBI and paid $ 75,000 in cash to the stockholders’ representative in satisfaction of the $ 1.25 million in milestone payments associated with milestones achieved in June 2021. As of December 31, 2024, no additional payments have been made under this agreement. TriLogic and MilanaPharm License Agreement / Hammock Assignment Agreement In December 2018, the Company entered into an Assignment Agreement with Hammock Pharmaceuticals, Inc., or the Assignment Agreement, and a First Amendment to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC, or the License Amendment. Both agreements relate to the Exclusive License Agreement among Hammock, TriLogic and MilanaPharm dated as of January 9, 2017, or the MilanaPharm License Agreement. Under the Assignment Agreement and the MilanaPharm License Agreement, as amended by the License Amendment, the Company acquired an exclusive, worldwide license under certain intellectual property to, among other things, develop and commercialize products for the diagnosis, treatment and prevention of human diseases or conditions in or through any intravaginal or urological applications. The licensed intellectual property relates to the hydrogel drug delivery platform of TriLogic and MilanaPharm known as TRI-726. In XACIATO, this proprietary technology is formulated with clindamycin for the treatment of bacterial vaginosis. In December 2019, the Company entered into amendments to each of the Assignment Agreement and License Amendment. In September 2021, the Company entered into a second amendment to the License Agreement. In March 2022, the Company entered into a Consent, Waiver and Stand-By License Agreement with TriLogic, MilanaPharm and Organon, which further amended the License Agreement. Under the terms of the License Agreement, the Company paid clinical and regulatory development milestones of $ 300,000 in the aggregate to MilanaPharm, the final payment of which was made in 2021, and $ 500,000 in connection with the first commercial sale in the United States of XACIATO in the fourth quarter of 2023. Additionally, the Company may pay up to $ 250,000 upon the first commercial sale in the United States of successive licensed products for each vaginal or urological use. In addition, upon achievement of $ 50.0 million in cumulative worldwide net sales of licensed products the Company must pay MilanaPharm $ 1.0 million. MilanaPharm is also eligible to receive (a) a low double-digit percentage of all income received by the Company or its affiliates in connection with any sublicense granted to a third party for use outside of the United States, subject to certain exclusions, and (b) high single-digit to low double-digit royalties based on annual worldwide net sales of licensed products and processes. Hammock assigned and transferred to the Company all of its right, title and interest in and to the MilanaPharm license agreement and agreed to cooperate to transfer to the Company all of the data, materials and the licensed technology in its possession pursuant to a technology transfer plan. Hammock is eligible to receive up to $ 1.1 million F-19 in the aggregate upon achievement of certain clinical and regulatory development milestones, $ 850,000 of which had been paid as of December 31, 2024. Pear Tree Acquisition In May 2018, the Company acquired Pear Tree Pharmaceuticals, Inc., or Pear Tree, to secure exclusive, sublicensable, worldwide rights under certain patents and know-how to develop and commercialize a proprietary formulation of tamoxifen for vaginal administration. This acquisition led to the Company's DARE-VVA1 program. Under the terms of the merger agreement, the Company agreed to pay the former stockholders of Pear Tree: (a) up to $ 15.5 million in the aggregate upon achievement of certain clinical development and regulatory milestones by licensed products, and (b) up to $ 47.0 million in the aggregate upon achievement of certain commercial milestones by licensed products. Additionally, the former stockholders of Pear Tree are eligible to receive tiered royalties based on single-digit to low double-digit percentages of annual net sales of licensed products by the Company or its affiliates, subject to customary reductions and offsets, and a portion of royalties the Company receives from sublicensees. Both the milestone and royalty payments may be made, in the Company's sole discretion, in cash or in shares of its common stock in accordance with the terms of the merger agreement. Under the merger agreement, in addition to customary royalty reductions and offsets, royalty payments and payments based on income received from sublicensees of licensed products made by the Company to Pear Tree's licensors are creditable against all royalty and sublicense revenue share payments payable to the former stockholders of Pear Tree. The Company agreed to pay licensors of Pear Tree (a) up to approximately $ 3.2 million in the aggregate upon achievement of certain clinical development, regulatory and commercial milestones by each licensed product, and (b) semi-annual royalties based on a single-digit percentage of net sales of licensed products by the Company or its affiliates, subject to customary reductions and offsets, or a portion of any royalties the Company or its affiliates receives from sublicensees, and a low double-digit percentage of all sublicensing fees or other lump sum payments or compensation the Company receives from sublicensees, subject to customary exclusions. The milestone payments to the licensors of Pear Tree may be made, in the Company's sole discretion, in cash or in shares of its common stock in accordance with the terms of the license agreements. Portions of certain milestone payments made to Pear Tree's licensors may be creditable against royalty payments due to Pear Tree's licensors. As of December 31, 2024, no payments have been made under this agreement. Catalent JNP License Agreement In April 2018, the Company entered into an exclusive license agreement with Catalent JNP, Inc., or Catalent, under which Catalent granted the Company (a) an exclusive, royalty-bearing worldwide license under certain patent rights, either owned by or exclusively licensed to Catalent, to make, have made, use, have used, sell, have sold, import and have imported products and processes, and (b) a non-exclusive, royalty-bearing worldwide license to use certain technological information owned by Catalent to make, have made, use, have used, sell, have sold, import and have imported products and processes. As a result of this license agreement, the Company commenced its DARE-HRT1, DARE-FRT1 and DARE-PTB1 programs. The Company is entitled to sublicense the rights granted to it under this agreement. Under the terms of the license agreement, the Company paid a $ 250,000 non-creditable upfront license fee to Catalent in connection with the execution of the agreement and will pay a $ 100,000 annual license maintenance fee on each anniversary of the date of the agreement. The annual maintenance fee will be creditable against royalties and other payments due to Catalent in the same calendar year but may not be carried forward to any other year. Catalent is eligible to receive up to (a) $ 13.5 million in the aggregate in payments based on the achievement of specified development and regulatory milestones, $ 1.0 million of which had been paid as of December 31, 2024; and (b) up to $ 30.3 million in the aggregate in payments based on the achievement of specified commercial sales milestones for each product or process covered by the licenses granted under the agreement. Additionally, Catalent is eligible to receive mid single-digit to low double-digit royalties based on worldwide net sales of products and processes covered by the licenses granted under the agreement. In lieu of such royalty payments, the Company will pay Catalent a low double-digit percentage of all sublicense income the Company receives for the sublicense of rights under the agreement to a third party. Adare Development and Option Agreement In March 2018, the Company entered into an exclusive development and option agreement with Adare Pharmaceuticals USA, Inc., or Adare, for the development and potential exclusive worldwide license of injectable formulations of etonogestrel for contraceptive protection over 6-month and 12-month periods (which the Company F-20 refers to as DARE-204 and DARE-214, respectively). The agreement, as amended, provides the Company with an option to negotiate an exclusive, worldwide, royalty-bearing license, with rights to sublicense, for the programs if the Company funds the conduct of specified development work. The Company has no obligation to exercise its option. SST License and Collaboration Agreement In February 2018, the Company entered into a license and collaboration agreement with Strategic Science & Technologies-D LLC and Strategic Science & Technologies, LLC, referred to collectively as SST, under which the Company received an exclusive, royalty-bearing, sublicensable license to develop and commercialize, in all countries and geographic territories of the world, for all indications for women related to female sexual dysfunction and/or female reproductive health, including treatment of female sexual arousal disorder and/or female sexual interest/arousal disorder, or the Field of Use, SST’s topical formulation of Sildenafil Cream, 3.6% as it existed as of the effective date of the agreement, or any other topically applied pharmaceutical product containing sildenafil or a salt thereof as a pharmaceutically active ingredient, alone or with other active ingredients, but specifically excluding any product containing ibuprofen or any salt derivative of ibuprofen, or the Licensed Products. SST will be eligible to receive payments of up to $ 18.0 million in the aggregate upon achievement of certain clinical and regulatory milestones in the U.S. and worldwide, and up to $ 100.0 million in the aggregate upon achievement of certain commercial sales milestones. If the Company enters into strategic development or distribution partnerships related to the Licensed Products, additional milestone payments would be due to SST. Additionally, SST is eligible to receive tiered royalties based on percentages of annual net sales of licensed products in the single-digit to mid double-digits subject to customary royalty reductions and offsets, and a percentage of sublicense revenue. As of December 31, 2024, $ 1.0 million became payable under this agreement and was subsequently paid in February 2025. ADVA-Tec License Agreement In March 2017, the Company entered into a license agreement with ADVA-Tec, Inc., or ADVA-Tec, under which the Company was granted the exclusive right to develop and commercialize Ovaprene for human contraceptive use worldwide. Under the terms of the license agreement, the Company will pay ADVA-Tec (a) up to $ 14.6 million in the aggregate based on the achievement of specified development and regulatory milestones, $ 1.2 million of which has been paid; and (b) up to $ 20.0 million in the aggregate based on the achievement of certain worldwide net sales milestones. Additionally, ADVA-Tec is eligible to receive royalties based on aggregate annual net sales of Ovaprene in specified regions at a royalty rate that will vary between 1 % and 10 % and will increase based on various net sales thresholds, subject to customary reductions and offsets. If the Company sublicenses its rights under the agreement, in lieu of royalty payments to ADVA-Tec, ADVA-Tec is eligible to receive a double-digit percentage of sublicense revenue received by the Company during the royalty term; provided, however, that for sublicense revenue the Company receives prior to the first commercial sale of a licensed product that represents an upfront payment or license fee due on or around the effective date of the sublicense, ADVA-Tec is eligible to receive a single-digit percentage of that sublicense revenue. As of December 31, 2024, only the $ 1.2 million in aggregate milestone payments noted above have been made. 4. PREPAID EXPENSES Prepaid expenses consisted of the following: As of December 31, 2024 2023 Prepaid clinical expense $ 1,290,605 $ 5,023,140 Prepaid development expense 663,723 376,959 Prepaid insurance expense 398,950 472,922 Prepaid legal and professional expenses 166,429 245,251 Total prepaid expenses $ 2,519,707 $ 6,118,272 F-21 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net, consist of the following: As of December 31, 2024 2023 Assets under construction $ 1,229,165 $ 600,000 IT equipment 37,239 51,978 Leasehold improvements 40,284 42,188 Lab equipment 204,938 107,511 $ 1,511,626 $ 801,677 Less– accumulated depreciation ( 175,894 ) ( 145,702 ) Property and equipment, net $ 1,335,732 $ 655,975 Depreciation expense was $ 42,325 and $ 38,363 for the years ended December 31, 2024 and 2023, respectively. 6. ACCRUED EXPENSES Accrued expenses consisted of the following: As of December 31, 2024 2023 Accrued clinical expense $ — $ 1,195,744 Accrued compensation and benefits 805,612 805,412 Accrued development expense 1,258,435 547,490 Accrued royalties payable — 6,504 Insurance financing payable 249,628 267,188 Other accruals 662,576 — Accrued license fee expense 66,667 66,667 Total accrued expenses $ 3,042,918 $ 2,889,005 7. VENDOR CONCENTRATION The Company had two major vendors that accounted for approximately 15 % and 12 % of the Company's research and development expenditures for the year ended December 31, 2024, and 21 % and 3 % of the Company's research and development expenditures for the year ended December 31, 2023. The same vendors accounted for 0 % of the Company's total accounts payable and accrued expenses as of each of December 31, 2024 and 2023. The Company continues to maintain its relationship with these vendors and anticipates incurring significant expenses with these vendors over the next 12 months. 8. INCOME TAXES The components of loss from continuing operations before provision for income taxes consists of the following (in thousands): Years Ended December 31, 2024 2023 Domestic $ 3,822 $ 29,099 Foreign 230 1,060 Loss before taxes $ 4,052 $ 30,159 F-22 The difference between the provision (benefit) for income taxes and the amount computed by applying the U.S. federal income tax rate for the years ended December 31, 2024 and 2023 are as follows: Years Ended December 31, 2024 2023 Federal statutory rate 21.0 % 21.0 % State income tax, net of federal benefit ( 6.26 ) % 0.84 % State tax rate change 29.65 % 1.15 % Permanent differences ( 2.21 ) % ( 0.02 ) % Research and development credit 31.74 % 7.47 % Stock compensation ( 5.49 ) % ( 0.75 ) % Other ( 9.49 ) % ( 3.04 ) % Change in valuation allowance ( 58.98 ) % ( 26.65 ) % Effective income tax rate ( 0.04 ) % — % The major components of the Company’s deferred tax assets as of December 31, 2024 and 2023 are shown below (in thousands). 2024 2023 Net operating loss carryforwards $ 86,589 $ 86,182 Research and development credit carryforwards 11,836 10,868 Capitalized research and development costs 12,614 12,570 Other 59 41 Stock compensation 3,570 2,618 Total deferred tax assets 114,668 112,279 Valuation allowance ( 114,668 ) ( 112,279 ) Net deferred tax assets $ — $ — The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Under applicable accounting standards, management has considered the Company’s history of losses and concluded that it is more likely than not the Company will not recognize the benefits of federal and state deferred tax assets. Accordingly, a valuation allowance of $ 114.7 million and $ 112.3 million was established at December 31, 2024 and 2023, respectively, to offset the net deferred tax assets. When and if management determines that it is more likely than not that the Company will be able to utilize the deferred tax assets prior to their expiration, the valuation allowance may be reduced or eliminated. The increase in valuation allowance of approximately $ 2.4 million and $ 8.0 million for the years ended December 31, 2024 and 2023, respectively, is primarily related to an increase in net operating losses and R&D credits generated during the year and changes in state tax rates. The Company has U.S. federal net operating loss, or NOL, carryforwards available at December 31, 2024 of approximately $ 315.2 million of which $ 1.1 million begin expiring in 2025 unless previously utilized and $ 139.8 million that do not expire. The Company has state NOL carryforwards of $ 298.4 million that begin expiring in 2031 unless previously utilized. The Company has U.S. federal research credit carryforwards available at December 31, 2024 of approximately $ 11.6 million that begin expiring in 2027 unless previously utilized. The Company has state research credit carryforwards of $ 2.5 million of which $ 0.2 million begin expiring in 2027 unless previously utilized. These federal and state research and development credits are subject to a 20% reserve under FASB ASC 740. The difference between federal and state NOL carryforwards is primarily due to previously expired state NOL carryforwards. Utilization of the NOL and research and development credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and research and development credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company has not yet completed an evaluation of ownership changes. To the extent an ownership change occurs, the NOL and credit carryforwards and other deferred tax assets may be subject to limitations. F-23 A reconciliation of the beginning and ending amount of uncertain tax benefits is as follows (in thousands): Years Ended December 31, 2024 2023 Beginning uncertain tax benefits $ 2,617 $ 2,316 Current year - increases 237 347 Prior year - reductions ( 30 ) ( 46 ) Ending uncertain tax benefits $ 2,824 $ 2,617 Included in the balance of uncertain tax benefits at December 31, 2024 are $ 2.8 million of tax benefits that, if recognized, would result in a reduction of the gross deferred tax asset, offset fully by valuation allowance and have no net impact on the financial statements. The Company anticipates that no material amounts of unrecognized tax benefits will be settled within 12 months of the reporting date. The Company's policy is to record estimated interest and penalties related to uncertain tax benefits as income tax expense. As of December 31, 2024 and 2023, the Company had no accrued interest or penalties recorded related to uncertain tax positions. The tax years 2020 through 2023 remain open to examination by major taxing jurisdictions to which the Company is subject, which are primarily in the U.S. The statute of limitations for U.S. net operating losses utilized in future years will remain open beginning in the year of utilization. No additional provision has been made for U.S. income taxes related to undistributed foreign earnings of the Company’s wholly-owned Australian subsidiary or for unrecognized deferred tax liabilities for temporary differences related to investments in subsidiaries. As such, earnings are expected to be permanently reinvested, the investments are permanent in duration, or the Company has estimated that no additional tax liability will arise as a result of the distribution of such earnings. A liability could arise if amounts are distributed by the subsidiary or if the subsidiary is ultimately disposed. It is not practical to estimate the additional income taxes, if any, related to permanently reinvested earnings. There are no unremitted earnings as of December 31, 2024. 9. STOCKHOLDERS’ EQUITY Reverse Stock Split On July 1, 2024, the Company effected a 1-for-12 reverse split of its issued common stock. At the effective time of the r everse stock split , every 12 shares of the Company’s common stock was automatically reclassified and combined into one share of common stock. No fractional shares were issued as a result of the reverse stock split. Stockholders who would have otherwise been entitled to receive a fractional share instead automatically had their fractional interests rounded up to the next whole share. The reverse stock split reduced the number of issued and outstanding shares of the Company’s common stock from approximately 101.1 million to approximately 8.5 million . The reverse stock split did not change the number of authorized shares or the par value per share of the Company’s common stock. Equity Line On October 21, 2024, the Company entered into a purchase agreement and registration rights agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park. Under the terms and subject to the conditions of the purchase agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to $ 15.0 million of the Company’s common stock. Such sales of common stock by the Company, if any, will be subject to certain limitations, and may occur from time to time, at the Company’s sole discretion, over the 24-month period commencing on November 27, 2024. In connection with entering into the purchase agreement, the Company issued 137,614 shares of its common stock to Lincoln Park in consideration for its commitment to purchase shares thereunder. September 2023 Registered Direct Offering In August 2023, the Company entered into a securities purchase agreement with an institutional investor and an investor affiliated with Douglas for the purchase and sale of 833,334 shares of the Company's common stock and warrants to purchase additional shares of the Company's common stock in a registered direct offering priced at-the-market under Nasdaq rules. The offering closed on September 1, 2023. Each warrant is exercisable for one share of F-24 the Company's common stock. The terms of the warrants are further described below in this Note 9. The offering price was $ 8.40 per share of common stock and accompanying warrant. The aggregate gross proceeds to the Company from the offering were $ 7.0 million, and net proceeds were approximately $ 7.0 million. The offering was made pursuant to the Company's registration statement on Form S-3 (File No. 333-254862), filed with the SEC on March 30, 2021, and declared effective by the SEC on April 7, 2021, and a prospectus supplement thereunder. March 2023 ATM Sales Agreement In March 2023, the Company entered into a sales agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, and Cantor Fitzgerald & Co., or Cantor, to sell shares of its common stock from time to time through an "at-the-market," or ATM, equity offering program under which Stifel and Cantor act as the Company's agent. The Company agreed to pay a commission equal to 3 % of the gross proceeds of any common stock sold under the agreement or such lower amount as the Company and Stifel and Cantor agree, plus certain legal expenses. In April 2024, the Company and Cantor mutually agreed to terminate the sales agreement with respect to Cantor. Through and including May 10, 2024, shares of the Company's common stock sold under the sales agreement were offered and sold under the Company's shelf registration statement on Form S-3 (File No. 333-254862), the base prospectus included therein, originally filed with the SEC on March 30, 2021 and declared effective by the SEC on April 7, 2021, and the prospectus supplements thereto, the most recent of which was dated March 28, 2024 relating to the offering of up to $ 19.0 million of shares of the Company's common stock. From and after May 11, 2024, shares of the Company's common stock sold under the sales agreement were and will be offered and sold under the Company's shelf registration statement on Form S-3 (File No. 333-278380), the base prospectus included therein, originally filed with the SEC on March 29, 2024 and declared effective by the SEC on May 10, 2024, the prospectus supplement thereto dated May 10, 2024 relating to the offering of up to $ 18.1 million of shares of the Company's common stock, and any subsequent prospectus supplement related to the offering of shares of the Company's common stock under the sales agreement. During the years ended December 31, 2024 and 2023, the Company sold 109,655 and 316,244 shares of common stock, respectively, under the sales agreement for net proceeds of approximately $ 0.5 million and $ 2.3 million, respectively. Common Stock Warrants December 2023 Warrants In connection with the royalty interest financing agreement the Company entered into in December 2023, the Company issued a warrant to purchase up to an aggregate of 422,805 shares of the Company's common stock. The warrant has a term of five years from the date of issuance and an exercise price of $ 4.10 per share, subject to customary adjustment for stock splits and similar transactions. A holder (together with its affiliates) may not exercise any portion of the warrant to the extent that the holder would own more than 4.99 % (or, at the election of the holder 9.99 %) of the Company's outstanding common stock immediately after exercise. The warrant includes certain rights in favor of the holder upon a “fundamental transaction” as described in the warrant, including the right of the holder to receive from the Company or the successor entity an amount of cash equal to the Black-Scholes value (as described in the warrants) of the unexercised portion of the warrant on the date of the consummation of such fundamental transaction. The warrant was allocated a value of $ 0.8 million using a Black-Scholes option pricing model based on the relative fair value method. The Black-Scholes model used the following assumptions: expected volatility: 85.91 %; risk-free interest rate: 4.05 %; expected dividend yield: 0 %; and expected term: 5 years. The warrant was deemed to be classified as equity and recorded within additional paid in capital on the consolidated balance sheets. As of December 31, 2024, no portion of the warrant had been exercised. September 2023 Warrants In connection with the registered direct offering completed in September 2023, the Company issued warrants to purchase up to an aggregate of 845,225 shares of the Company's common stock. The warrants became exercisable on March 1, 2024, expire March 1, 2029 and have an exercise price of $ 9.11 per share, subject to customary adjustment for stock splits and similar transactions. A holder (together with its affiliates) may not exercise any portion of a warrant to the extent that the holder would own more than 4.99 % (or, at the election of the holder 9.99 %) of the Company's outstanding common stock immediately after exercise. The warrants include certain rights in favor of the holders upon a “fundamental transaction” as described in the warrants, including the right of the holders to receive from the Company or the successor entity an amount of cash equal to the Black-Scholes value (as described in the warrants) of the unexercised portion of the warrants on the date of the consummation of such fundamental transaction. F-25 The warrants were allocated a value of $ 2.9 million using a Black-Scholes option pricing model based on the relative fair value method as they were issued with common stock. The Black-Scholes model used the following assumptions: expected volatility: 87.77 %; risk-free interest rate: 4.29 %; expected dividend yield: 0 %; and expected term: 5.5 years. The warrants were deemed to be classified as equity and recorded within additional paid in capital on the consolidated balance sheets. As of December 31, 2024, none of the warrants have been exercised. February 2018 Warrants In connection with an underwritten public offering in February 2018, the Company issued to the investors in that offering, warrants exercisable through February 2023 with an initial exercise price of $ 36.00 per share. The Company estimated the fair value of the warrants as of February 15, 2018 to be approximately $ 3.0 million which was recorded in equity as of the issuance date. The warrants included a price-based anti-dilution provision, which resulted in automatic reductions to the exercise price of the warrants in April 2019 and July 2020 to $ 11.76 per share and $ 11.52 per share, respectively. In January 2023, warrants to purchase 112,793 shares of common stock were exercised for gross proceeds of approximately $ 1.3 million and the remaining unexercised warrants expired in February 2023. Summary of Warrant Activity A summary of warrant activity during the years ended December 31, 2024 and 2023 is presented below: Common Stock Number of Shares Underlying Warrants Weighted Average Exercise Price Weighted Average Remaining Life in Years Intrinsic Value Outstanding, December 31, 2022 115,085 $ 12.03 0.23 $ — Granted 1,268,030 Exercised ( 112,793 ) Forfeited or expired ( 1,750 ) Outstanding, December 31, 2023 1,268,572 $ 7.49 5.11 $ — Granted — — Exercised — — Forfeited or expired — — Outstanding and exercisable, December 31, 2024 1,268,572 $ 7.49 4.10 $ — Common Stock The authorized capital of the Company consists of 240,000,000 shares of common stock with a par value of $ 0.0001 per share and 5,000,000 shares of preferred stock with a par value of $ 0.01 per share. The issued and outstanding common stock of the Company consisted of 8,700,386 and 8,331,161 shares of common stock as of December 31, 2024 and 2023, respectively. There were no shares of preferred stock issued or outstanding as of December 31, 2024 or 2023. Common Stock Reserved for Future Issuance The following table summarizes common stock reserved for future issuance at December 31, 2024: Common stock reserved for issuance upon exercise of warrants outstanding 1,268,572 Common stock reserved for issuance upon exercise of options outstanding 883,334 Common stock reserved for future equity awards 465,751 Total 2,617,657 F-26 10. STOCK-BASED COMPENSATION 2014 Employee Stock Purchase Plan The Company’s 2014 Employee Stock Purchase Plan, or the ESPP, became effective in April 2014, but no offering period has been initiated thereunder since January 2017. In June 2024, the Company's board of directors suspended the ESPP. There was no stock-based compensation related to the ESPP for the years ended December 31, 2024 or December 31, 2023. Amended and Restated 2014 Stock Incentive Plan The Amended and Restated 2014 Stock Incentive Plan, or the Amended 2014 Plan, provided for the grant of stock-based awards to employees, directors, consultants and advisors. As a result of the approval of the 2022 Plan (as defined below) by the Company's stockholders on June 23, 2022, no further awards have been or will be granted under the Amended 2014 Plan since June 23, 2022. Outstanding awards previously granted under the Amended 2014 Plan continue to remain outstanding in accordance with their terms. 2022 Stock Incentive Plan In April 2022, the Company's board of directors approved the Daré Bioscience, Inc. 2022 Stock Incentive Plan, or the 2022 Plan, which was subsequently approved by the Company's stockholders on June 23, 2022, and became effective as of that date. The 2022 Plan provides for the grant of stock-based incentive awards to employees, directors, consultants, and advisors. The number of shares of common stock authorized for issuance under the 2022 Plan is (a) 843,108 ; plus (b) up to 512,056 shares subject to awards granted under the Amended 2014 Plan or the 2007 Stock Incentive Plan that expire, terminate or are otherwise forfeited on or after June 23, 2022. Options granted are exercisable at various dates as determined upon grant and will expire no more than ten years from their date of grant. Stock options generally vest over a four-year term. The exercise price of each option is determined by the Company's board of directors or its compensation committee based on the estimated fair value of the Company's stock on the date of grant. Summary of Stock Option Activity The table below summarizes stock option activity under the Company's stock incentive plans and related information for the years ended December 31, 2024 and 2023. The exercise price of all options granted during the years ended December 31, 2024 and 2023 was equal to the market value of the Company’s common stock on the date of grant. As of December 31, 2024, unamortized stock-based compensation expense of approximately $ 2.2 million will be amortized over the weighted average period of 1.1 years. The number of shares of common stock available for future awards granted under the 2022 Plan as of December 31, 2024 was 465,751 . F-27 Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value * Outstanding at December 31, 2022 551,003 $ 19.18 Granted 238,120 13.62 Exercised — — Cancelled/forfeited ( 525 ) 14.07 Expired ( 29 ) 13.92 Outstanding at December 31, 2023 788,569 17.50 Granted 228,060 5.45 Exercised — — Canceled/forfeited ( 79,148 ) 12.90 Expired ( 54,147 ) 21.16 Outstanding at December 31, 2024 883,334 $ 14.58 6.73 $ — Options exercisable at December 31, 2024 593,118 $ 16.96 5.81 $ — Options vested and expected to vest at December 31, 2024 593,118 $ 16.96 5.81 $ — *The aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company's common stock exceeded the exercise price of the stock options at December 31, 2024 for those stock options for which the quoted market price was in excess of the exercise price. The weighted average grant-date fair value of stock options granted during at December 31, 2024 and 2023 was $ 4.10 and $ 11.28 , respectively. Compensation Expense Total stock-based compensation expense related to stock options granted to employees and directors recognized in the consolidated statements of operations and comprehensive loss is as follows: Years Ended December 31, 2024 2023 Research and development $ 833,689 $ 823,148 General and administrative 1,369,567 1,707,536 Total $ 2,203,256 $ 2,530,684 The assumptions used in the Black-Scholes option-pricing model for stock options granted to employees and to directors in respect of their service on the Company's board of directors during the years ended December 31, 2024 and 2023 is as follows: 2024 2023 Expected life in years 6.0 6.0 Risk-free interest rate 4.13 % 3.56 % Expected volatility 90 % 107 % Dividend yield 0.0 % 0.0 % 11. LEASED PROPERTIES Clean Room Space On July 24, 2024, the Company entered into a scope of work (the "SOW") with an unrelated third party for a controlled clean room space in Burlington, Massachusetts. The SOW became effective upon the execution of an associated License and Services Agreement, which governs the SOW. The term of the SOW is 22 months and commenced on March 1, 2025. Upon execution of the SOW, the Company made a payment of approximately $ 459,000 . Fixed payments will be due at the beginning of each calendar quarter and variable amounts related to support services will be due monthly based on services provided during the preceding month. The Company's total F-28 obligation in respect of the fixed payments due under the SOW is approximately $ 3.5 million. The SOW may be renewed each year and if renewed, the fixed payment amount may increase yearly by up to 5 %. General Office Space The Company's lease for its corporate headquarters ( 3,169 square feet of office space) commenced on July 1, 2018. In February 2022, the Company entered into an amendment to extend the term of the lease through August 31, 2024. On March 8, 2024, the Company entered into another amendment to extend the term of the lease for three years such that the term now expires on October 31, 2027, which resulted in additional operating lease liabilities and ROU assets of approximately $ 0.4 million in March 2024. MBI, a wholly-owned subsidiary the Company acquired in November 2019, leases general office and laboratory space in Lexington, Massachusetts. The lease commenced on November 1, 2023 for a term of three years , expiring on December 31, 2026, and resulted in an increase in operating lease liabilities and ROU assets of approximately $ 0.4 million. Under the terms of each lease, the lessee pays base annual rent (subject to an annual fixed percentage increase), plus property taxes, and other normal and necessary expenses, such as utilities, repairs, and maintenance. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. The leases do not require material variable lease payments, residual value guarantees or restrictive covenants. The leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment. The Company uses an incremental borrowing rate consisting of the current prime rate plus 200 basis points for operating leases. The depreciable lives of operating leases and leasehold improvements are limited by the expected lease term. At December 31, 2024, the Company reported operating lease ROU assets of approximately $ 1.2 million in other non-current assets, approximately $ 0.5 million in current portion of lease liabilities, and approximately $ 0.8 million in lease liabilities long-term in the consolidated balance sheets. Total operating lease costs were approximately $ 0.8 million and $ 0.6 million for the years ended December 31, 2024 and 2023, respectively. Operating lease costs consist of monthly lease payments expense, common area maintenance and other repair and maintenance costs and are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. Cash paid for amounts included in the measurement of operating lease liabilities was approximately $ 0.6 million and $ 0.4 million for the years ended December 31, 2024 and 2023, respectively, and these amounts are included in operating activities in the consolidated statements of cash flows. At December 31, 2024, operating leases had a weighted average remaining lease term of 2.42 years and a weighted average interest rate of 10.50 %. At December 31, 2024, future minimum lease payments under the Company's operating leases are as follows: Year ending December 31, 2025 $ 660,000 2026 680,000 2027 130,000 Total future minimum lease payments 1,470,000 Less: accreted interest 167,000 Total operating lease liabilities $ 1,303,000 12. ROYALTY INTEREST FINANCING On December 21, 2023, the Company entered into a royalty interest financing agreement, or the Royalty Interest Agreement, with United in Endeavour, LLC, or UiE, under which UiE acquired a portion of the Company's royalty interest in XACIATO. The Company received $ 5.0 million from UiE when the parties entered into the Royalty Interest Agreement (the "Initial Investment"), and between January 1, 2024 and December 31, 2026, the Company may, in its sole discretion, but subject to XOMA's prior written consent (see Note 13, Royalty Purchase Agreements), F-29 elect to receive three additional payments (each a "Supplemental Investment") from UiE of up to an aggregate of $ 7.0 million, for a total of up to $ 12.0 million. Under the Royalty Interest Agreement, the Company agreed to make the following payments to UiE, until such time when UiE has received aggregate payments equaling a 12 % internal rate of return (the “IRR”) on the Initial Investment and each Supplemental Investment, if any (the "Hard Cap"): (i) from December 21, 2023 through December 31, 2025, 50 % of the amount of royalty payments remaining after all amounts that are due and payable and actually paid by the Company to any licensor or sublicensee on the royalty payments generated and received by the Company on net sales of XACIATO by Organon have been deducted (the “Net Royalty Payments”), (ii) from January 1, 2026 through December 31, 2029, 75 % of the Net Royalty Payments, and (iii) from December 21, 2023 through December 31, 2029, 10 % of the amount of milestone payments remaining after all amounts that are due and payable and actually paid by the Company to any licensor or sublicensee on the milestone payments generated and received by the Company on net sales of XACIATO by Organon have been deducted. After December 31, 2029, the Company will be required to make certain additional payments to UiE to the extent UiE has not received payments equaling the Hard Cap by December 31, 2029, December 31, 2033, and December 31, 2034, respectively. In addition, if UiE has not received payments equaling the Hard Cap by December 31, 2035 and the Company has other sources of assets or income besides XACIATO sufficient to complete such payments, the Company has agreed to pay UiE quarterly payments evenly divided over a two-year term, such that UiE will have obtained the IRR, taking into account all other payments received by UiE from the Company under the Royalty Interest Agreement. UiE’s right to receive payments will terminate when UiE has received payments in an amount equal to the Hard Cap. The Company evaluated the terms of the Royalty Interest Agreement and concluded that the features of the Royalty Interest Agreement were similar to those of a debt instrument. As a result, the Company applied the debt recognition guidance under ASC 470, Debt, and recorded the Initial Investment as a liability related to the sale of future royalties (“Royalty Obligation”) on the Company's 2023 consolidated balance sheet, which will be amortized under the effective interest method over the estimated term of the Royalty Interest Agreement. If the Company elects to receive additional Supplemental Investments, such additional Supplemental Investments will also be recorded as a liability related to the sale of future royalties when they are received and amortized under the interest method over the estimated remaining term of the Royalty Interest Agreement. In addition, in accordance with ASC 470, Debt, the Company will account for any royalties received in the future as non-cash royalty revenue in the consolidated statements of operations as a reduction to the debt balance. As royalties and milestone payments are received by or on behalf of the Company from Organon and the Company subsequently pays or causes to be paid the amounts due to UiE in respect thereof in accordance with the Royalty Interest Agreement, the Royalty Obligation will be effectively repaid during the term of the Royalty Interest Agreement. In order to determine the amortization of the Royalty Obligation, the Company is required to estimate the total amount of future payments to UiE during the term of the Royalty Interest Agreement. At execution of the Royalty Interest Agreement, the Company’s estimate of this total interest expense resulted in an effective annual interest rate of approximately 22.48 %. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the royalty period. The Company will periodically assess the estimated amounts due and payable to UiE and to the extent the amount or timing of such payments is materially different than the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense. There are a number of factors that could materially affect XACIATO's commercial success, and therefore the amount and timing of the Company's payments to UiE, and correspondingly, the amount of interest expense recorded by the Company, most of which are not within the Company’s control. Such factors include, but are not limited to, the capabilities of Organon and its commitment of sufficient resources to market, distribute and sell the product; timely and adequate commercial supply of the finished product and its components; perceived superiority of its cure rates compared to other available treatments; patient satisfaction and willingness to use it again and refer it to others; price pressure given the high level of generic treatments and changes in health care laws and regulations; adequate coverage, pricing and reimbursement from third-party payors; and approval of new entrants, including alternative, non-antibiotic treatment options. These factors could result in increases or decreases to both royalty revenues and interest expense. Warrants In connection with entering into the Royalty Interest Agreement, the Company issued to UiE a warrant (the “Initial Royalty Warrant”) to purchase up to 422,804 shares of the Company’s common stock. In addition, for every $ 1,000,000 of Supplemental Investment, the Company will issue a warrant to purchase 84,561 shares of common stock, for an aggregate of warrants to purchase up to 591,927 shares of common stock (collectively the “Additional Royalty Warrants,” and together with the Initial Royalty Warrant, the “Royalty Interest Agreement Warrants”). F-30 The Royalty Interest Agreement Warrants are exercisable, in full or in part, at any time on or prior to the fifth anniversary of their issuance date at an exercise price of $ 4.10 per share, subject to customary anti-dilution adjustments. The Royalty Interest Agreement Warrants may be exercised for cash, or if at the time of exercise there is no effective registration statement registering for resale the shares underlying the Royalty Interest Agreement Warrants, then in lieu of paying the exercise price in cash, the holders may elect to exercise on a cashless basis. The Royalty Interest Agreement Warrants were deemed to be equity classified warrants and recorded under additional paid in capital. The fair value of the Initial Royalty Warrant was determined to be $ 0.8 million (Note 9) and was recorded as a debt discount against the Initial Investment. The following table shows the activity of the Royalty Obligation since the transaction inception through the period indicated: December 31, 2024 Upfront payment from the sale of future royalties $ 5,000,000 Debt issuance cost ( 276,101 ) Relative fair value of Initial Royalty Warrant ( 834,512 ) Royalty payments ( 2,189 ) Non-cash interest expense and interest payable associated with the sale of future royalties 862,626 Liability related to the sale of future royalties $ 4,749,824 13. ROYALTY PURCHASE AGREEMENTS On April 29, 2024, the Company entered into a traditional royalty purchase agreement (the "XACIATO RPA"), and a synthetic royalty purchase agreement, (the "Synthetic RPA and together with the XACIATO RPA, the “Royalty Purchase Agreements”) with XOMA pursuant to which XOMA paid $ 22.0 million to the Company. In addition, if XOMA receives total payments under the Royalty Purchase Agreements (as described below) equal to an amount that exceeds $ 88.0 million, XOMA will pay $ 11.0 million to the Company for each successive $ 22.0 million XOMA receives under the Royalty Purchase Agreements (such $ 11.0 million payments to the Company, the “Contingent Purchase Price Payments”). Under the Royalty Purchase Agreements, the Company sold, assigned, transferred and conveyed its right, title and interest in and to the following to XOMA: (a) 100 % of the royalties and potential milestone payments the Company would otherwise have the right to receive from and after April 1, 2024 under the Company's exclusive license agreement with Organon, based on net sales of XACIATO, net of (i) all royalty and milestone payments due and payable and actually paid by or on behalf of the Company under its exclusive license agreement with third-party licensors TriLogic and MilanaPharm, and (ii) all payments due and payable and actually paid by or on behalf of the Company under the Royalty Interest Agreement between the Company and UiE (such net amount, the “Purchased Receivables”); (b) 25 % of the potential future $ 20.0 million payment that the Company would otherwise have the right to receive under the Company's license agreement with Bayer, if Bayer, in its sole discretion, elects to make the license granted thereunder effective following completion of the pivotal clinical trial of Ovaprene; and (c) a synthetic royalty of 4.0 % of the Company's, its affiliates’ and its sublicensees’ future net sales of the Company's investigational product Ovaprene, and 2.0 % of the Company's, its affiliates’ and its sublicensees’ future net sales of the Company's investigational product Sildenafil Cream, 3.6 %; provided, however , that, if XOMA receives total payments under the Royalty Purchase Agreements, net of any Contingent Purchase Price Payments made to the Company, equal to an amount that exceeds $ 110.0 million, the foregoing percentages will be reduced to 2.5 % and 1.25 %, respectively (such amounts described in the foregoing clauses (b) and (c), collectively, the “Revenue Participation Right”). Pursuant to the XACIATO RPA, XOMA, at its sole cost and discretion, may repay in full and retire all of the Company's payment obligations to UiE under the Royalty Interest Agreement. If XOMA does so, no further amounts in respect of the Royalty Interest Agreement will be deducted from the net royalties and net milestone payments that XOMA is entitled to receive under the XACIATO RPA. As of April 29, 2024, the Company cannot elect to receive any additional funding from UiE under the Royalty Interest Agreement without XOMA’s prior written consent. In connection with the synthetic royalty purchase agreement, the Company granted to XOMA a security interest in certain product assets related to Ovaprene and Sildenafil Cream. F-31 The $ 22.0 million the Company received from XOMA, less transaction costs of approximately $ 1.6 million, was allocated to the XACIATO RPA and recorded as other income on the Company's consolidated statement of operations and comprehensive loss in the second quarter of 2024. See Note 2, Basis of Presentation and Summary of Significant Accounting Policies, for additional information. 14. COMMITMENTS AND CONTINGENCIES Insurance Financing In each of July 2024 and 2023, the Company obtained financing for certain director and officer and other insurance premiums. The total premiums, taxes and fees financed each year was approximately $ 0.6 million with an annual interest rate of approximately 8.0 %. In consideration of the premium payment by the lender to the insurance companies or the agent or broker, the Company unconditionally promised to pay the lender the amount financed plus interest and other charges permitted under the agreements and the Company assigned to the lender a first priority lien on and a security interest in the financed insurance policies. With respect to the financing obtained in July 2024, the Company will make monthly installment payments through April 20, 2025. With respect to the financing obtained in July 2023, the Company made monthly installment payments through April 20, 2024. The financed amount is recognized as an insurance financing cost included in other current assets and accrued expenses in the Company's consolidated balance sheets. As of December 31, 2024, the Company's remaining obligation for the financing obtained in July 2024 was approximately $ 0.2 million. As of December 31, 2023, the Company's remaining obligation for the financing obtained in July 2023 was approximately $ 0.3 million. The Company had no remaining obligations for the financing obtained in July 2023 as of December 31, 2024. CRADA with NICHD for the Pivotal Phase 3 Study of Ovaprene In July 2021, the Company entered into a Cooperative Research and Development Agreement, or the CRADA, with the U.S. Department of Health and Human Services, as represented by the Eunice Kennedy Shriver National Institute of Child Health and Human Development, or NICHD, for the conduct of a multi-center, non-comparative, pivotal Phase 3 clinical study of Ovaprene, or the Ovaprene Phase 3. The Ovaprene Phase 3 is being conducted within NICHD’s Contraceptive Clinical Trials Network with NICHD's contract research organization providing clinical coordination and data collection and management services for the Ovaprene Phase 3. The Company and NICHD each provide medical oversight and final data review and analysis for the Ovaprene Phase 3 and will work together to prepare the final report of the results of the Ovaprene Phase 3. The Company is responsible for providing clinical supplies of Ovaprene, coordinating interactions with the FDA, preparing and submitting supportive regulatory documentation, and providing a total of $ 5.5 million in payments to NICHD to be applied toward the costs of conducting the Ovaprene Phase 3. NICHD is responsible for the other costs related to the conduct of the Ovaprene Phase 3. The Company made aggregate payments of $ 5.5 million to NICHD, $ 0.5 million of which was paid in July 2024 and $ 5.0 million of which was paid in prior years. The Company had no remaining obligation under the CRADA at December 31, 2024. Legal Proceedings From time to time, the Company may be involved in various claims arising in the normal course of business. Management is not aware of any material claims, disputes or unsettled matters that would have a material adverse effect on the Company’s results of operations, liquidity or financial position that the Company has not adequately provided for in the accompanying consolidated financial statements. Employment Agreements Certain employees of the Company are entitled to payments if their employment is terminated by the Company without cause, if they resign for good reason, if their employment agreements are not renewed, or if their employment is terminated by the Company without cause or if they resign for good reason, in each case, within three months prior to or 12 months following a change in control of the Company. Upon termination by the Company without cause, if they resign for good reason, if their employment agreements are not renewed, such executives are entitled to receive a payment of an amount equal to either six or twelve months of base salary and to receive continuing health benefits coverage for periods equal to either six or twelve months following the termination of employment or until such officer is covered under a separate plan from another employer. If their employment is terminated by the Company without cause or if they resign for good reason, in each case, within three months prior to or 12 months following a change in control of the Company, such executives will be entitled to receive a payment of an amount equal to either nine or eighteen months of base salary and target bonus and to receive continuing health benefits coverage for periods ranging between nine and eighteen months following the termination of employment. In addition, F-32 upon a change in control of the Company, each officer’s outstanding unvested options will fully vest and accelerate subject to the conditions outlined in such officer’s employment agreement. Related-Party Agreement On January 26, 2024, the Company entered into a consulting agreement with its former Chief Financial Officer to assist in transition matters subsequent to her retirement. Pursuant to the agreement, for a nine month period commencing on January 26, 2024, the Company paid its former Chief Financial Officer $ 31,667 per month and reimbursed her up to $ 500 per month for her health insurance premiums. Employee Benefit – 401(k) Plan The Company has a 401(k) retirement plan, or the 401(k) Plan, covering all qualified employees. The 401(k) Plan allows each participant to contribute a portion of their base wages up to an amount not to exceed an annual statutory maximum. The 401(k) Plan includes a Safe Harbor Plan that provides a Company match up to 4 % of each participant's cash compensation. The Company made matching contributions of approximately $ 0.2 million and $ 0.2 million during the years ended December 31, 2024 and 2023, respectively. 15. GRANT AWARDS October 2024 Grant Award In October 2024, the Company entered into a subaward agreement with National Collegiate Inventors and Innovators Alliance, Inc. d/b/a VentureWell (the "CMF") under which the Company is entitled to receive funding of up to $ 10.0 million in milestone-based payments subject to the Company's achievement over an approximately 24-month period of specified research activities and objectives relating to the advancement of the Company's DARE-HPV development program, including commencement of a Phase 2 clinical study to evaluate the safety and preliminary efficacy of DARE-HPV for the clearance of high-risk HPV infection in women. The subaward agreement was the result of the Company's selection by an agency within the U.S. Department of Health and Human Services. The CMF is a consortium management firm that received funding from the federal agency for the subaward agreement. The Company receives funding in advance and tracks and reports eligible expenses incurred to the federal agency. The Company is required to apply the funds it receives solely toward direct costs for the funded project, other than approximately 22 % of such funds, which it may apply toward general overhead and administrative expenses that support the entire operations of the Company. Funds received that have not been spent are recorded as cash and cash equivalents and as a deferred grant funding liability in the Company’s consolidated balance sheets. The deferred grant funding liability also includes grant funds spent but not yet expensed in accordance with GAAP. The Company must track expenses incurred under the award and submit a detailed accounting of such expenses. Through December 31, 2024, the Company received one payment of $ 1.0 million under this award. The Company recorded credits to research and development expense of approximately $ 0.4 million for costs related to this award for the year ended December 31, 2024. As of December 31, 2024, the Company has recorded approximately $ 0.6 million of deferred grant funding liability in the Company's consolidated balance sheets. NICHD and NIH Non-Dilutive Grant Funding The Company has received notices of awards and non-dilutive grant funding from the NICHD and the National Institutes of Health, or NIH, to support the development of several of its product candidates. The NICHD and NIH issue notices of awards to the Company for a specified amount, and the Company must incur and track expenses eligible for reimbursement under the award and submit a detailed accounting of such expenses to receive payment. If the Company receives payments under the award, the amounts of such payments are recognized in the statements of operations as a reduction to research and development activities as the related costs are incurred to meet those obligations over the period. F-33 DARE-HPV In December 2024, the Company received a notice of award from the National Institute of Allergy and Infectious Diseases (NIAID), a component of the NIH, that the Company was awarded a $ 1.0 million grant in support of non-clinical activities for the development of DARE-HPV for an initial project year of December 2024 through November 2025, and that an additional $ 1.0 million was recommended for the subsequent project year, subject to the availability of funds and satisfactory progress of the project, as determined by NIAID. The Company recorded no credits to research and development expense for costs related to the NIH award for the year ended December 31, 2024 and recorded no receivable at December 31, 2024. DARE-PTB1 In August 2020, the Company received a notice of award from NICHD to support the development of DARE-PTB1. The award of approximately $ 0.3 million was used for what was referred to as the "Phase I" segment of the project outlined in the Company's grant application, which ended in July 2023. The Company received aggregate reimbursements under the award of approximately $ 0.2 million during the grant period which ended in July 2023. No further funds are available under this award for the Phase I segment. In December 2023, the Company received a notice of award of approximately $ 2.0 million for the "Phase II" segment of the project. The Company recorded credits to research and development expense for costs related to the NICHD award of approximately $ 0.7 million for the year ended December 31, 2024. The Company recorded a receivable of approximately $ 0.1 million at December 31, 2024 for expenses incurred through such date that it believes are eligible for reimbursement under the grant. DARE-LARC1 In September 2021, the Company received a notice of award from NICHD to support the development of DARE-LARC1. The award in the amount of approximately $ 0.3 million was used to explore device insertion and removal in nonclinical studies. The Company recorded credits to research and development expense of approximately $ 32,000 for costs related to the NICHD award for the year ended December 31, 2023. The Company received aggregate reimbursements under the NICHD award of approximately $ 0.3 million during the grant period, which ended in June 2023. No further funds are available under this award. DARE-204 and DARE-214 In May 2022, the Company received a notice of award from NICHD of approximately $ 0.2 million to support end-user research to better understand women's preferences for a long-acting injectable contraceptive method. The findings from the research will inform the Company's target product profile and guide its development priorities for DARE-204 and DARE-214. The Company recorded credits to research and development expense of approximately $ 0.1 million for costs related to the NICHD award for the year ended December 31, 2023. The Company received aggregate reimbursements under the NICHD award of approximately $ 0.2 million during the grant period, which ended in September 2023. No further funds are available under this award. DARE-PTB2 In July 2023, the Company received a notice of award from NICHD of approximately $ 0.4 million to support preclinical development of a potential new therapeutic for the prevention of idiopathic preterm birth. The grant funds will support activities related to the conduct and completion of proof-of-concept target validation studies in collaboration with the University of South Florida, which are to occur over a 12-month period. The Company recorded credits to research and development expense of approximately $ 0.3 million and $ 0.1 million for costs related to the NICHD award for the year ended December 31, 2024 and 2023, respectively. The Company received aggregate reimbursements under the NICHD award of approximately $ 0.4 million during the grant period, which ended in July 2024. No further funds are available under this award. Other Non-Dilutive Grant Funding As described below, the Company has received substantial funding under grant agreements it entered into with the Gates Foundation, or the Foundation. The Company is required to apply the funds it receives under the agreements solely toward direct costs for the applicable funded projects, other than approximately 5 %- 15 % of such funds, which it may apply toward general overhead and administrative expenses that support the entire operations of F-34 the Company. The Company receives funding in advance and tracks and reports eligible expenses incurred to the Foundation. Funds received that have not been spent are recorded as cash and cash equivalents and as a deferred grant funding liability in the Company’s consolidated balance sheets. The deferred grant funding liability also includes grant funds spent but not yet expensed in accordance with GAAP. The grant agreements include the Foundation's standard discretionary termination provisions. Any grant funds that have not been used or committed to the funded project must be returned promptly to the Foundation upon expiration or termination of the agreement. 2024 Contraceptive Product Candidate Grant Agreement In November 2024, the Company entered into a grant agreement with the Foundation under which the Company was awarded a new grant of up to approximately $ 10.7 million to support (i) expansion of the number of study sites in the ongoing Phase 3 clinical trial of Ovaprene, and (ii) activities that will aid in the identification and development of a novel non-hormonal intravaginal contraceptive candidate, suitable for and acceptable to women in low- and middle-income country settings who need or would prefer to use such a product to avoid an unplanned pregnancy. An initial payment of approximately $ 5.4 million was made to the Company in November 2024. Additional payments are contingent upon the Company's achievement of specified development and reporting milestones during the term of the grant agreement, which extends through October 2026. The Company will track and report eligible expenses incurred to the Foundation. The Company recorded credits to research and development expense of approximately $ 0.2 million for costs related to this award for the year ended December 31, 2024. As of December 31, 2024, the Company has recorded approximately $ 5.2 million of deferred grant funding liability related to this award in the Company's consolidated balance sheets. 2024 Biotherapeutic Product Grant Agreement In January 2024, the Company entered into an agreement with the Foundation under which the Company was awarded $ 750,000 to fund activities related to bacteria-based live biotherapeutic product development. The Company received the full amount of the award in January 2024. The Company recorded credits to research and development expense of approximately $ 0.7 million for costs related to this award for the year ended December 31, 2024. As of December 31, 2024, the Company has recorded approximately $ 39,000 of deferred grant funding liability related to this award in the Company's consolidated balance sheets. 2021 DARE-LARC1 Grant Agreement In June 2021, the Company entered into an agreement with the Foundation under which the Company was awarded up to approximately $ 49.0 million to support the development of DARE-LARC1. The agreement supports technology development and preclinical activities over the period of June 30, 2021 to November 1, 2026, to advance DARE-LARC1 through nonclinical proof-of-principle studies and other IND-enabling work to allow for the submission of an IND application with the FDA, approval of which will be required to commence testing in humans. As of December 31, 2024, the Company has received a cumulative total of approximately $ 31.8 million in non-dilutive funding under the agreement, including $ 4.5 million during 2023 and $ 3.5 million during 2024. Additional payments are contingent upon the DARE-LARC1 program’s achievement of specified development and reporting milestones. The Company recorded credits to research and development expense of approximately $ 6.2 million and $ 8.7 million for costs related to this award for the year ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company recorded approximately $ 10.8 million of deferred grant funding liability related to this award in the Company's consolidated balance sheets. 2022 DARE-LBT Grant Agreement In November 2022, the Company entered into an agreement with the Foundation under which the Company was awarded $ 585,000 to support the development of DARE-LBT over the period of November 11, 2022 to February 29, 2024. The Company received the full amount of the award in November 2022. The Company recorded credits to research and development expense of approximately $ 0.2 million and $ 0.3 million for costs related to this award for the year ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company had no deferred grant funding liability related to this award in the Company's consolidated balance sheets. F-35 16. SEGMENT INFORMATION Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company and the Company’s chief operating decision maker view the Company’s operations and manage its business in one operating segment, which is the business of identifying, developing and commercializing pharmaceutical products that target unmet needs in women's health. The CODM, who is the chief executive officer (“CEO”), manages and allocates resources to the operations of the Company on a consolidated basis. The Company’s measure of segment profit or loss is net loss. Managing and allocating resources on a consolidated basis enables the CEO to assess the overall level of resources available and how to best deploy these resources across functions and research and development projects that are in line with the Company’s long-term company-wide strategic goals. Consistent with this decision-making process, the CEO uses consolidated financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets. Operating expenses are used to monitor budget versus actual results. The CODM does not review assets in evaluating the results of the Company, and therefore, such information is not presented. In addition, substantially all of the Company's revenue was generated in the United States and substantially all of the Company's long-lived assets reside in the United States. The following table summarizes the segment's financial information including the Company’s significant segment expenses: Year Ended December 31, 2024 2023 Revenue: License fee revenue $ — $ 1,000,000 Milestone revenue — 1,800,000 Royalty revenue 9,784 7,885 Total revenue 9,784 2,807,885 Segment operating expenses: Research and development: Direct program costs: Ovaprene 8,518,495 3,762,611 Sildenafil Cream, 3.6% 2,361,052 7,746,264 Other advanced clinical stage programs 1,321,888 3,498,955 Phase 1 and Phase 1-ready clinical stage programs 761,721 2,912,857 Preclinical stage programs 4,233,762 7,432,439 Other development programs 27,542 189,706 Contra-R&D expenses ( 7,685,533 ) ( 8,965,347 ) Total research and development direct program costs 9,538,927 16,577,485 Indirect costs: Personnel-related (including stock compensation) 5,611,057 5,566,016 Other indirect costs 254,772 384,289 Contra R&D expenses ( 1,199,548 ) ( 989,716 ) Total research and development indirect costs 4,666,281 4,960,589 General and administrative 9,156,061 12,109,691 Other operating expenses 100,000 100,000 Total segment operating expenses 23,461,269 33,747,765 Loss from operations ( 23,451,485 ) ( 30,939,880 ) Sale of royalty and milestone rights, net 20,379,376 — Interest expense 857,364 35,109 Interest income ( 539,743 ) ( 813,278 ) Other income (expense), net 663,869 ( 320 ) Net loss $ ( 4,053,599 ) $ ( 30,161,391 ) F-36 17. SUBSEQUENT EVENTS Noncompliance with Nasdaq’s Minimum Market Value of Listed Securities Requirement On August 12, 2024, the Company received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) notifying it that it did not meet the requirement in Nasdaq Listing Rule 5550(b)(2) for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(2) requires a company listed on Nasdaq to maintain a minimum market value of listed securities of $35.0 million (the “Minimum MVLS Rule”). The Company was provided an initial period of 180 calendar days, or until February 10, 2025, to regain compliance with the Minimum MVLS Rule. On February 13 , 2025, Nasdaq’s Listing Qualifications Department notified the Company that because it did not regain compliance with the Minimum MVLS Rule by February 10, 2025, its common stock is subject to delisting from Nasdaq unless the Company timely requests a hearing before the Nasdaq Hearing Panel (the “Panel”). On February 20, 2025, the Company requested a hearing before the Panel, which request stayed the delisting of its common stock pending the decision of the Panel following the hearing and the expiration of any extension period that may be granted by the Panel. The hearing occurred on March 25, 2025. Pursuant to published Nasdaq guidance, the Panel typically issues it decision within 30 days of the hearing. There can be no assurance that the Panel will grant the Company any extension period within which to regain compliance with the Minimum MVLS Rule, or if any extension period is granted, that the Company will regain compliance with the Minimum MVLS Rule within such extension period, or that the Company will be successful in otherwise maintaining the listing of our common stock on The Nasdaq Capital Market. F-37