FEMASYS INC 10-K

Item 8. Financial Statements and Supplementary Data. Financial Statements Table of Contents Page Report of Independent Registered Public Accounting Firm ( KPMG LLP , PCAOB 185 ) 72 Balance Sheets at December 31, 2021 and 2020 73-74 Statements of Comprehensive Loss for the Years Ended December 31, 2021 and 2020 75 Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2021 and 2020 76 Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 77 Notes to Financial Statements 78-95 71 Table of Contents KPMG LLP Suite 2000 303 Peachtree Street, N.E. Atlanta, GA 30308-3210 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Femasys Inc.: Opinion on the Financial Statements We have audited the accompanying balance sheets of Femasys Inc. (the Company) as of December 31, 2021 and 2020, the related statements of comprehensive loss, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these 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 financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Company’s auditor since 2016. Atlanta, Georgia March 24, 2022 72 Table of Contents FEMASYS INC. Balance Sheets Assets December 31, 2021 December 31, 2020 Current assets: Cash and cash equivalents $ 24,783,029 3,322,226 Accounts receivable, net 84,258 125,790 Inventory, net 208,270 131,378 Other current assets 555,853 284,115 Total current assets 25,631,410 3,863,509 Property and equipment, at cost: Leasehold improvements 1,155,332 1,155,332 Office equipment 99,344 64,145 Furniture and fixtures 424,947 424,947 Machinery and equipment 2,261,793 2,242,088 Construction in progress 379,713 139,150 4,321,129 4,025,662 Less accumulated depreciation ( 2,722,117 ) ( 2,197,868 ) Net property and equipment 1,599,012 1,827,794 Long-term assets: Lease right-of-use assets, net 665,747 1,057,506 Intangible assets, net of accumulated amortization 25,093 65,069 Other long-term assets 655,418 792,440 Total long-term assets 1,346,258 1,915,015 Total assets $ 28,576,680 7,606,318 ( continued ) 73 Table of Contents FEMASYS INC. Balance Sheets Liabilities, Redeemable Preferred Stock and Stockholders’ Equity (Deficit) December 31, 2021 December 31, 2020 Current liabilities: Accounts payable $ 445,522 674,333 Accrued expenses 603,787 1,117,601 Clinical holdback - current portion 18,947 — Note payable – current portion 181,123 630,010 Lease liabilities – current portion 406,674 434,072 Other – current 36,037 32,895 Total current liabilities 1,692,090 2,888,911 Long-term liabilities: Clinical holdback - long-term portion 149,791 164,972 Note payable – long-term portion — 182,490 Lease liabilities – long-term portion 402,417 809,092 Other – long-term — 32,895 Total long-term liabilities 552,208 1,189,449 Total liabilities 2,244,298 4,078,360 Commitments and contingencies Redeemable convertible preferred stock: Preferred stock, Series B, $ 0.001 par, none authorized, issued and outstanding as of December 31, 2021 ; 13,344,349 shares authorized, issued and outstanding as of December 31, 2020 — 10,748,873 Preferred stock, Series C, $ 0.001 par, none authorized, issued and outstanding as of December 31, 2021 ; 42,491,484 shares authorized, issued and outstanding as of December 31, 2020 — 44,594,813 Stockholders’ equity (deficit): Common stock, $ 0.001 par, 200,000,000 authorized, 11,921,388 shares issued and 11,804,165 outstanding as of December 31, 2021 ; and 95,583,558 authorized, 1,110,347 shares issued and 993,124 outstanding as of December 31, 2020 11,921 1,110 Treasury stock, 117,223 shares ( 60,000 ) ( 60,000 ) Preferred stock, Series A, $ 0.001 par, none authorized, issued and outstanding as of December 31, 2021 ; 17,310,609 shares authorized, and 17,210,609 shares issued and outstanding as of December 31, 2020 — 17,211 Warrants 702,492 702,492 Additional paid-in-capital 108,418,304 22,725,949 Accumulated other comprehensive loss, net of tax — — Accumulated deficit ( 82,740,335 ) ( 75,202,490 ) Total stockholders’ equity (deficit) 26,332,382 ( 51,815,728 ) Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) $ 28,576,680 7,606,318 See accompanying notes to financial statements. 74 Table of Contents FEMASYS INC. Statements of Comprehensive Loss Years ended December 31, 2021 and 2020 December 31, 2021 December 31, 2020 Sales $ 1,179,689 1,037,918 Cost of sales 370,384 306,533 Gross margin 809,305 731,385 Operating expenses: Research and development 4,084,304 4,130,613 Sales and marketing 208,735 310,219 General and administrative 4,262,002 2,544,043 Depreciation and amortization 591,068 679,653 Total operating expenses 9,146,109 7,664,528 Loss from operations ( 8,336,804 ) ( 6,933,143 ) Other income (expense): Interest income, net 3,768 22,504 Other income 821,515 10,000 Interest expense ( 19,226 ) ( 12,553 ) Other expense ( 3,098 ) — Total other income 802,959 19,951 Loss before income taxes ( 7,533,845 ) ( 6,913,192 ) Income tax expense 4,000 1,800 Net loss $ ( 7,537,845 ) ( 6,914,992 ) Comprehensive loss: Net loss $ ( 7,537,845 ) ( 6,914,992 ) Change in fair value of available for sale investments — ( 20 ) Total comprehensive loss $ ( 7,537,845 ) ( 6,915,012 ) Net loss attributable to common stockholders, basic and diluted $ ( 7,537,845 ) ( 6,914,992 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 1.12 ) ( 7.20 ) Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 6,712,028 959,862 See accompanying notes to financial statements. 75 Table of Contents FEMASYS INC. Statements of Stockholders’ Equity (Deficit) Series B and Series C Redeemable Convertible Preferred stock Common stock Treasury stock Preferred stock Additional Accumulated other Total stockholders’ Shares Amount Shares Amount Shares Amount Shares Amount Warrants paid-in capital comprehensive loss, net of tax Accumulated deficit Equity (Deficit) Balance at December 31, 2019 55,835,833 $ 55,343,686 1,057,291 $ 1,057 117,223 $ ( 60,000 ) 17,210,609 $ 17,211 $ 702,492 $ 22,254,162 $ 20 $ ( 68,287,498 ) $ ( 45,372,556 ) Issuance of common stock for cash upon exercise of options — — 53,056 53 — — — — — 153,147 — — 153,200 Share-based compensation expense — — — — — — — — — 318,640 — — 318,640 Net loss — — — — — — — — — — — ( 6,914,992 ) ( 6,914,992 ) Other comprehensive income — — — — — — — — — — ( 20 ) — ( 20 ) Balance at December 31, 2020 55,835,833 55,343,686 1,110,347 1,110 117,223 ( 60,000 ) 17,210,609 17,211 702,492 22,725,949 — ( 75,202,490 ) ( 51,815,728 ) Issuance of common stock for cash upon exercise of options — — 44,698 45 — — — — — 126,501 — — 126,546 Issuance of common stock for in connection with IPO — — 2,650,000 2,650 — — — — — 30,019,707 — — 30,022,357 Automatic conversion of preferred stock in connection with IPO ( 55,835,833 ) ( 55,343,686 ) 8,116,343 8,116 — — ( 17,210,609 ) ( 17,211 ) — 55,352,781 — — 55,343,686 Share-based compensation expense — — — — — — — — — 193,366 — — 193,366 Net loss — — — — — — — — — — — ( 7,537,845 ) ( 7,537,845 ) Balance at December 31, 2021 — $ — 11,921,388 $ 11,921 117,223 $ ( 60,000 ) — $ — $ 702,492 $ 108,418,304 $ — $ ( 82,740,335 ) $ 26,332,382 See accompanying notes to financial statements. 76 Table of Contents FEMASYS INC. Statements of Cash Flows Years ended December 31, 2021 and 2020 Years ended December 31 2021 2020 Cash flows from operating activities: Net loss $ ( 7,537,845 ) ( 6,914,992 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 551,092 560,801 Amortization 39,976 118,852 Amortization of discount on investments — ( 1,189 ) Amortization of right-of-use assets 373,219 421,111 Inventory reserve 540 5,800 Share-based compensation expense 193,366 318,640 Loan and accrued interest forgiveness on note payable ( 821,515 ) — Loss on fixed asset disposition 3,098 — Changes in operating assets and liabilities: Accounts receivable 41,532 ( 42,236 ) Inventory ( 77,432 ) 35,319 Other assets 475,993 79,442 Accounts payable ( 228,811 ) 80,755 Accrued expenses and other ( 504,799 ) 765,421 Lease liabilites ( 413,212 ) ( 445,733 ) Other liabilities ( 25,987 ) 84,994 Net cash used in operating activities ( 7,930,785 ) ( 4,933,015 ) Cash flows from investing activities: Maturities of short-term investments — 1,000,000 Purchases of furniture and equipment ( 306,868 ) ( 8,352 ) Payments for patents and other intangible assets — ( 23,329 ) Net cash (used in) provided by investing activities ( 306,868 ) 968,319 Cash flows from financing activities: Payments of deferred offering costs ( 1,578,643 ) ( 75,000 ) Proceeds from issuance of common stock 31,740,046 153,200 Proceeds from note payable — 812,500 Repayment of note payable ( 442,086 ) — Payments under lease obligations ( 20,861 ) ( 19,052 ) Net cash provided by financing activities 29,698,456 871,648 Net change in cash and cash equivalents 21,460,803 ( 3,093,048 ) Cash and cash equivalents: Beginning of year 3,322,226 6,415,274 End of year $ 24,783,029 3,322,226 Supplemental cash flow information Cash paid for: Interest $ 15,865 6,900 Income taxes $ 800 2,000 Non-cash investing and financing activities: Conversion of convertible preferred stock to common stock $ 55,360,897 — Deferred offering costs included in accounts payable and accrued expenses $ — 127,479 Prepaid insurance financed with promissory notes $ 181,123 — See accompanying notes to financial statements. 77 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (1) Organization, Nature of Business, and Liquidity Organization and Nature of Business Femasys Inc. (the Company or Femasys) was incorporated in Delaware on February 19, 2004 and is headquartered in Suwanee, Georgia. The Company is a biomedical company focused on transforming women’s healthcare by developing novel solutions and next-generation advancements providing significant clinical impact to address severely underserved areas. Our mission is to provide women worldwide with superior minimally-invasive, non-surgical product technologies, accessible in the office, improving patient care and overall health economics. The Company currently operates as one segment and is focused on servicing the reproductive health needs for those seeking permanent birth control or solutions for infertility issues. Femasys has an expansive intellectual property portfolio which covers both design and utility patents in the U.S. and significant ex-U.S. markets for each product initiative. Femasys has taken concepts internally conceived and protected through development, including domestic and foreign regulatory approvals, and production, through in-house manufacturing. FemBloc® (FemBloc), the Company’s solution for permanent birth control, is based on the Company’s non-surgical platform technology and is presently completing a validation study under an approved Investigational Device Exemption (IDE) from the U.S. Food and Drug Administration (FDA). FemaSeed® (FemaSeed), a solution which enables directed intrauterine insemination to improve on traditional IUI and provide a lower cost option to in vitro fertilization methods, received approval in April 2021 from the FDA on its IDE and the clinical study was initiated in July 2021. FemVue® Saline-Air Device (FemVue) is a product approved for sale in the U.S., Europe, Japan, and Canada for the diagnosis of infertility. FemChec® Pressure Management Device (FemChec) evaluates the women’s fallopian tubes after a FemBloc procedure and is part of the FemBloc validation study. FemCerv® Endocervical Sampler (FemCerv) is designed to collect a complete, non-contaminated cervical tissue sample. Basis of Presentation The Company has prepared the accompanying financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Liquidity As of December 31, 2021, the Company has cash and cash equivalents of $ 24,783,029 . The Company plans to finance its operations and development needs with its existing cash and cash equivalents, in the future with additional equity and/or debt financing arrangements, and revenue from the sale of FemVue to support the Company’s research and development activities, largely in connection with FemBloc and FemaSeed. There can be no assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis, or at all. If the Company is not able to obtain sufficient funds on acceptable terms when needed, the Company’s business, results of operations, and financial condition could be materially adversely impacted. For the year ended December 31, 2021, the Company generated a net loss of $ 7,537,845 . The Company expects such losses to increase over the next few years as the Company advances FemBloc and FemaSeed through clinical development until FDA approval is received and the products are available to be marketed. The Company believes that its cash and cash equivalents as of December 31, 2021 will be sufficient to fund its operating expenses and research & development expenditure requirements through at least 12 months from the date of filing these financial statements for the year ended December 31, 2021. The financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. (2) Summary of Significant Accounting Policies (a) Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting periods. The most significant estimates used in these financial statements include the pre-IPO valuation of common stock, preferred stock, stock options, warrants, and the valuation of useful lives of property and equipment and intangible assets. Actual results could differ from those estimates. 78 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (b) Certain Risk and Uncertainties M ost of the products developed by the Company, such as its FemBloc and FemaSeed, will require approval from the FDA or corresponding foreign regulatory agencies prior to commercial sales. The FemVue Catheter System, FemVue® Saline‑Air Device, FemChec® Pressure Management Device, and FemCerv® Endocervical Sampler have achieved FDA clearance. The Company maintains a current CE mark for FemVue® Saline‑Air Device and FemCerv® Endocervical Sampler. The FemVue® Saline‑Air Device has also received approval to sell in Canada, Europe, Hong Kong and Japan. There can be no assurance the Company’s other products in development will receive the necessary clearances. If the Company is denied clearance or clearance is delayed, it might have a material adverse impact on the Company. The medical device industry is characterized by frequent and extensive litigation and administrative proceedings over patent and other intellectual property rights. Whether a product infringes a patent involves complex legal and factual issues, the determination of which is often difficult to predict, and the outcome may be uncertain until the court has entered final judgment and all appeals are exhausted. The Company’s competitors may assert that its products or the use of its products are covered by United States or foreign patents held by them. If such relevant patents are upheld as valid and enforceable and the Company is found to infringe, the Company could be prevented from selling its products unless it can obtain a license to use technology or ideas covered by such patents or are able to redesign its products to avoid infringement. A license may not be available at all or on commercially reasonable terms, and it may not be able to redesign its products to avoid infringement. The Company relies on single source suppliers to provide certain components of all its products commercially available and those under development. The Company purchases these components on a purchase order basis. If the Company overestimates its component requirements, it could have excess inventory, which would increase its costs and result in write‑downs harming its operating results. If the Company underestimates its requirements, it may not have an adequate supply, which could interrupt the manufacturing of its products. (c) Fair Value of Financial Instruments Certain of the Company’s financial instruments, including cash, accounts receivable, inventory, accounts payable, accrued expenses, notes payable and other liabilities approximate their fair value because of the short‑term maturity of these financial instruments. The fair value of our cash equivalents are based on Level 1 inputs (notes 3 and 4), and the fair value of stock options and warrants is based on Level 3 inputs (note 3). (d) Cash and Cash Equivalents The Company considers all highly liquid investments with an initial maturity of three months or less when purchased to be cash equivalents. Cash equivalents, which may consist of amounts invested in money market funds, corporate bonds and commercial paper, are stated at fair value. (e) Accounts Receivable The Company grants trade credit to customers in the normal course of business and does not require collateral or any other security to support its receivables. Management reviews its accounts receivable monthly for any collection issues. Potentially uncollectible accounts are written off to bad debt expense when it is determined that the likelihood a customer account is uncollectible is probable. For the years ending December 31, 2021 and 2020, no charges written off against the reserve. As of December 31, 2021 and 2020, the Company’s reserves for uncollectible accounts were $ 2,026 . (f) Inventories Inventories are stated at the lower of cost or net realizable value. Cost, which includes amounts related to materials, labor and overhead, is determined on a first‑in, first‑out basis. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Management reviews inventories continually for aging or obsolescence and accounts for such items once identified. In 2021 and 2020, the Company disposed of inventory in the amount of $ 586 and $ 7,388 , respectively. As of December 31, 2021 and 2020, the FemVue reserve for slow moving, obsolete, or unusable inventories was $ 850 and $ 896 , respectively. Inventory stated at cost, net of reserve, consisted of the following as of December 31: 2021 2020 Materials $ 111,531 61,270 Work in progress 12,795 49,650 Finished goods 83,944 20,458 Inventory, net $ 208,270 131,378 79 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (g) Other Assets The Company has research tax credits that are available to the Company to offset future payroll withholding liabilities. As of December 31, 2021 and 2020, the total amount of these credits is $ 766,571 and $ 707,290 , respectively. The Company has included these amounts on the accompanying balance sheets as follows as of December 31: 2021 2020 Other current assets $ 184,638 163,829 Other long-term assets 581,933 543,461 Research tax credits available to the Company $ 766,571 707,290 (h) Property and Equipment Property and equipment are carried at cost less accumulated depreciation and, if applicable, impairment charges. Expenditures which materially increase value or extend useful lives of assets are capitalized, while maintenance and repairs which do not improve or extend the lives of the respective assets are charged to operations when incurred. Gains and losses on the retirement or disposal of individual assets are included in the results of operations. Depreciation and amortization are computed using the straight‑line method over estimated useful lives of assets as follows: Leasehold improvements Shorter of lease term(s) or useful life Office equipment 5 years Furniture and fixtures 7 years Machinery and equipment 5 to 7 years Depreciation expense for the years ended 2021 and 2020 was $ 532,552 and $ 542,519 , respectively. In 2021, the Company disposed of property and equipment at a cost of $ 11,401 with a net book value of $ 3,098 , which is recorded in other expense on the statements of comprehensive loss. In 2020, the Company disposed of property and equipment at a cost of $ 21,500 with no net book value. (i) Impairment of Long-Lived Assets The Company reviews long‑lived assets, including property and equipment and definite lived intangibles, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset group may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset group and its eventual disposition is less than its carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of a long‑lived asset group exceeds its fair value. The Company has no t recorded any impairment losses to date. (j) Leases The Company records operating leases as right-of-use assets and operating lease liabilities in its balance sheets for all operating leases with terms exceeding one year . Right-of-use assets represent the right to use an underlying asset for the lease term, including extension options considered reasonably certain to be exercised, and operating lease liabilities to make lease payments. Right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term. To the extent that lease agreements do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the lease commencement date to determine the present value of lease payments. The expense for operating lease payments is recognized on a straight-line basis over the lease term and is included in operating expenses in the Company’s statement of comprehensive loss. Non-lease components included in lease agreements are accounted for separately. The Company records finance leases as right-to-use assets and finance lease liabilities in its balance sheets for all finance leases with terms exceeding one year , similar to operating leases, and records interest expense and depreciation expense on the right-of-use asset in the statement of comprehensive loss. 80 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (k) Intangible Assets Intangible assets consist of patent and trademark application costs and related legal fees, carried at cost less accumulated amortization and, if applicable, impairment charges. Amortization is computed using the straight‑line method over a weighted average useful life of three years and is recorded in depreciation and amortization expense within the results of operations. Intangible assets consist of the following as of December 31: 2021 2020 Cost $ 1,668,951 1,668,951 Accumulated amortization ( 1,643,858 ) ( 1,603,882 ) Net book value $ 25,093 65,069 Amortization expense for intangible assets for the years ended December, 31 2021 and 2020 was $ 39,976 and $ 118,852 , respectively. Amortization expense related to intangible assets is expected to be $ 21,799 and $ 3,294 for the years ended December 31, 2022 and 2023. (l) Deferred Offering Costs Deferred offering costs, which consisted mainly of legal, consulting, and accounting fees directly attributable to a strategic financing transaction, were capitalized in accordance with Staff Accounting Bulletin (SAB) Topic 5.A, codified in Accounting Standards Codification (ASC) 340-10-S99-1. In May 2021, the Company expensed $ 188,544 of deferred offering costs in connection with another financing transaction to focus on the IPO transaction. In June 2021, upon the closing of the IPO, total deferred offering costs of $ 1,591,143 were offset against the proceeds of the IPO offering. As of December 31, 2021, no amounts of deferred offering costs were capitalized. As of December 31, 2020, deferred offering costs capitalized were $ 202,479 and are included in other long-term assets in the accompanying balance sheets. (m) Accrued Expenses Accrued clinical trial expenses include research and development costs for third-party services, largely related to our clinical trials, that are estimated based upon the services provided but not yet invoiced. These costs, at times, may be a significant component of the research and development expenses and the Company makes estimates in determining the accrued expense each period. As actual costs become known, the Company adjusts its accrual. Accrued compensation expenses as of December 31, 2020 include compensation expense in connection with a retention plan that was put in place in November 2019 for certain employees, which were paid in 2021. Accrued other expenses include director fees, sales taxes and other accrued expenses. Accrued expenses consisted of the following as of December 31: 2021 2020 Clinical trial costs $ 301,730 289,180 Compensation costs 98,272 796,864 Franchise taxes 103,020 — Other 100,765 31,557 Accrued expenses $ 603,787 1,117,601 81 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (n) Clinical Holdback As part of the regulatory approval process for taking its products to market or conducting post-market clinical studies to support marketing efforts for products with regulatory clearance, the Company enters into certain Clinical Trial Agreements (CTAs) which include, among other things, the compensation and payment schedule the participating medical institutions and physicians will receive for all costs in connection with the clinical trial (or study) under the terms of the CTA. As individual patients are enrolled in the study by the participating medical institution or physician, the Company pays certain per study fees according to the CTA for the duration of the trial. As invoices are received by the Company from the medical institution or physician, the Company retains any agreed upon percentage of total invoiced costs, generally ranging between 5 % - 15 %, that is withheld from payment until the end of the study. These retained amounts are recorded as clinical holdback, a liability, on the accompanying balance sheets, and all expenses incurred in connection with these CTA activities are expensed as services are provided, which are included as research and development expenses on the accompanying statements of comprehensive loss. The following table shows the activity within the clinical holdback liability accounts for the year ended December 31, 2021: Balance at December 31, 2020 $ 164,972 Clinical holdback retained 15,503 Clinical holdback paid ( 11,737 ) Balance at December 31, 2021 $ 168,738 Less: clinical holdback - current portion ( 18,947 ) Clinical holdback - long-term portion $ 149,791 The following table shows the activity within the clinical holdback liability accounts for the year ended December 31, 2020: Balance at December 31, 2019 $ 145,768 Clinical holdback retained 19,630 Clinical holdback paid ( 426 ) Balance at December 31, 2020 $ 164,972 Less: clinical holdback - current portion — Clinical holdback - long-term portion $ 164,972 (o) Revenue Recognition The Company’s policy is to recognize revenue when a customer obtains control of the promised goods under ASC 606, Revenue from Contracts with Customers. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods, and the Company has elected to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price. The Company does not have multiple performance obligations in its customer orders, so revenue is recognized upon shipment of our goods based upon contractually stated pricing at standard payment terms ranging from 30 to 60 days. All revenue is recognized point in time and no revenue is recognized over time. There was no revenue recognized during the years ended December 31, 2021 and 2020 from performance obligations satisfied or partially satisfied in prior periods. Additionally, there were no unsatisfied performance obligations as of December 31, 2021 and 2020. The majority of products sold directly to U.S customers are shipped via common carrier, and the customer pays for shipping and handling and assumes control Free on Board (FOB) shipping point. Products shipped to our international distributors are in accordance with their respective agreements; however, the shipping terms are generally EX-Works, reflecting that control is assumed by the distributor at the shipping point. Returns are only accepted with prior authorization from the Company. Items to be returned must be in original unopened cartons and are subject to a 30 % restocking fee. As of December 31, 2021, the Company has not had a history of significant returns. The following table summarizes our FemVue sales by geographic region for the years ending December 31: Primary geographical markets 2021 2020 U.S. $ 1,005,612 900,751 International 174,077 137,167 Total $ 1,179,689 1,037,918 (p) License, Manufacturing, and Supply Agreement – Bayer Yakuhin The Company entered into a FemVue® License, Manufacturing, and Supply Agreement with Bayer Yakuhin, Ltd., a wholly owned subsidiary of Bayer AG, in 2012. The Company sells products based on purchase orders provided by Bayer Yakuhin in accordance with their agreement. Control and risk of ownership transfer at the time of shipment and Femasys records revenue at that time. 82 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (q) Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, money market funds, and accounts receivable. The Company maintains its cash and money market funds primarily in one bank in amounts which, at times, exceed federally insured limits. Management believes that the financial institution that holds the Company’s cash and money market funds is financially sound and minimal credit risk exists with respect to these holdings. The Company generates revenue from sales directly to U.S. customers and to our international distributors with all prices in U.S. dollars. For the years ended December 31, 2021 and 2020, Bayer Yakuhin, Ltd. accounted for 15 % and 11 % of total revenue, respectively. No other customers accounted for more than 10% of total revenue. As of December 31, 2021, the Company had no customer with an accounts receivable balance greater than 10% of total receivables. As of December 31, 2020, the Company had two customers with an accounts receivable balance greater than 10% of total receivables or representing 18 % and 11 % of total receivables. (r) Research and Development The Company’s research and development expenses consist of engineering, product development, and clinical and regulatory expenses and are expensed as incurred. These expenses include direct expenses related to employee compensation, including salary, benefits and stock-based compensation; expenses related to consulting fees, testing fees, materials, and supplies; and activities conducted by third-party service providers, which include the conducting of preclinical studies and clinical trials. (s) Sales and Marketing The Company’s sales and marketing expenses consist of direct expenses related to employee compensation, including salary, benefits and stock-based compensation, advertising and marketing, business development, customer service, and travel. (t) General and Administrative The Company’s general and administrative expenses include accounting, human resources, and general corporate expenses. These expenses are primarily related to employee compensation, including salary, benefits, and stock‑based compensation. General corporate expenses generally relate to office rent, utilities, insurance, legal, and professional fees. (u) Advertising Expense Advertising costs are expensed as incurred. Advertising costs were $ 27,000 and $ 4,125 for the years ended December 31, 2021 and 2020, respectively. They are reflected in sales and marketing expenses in the statements of comprehensive loss. (v) Stock-Based Compensation Share‑based payments, including grants of stock options, are recognized in the financial statements based on their fair value. The fair value of stock options is estimated using the Black‑Scholes model. This model requires the input of highly subjective assumptions, including the expected term of the award, expected stock volatility, and the price of the underlying shares of stock. Details of the stock‑based compensation and accounting treatment are discussed in note 9. (w) Income Taxes The Company utilizes the asset‑and‑liability method of accounting for income taxes as set forth in ASC 740, Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the net operating loss, capital loss, and tax credit carry forwards. Valuation allowances are established against deferred tax assets if it is more likely than not that they will not be realized. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The standard requires that the Company recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The Company has determined it had no unrecognized tax benefits as of December 31, 2021 and 2020. As of December 31, 2021, the 2018 through 2021 tax years remain subject to examination by federal and most state tax authorities. The use of net operating losses generated in tax years prior to 2018 may also subject returns for those years to examination. (x) Other Income In June 2021, the Company was notified by Georgia Primary Bank that the Paycheck Protection Program (PPP) loan in the amount of $ 812,500 and accrued interest of $ 9,015 was fully forgiven. For the year ended December 31, 2021, the Company recorded $ 821,515 in other income in connection with the Small Business Administration (SBA) PPP loan forgiveness program (see note 6). In April 2020, the Company received the SBA Economic Injury Disaster Loan advance (EIDL advance) of $ 10,000 . This EIDL advance was originally included in notes payable (see note 6) since the SBA was required to deduct the amount of any EIDL advance received by a Paycheck Protection Program (PPP) borrower from the PPP forgiveness payment remitted by SBA to the lender. In December 2020, the Economic Aid to Hard-Hit Small Business, Nonprofits and Venues Act (Economic Aid Act) was signed into law, which repealed the SBA requirement to deduct the amount of any EIDL advance received by a PPP borrower from the PPP forgiveness payment. As a result of the Economic Aid Act, the Company recognized the EIDL advance as grant income in December 2020, which is recorded as other income on the statements of comprehensive loss. 83 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (y) Net Loss per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration of common stock equivalents. The net loss attributable to common stockholders is calculated by adjusting the net loss of the Company for the cumulative dividends, if any, on the convertible preferred stock. Diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since the effect of potentially dilutive securities is anti-dilutive given the net loss of the Company. (z) Recently Issued Accounting Pronouncements – Recently Adopted On January 1, 2021, the Company adopted Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which the Financial Accounting Standards Board (FASB) issued in December 2019. This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance was effective for annual periods after December 15, 2020, including interim periods within those annual periods. The Company’s adoption of this new guidance did not have a material impact on the Company’s financial statements and footnote disclosures. (aa) Recently Issued Accounting Pronouncements – Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard changes the accounting for credit losses for financial assets and certain other instruments, including trade receivables and contract assets, that are not measured at fair value through net income. Under legacy standards, we recognize an impairment of receivables when it was probable that a loss had been incurred. Under the new standard, we are required to recognize estimated credit losses expected to occur over the estimated life or remaining contractual life of an asset (which includes losses that may be incurred in future periods) using a broader range of information including reasonable and supportable forecasts about future economic conditions. The guidance is effective for smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years with early adoption permitted. We do not expect the adoption of the standard to have a significant impact on our results of operations, financial position or cash flows as credit losses are not expected to be significant based on historical collection trends, the financial condition of payment partners, and external market factors. No other new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company’s consolidated financial statements. (3) Fair Value The Company applies a fair value hierarchy that requires the use of observable market data, when available, and prioritizes the inputs to valuation techniques used to measure fair value in the following categories: Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets. Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for Identical or similar instruments in markets that are not active, and model‑based valuation techniques for which all significant assumptions are observable in the market. Level 3 – Valuation is generated from model‑based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions market participants would use in pricing the asset or liability. The Company’s options on common stock and warrants are classified as equity instruments and are measured at fair value at issue date. The Company values the options based on the Black‑Scholes option pricing model. The Company uses unobservable inputs for the model’s assumptions, including management’s assumptions of the Company’s volatility and price of the underlying stock (notes 8 and 9). 84 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (4) Cash and Cash Equivalents As of December 31, 2021 and 2020, money market funds included in cash and cash equivalents on the balance sheets were $ 24,388,443 and $ 3,038,612 , respectively, which represent Level 1 within the fair value hierarchy (see note 3). (5) Commitments and Contingencies (a) Leases As of December 31, 2021, the Company has the right of use for its facilities located in Suwanee, GA under a long-term operating lease agreement, as amended (Lease Agreement), which expires January 2024 . The Company has the option (Extension Option) to extend the term for two consecutive terms of five years each at 100 % of the then current market rate, as agreed by both parties, and upon certain terms and conditions, and the Company must provide written notice of its intent to exercise this extension option at least twelve months prior to the expiration date of January 2024. Under the terms of the lease agreement, the Company’s monthly rent is subject to increases on an annual basis. As of December 31, 2021, the Company’s monthly rent payment was $ 44,339 . Operating right-of-use assets and lease liabilities consist of the following as of December 31: 2021 2020 Lease right-of-use assets $ 635,668 1,008,887 Total $ 635,668 1,008,887 Lease liabilities: 2021 2020 Lease liabilities – current portion $ 383,616 413,211 Lease liabilities – long-term portion 386,224 769,840 Total $ 769,840 1,183,051 As of December 31, 2021 and 2020, the weighted average discount rate for all operating leases with initial terms of more than one year was approximately 10 % and the weighted average remaining term for operating leases was 2.1 years and 3.1 years, respectively. The operating lease agreement for our facility includes non-lease costs, such as common area maintenance, which are recorded as variable lease costs. Operating lease expenses for the year ended are summarized as follows for the years ending December 31: Lease cost: 2021 2020 Operating lease cost $ 487,746 490,754 Short-term lease cost 3,343 — Variable lease cost 17,497 14,326 Total $ 508,586 505,080 85 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (b) Financing Leases The Company has the right of use for certain leasehold improvements and office equipment at its facility located in Suwanee, GA. For the years ending December 31, 2021 and 2020, no new financing leases were entered into during the year. Lease expense will be recognized as payment of financing lease, depreciation expense and interest expense. Financing right-of-use assets and lease liabilities consist of the following as of December 31: 2021 2020 Lease right-of-use assets $ 150,122 150,122 Accumulated depreciation ( 120,043 ) ( 101,503 ) Net $ 30,079 48,619 Lease liabilities: 2021 2020 Lease liabilities – current portion $ 23,058 20,861 Lease liabilities – long-term portion 16,193 39,252 Total $ 39,251 60,113 As of December 31, 2021 and 2020, the weighted average discount rate for all financing leases with initial terms of more than one year was approximately 10 %, and the weighted average remaining term for financing leases was 1.6 and 2.6 years, respectively. Depreciation expense associated with the Company’s financing leases was $ 18,540 and $ 18,282 , respectively, and interest expense was $ 5,090 and $ 7,078 for the years ended December 31, 2021 and 2020, respectively. The following table summarizes the Company’s undiscounted cash payment obligations for its lease liabilities with initial terms of more than twelve months as of December 31, 2021: Operating leases: 2022 $ 541,307 2023 557,500 2024 47,029 Total undiscounted lease payments -operating leases 1,145,836 Financing leases: 2022 25,951 2023 16,792 Total undiscounted lease payments -finance leases 42,743 Total undiscounted lease payments 1,188,579 Less: imputed interest ( 379,488 ) Lease liability 809,091 Less: current portion of lease liability ( 406,674 ) Lease liability, less current portion $ 402,417 (c) Clinical Trial Agreements As part of the regulatory approval process for taking its products to market or conducting post-market clinical studies to support marketing efforts for products with regulatory clearance, the Company enters into a CTA to compensate each participating medical institution and physician. Generally, upon executing a CTA with a participating medical institution or physician, the Company pays a fee for review board approval that usually requires annual renewals and one time site startup costs. As individual patients are enrolled in the clinical trial by the participating medical institution or physician, the Company pays certain per patient fees according to the CTA for the duration of the trial. Expenses incurred in connection with these CTA activities are expensed as services are provided and are included in research and development expenses on the accompany statements of comprehensive loss. (d) Legal Claims Occasionally, the Company may be a party to legal claims or proceedings of which the outcomes are subject to significant uncertainty. In accordance with ASC 450, Contingencies , the Company will assess the likelihood of an adverse judgment for any outstanding claim as well as ranges of probable losses. When it has been determined that a loss is probable and the amount can be reasonably estimated, the Company will record a liability. For the years ended December 31, 2021 and 2020, there were no material legal contingencies requiring accrual or disclosure. The Company, as permitted under Delaware law and in accordance with its bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director who is or was serving at the Company’s request in such capacity. The Company entered into employment agreements with its officers, which provides for indemnification protection in the executive’s capacity as an officer for actions taken within the scope of employment. The maximum amount of potential future indemnification is unlimited; however, the Company has obtained director and officer insurance that limits its exposure. The Company believes the fair value for these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of December 31, 2021 and 2020. 86 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (6) Notes Payable Notes payable as of December 31, 2021 and December 31, 2020 are as follows: 2021 2020 Notes payable - current portion $ 181,123 630,010 Notes payable - long-term portion — 182,490 Total notes payable $ 181,123 812,500 (a) Paycheck Protection Program Loan In April 2020, the Company executed a promissory note (Note) with Georgia Primary Bank (the Lender) evidencing an unsecured loan in the amount of $ 812,500 , which was made pursuant to the PPP. The PPP was established under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which was enacted on March 27, 2020, and is administered by the SBA. All the funds under the PPP loan were disbursed to the Company in April 2020 and was recognized as debt on the Company’s financial statements. The Note provided for a fixed interest rate of one percent per year, and the Company was not imputing any additional interest at a market rate because this was a government-guaranteed obligation. Monthly principal and interest payments of $ 45,717 on the PPP loan were due beginning November 2020 and the final payment was due in April 2022 (Maturity Date). The Note contained customary event of default provisions. Under the terms of the CARES Act, PPP loan recipients could apply for and be granted forgiveness for all or a portion of the loans granted under the PPP. Such forgiveness is subject to approval by the SBA and the Lender and determined, subject to limitations, based on factors set forth in the CARES Act, including verification of the use of loan proceeds for payment of payroll costs and payment of mortgage interest, rent, and utilities. In the event the PPP loan, or any portion thereof, is forgiven, it is applied to outstanding principal. As of September 30, 2020, the Company had used all the proceeds from the PPP loan to retain employees, maintain payroll, and make lease and utility payments. In October 2020, the Company submitted the loan forgiveness application to the Lender requesting forgiveness for the full amount of the loan. The Lender had 60 days from receipt of the loan forgiveness application to issue a decision to the SBA, and the SBA, subject to its review, would remit funds within 90 days after the Lender issues its decision to the SBA. In June 2021, the Company was notified by the Lender that the PPP Loan in the amount of $ 812,500 and accrued interest of $ 9,015 was fully forgiven; and, as a result, the entire amount was derecognized on the Company’s financial statements, which was included as other income for the twelve months ended December 31, 2021 on the accompanying statements of comprehensive loss. The Company is required to maintain all necessary records for at least six years following the date of forgiveness, and the SBA reserves the right to audit our fully forgiven PPP loan. As of December 31, 2021, no amounts were outstanding under the PPP loan. As of December 31, 2020, the PPP loan outstanding was $ 812,500 , and interest expense accrued in connection with this PPP loan was $ 5,654 and was included in accrued expenses on the accompanying balance sheets. For the years ended December 31, 2021 and 2020, interest expense on the PPP loan was $ 0 and $ 5,654 , respectively. (b) Economic Injury Disaster Loan advance In April 2020, the Company received the SBA Economic Injury Disaster Loan advance (EIDL advance) of $ 10,000 . This EIDL advance was originally included in notes payable since the SBA was required to deduct the amount of any EIDL advance received by a PPP borrower from the PPP forgiveness payment remitted by SBA to the lender. In December 2020, the Economic Aid to Hard-Hit Small Business, Nonprofits and Venues Act (Economic Aid Act) was signed into law, which repealed the SBA requirement to deduct the amount of any EIDL advance received by a PPP borrower from the PPP forgiveness payment. As a result of the Economic Aid Act, the Company recognized the EIDL advance as other income in December 2020. As of December 31, 2021 and December 31, 2020 no amounts were outstanding under the EIDL advance. For the year ended December 31, 2021 and 2020, EIDL other income recognized was $ 0 and $ 10,000 , respectively. 87 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (c) AFCO Credit Corporation (AFCO) In the first quarter of 2021, the Company executed two Promissory Notes with AFCO (AFCO notes) to finance certain insurance premiums totaling $ 64,842 , requiring the Company to pay $ 16,210 in down payments and make monthly installment payments. The annual interest rate was 10.5 % and the monthly installment payments were $ 6,094 , which represented principal and interest. The final installment payments were paid in October 2021 . In the second quarter of 2021, the Company executed another Promissory Note with AFCO (AFCO note) to finance certain insurance premiums totaling $ 558,367 , requiring the Company to pay $ 111,673 in a down payment and make monthly installment payments. The annual interest rate is 5.25 % and the monthly installment payment is $ 45,751 , which represents principal and interest. The final installment payment is due April 2022 . As of December 31, 2021 and December 31, 2020, the principal balance on the AFCO note was $ 181,123 and $ 0 , respectively and is included in Notes payable – current portion in the accompanying balance sheets. Interest expense in connection with the three AFCO promissory notes was $ 10,775 and $ 0 the years ended December 31, 2021 and 2020, respectively. (7) Income Taxes A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows as of December 31: 2021 2020 Federal income tax at statutory federal rate 21.00 % 21.00 % Permanent differences 2.00 ( 1.00 ) Research and development credit 3.00 3.00 Other deferred adjustments — ( 5.00 ) State income tax expense (net of federal benefit) 1.00 1.00 Valuation allowance ( 27.00 ) ( 19.00 ) Effective tax rate — % — % Deferred tax assets (liabilities) consisted of the following as of December 31: 2021 2020 Deferred tax asset arising from: Net operating loss carry forwards $ 16,873,473 14,975,253 Accrued expenses (vacation) 13,920 171,662 Intangibles 82,451 67,109 Research and development tax credits 3,190,604 2,952,047 Share-based compensation expense 20,207 20,035 Lease liabilities 188,789 271,231 Other 8,898 15,281 Deferred tax asset 20,378,342 18,472,618 Deferred tax liability arising from: UNICAP ( 10,615 ) ( 10,470 ) Right-of-use assets ( 138,239 ) ( 231,283 ) Property and equipment ( 14,409 ) ( 27,898 ) Deferred tax liability ( 163,263 ) ( 269,651 ) Valuation allowance $ 20,215,079 18,202,967 Net deferred tax asset $ — — Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and the Company is required to reduce its deferred tax assets by a valuation allowance if it is more likely than not that some or all of its deferred tax assets will not be realized. Management must use judgment in assessing the potential need for a valuation allowance, which requires an evaluation of both negative and positive evidence. The weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. In determining the need for and amount of the valuation allowance, if any, the Company assesses the likelihood that it will be able to recover its deferred tax assets using historical levels of income, estimates of future income and tax planning strategies. As a result of historical cumulative losses, the Company determined that, based on all available evidence, there was substantial uncertainty as to whether it will recover recorded net deferred taxes in future periods. Accordingly, the Company recorded a valuation allowance against all of its net deferred tax assets as of December 31, 2021 and 2020. The change in valuation allowance was $ 2,012,112 and $ 1,337,524 for the years ended December 31, 2021 and 2020, respectively. 88 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 As of December 31, 2021 and 2020, respectively, the Company has $ 78,264,967 and $ 69,762,635 of federal net operating loss carry forwards and $ 2,407,689 and $ 2,169,132 of federal research and experimentation tax credits, respectively, and state net operating loss carry forwards of $ 7,774,956 and $ 5,962,200 , respectively. The utilization of such net operating loss carryforwards and the realization of tax benefits in future years depend predominately upon having taxable income. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may result in a limitation on the amount of net operating loss carry forwards and tax credit carry forwards that may be used in future years. The Company’s net operating losses may be subject to Section 382 of the Internal Revenue Code which provide for a limitation on the annual use of net operating losses following certain ownership changes that could limit the Company’s ability to utilize these carryforwards. The Company has completed an analysis covering the period February 19, 2004 through December 31, 2018, to determine if such ownership changes have occurred and concluded it was more likely than not that there were changes in ownership during the period, with the most recent change of ownership occurring on December 16, 2016. Further analyses will be performed prior to recognizing the benefits of any losses or credits in the financial statements, and the Company is in the process of determining the limitations that Section 382 will have on the Company’s net operating loss carryforwards and research credits. In general, the annual use limitation equals the aggregate value of the Company’s stock at the time of the ownership change multiplied by a specified tax-exempt interest rate. The following schedule indicates the expiration year, as of December 31, for the Company’s federal net operating loss carryforwards available to future years without taking into account any Section 382 limitations as of December 31, 2021: 2024 $ 430,332 2025 865,274 2026 1,213,130 2027 2,082,043 2028 2,536,605 2029 2,235,045 2030 4,132,949 2031 3,160,709 2032 3,533,521 2033 2,987,848 2034 2,516,728 2035 4,777,558 2036 4,503,474 2037 6,869,819 Indefinitely 36,419,932 Total $ 78,264,967 The FASB issued authoritative guidance on accounting for uncertainty in income taxes, which clarifies the accounting for income taxes, by prescribing a minimum recognition threshold that a tax position is required to meet before recognition in the financial statements. The guidance also provides direction on recognition, measurement, classification, interest, and penalties, accounting in interim periods, disclosure, and transition. Management has determined there are no uncertain tax positions. Accordingly, these financial statements do not include any adjustments or disclosures related to uncertain tax positions. (8) Redeemable Convertible Preferred Stock and Stockholders’ Equity The Company’s Board of Directors approved in January 2017 the Tenth Amended and Restated Certificate of Incorporation authorizing the Company to issue for all classes of stock 169,000,000 shares at $ 0.001 par value per share, of which 95,853,558 shares were designated Common Stock and 73,146,442 shares were designated Preferred Stock. In May 2021, Amendment No 1 of the Tenth Amended and Restated Certificate of Incorporation was filed with the Secretary of Delaware where each nine shares of common stock issued and outstanding were automatically converted into one share of common stock (reverse stock split); thus, the Company effected a 1-for- 9 reverse stock split of its common stock. The par value and the authorized shares of the common stock were not adjusted as a result of the reverse stock split. The reverse stock split resulted in an adjustment to the convertible preferred stock conversion price to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. 89 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 In June 2021, the Company issued 2,650,000 shares of common stock in connection with the Company’s IPO of its common stock at $ 13.00 per share. Net proceeds to the Company, after deducting underwriting discounts, commissions, and legal expenses, was $ 31,613,500 . Offering costs incurred by the company were $ 2,016,143 , which include legal expenses incurred and paid by our underwriters of $ 425,000 . Immediately prior to the closing of the IPO, all our shares of our convertible Series A preferred stock and our redeemable convertible Series B and Series C preferred stock automatically converted into 8,116,343 shares of common stock. The Company filed an Eleventh Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate”) with the Secretary of State of the State of Delaware in connection with the completion of the IPO on June 22, 2021. The Amended and Restated Certificate amends and restates the Company’s existing certificate of incorporation in its entirety to, among other things: (i) authorize 200,000,000 shares of common stock; (ii) eliminate all references to the previously-existing series of preferred stock (Series A, B and C); and (iii) authorize 10,000,000 shares of undesignated preferred stock that may be issued from time to time by the Board in one or more series. (a) Common Stock The holders of the common stock shall have the exclusive right to vote for the election of directors and on all other matters requiring stockholder action, each outstanding share entitling the holder thereof to one vote on each matter properly submitted to the stockholders of the Company for their vote; provided, however, that, except as otherwise required by law, holders of common stock, as such, shall not be entitled to vote on any amendment to the Amended and Restated Certificate (or on any amendment to a certificate of designations of any series of preferred stock) that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of preferred stock if the holders of such affected series of preferred stock are entitled to vote, either separately or together with the holders of one or more other such series, on such amendment pursuant to this Amended and Restated Certificate (or pursuant to a certificate of designations of any series of preferred stock). Dividends may be declared and paid or set apart for payment upon the common stock out of any assets or funds of the Company legally available for the payment of dividends, but only when and as declared by the Board of Directors or any authorized committee thereof. In the event of our liquidation or dissolution, the holders of common stock are entitled to receive proportionately our net assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption, or conversion rights. (b) Convertible Preferred Stock As of December 31, 2020, the Convertible Preferred Stock consisted of the following: Shares authorized Issued and outstanding Series A Preferred: Series A-1 Convertible Preferred 4,580,000 4,580,000 Series A-2 Preferred 1,342,509 1,342,509 Series A-3 Preferred 1,060,697 1,060,697 Series A-4 Preferred 2,242,403 2,242,403 Series A-5 Preferred (formerly, Preferred Stock B-1) 3,000,000 3,000,000 Series A-6 Preferred (formerly, Preferred Stock C-1) 2,800,000 2,800,000 Series A-7 Preferred (formerly, Preferred Stock D-1) 2,285,000 2,185,000 Total 17,310,609 17,210,609 In June 2021, the 17,210,609 shares of convertible preferred stock outstanding were automatically converted into 1,912,332 shares of common stock after taking into account the 1-for- 9 reverse stock split. As of December 31, 2021, no shares of convertible preferred stock have been issued and/or outstanding, and no dividends have been declared or paid since inception. 90 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (c) Redeemable Convertible Preferred Stock As of December 31, 2020, the Redeemable Convertible Preferred Stock consisted of the following: Shares authorized Issued and outstanding Original Issuance Price Initial Carrying Value Redeemption Value Series B Preferred 13,344,349 13,344,349 $ 0.8055 $ 10,748,873 $ 10,748,873 Series C Preferred 42,491,484 42,491,484 1.0495 44,594,813 44,594,813 Total 55,835,833 55,835,833 55,343,686 55,343,686 In June 2021, the 55,835,833 shares of redeemable convertible preferred stock outstanding were automatically converted into 6,204,011 shares of common stock after taking into account the 1-for- 9 reverse stock split. As of December 31, 2021, no shares of redeemable convertible preferred stock have been issued and/or outstanding, and no dividends have been declared or paid since inception. (d) Preferred Stock Under the terms of our Amended and Restated Certificate, the Company’s Board of Directors is authorized to direct the Company to issue shares of preferred stock in one or more series without stockholder approval. Our Board of Directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. The purpose of authorizing our Board of Directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings, and other corporate purposes, could have the effect of making it more difficult for a third-party to acquire, or could discourage a third-party from seeking to acquire, a majority of our outstanding voting stock. As of December 31, 2021, no shares of preferred stock are outstanding. (e) Dividends As of December 31, 2021, no dividends have been declared or paid since inception. As of December 31, 2021, the Company had 11,804,165 shares of common stock outstanding, (9) Equity Incentive Plans (a) Stock Option Plans – Prior to our IPO Prior to our IPO in June 2021, the Company maintained two equity incentive plans, the 2004 Stock Incentive Plan, as amended, or 2004 Plan, and the 2015 Stock-Based Incentive Compensation Plan, or 2015 Plan, which provided our employees, non-employee directors, consultants and independent contractors the opportunity to participate in the equity appreciation of our business through the receipt of stock options to purchase shares of our common stock. New grants ceased being made under the 2004 Plan upon the adoption of the 2015 Plan; however, outstanding stock options under the 2004 Plan may continue to be exercised in accordance with their terms. We adopted the 2015 Plan in April 2015, which contains substantially similar terms and conditions as the 2004 Plan. The 2015 Plan initially had 1,176,681 shares of our common stock reserved for issuance under the 2015 Plan and was administered by the compensation committee of the Board of Directors. Upon the closing of our IPO, no further awards will be made under the 2015 Plan; however, outstanding stock options under the 2015 Plan may continue to be exercised in accordance with their terms. No grants were awarded under our 2015 plan for the years ended December 31, 2021 and 2020. (b) Stock Option Plans – Post our IPO In June 2021, in connection with the IPO, our 2021 Equity Incentive Plan (“2021 Plan”) became effective, which was adopted by our Board of Directors in February 2021 and our stockholders approved the 2021 Plan in March 2021. The 2021 Plan is administered by our compensation committee. Upon the effectiveness of the 2021 Plan, no new grants will be awarded under our 2015 Stock-Based Incentive Compensation Plan. Under the 2021 Plan, the Company may grant awards in respect of our shares of common stock to our employees, consultants, and our non-employee directors pursuant to option awards, stock appreciation right, or SAR, awards, restricted stock awards, restricted stock unit, or RSU, awards, performance stock awards, performance stock unit, or PSU, awards, and other stock-based awards. 91 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 The total number of shares of common stock available for awards under the 2021 Plan is 1,111,111 , provided that such number shall be automatically increased on each January 1, beginning on January 1, 2022, by 4 % of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by our Board of Directors. The aggregate number of shares of our common stock that will be available for issuance under awards granted pursuant to the 2021 Plan shall also be increased by the number of shares underlying the portion of an award granted under our 2015 Plan that is cancelled, terminated or forfeited or lapses after the effective date of the 2021 Plan. No more than 1,111,111 shares of common stock issued under the 2021 Plan may be issued pursuant to the exercise of incentive stock options (ISO), provided that such number shall be automatically increased on each January 1, beginning on January 1, 2022, by the lesser of 4 % of the outstanding number of shares of our common stock on the immediately preceding December 31 or 555,555 shares of common stock. Shares of common stock issued by us in connection with the assumption or substitution of outstanding grants or under certain stockholder approved plans from an acquired company shall not reduce the number of shares of common stock available for awards under the 2021 Plan. Shares of common stock underlying the portion of an award that is forfeited or otherwise terminated for any reason whatsoever, in any case, without the issuance of shares of common stock, will be added back to the number of shares of common stock available for grant under the 2021 Plan. No non-employee director may be granted awards under the 2021 Plan in any one calendar year covering a number of shares of common stock that have a fair market value on the grant date in excess of $ 350,000 in the first calendar year of such non-employee director’s initial service as a non-employee director and $ 200,000 in any other calendar year of such non-employee director’s service as a non-employee director. Options granted under the 2021 Plan may be either ISOs or nonqualified stock options. The price at which shares of common stock may be purchased upon exercise shall be determined by the compensation committee but shall not be less than the fair market value of one share of common stock on the date of grant, or, in the case of an ISO granted to a ten-percent stockholder, less than 110 % of the fair market value of a share of common stock on the date of grant. The compensation committee may grant options that have a term of up to 10 years, or, in the case of an ISO granted to a ten-percent stockholder, five years . The award agreement shall specify the exercise price, term, vesting requirements, including any performance goals, and any other terms and conditions applicable to the granted option. Unless otherwise provided in an award agreement or an effective employment, consulting, severance or similar agreement with us or a subsidiary, upon a participant’s termination of service for any reason, the unvested portion of each award of options granted generally will be forfeited with no compensation due the participant. Activity under the stock option plans was as follows: Number of options Weighted average exercise price Balances at December 31, 2019 983,889 $ 3.69 Granted — — Exercised ( 53,056 ) 2.88 Expired — — Forfeited ( 187,206 ) 4.23 Balances at December 31, 2020 743,627 $ 3.60 Granted — — Exercised ( 44,698 ) 2.83 Expired ( 556 ) 27.00 Forfeited ( 8,378 ) 5.43 Balances at December 31, 2021 689,995 $ 3.58 The intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $ 159,062 and $ 181,700 , respectively. The intrinsic values represent the dollar value of the exercised stock options whereby the fair market value of the underlying common stock exceeded the exercise price of the stock option as of the exercise date. 92 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 The options outstanding and vested and currently exercisable by exercise prices as of December 31, 2021 were as follows: Option outstanding Options vested and exercisable Exercise price Outstanding (in shares) Weighted average remaining life years Number of options vested Exercise price Weighted average remaining life years $ 1.71 227,780 4.21 116,669 $ 1.71 4.21 3.24 279,837 5.50 279,837 3.24 5.50 3.96 66,949 6.21 55,283 3.96 6.20 4.50 1,667 6.87 834 4.50 6.87 4.95 44,445 7.24 22,223 4.95 7.24 6.12 57,092 7.95 28,763 6.12 7.95 27.00 12,225 0.57 12,225 27.00 0.57 689,995 5.37 515,834 5.38 (c) Stock‑Based Compensation for Nonemployees Stock‑based compensation expense related to stock options granted to nonemployees is recognized on a straight-line basis as the options vest. The Company believes that the value of the stock options is more reliably measurable than the fair value of the services received. For the years ended December 31, 2021 and 2020, no options were granted to nonemployees. Stock‑based compensation expense recorded for options granted to nonemployees for the years ended December 31, 2021 and 2020 was $ 2,296 and $ 4,714 , respectively. (d) Stock‑Based Compensation Associated with Awards to Employees Stock‑based compensation expense recognized is based on the value of the portion of stock‑based awards that is ultimately expected to vest on a straight-line basis. Stock‑based compensation expense recognized in the Company’s statements of comprehensive loss during the years ended December 31, 2021 and 2020 includes compensation expense for stock‑based awards based on the fair value estimated in accordance with the provisions of ASC 718, Compensation – Stock Compensation. For the years ended December 31, 2021 and 2020, no options were granted to employees. Stock‑based compensation expense recorded for options granted to employees for the years ended December 31, 2021 and 2020 was $ 191,070 and $ 313,926 , respectively. (e) Valuation The Company uses the Black‑Scholes option pricing model to determine the fair value of stock awards granted to employee and nonemployees. The determination of the fair value of share‑based payment awards granted using a pricing model is affected by our stock price as well as the assumptions regarding a number of complex and subjective variables as follows: (i) Expected Term The expected term of stock options represents the period the stock options are expected to remain outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, the Company estimates the expected term for all options granted by using the simplified method provided by the ASC 718, which calculates the expected term as the average of the time-to-vesting and the contractual life of the options. The contractual term for options awarded since inception is 10 years for employees and non-employees. (ii) Risk‑Free Interest Rate The risk‑free interest rate is based on U.S. Treasury zero‑coupon issues with remaining terms similar to the expected term on the options. (iii) Dividend Yield The Company has not declared or paid any cash dividends from inception through December 31, 2021 and does not plan to pay any cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation model. 93 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (iv) Expected Volatility Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. The Company determines volatility based on an analysis of comparable companies. (v) Forfeitures The Company accounts for forfeitures as they occur. The following table shows stock-based compensation expense related to vested stock option grants to employees, directors and nonemployees by financial statement line item on the accompanying statement of comprehensive loss for the year ended December 31: 2021 2020 Research and development $ 106,469 159,308 Sales and marketing 3,759 11,616 General and administrative 83,138 147,716 Total share-based compensation expense $ 193,366 318,640 As of December 31, 2021, the remaining amount of stock‑based compensation expense that is expected to be recognized in future periods for employees and nonemployees is $ 287,748 , which includes $ 155,222 of compensation expense to be recognized upon achieving a certain performance condition. The $ 132,526 of unrecognized expense is expected to be recognized over a weighted average period of 1.5 years. (f) Employee Stock Purchase Plan (“ESPP”) In June 2021, in connection with the IPO, our ESPP became effective which was adopted by our Board of Directors in February 2021 and our stockholders approved the 2021 ESPP Plan in March 2021. The ESPP is administered by our compensation committee. The total number of shares of our common stock available for purchase under the ESPP is 166,666 , provided that such number is automatically increased on January 1 of each calendar year, from January 1, 2022 through January 1, 2031 by the least of (i) 1.0 % of the total number of shares of our common stock outstanding on December 31 of the immediately preceding calendar year, (ii) 222,222 shares of our common stock or (iii) a number determined by our board of directors that is less than the foregoing clauses (i) and (ii). Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our common stock will be purchased for employees participating in the offering. An offering may be terminated under certain circumstances. No employee may purchase more than 12,254 shares of our common stock under the ESPP during any offering period. Unless otherwise determined by our board of directors, shares of common stock will be purchased for accounts of employees participating in the ESPP at a price per share equal to the lower of (i) 85 % of the fair market value of a share of our common stock on the last date of an offering period or (ii) 85 % of the fair market value of a share of our common stock on the first day of such offering period. As December 31, 2021, no shares of our common stock have been purchased under the ESPP. (10) Retirement Plan The Company has a 401(k) defined contribution plan covering substantially all full‑time employees, meeting certain eligibility requirements. The Company has no required matching or other contribution requirements. For the year end December 31, 2021 and 2020, the company contributed $ 0 and $ 14,645 of voluntary employer matching contributions. (11) Related‑Party Transactions During the years ended December 31, 2021 and 2020, there were no related-party transactions. 94 Table of Contents FEMASYS INC. Notes to Financial Statements December 31, 2021 and 2020 (12) Net Loss per Share Attributable to Common Stockholders The following table sets forth the computation of the basic and diluted net loss per share for the years ended December 31: 2021 2020 Net loss attributable to common stockholders, basic & diluted $ ( 7,537,845 ) ( 6,914,992 ) Weighted average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted 6,712,028 959,862 Net loss per share attributable to common stockholders, basic and diluted $ ( 1.12 ) ( 7.20 ) The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding because they would be anti-dilutive for the years ended December 31: 2021 2020 Convertible preferred stock outstanding — 8,116,343 Options to purchase common stock 689,995 743,627 Warrants to purchase to common stock 244,572 244,572 Total potential shares 934,567 9,104,542 95 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, and the information described above in this Item 9A, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at December 31, 2021 due to the material weakness described below. Management’s Report on Internal Control Over Financial Reporting As required by Rule 13a-15(c) promulgated under the Exchange Act, our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2021. Management’s assessment was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013 Framework) (“COSO”). Based on management’s assessment, management has concluded that our internal control over financial reporting was not effective as of December 31, 2021 due to the material weakness in our internal control over financial reporting. The material weakness identified that we did not have formalized financial reporting processes and policies in place to ensure that risks are properly assessed, controls are properly designed, and internal controls are properly monitored. We have concluded that this material weakness arose because we did not have the necessary business processes, personnel, and related internal controls necessary to satisfy the accounting and financial reporting requirements of a public company. Planned Remediation of Material Weakness To address our material weakness, we added accounting personnel, including a Chief Financial Officer hired on February 28, 2022, which will allow us to implement and enhance our formalized policies and procedures regarding internal control over financial processes. We intend to continue to take steps to remediate the material weakness described above through hiring additional qualified accounting and financial reporting personnel, further evolving our accounting processes, and monitoring of our controls. We will not be able to fully remediate this material weakness until these steps have been completed and have been operating effectively for a sufficient period of time. Changes in Internal Control over Financial Reporting Other than the remediation efforts described above in this Item 9A, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on Effectiveness of Controls Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. Item 9B. Other Information. Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance. 96 Table of Contents The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2022 Annual Meeting of Stockholders under the captions “Election of Directors,” “Officers and Directors” and “Corporate Governance.” Code of Ethics The board of directors has adopted a Code of Ethics applicable to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. A copy of the Code of Ethics is available at our website www.femasys.com. Item 11. Executive Compensation. Compensation of Directors and Executive Officers The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2022 Annual Meeting of Stockholders under the caption “Compensation of Executive Officers and Directors - Executive Compensation.” Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this item with respect to the security ownership of certain beneficial owners and the security ownership of management is incorporated herein by reference to our definitive proxy statement for our 2022 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners and Management.” Equity compensation plans The information required by this item with respect to the equity compensation plans is incorporated herein by reference to this annual report on Form 10-K, Item 5, under the caption “Equity compensation plans.” Item 13. Certain Relationships and Related Transactions and Director Independence. The information required by this item with respect to certain relationships and related transactions is incorporated herein by reference to our definitive proxy statement for our 2022 Annual Meeting of Stockholders under the caption “Certain Relationships and Related-Person Transactions.” The information required by this item with respect to director independence is incorporated herein by reference to our definitive proxy statement for our 2022 Annual Meeting of Stockholders under the caption “Corporate Governance — Director Independence.” Item 14. Principal Accounting Fees and Services. The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2022 Annual Meeting of Stockholders under the captions “Ratification of Appointment of our Independent Registered Public Accounting Firm” and “Audit Committee Matters — Audit and Other Fees.” PART IV Item 15. Exhibits. Exhibit Incorporated by Reference File Number Description of Document Schedule/Form Number Exhibit Filing Date 3.1 Eleventh Amended and Restated Certificate of Incorporation of Femasys Inc. Form 8-K 001-40492 3.1 June 22, 2021 3.2 Amended and Restated Bylaws of Femasys Inc. Form 8-K 001-40492 3.2 June 22, 2021 4.1* Description of the Registrant’s Securities 4.2 Form of Certificate of Common Stock Form S-1 333-256156 4.1 May 14, 2021 10.1 Femasys Inc. 2021 Equity Incentive Plan, and forms of agreements thereunder Form S-1/A 333-256156 10.3 May 14, 2021 10.2 Femasys Inc. 2021 Employee Stock Purchase Plan Form S-1/A 333-256156 10.4 May 14, 2021 10.3 Amended and Restated Employment Agreement, by and between Femasys Inc. and Kathy Lee-Sepsick Form S-1/A 333-256156 10.6 June 14, 2021 10.4 Amended and Restated Employment Agreement, by and between Femasys Inc. and Daniel Currie Form S-1/A 333-256156 10.8 June 14, 2021 10.5 Employment Agreement, dated February 15, 2010, by and between Femasys Inc. and Gary Thompson Form S-1/A 333-256156 10.9 June 14, 2021 10.6 Femasys Inc. Non-Employee Director Compensation Policy Form S-1/A 333-256156 10.11 June 14, 2021 10.7 Form of Indemnification Agreement between Femasys Inc. and its directors and officers Form S-1/A 333-256156 10.12 June 14, 2021 97 Table of Contents 10.8 Master Services Agreement and Statement of Work for consulting services, effective August 12, 2021, by and between Femasys Inc. and Bespoke Medical Affairs Solutions, LLC Form 10-Q 001-40492 10.1 November 12, 2021 10.9 Employment Agreement, dated as of February 28, 2022, between Femasys Inc. and Dov Elefant Form 8-K 001-40492 10.1 February 24, 2022 10.10 Form of Inducement Stock Option Agreement Form 8-K 001-40492 10.2 February 24, 2022 23.1* Consent of KPMG LLP 24.1* Power of Attorney (included on signature page) 31.1* Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as inline XRBL and contained in Exhibit 101) Item 16. Form 10-K Summary. None. 98 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Suwanee, State of Georgia, on this 24 day of March 2022. FEMASYS INC. Dated: March 24, 2022 By: /s/ Kathy Lee-Sepsick Kathy Lee-Sepsick POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kathy Lee-Sepsick and Daniel Currie, and each of them as his or her true and lawful attorneys-in- fact and agents, each with the full power of substitution, for him or her and in his or her name, place or stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, and each of them, or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof. 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 By: /s/ Kathy Lee-Sepsick March 24, 2022 Kathy Lee-Sepsick Chair of the Board of Directors, President and Chief Executive Officer (principal executive officer) By: /s/ Dov Elefant March 24, 2022 Dov Elefant Chief Financial Officer (principal financial and accounting officer) By: /s/ John Adams, Jr. March 24, 2022 John Adams, Jr. Director By: /s/ John Dyett March 24, 2022 John Dyett Director By: /s/ Charles Larsen March 24, 2022 Charles Larsen Director By: /s/ Anne Morrissey March 24, 2022 Anne Morrissey Director By: /s/ Wendy Perrow March 24, 2022 Wendy Perrow Director By: /s/ Edward Uzialko, Jr. March 24, 2022 Edward Uzialko, Jr. Director 99