Evofem Biosciences, Inc.

1. Description of Business and Basis of Presentation

Description of Business

Evofem is a San Diego-based commercial-stage biopharmaceutical company committed to commercializing innovative products to address unmet needs in women’s sexual and reproductive health.

The Company’s first commercial product, PHEXX®, was approved by the FDA on May 22, 2020, for the prevention of pregnancy and launched in the U.S. in September 2020. PHEXX is the first and only non-hormonal prescription contraceptive vaginal gel. Women use it when they have sex, applying PHEXX 0-60 minutes prior to intercourse. Because PHEXX is hormone-free and non-systemic, it is not associated with side effects of hormonal contraceptive methods, which include depression, weight gain, headaches, loss of libido, mood swings and irritability. Taking hormones may not be right for some women, especially those with certain medical conditions including clotting disorders, hormone-sensitive cancers, diabetes, or a BMI over 30, as well as women who are breast feeding, and / or who smoke.

The Company acquired global rights to SOLOSEC® on July 14, 2024 and relaunched the brand in November 2024. SOLOSEC is an FDA-approved single-dose oral antimicrobial agent that provides a complete course of therapy for the treatment of two common sexual health infections – bacterial vaginosis (BV) and trichomoniasis. This acquisition aligns with and advances the Company’s mission to commercialize innovative and differentiated products for women’s sexual and reproductive health.

Outside the U.S., the Company’s strategy is to commercialize its products in global markets through commercial partnerships and/or license agreements.

Under the 2020 Global Health Agreement with Adjuvant Capital, the Company has also submitted marketing applications for PHEXX under the trademark Femidence™ in Nigeria, Ethiopia, and Ghana. Femidence was approved in Nigeria on October 6, 2022, by the National Agency for Food and Drug Administration and Control. In October 2021, the Company submitted Femidence for approval in Mexico. The Company has not allocated resources to follow up with these regulatory bodies or advance commercialization in Nigeria due to fiscal constraints since October 2022.

Basis of Presentation and Principles of Consolidation

The Company prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC) related to annual reports on Form 10-K. The Company’s financial statements are presented on a consolidated basis, which include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Reverse Stock Split

On November 26, 2025, the Company’s stockholders approved a reverse stock split of the Company’s issued and outstanding shares of Common Stock at a ratio of between 1-for-500 and 1-for-1,500. The Company’s board of directors has not yet effectuated the reverse stock split as of the date of filing of this Annual Report.

Risks, Uncertainties and Going Concern

Any disruptions in the commercialization of PHEXX or SOLOSEC and/or their supply chains could have a material adverse effect on the Company’s business, results of operations and financial condition.

The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities, in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of this uncertainty.

The Company’s principal operations are related to the commercialization of PHEXX and, since July 2024, SOLOSEC. Additional activities have included raising capital, identifying alternative manufacturing to lower PHEXX cost of goods sold (COGS), seeking ex-U.S. licensing partners to add non-dilutive capital to the balance sheet and geographically diversify its revenue streams, seeking product in-licensing/acquisition opportunities to expand and diversify its U.S. revenue streams, and establishing and maintaining a corporate infrastructure to support commercial products. The Company has incurred operating losses and negative cash flows from operating activities since inception. As of December 31, 2025, the Company had a working capital deficit of $69.5 million and an accumulated deficit of $897.4 million.

On January 6, 2025, the Company received a written notice from the OTC Markets notifying the Company that, because the closing bid price for the Company’s Common Stock was below $0.01 per share for 30 consecutive calendar days, the Company was not compliant with the minimum bid price requirement for continued listing on the OTCQB, as set forth in the OTCQB listing standards, section 2.3 (the Minimum Bid Price Requirement). In accordance with OTCQB Listing Standards, Section 4.1, to regain compliance with the Minimum Bid Price Requirement the Company’s closing bid price was required to be equal to or greater than $0.01 for ten consecutive trading days during the 90-day compliance period which ended April 6, 2025.

On April 22, 2025, the Company received a written notice from the OTC Markets that it did not regain compliance with the Minimum Bid Price Requirement during the specified period, and as such, its Common Stock was removed from OTCQB and began trading on the OTC Pink Current (OTCPK) at market open on April 23, 2025.

The Company’s Common Stock was moved to and began trading on the Over-the-Counter Integrated Disclosure (OTCID), the new basic reporting market tier launched by the OTC Markets Group, at market open on July 1, 2025.

Management’s plans to meet its cash flow needs in the next 12 months include generating recurring product revenue from PHEXX and SOLOSEC, earning milestone payments by achieving certain regulatory milestones under the License and Supply Agreement with Pharma 1 for SOLOSEC, restructuring its current payables, and obtaining additional funding through non-dilutive or dilutive financings, collaborations or partnerships with other companies, including license agreements for PHEXX and/or SOLOSEC in the U.S. or foreign markets, or through other potential business combinations.

The Company anticipates it will continue to incur net losses for the foreseeable future. According to management estimates, liquidity resources were not sufficient to maintain the Company’s cash flow needs for the twelve months from the date of issuance of these audited consolidated financial statements.

If the Company is not able to obtain the required funding through a significant increase in revenue, equity or debt financings, license agreements for PHEXX and/or SOLOSEC, or other means, or is unable to obtain funding on terms favorable to the Company, or if there is another event of default affecting the notes payable, there will be a material adverse effect on commercialization operations and the Company’s ability to execute its strategic development plan for future growth. If the Company cannot successfully raise additional funding and implement its strategic development plan, the Company may be forced to make further reductions in spending, including spending in connection with its commercialization activities, extend payment terms with suppliers, liquidate assets where possible at a potentially lower amount than as recorded in the consolidated financial statements, suspend or curtail planned operations, or cease operations entirely. Any of these could materially and adversely affect the Company’s liquidity, financial condition and business prospects, and the Company would not be able to continue as a going concern. The Company has concluded that these circumstances and the uncertainties associated with the Company’s ability to obtain additional equity or debt financing on terms that are favorable to the Company, or at all, and otherwise succeed in its future operations raise substantial doubt about the Company’s ability to continue as a going concern.

Subsequent Events

Subsequent events were evaluated through the filing date of this Annual Report, March 11, 2026.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the notes thereto.

Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include, but are not limited to: the assumptions used in measuring the revenue gross-to-net variable consideration items; the allowance for expected credit losses estimate; the assumptions used in estimating the fair value of convertible notes, preferred stock, warrants and purchase rights issued; the assumptions used in the valuation of inventory, the intangible asset, and contingent liabilities; the useful lives and recoverability of long-lived assets; the assumptions used to estimate the amount due under the contingent Rush Royalty liability; and the valuation of deferred tax assets. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances and adjusts when facts and circumstances dictate. The estimates are the basis for making judgments about the carrying values of assets, liabilities and recorded expenses that are not readily apparent from other sources. As future events and their effects cannot be determined with precision, actual results may materially differ from those estimates or assumptions.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (CODM), the Chief Executive Officer of the Company, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business inone operating segment. The Company’s CODM assesses performance and decides how to allocate resources for the Company’sone operating segment based on consolidated net income or loss that is reported on the consolidated statements of operations. The Company has also evaluated the significant segment expenses incurred by the single segment that are regularly provided to the CODM. The significant segment expenses regularly provided to the CODM are consistent with those reported on the consolidated statements of operations and include cost of goods sold, research and development, selling and marketing, and general and administrative. The CODM uses these expense categories, along with product sales, net information, to make key operating decisions such as: the strategic direction of the Company, pursuing and/or approving product acquisitions, decisions about key personnel, and approving annual operating budgets. The Company manages assets on a consolidated basis as reported on the consolidated balance sheets.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. Deposits in the Company’s checking and time deposit are maintained in federally insured financial institutions and are subject to federally insured limits or limits set by Securities Investor Protection Corporation. The Company deposits its funds in major U.S. banks and is exposed to credit risk in the event of default to the extent of amounts recorded on the consolidated balance sheets.

The Company has not experienced any losses in such accounts and believes it is not exposed to significant concentrations of credit risk on its cash, cash equivalents and restricted cash balances on amounts in excess of federally insured limits due to the financial position of the depository institutions in which these deposits are held.

The Company is also subject to credit risk related to its trade accounts receivable from product sales. Its customers are located in the U.S. and, starting in the fourth quarter of 2025, in the United Arab Emirates (UAE), and consist of wholesale distributors, retail pharmacies, mail-order specialty pharmacies and, in the UAE, its licensee, Pharma 1.

In the U.S., products are distributed primarily through three major distributors and mail-order pharmacies, which receive service fees calculated as a percentage of the gross sales and a fee-per-unit shipped or sold, respectively. These entities are not obligated to purchase any set number of units; they distribute products on demand as orders are received.

For the years ended December 31, 2025 and 2024, the Company’s three largest customers combined made up approximately 80% and 81% of its gross product sales, respectively. As of December 31, 2025 and 2024, the Company’s three largest customers combined made up 91% and 89%, respectively, of its trade accounts receivable balance.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents consist of readily available cash in checking accounts and money market funds. Restricted cash consists of cash held in monthly time deposit accounts as well as an immaterial letter of credit.

Trade Accounts Receivable and Allowance

The Company extends credit to its customers in the normal course of business after evaluating their overall financial condition and evaluates the collectability of its accounts receivable by periodically reviewing the age of the receivables, the financial condition of its customers, and its past collection experience. Trade accounts receivable are amounts owed to the Company by its customers for products that have been delivered. The trade accounts receivable is recorded at the invoice amount, less prompt pay and other discounts, chargebacks and an allowance for credit losses, if any. The allowance for expected credit losses is the Company’s estimate of losses over the life of the receivables. The Company determines the allowance for expected credit losses based on its historical payment information by customer, the analysis of the trade accounts receivable balance by customer segment, and reasonably estimable future economic conditions. When the collectability of an invoice is no longer probable, the Company will create a reserve for that specific receivable. If a receivable is determined to be uncollectible, it is charged against the general credit loss reserve or the reserve for the specific receivable, if one exists. No allowance was deemed necessary at December 31, 2025 or 2024.

Intangible Assets

Finite lived intangible assets, including the SOLOSEC Intellectual Property (IP) acquired as part of the SOLOSEC asset acquisition are amortized on a straight-line basis over their estimated useful lives. Intangible assets are typically only recognized when an asset is acquired as part of a business combination or asset acquisition. In the case of a business combination, the initial value is based on the fair value of the asset as determined by a third-party valuation. In the case of intangible assets acquired through an asset acquisition, the initial value includes the fair value of the consideration paid plus any direct acquisition related expenses allocated to the acquired intangible assets based on their relative fair values. For intangible assets acquired in an asset acquisition with contingent liabilities as part of the consideration, the Company adjusts the carrying value of the intangible assets as part of the quarterly adjustment to bring the contingent consideration to fair value. Additionally, the Company reviews the carrying amount of its amortizing intangible assets for possible impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. When testing for impairment, the Company compares the undiscounted cash flows of the asset or asset group to its carrying value. If the estimated undiscounted cash flows exceed the carrying value, no impairment is recorded. If the undiscounted cash flows do not exceed the carrying value, an impairment is recorded to bring the carrying value of the asset down to its fair value.

Fair Value of Financial Instruments

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which to transact and the market-based risk. The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis.

The valuation of assets and liabilities are subject to fair value measurements using a three-tiered approach. Fair value measurement is classified and disclosed by the Company in one of the following three categories:

The carrying amounts reported in the consolidated balance sheets for restricted cash and cash equivalents, accounts payable, accrued expenses, accrued compensation, and other current liabilities approximate their fair values due to their short-term nature.

The Company believes that the Adjuvant Notes bear interest at a rate that approximates prevailing market rates for instruments with similar characteristics. The Company estimates the fair value of other instruments carried at fair value utilizing a specialist using a Monte Carlo methodology as described in Note 6 – Fair Value of Financial Instruments. Based on the assumptions used to value these instruments at fair value, these instruments are categorized as Level 3 in the fair value hierarchy.

Inventories

Inventories, consisting of purchased materials, direct labor and manufacturing overheads, are stated at the lower of cost, or net realizable value. Cost 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. At each balance sheet date, the Company evaluates ending inventories for excess quantities, obsolescence, or shelf-life expiration. The evaluation includes an analysis of the Company’s current and future strategic plans, anticipated future sales, the price projections of future demand, and the remaining shelf life of goods on hand. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value in accordance with the first-in, first-out inventory costing method.

Inventories consist of the following (in thousands) for the period indicated:

Property and Equipment

Property and equipment generally consist of manufacturing and research equipment, computer equipment and software and office furniture. Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets (generally three tofive years) using the straight-line method. Leasehold improvements are stated at cost and are amortized on a straight-line basis over the lesser of the remaining term of the related lease or the estimated useful lives of the assets. Repairs and maintenance costs are charged to expense as incurred and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheets and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized.

Impairment of Long-lived Assets

The Company reviews property and equipment and intangible asset for impairment on an annual basis and whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. An impairment loss would be recognized when estimated future undiscounted cash flows relating to the asset or asset group are less than its carrying amount. An impairment loss is measured as the amount by which the carrying amount of an asset or asset group exceeds its fair value. The Company recognized impairments of an immaterial amount and of approximately $0.7 million related to equipment that was recorded as construction in-process during the years ended December 31, 2025 and 2024, respectively.

Clinical Trial Accruals

As part of the process of preparing the consolidated financial statements, the Company is required to estimate expenses resulting from obligations under contracts with vendors, clinical research organizations (CROs), consultants and under clinical site agreements relating to conducting clinical trials. The financial terms of these contracts vary and may result in payment flows that do not match the periods over which materials or services are provided under such contracts.

The Company’s objective is to reflect the appropriate clinical trial expenses in our consolidated financial statements by recording those expenses in the period in which services are performed and efforts are expended. The Company accounts for these expenses according to the progress of the clinical trial as measured by patient progression and the timing of various aspects of the trial. Management determines accrual estimates through financial models and discussions with applicable personnel and outside service providers as to the progress of clinical trials.

During a clinical trial, the Company adjusts the clinical expense recognition if actual results differ from its estimates. The Company makes estimates of accrued expenses as of each balance sheet date based on the facts and circumstances known at that time. The Company’s clinical trial accruals are partially dependent upon accurate reporting by CROs and other third-party vendors. The Company’s understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low for any period.

Fair Value of Warrants

Upon the issuance of warrants, they are initially measured at fair value and reviewed for the appropriate classification (liability or equity). Warrants determined to require liability accounting are subsequently re-measured with changes in fair value being recognized as a component of other income (expense), net in the consolidated statements of operations. Warrants are valued using an option-pricing model based on the applicable assumptions, which include the exercise price of the warrants, time to expiration, expected volatility of our peer group, risk-free interest rate, and expected dividends. The Company re-evaluates the classification of its warrants at each balance sheet date to determine the proper balance sheet classification for each warrant. The assumptions used in the Option Pricing Model (OPM) are considered level 3 assumptions and include, but are not limited to, the market value of invested capital, our cumulative equity value as a proxy for the exercise price, the expected term the purchase rights will be held prior to exercise and a risk-free interest rate, and probability of change of control events.

Leases

The Company determines if an arrangement is a lease or implicitly contains a lease as well as if the lease is classified as an operating or finance lease in accordance with Accounting Standards Codification (ASC) 842,Leases (ASC 842), at inception based on the lease definition. Operating leases are included in operating lease right-of-use (ROU) assets and operating lease liabilities in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date or the adoption date for existing leases based on the present value of lease payments over the lease term using an estimated discount rate.

For leases which do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date or the adoption date in determining the present value of lease payments over a similar term. In determining the estimated incremental borrowing rate, the Company considers a rate obtained from its primary banker for discussion purposes of a potential collateralized loan with a term similar to the lease term; the Company’s historical borrowing capability in the market; and the Company’s costs incurred for underwriting discounts and financing costs in its previous equity financings. For leases which have an implicit rate, the Company uses the rate implicit in the lease to determine the present value of the lease payments. The ROU assets also include any lease payments made and exclude lease incentives. For operating leases, lease expense is recognized on a straight-line basis over the lease term. Lease and non-lease components within a contract are generally accounted for separately. Short-term leases of 12 months or less, if any, are expensed as incurred which approximates the straight-line basis due to the short-term nature of the leases.

See Note 7 - Commitments and Contingencies for more detailed discussions on leases and financial statement information under ASC 842*.*

Revenue

The Company recognizes revenue from the sale of PHEXX and SOLOSEC in accordance with ASC 606,Revenue from Contracts with Customers (ASC 606). The provisions of ASC 606 require the following steps to determine revenue recognition: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

An estimate for variable consideration is made with each sale and is recorded in conjunction with the revenue being recognized. To calculate the variable consideration, the Company uses the expected value method and the amount is recorded either as a reduction to accounts receivable or as a current liability based on the nature of the allowance and the terms of the related arrangements. An estimated amount of variable consideration may differ from the actual amount. At each balance sheet date, these provisions are analyzed and adjustments are made if necessary. Any adjustments made to these provisions would also affect net product revenue and earnings.

Research and Development

Research and development expenses include costs associated with the Company’s research and development activities, including, but not limited to, payroll and personnel-related expenses, stock-based compensation expense, materials, laboratory supplies, clinical studies, and outside services. Research and development costs are expensed as incurred, except when accounting for nonrefundable advance payments for goods or services not yet received. These payments, if any, are capitalized at the time of payment and expensed as the related goods are delivered or the services are performed.

Advertising

Costs for producing advertising are expensed when incurred. Costs for communicating advertising, such as television commercial airtime and print media space, are recorded as prepaid expenses and then expensed when the advertisement occurs. Advertising costs were immaterial in both of the presented periods.

Patent Expenses

The Company expenses all costs incurred relating to patent applications, including, but not limited to, direct application fees and the legal and consulting expenses related to making such applications. Such costs are included in general and administrative expenses in the consolidated statements of operations.

Stock-based Compensation

Stock-based compensation expense for stock options issued to employees, non-employee directors and consultants is measured based on estimating the fair value of each stock option on the date of grant using the Black-Scholes (BSM) option-pricing model.

The following table summarizes the Company’s stock-based awards expensing policies for employees and non-employees:

Fair Value of Stock Options

The fair value of stock options is determined by using the BSM option-pricing model based on the applicable assumptions, which includes the exercise price of options, expected term, expected volatility of our peer group, risk-free interest rate and expected dividend. The Company records forfeitures when they occur. The Company did not issue any stock options in either period presented.

Income Taxes

The accounting guidance for uncertainty in income taxes prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities based on the technical merits of the position.

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

Net Income (Loss) per Share

Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. The net income (loss) available to common stockholders is adjusted for amounts in accumulated deficit related to the deemed dividends triggered for certain financial instruments. Such adjustment was $0.1 million in both the years ended December 31, 2025 and 2024. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, potentially dilutive securities are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for the year ended December 31, 2024. Potentially dilutive securities excluded from the calculation of diluted net loss per share are summarized in the table below. Common shares were calculated for the convertible preferred stock and the convertible debt using the if-converted method.

The schedule of potentially dilutive securities excluded from the calculation of diluted net income (loss) per share is included below:

The following table sets forth the computation of net income attributable to common shareholders, weighted average common shares outstanding for diluted net income per share, and diluted net income per share attributable to common shareholders for the year ended December 31, 2025 (in thousands, except share and per share amounts):

Correction of Previously Issued Interim Condensed Consolidated Financial Statements and Prior Period Errors

In the fourth quarter of 2025, the Company recorded an adjustment to correct an error in the second and third quarters of 2025 reported amounts caused by using an incorrect dividend rate related to the Series E-1 Shares deemed dividends. This correction resulted in less than $0.1 million lower convertible preferred stock deemed dividends in the consolidated statement of operations during the year ended December 31, 2025. There was a corresponding decrease to both the value of the Series E-1 Shares in the Series E-1, F-1, and G-1 convertible and redeemable preferred stock and to the accumulated deficit in the consolidated balance sheet as of December 31, 2025. There was no impact to the consolidated statement of cash flows for the year ended December 31, 2025. In addition to immaterially overstating the value of the Series E-1 Shares in the interim consolidated balance sheets as of June 30, 2025 and September 30, 2025, the convertible preferred stock deemed dividends in the interim consolidated statement of operations for the three and six months ended June 30, 2025, and for the three and nine months ended September 30, 2025, each as filed in the respective Form 10-Q, the error also had the impact of overstating the number of potentially dilutive securities that are not included in the diluted earnings per share and the number of common stock reserved for future issuance as disclosed in the footnotes to the interim financial statements. The adjustment recorded in the fourth quarter of 2025 corrected the deemed dividends for the year ended December 31, 2025, and the value and quantity of the Series E-1 Shares as of December 31, 2025. The Company has concluded that the impact to the previously issued interim financial statements is not material.

In 2025, the Company also recorded an adjustment to correct an error in the 2023 and 2024 reported product sales, net amounts caused by using an incorrect Wholesaler Acquisition Cost (WAC) when calculating net revenue variable considerations related to the distribution service fees and product returns for certain customers pursuant to ASC 606. This correction resulted in $0.4 million lower product sales, net in the consolidated statement of operations for the year ended December 31, 2025. There was a corresponding increase in other current liabilities in the consolidated balance sheet as of December 31, 2025. There was no impact to the consolidated statement of cash flows for the year ended December 31, 2025. In addition to overstating the product sales, net by $0.3 million and less than $0.1 million for the years ended December 31, 2023 and 2024, respectively. The error also had the impact of understating the other current liabilities by $0.3 million at both December 31, 2023 and 2024 and overstating accounts receivable by $0.1 million at both December 31, 2023 and 2024, as well as overstating basic earnings per share by $0.07 and diluted earnings per share by less than $0.01 for the year ended December 31, 2023, and basic and diluted earnings per share by less than $0.01 for the year ended December 31, 2024 as filed in the respective Form 10-Ks. The impact on all the previously reported earnings per share was less than 1% of the reported earnings per share amounts in each period. The overstated product sales, net in the years ended December 31, 2023 and 2024 also caused the accumulated deficit to be understated by $0.3 million and $0.4 million at December 31, 2023 and 2024, respectively. The adjustment recorded in 2025 corrected other current liabilities, accounts receivable, and accumulated deficit as of December 31, 2025. The Company has concluded that the impact to the previously issued audited consolidated financial statements is not material.

Finally, the Company also noted that the prefunded warrants should have been included in the weighted-average shares outstanding in the disclosure of basic and diluted earnings per share for the year ended December 31, 2024. Correcting this calculation resulted in an increase in the weighted-average shares outstanding of 4,807,492 and a $0.01 lower net loss per share attributable to common shareholders for the year then ended.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). The Company adopted the new standard during the year ended December 31, 2025 and the additional disclosure requirements with retrospective application, which are contained in Note 11 - Income Taxes.

No other significant new standards were adopted during the year ended December 31, 2025.

Recently Issued Accounting Pronouncements — Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted as of the specified effective date.

In October 2023, the FASB issued ASU 2023-06,Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, designed to clarify or improve disclosure and presentation requirements on a variety of topics and align the requirements in the FASB ASC with the SEC regulations. This guidance is effective for the Company no later than June 30, 2027. The Company is still evaluating the impact of ASU 2023-06.

In November 2024, the FASB issued ASU 2024-03,Disaggregation of Income Statement Expenses, which primarily requires disaggregation of specific expense categories in disclosures within the footnotes on an annual and interim basis. ASU 2024-03 is effective for the Company’s annual period ending December 31, 2027 and interim periods thereafter. Early adoption is permitted. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The Company is still evaluating the impacts of ASU 2024-03 and ASU 2025-01.

In November 2024, the FASB issued ASU 2024-04,Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, designed to clarify the requirements for accounting for the settlement of a debt as an induced conversion versus as an extinguishment. This guidance is effective for the Company on January 1, 2026. The Company adopted ASU 2024-04 on January 1, 2026 and will apply the guidance on any transactions to which it applies that occur going forward.

In July 2025, the FASB issued ASU 2025-05,Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. This guidance is effective for the Company no later than January 1, 2026. The Company is still evaluating the impact of ASU 2025-05.

In December 2025, the FASB issued ASU 2025-11,Interim Reporting (Topic 270): Narrow-Scope Improvements, to improve the guidance in ASC 270 related to interim reporting and also to clarify when it applies. This guidance is effective for the Company no later than January 1, 2028. The Company is still evaluating the impact of ASU 2025-11.

In December 2025, the FASB issued ASU 2025-12,Codification Improvements, to update the FASB Accounting Standards Codification (the Codification) for a broad range of topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. This guidance is effective for the Company no later than January 1, 2027. The Company is still evaluating the impact of ASU 2025-12.

The Company does not believe the impact of any other recently issued standards and any issued but not yet effective standards will have a material impact on its consolidated financial statements upon adoption.

3. Revenue

In accordance with ASC 606, the Company recognizes revenue when its performance obligation is satisfied by transferring control of the product to a customer. Any payments received before the Company satisfies its performance obligations are considered deferred revenue until the obligations are satisfied. In accordance with the Company’s contracts with customers, control of the product is transferred upon the conveyance of title, which occurs when the product is sold to and received by a customer. The Company’s customers are primarily located in the U.S., with the first order for PHEXX from the UAE placed in late 2025, and consist of wholesale distributors, retail pharmacies, and mail-order specialty pharmacies. Payment terms typically range from 31 to 66 days, include prompt pay discounts, and vary by customer. Trade accounts receivable due to the Company from contracts with its customers are stated separately in the consolidated balance sheets, net of various allowances as described in the Trade Accounts Receivable policy in Note 2 - Summary of Significant Accounting Policies.

The amount of revenue recognized by the Company is equal to the amount of consideration that is expected to be received from the sale of product to its customers. Revenue is only recognized when the performance obligation is satisfied. To determine whether a significant reversal will occur in future periods, the Company assesses both the likelihood and magnitude of any such potential reversal of revenue.

The Company’s products are sold to domestic customers at the WAC, or in some cases at a discount to WAC. However, the Company records product revenue net of reserves for applicable variable consideration. These types of variable consideration reduce revenue and include the following:

In accordance with ASC 606, the Company must make significant judgments to determine the estimate for certain variable consideration. For example, the Company must estimate the percentage of end-users that will obtain the product through public insurance such as Medicaid or through private commercial insurance. To determine these estimates, the Company relies on historical sales data showing the amount of various end-user consumer types, inventory reports from the wholesale distributors and mail-order specialty pharmacy, and other relevant data reports.

The specific considerations that the Company uses in estimating these amounts related to variable consideration are as follows:

Distribution services fees – The Company pays distribution service fees to its wholesale distributors and mail-order specialty pharmacies. These fees are a contractually fixed percentage of WAC and are calculated at the time of sale based on the purchase amount or distributor’s sales of products for certain wholesale distributors. The Company considers these fees to be separate from the customer’s purchase of the product and, therefore, they are recorded in other current liabilities on the consolidated balance sheets.

Prompt pay and other discounts – The Company incentivizes its customers to pay their invoices on time through prompt pay discounts. These discounts are an industry standard practice, and the Company offers a prompt pay discount to each wholesale distributor and retail pharmacy customers. The specific prompt pay terms vary by customer and are contractually fixed. Prompt pay discounts are typically taken by the Company’s customers. The Company may also give other discounts to its customers to incentivize purchases and promote customer loyalty. The terms of such discounts may vary by customer. An estimate of the prompt pay discounts and other discounts are recorded at the time of sale based on the purchase amount as contra trade accounts receivable on the consolidated balance sheets.

Product returns – Domestic customers have the right to return product that is within six months or less of the labeled expiration date or that is past the expiration date by no more than twelve months. PHEXX has a shelf life of 48 months. SOLOSEC has a shelf life of 60 months. The Company uses historical sales and return data to estimate future product returns. Product return estimates are recorded as other current liabilities on the consolidated balance sheets.

Chargebacks – Certain government entities and covered entities (e.g., Veterans Administration, 340B covered entities, group purchasing organizations) are able to purchase products at a price discounted below WAC. The difference between the government or covered entity purchase price and the wholesale distributor purchase price of WAC will be charged back to the Company. The Company estimates the amount of each chargeback channel based on the expected number of claims in each channel and related chargeback that is associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Estimated chargebacks are recorded as contra trade accounts receivable on the consolidated balance sheets.

Rebates – The Company is subject to mandatory discount obligations under the Medicaid and Tricare programs. The rebate amounts for these programs are determined by statutory requirements or contractual arrangements. Rebates are owed after the product has been dispensed to an end user and the Company has been invoiced. Rebates for Medicaid and Tricare are invoiced in arrears. The Company also has a commercial rebate program whereby certain customers receive a rebate as contractually arranged. The Company estimates the amount of rebates based on the expected number of claims and related cost that is associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Rebate estimates are recorded as other current liabilities on the consolidated balance sheets.

Patient support programs – The Company voluntarily offers a co-pay program to provide financial assistance to patients meeting certain eligibility requirements. The Company estimates the amount of financial assistance for these programs based on the expected number of claims and related cost associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Patient support program estimates are recorded as other current liabilities on the consolidated balance sheets.

The variable considerations discussed above were recorded in the consolidated balance sheets and consisted of $0.5 million and $0.3 million in contra trade accounts receivable as of December 31, 2025 and 2024, respectively, and $11.2 million and $7.2 million in other current liabilities as of December 31, 2025 and 2024, respectively.

4. Debt

Baker Notes (temporarily owned by Aditxt from December 11, 2023 through February 26, 2024 and owned by Future Pak, LLC since July 23, 2024)

On April 23, 2020, the Company entered into a Securities Purchase and Security Agreement (the Baker Bros. Purchase Agreement) with certain affiliates of Baker Bros. Advisors LP, as purchasers (the Baker Purchasers), and Baker Bros. Advisors LP, as designated agent, pursuant to which the Company agreed to issue and sell to the Baker Purchasers (i) convertible senior secured promissory notes (the Baker Notes) in an aggregate principal amount of up to $25.0 million and (ii) warrants to purchase shares of Common Stock (the Baker Warrants) in a private placement, which closed in two closings (April 24, 2020, the Baker Initial Closing, and June 9, 2020, the Baker Second Closing). As a result of the two closings, the Company issued and sold Baker Notes with an aggregate principal amount of $25.0 million and Baker Warrants exercisable for 2,731 shares of Common Stock. Upon the completion of the underwritten public offering in June 2020, the exercise price of the Baker Warrants was $4,575 per share. The Baker Warrants had a five-year term with a cashless exercise provision and were immediately exercisable at any time from their respective issuance date. The April 2020 Baker Warrants expired on April 24, 2025. The June 2020 Baker Warrants expired on June 9, 2025.

The Baker Notes have a five-year term, with no pre-payment ability during the first three years. Interest on the unpaid principal balance of the Baker Notes (the Baker Outstanding Balance) accrues at 10.0% per annum, with interest accrued during the first year from the two respective closing dates recognized as payment-in-kind. The effective interest rate for the periods was 10.0%. Accrued interest beyond the first year of the respective closing dates is to be paid in arrears on a quarterly basis in cash or recognized as payment-in-kind, at the direction of the Baker Purchasers. As discussed below, with the amendment to the Baker Bros. Purchase Agreement, interest payments were paid in-kind. Interest pertaining to the Baker Notes for the years ended December 31, 2025 and 2024 were approximately $11.6 million and $10.5 million, respectively, which was added to the outstanding principal balance. The Company accounts for the Baker Notes under the fair value method as described below and, therefore, the interest associated with the Baker Notes is included in the fair value determination.

The Baker Notes were callable by the Company on 10 days’ written notice beginning on the third anniversary of the initial closing date of April 24, 2020 at a call price equal to 100% of the Baker Outstanding Balance plus accrued and unpaid interest if the Company’s Common Stock as measured using a 30-day VWAP was greater than the benchmark price of $9,356.25 as stated in the Baker Bros. Purchase Agreement, or 110% of the Baker Outstanding Balance plus accrued and unpaid interest if the VWAP was less than such benchmark price. The Baker Purchasers also had the option to require the Company to repurchase all or any portion of the Baker Notes in cash upon the occurrence of certain events. In a repurchase event, as defined in the Baker Bros. Purchase Agreement, the repurchase price will equal 110% of the Baker Outstanding Balance plus accrued and unpaid interest. In the event of default or the Company’s change of control, the repurchase price would equal to the sum of (x) three times of the Baker Outstanding Balance plus (y) the aggregate value of future interest that would have accrued. The Baker Notes were convertible at any time at the option of the Baker Purchasers at the conversion price of $4,575 per share prior to the First and Second Baker Amendments (as defined below).

On November 20, 2021, the Company entered into the first amendment to the Baker Bros. Purchase Agreement (the First Baker Amendment), in which each Baker Purchaser had the right to convert all or any portion of the Baker Notes into Common Stock at a conversion price equal to the lesser of (a) $4,575 and (b)115% of the lowest price per share of Common Stock (or, as applicable with respect to any equity securities convertible into Common Stock,115% of the applicable conversion price) sold in one or more equity financings until the Company has met a qualified financing threshold defined as one or more equity financings resulting in aggregate gross proceeds to the Company of at least $50 million (the Financing Threshold).

The First Baker Amendment extended, effective upon the Company’s achievement of the Financing Threshold, the affirmative covenant to achieve $100.0 million in cumulative net sales of PHEXX by June 30, 2022 to June 30, 2023. Additionally per the First Baker Amendment, if the Company were to issue warrants to purchase capital stock of the Company (or other similar consideration) in any equity financing that closed on or prior to the date on which the Company met the Financing Threshold, the Company was required to issue to the Baker Purchasers an equivalent coverage of warrants (or other similar consideration) on the same terms as if the Baker Purchasers had participated in the financing in an amount equal to the then outstanding principal of Baker Notes held by the Baker Purchasers. In satisfaction of this requirement and in connection with the closing of the May 2022 Public Offering, the Company issued warrants to purchase 582,886 shares of the Company’s Common Stock at an exercise price of $93.75 per share to the Baker Purchasers (the June 2022 Baker Warrants). As required by the terms of the First Baker Amendment, the June 2022 Baker Warrants have substantially the same terms as the warrants issued in the May 2022 Public Offering. Refer to Note 8 - Convertible and Redeemable Preferred Stock and Stockholders’ Deficit for further information. The exercise price of the initial Baker Warrants and the June 2022 Baker Warrants was reset multiple times as a result of various Notes issuances in accordance with the agreement. The exercise price of the June 2022 Baker Warrants was $0.0154 per share as of December 31, 2025.

On March 21, 2022, the Company entered into the second amendment to the Baker Bros. Purchase Agreement (the Second Baker Amendment), which granted each Baker Purchaser the right to convert all or any portion of the Baker Notes into Common Stock at a conversion price equal to the lesser of (a) $725.81 or (b)100% of the lowest price per share of Common Stock (or as applicable with respect to any equity securities convertible into Common Stock,100% of the applicable conversion price) sold in any equity financing until the Company (i) met the qualified financing threshold by June 30, 2022, defined as a single underwritten financing resulting in aggregate gross proceeds to the Company of at least $20 million (Qualified Financing Threshold) and (ii) disclosed top-line results from theEVOGUARDclinical trial (the Clinical Trial Milestone) on or before October 31, 2022. The Second Baker Amendment also provided that the exercise price of the Baker Warrants will equal the conversion price of the Baker Notes. The Company met the Qualified Financing Threshold upon the closing of the May 2022 Public Offering, and as of September 30, 2022, the conversion price and exercise price of the Baker Warrants was reset to $93.75. The Company achieved the Clinical Trial Milestone in October 2022. Also, with the achievement of the Qualified Financing Threshold and the Clinical Trial Milestone, the affirmative covenant to achieve $100.0 million in cumulative net sales of PHEXX was extended to June 30, 2023, which was subsequently waived via the Baker Fourth Amendment as discussed below.

On September 15, 2022, the Company entered into the third amendment to the Baker Bros. Purchase Agreement (the Third Baker Amendment), pursuant to which the conversion price was amended to $26.25, subject to adjustment for certain dilutive Company equity issuance adjustments for a two-year period; an interest make-whole payment due in certain circumstances was removed; and certain change of control and liquidation payment amounts were reduced from three times the outstanding amounts of the Baker Notes to two times the outstanding amounts. In addition, the Third Baker Amendment provided that the Company may make future interest payments to the Baker Purchasers in kind or in cash, at the Company’s option. On the same day, the Company also entered into a Secured Creditor Forbearance Agreement with the Baker Purchasers (Forbearance Agreement), according to which the Baker Purchasers agreed to forebear the defaults that existed at that time.

On December 19, 2022, the Company entered into the First Amendment to the Forbearance Agreement (the Amendment) effective as of December 15, 2022 to amend certain provisions of the Forbearance Agreement dated September 15, 2022. The Amendment revised the Forbearance Agreement to (i) amend the Fifth Recital Clause (as defined therein) to clarify that the Baker Purchasers consent to any additional indebtednesspari passu, but not senior to that of the Baker Purchasers, in an amount not to exceed $5.0 million, and (ii) strike and entirely replace Section 4 to clarify the terms of the Baker Purchasers’ consent to Interim Financing (as defined therein). No other revisions were made to the Forbearance Agreement.

On March 7, 2023, Baker Bros. Advisors, LP (the Designated Agent) provided a Notice of Event of Default and Reservation of Rights (the Notice of Default) relating to the Baker Bros. Purchase Agreement. The Notice of Default claimed that the Company failed to maintain the “Required Reserve Amount” as required by the Third Baker Amendment. The Designated Agent, at the direction of the Baker Purchasers, accelerated repayment of the outstanding balance payable. As a result, approximately $92.7 million, representing two times the sum of the outstanding balance and all accrued and unpaid interest thereon and all other amounts due under the Baker Bros. Purchase Agreement and other documents, was due and payable within three business days of receipt of the Notice of Default. In addition, the Company did not meet the $100.0 million cumulative net sales threshold by June 30, 2023 and as such was in default as of that date. As discussed below, all existing defaults were cured upon the signing of the Fourth Baker Amendment.

On September 8, 2023, the Company entered into the Fourth Amendment to the Baker Bros. Purchase Agreement (the Fourth Baker Amendment) with the Baker Purchasers. The Fourth Amendment amends certain provisions within the Baker Bros. Purchase Agreement including:

The outstanding balance of the Baker Notes will continue to accrue interest at 10% per annum and, in the event of a default in the agreement or a failure to pay the Repurchase Price (as defined below) on or before September 8, 2028 (the Baker Notes maturity date), the Baker Purchasers may collect on the full principal amount then outstanding.

The Company paid the required $1.0 million upfront payment in September 2023 and is required to make quarterly cash payments based upon a percentage of the Company’s global net product revenue. The cash payments will be determined based upon the quarterly global net revenue of PHEXX according to the table below.

The quarterly cash payments became payable beginning in the fourth quarter of 2023 and have been timely paid since.

Regardless of the percentage paid, the quarterly cash payment amounts, along with the $1.0 million upfront payment, will be deducted from the Repurchase Price (Applicable Reductions). Quarterly cash payments, which will be treated as Applicable Reductions paid to date as of December 31, 2025, amount to $1.2 million.

The Fourth Amendment also granted the Company the ability to repurchase the principal amount and accrued and unpaid interest of the Baker Notes for up to a five-year period for the one-time Repurchase Price designated below:

The Company evaluated whether any of the embedded features required bifurcation as a separate component. The Company elected the fair value option (FVO) under ASC 825,Financial Instruments (ASC 825), as the Baker Notes are qualified financial instruments and are, in whole, classified as liabilities. Under the FVO, the Company recognized the debt instrument at fair value, inclusive of the embedded features, with changes in fair value related to changes in the Company’s credit risk being recognized as a component of accumulated other comprehensive loss in the consolidated balance sheets. All other changes in fair value were recognized in the consolidated statements of operations.

As part of the consideration for the merger contemplated by the A&R Merger Agreement, on December 11, 2023, the Baker Purchasers signed an agreement to assign the Baker Notes to Aditxt, Inc. (Aditxt) (the December Assignment Agreement). Upon execution of the December Assignment Agreement, Aditxt assumed all terms under the Baker Notes, with Aditxt becoming the new senior secured debtholder of the Company, governed by the requirements under the Fourth Baker Amendment. The Baker Notes were re-assigned back to the Baker Purchasers on February 26, 2024 (the February Assignment Agreement).

Due to the execution of the February Assignment Agreement, the Company reviewed the Baker Notes in accordance with ASC 470 –Debt (ASC 470). The Baker Notes, having been effectively terminated, were extinguished on February 26, 2024, resulting in removing the fair value of the old Baker Notes of $13.5 million. The newly re-assigned Baker Notes were subsequently recorded at fair value using the valuation methods discussed in Note 6 – Fair Value of Financial Instruments.

On July 23, 2024, the Company consented to the transfer of ownership of the Baker Notes from Baker Brothers Life Sciences, 667, L.P., and Baker Bros. Advisors, LP, each a Delaware limited partnership (collectively, Baker) to Future Pak, LLC (the Assignee) (the July 2024 Assignment). The terms of the Baker Notes were not changed in connection with the assignment from Baker to the Assignee. Due to the July 2024 Assignment, the Company reviewed the Baker Notes in accordance with ASC 470. The Baker Notes, having been effectively terminated, were extinguished on July 23, 2024, resulting in removing the fair value of the old Baker Notes of $12.3 million and the related accumulated other comprehensive income of $0.1 million as of the date of the extinguishment. The Company also recognized a loss of approximately $1.0 million within the consolidated statement of operations, in the gain on debt extinguishment line item for the year ended December 31, 2024. The newly re-assigned Baker Notes were subsequently recorded at fair value using the valuation methods discussed in Note 6 – Fair Value of Financial Instruments.

The Company did not repurchase the Baker Notes prior to September 8, 2025. As of December 31, 2025, the Baker Notes are recorded at fair value in the consolidated balance sheet as short-term Notes – carried at fair value with a total fair value of $15.5 million, and the total outstanding balance including principal and accrued interest is $120.5 million. As of December 31, 2024, the Baker Notes were recorded at fair value in the consolidated balance sheet as short-term Notes – carried at fair value with a total balance of $13.8 million, and the total outstanding balance including principal and accrued interest was $109.5 million.

On September 27, 2024, the Assignee, as agent for the Baker Purchasers (in such capacity, the Designated Agent), provided a Notice of Event of Default and Reservation of Rights (the September 2024 Notice of Default) relating to the Baker Bros. Purchase Agreement by and among the Company, Designated Agent, as certain guarantors and the purchasers (each a Baker Purchaser and collectively the Baker Purchasers). The September 2024 Notice of Default claims that by entering into arrangements to pay certain existing obligations, including obligations owed to the U.S. Department of Health and Human Services, an Event of Default has occurred under Section 9.1(e) of the Baker Bros. Purchase Agreement.

According to the Notice of Default, the Designated Agent has accelerated repayment of the outstanding principal balance owed by the Company under the Securities Purchase Agreement. If all Baker Purchasers exercise the Section 5.7 Option (as defined below), the repurchase price would be equal to the total outstanding balance, including principal and accrued interest. Pursuant to Section 5.7(b) of the Baker Bros. Purchase Agreement, upon the occurrence of an Event of Default, each Purchaser may elect, at its option, to require the Company to repurchase the Baker Notes held by such Purchaser (or any portion thereof) at a repurchase price equal to two times the sum of the outstanding principal balance and all accrued and unpaid interest thereon, due within three business days after such Purchaser delivers a notice of such election (the Section 5.7 Option).

On October 27, 2024, the Designated Agent sent an amended and supplemental notice to the Initial Notice of Default (the Amended Notice of Default) which added new claims of default based on the Company’s payment agreements of existing obligations, including obligations owed to the U.S. Department of Health and Human Services; allegedly triggering an Event of Default under Section 9.1(e) of the Baker Bros. Purchase Agreement, as amended. Furthermore, the Amended Notice stated that, because the events of default described in the Amended Notice of Default are not the certain prior events of default listed in the Forbearance Agreement (Specified Defaults), the Designated Agent and the holders of the senior secured promissory notes described in the Baker Bros. Purchase Agreement thereby provided notice to the Company that the Forbearance Agreement was terminated as of October 27, 2024.

On November 8, 2024, the Designated Agent sent an amended and supplemental notice tothe Notices (the Third Amended Notice of Default) which added new claims of default based on (i) the Company’s failure to maintain a cash position of $1.0 million or greater, as required under Section 5(b) of the Forbearance Agreement (ii) the Company’s failure to deliver financial and operating reports in accordance with the timeline required under the Section 8.1(n) of the Baker Stock Purchase Agreement, and (iii) to clarify the outstanding balance under the notes of the Baker Stock Purchase Agreement plus all accrued and unpaid interest thereon, in the sum of approximately is $107.0 million as opposed to the Repurchase Price as defined in the Fourth Amendment.

The Events of Defaults have not been waived or cured. The Company strongly disagrees with the Designated Agent’s claim that an Event of Default has occurred. The Company intends to contest any attempt by the Designated Agent and the Baker Purchasers to exercise their default rights and remedies under the Baker Bros. Purchase Agreement.

Adjuvant Notes

On October 14, 2020, the Company entered into a Securities Purchase Agreement (the Adjuvant Purchase Agreement) with Adjuvant Global Health Technology Fund, L.P., and Adjuvant Global Health Technology Fund DE, L.P. (together, the Adjuvant Purchasers), pursuant to which the Company sold unsecured convertible promissory notes (the Adjuvant Notes) in aggregate principal amount of $25.0 million.

The Adjuvant Notes initially had a five-year term, and in connection with certain Company change of control transactions, the Adjuvant Notes could be prepaid at the option of the Company or would have become payable on the date of the consummation of a change of control transaction at the option of the Adjuvant Purchasers. The Adjuvant Notes have interest accruing at 7.5% per annum on a quarterly basis in arrears to the outstanding balance of the Adjuvant Notes and are recognized as payment-in-kind. The effective interest rate for the year ended December 31, 2025 was 7.5%.

Interest expense for the Adjuvant Notes consists of the following, and is included in short-term convertible notes payable on the consolidated balance sheets as of December 31, 2025 and 2024 and in other expense, net on the consolidated statements of operations for the years ended December 31, 2025 and 2024 (in thousands):

The Adjuvant Notes are convertible, subject to customary 19.99% beneficial ownership limitations, into shares of the Company’s Common Stock at any time at the option of the Adjuvant Purchasers at a conversion price of $6,843.75 per share. In connection with certain Company change of control transactions, the Adjuvant Notes may be prepaid at the option of the Company or will become payable at the option of the Adjuvant Purchasers. To the extent not previously prepaid or converted, the Adjuvant Notes were originally automatically convertible into shares of the Company’s Common Stock at a conversion price of $6,843.75 per share immediately following the earliest of the time at which the (i) 30-day volume-weighted average price of the Company’s Common Stock was $18,750 per share, or (ii) the Company achieved cumulative net sales of $100.0 million, provided such net sales were achieved prior to July 1, 2022.

On April 4, 2022, the Company entered into the first amendment to the Adjuvant Purchase Agreement (the Adjuvant Amendment). The Adjuvant Amendment extended the affirmative covenant to achieve $100.0 million in cumulative net sales of PHEXX by June 30, 2022 to June 30, 2023. The Adjuvant Amendment also provided for an adjustment to the conversion price of the Adjuvant Notes such that the conversion price (the Conversion Price) for these Notes, effective as of the May 2023 reverse stock split, will now be the lesser of (i) $678.49 and (ii)100% of the lowest price per share of Common Stock (or with respect to securities convertible into Common Stock,100% of the applicable conversion price) sold in any equity financing until the Company met the Qualified Financing Threshold, as defined in the Adjuvant Amendment. Effective as of the Company’s achievement of the Qualified Financing Threshold, the automatic conversion provisions in the Adjuvant Purchase Agreement were further amended to provide that the Adjuvant Notes will automatically convert into shares of the Company’s Common Stock at the Conversion Price immediately following the earliest of the time at which the (i)30-day volume-weighted average price of the Company’s Common Stock is $18,750 per share, or (ii) the Company achieves cumulative net sales of PHEXX of $100.0 million, provided such net sales were achieved prior to July 1, 2023.

The Adjuvant Notes contain various customary affirmative and negative covenants agreed to by the Company. On September 12, 2022, the Company was in default of the Adjuvant Notes due to the default with the Baker Notes under the cross-default provision. On September 15, 2022, the Company entered into a Forbearance Agreement (the Adjuvant Forbearance Agreement) with the Adjuvant Purchasers, pursuant to which the Adjuvant Purchasers agreed to forbear from exercising any of their rights and remedies during the Forbearance Period as defined in therein, but solely with respect to the specified events of default provided under the Adjuvant Forbearance Agreement.

Also on September 15, 2022, the Company entered into the second amendment to the Adjuvant Purchase Agreement (the Second Adjuvant Amendment), pursuant to which the conversion price per share was reduced to $26.25, subject to adjustment for certain dilutive Company equity issuance adjustments for a two-year period. In addition, the Company entered into an exchange agreement, pursuant to which the Adjuvant Purchasers agreed to exchange 10% of the outstanding amount of the Adjuvant Notes as of September 15, 2022 (e.g. $2.9 million of the Adjuvant Notes) for rights to receive 109,842 shares of Common Stock (the Adjuvant Purchase Rights). The number of shares for each Adjuvant Purchase Right was initially fixed, but is subject to certain customary adjustments and, until the second anniversary of issuance (i.e., October 14, 2022), adjustments for certain dilutive Company equity issuances. Refer to Note 8 – Convertible and Redeemable Preferred Stock and Stockholders’ Deficit regarding additional issuances of purchase rights under this provision. The Adjuvant Purchase Rights expire on June 28, 2027 and do not have an exercise price per share and, therefore, will not result in cash proceeds to the Company. As of December 31, 2025, all Adjuvant Purchase Rights remain outstanding and the conversion price of the Adjuvant Notes was $0.0154. Assuming this conversion price per share, the Adjuvant Notes could be converted into 2,127,923,494 shares of Common Stock.

The Company was in default of the Adjuvant Notes as of September 30, 2023, due to the failure to meet the cumulative net sales requirement. However, the Adjuvant Purchasers forbore such default in October 2023 and therefore the Company was no longer in default.

On April 10, 2025, Aditxt, the Company and the Adjuvant Purchasers entered into a Call Option Agreement wherein the Adjuvant Purchasers granted to Aditxt, a call option to purchase, at the sole discretion of Aditxt, all of the convertible Adjuvant Notes and Rights to receive Common Stock held by Adjuvant for an aggregate purchase price of $13.0 million. The call option expired on June 30, 2025.

As described in Note 8 – Convertible and Redeemable Preferred Stock and Stockholders’ Deficit, on August 22, 2025, the Company entered into an Exchange Agreement with Adjuvant providing for the exchange of a portion of the Adjuvant Notes due in the aggregate original principal and accrued interest amount of approximately $0.4 million into an aggregate 365 shares of Series G-1 convertible preferred stock, par value $0.0001 per share (the Series G-1 Shares). The exchange was accounted for as a partial debt extinguishment via delivery of other financial assets and the difference between the carrying value of the extinguished debt and the fair value of the Series G-1 Shares at issuance of approximately $0.4 million was recorded as an increase to capital contribution during the year ended December 31, 2025.

On October 13, 2025 the Company and the Adjuvant Purchasers entered into a third amendment to the Adjuvant Purchase Agreement (the Adjuvant Third Amendment). The Adjuvant Third Amendment amends certain provisions including updating the date that the Adjuvant Notes will be payable in full to the earlier of (a) six months after the October 13, 2025, (b) at the election of Adjuvant, the date of a consummation of a Change of Control (as defined in the Adjuvant Purchase Agreement), and (c) the date of any acceleration of the Adjuvant Notes in accordance with Section 8 (the maturity date, as per the Adjuvant Purchase Agreement). The Adjuvant Notes may not be prepaid prior to the date that is six months after October 13, 2025 without prior written consent of the Adjuvant Purchasers.

The Adjuvant Notes are accounted for in accordance with authoritative guidance for convertible debt instruments and are classified as current liabilities in the consolidated balance sheets. The aggregate proceeds of $25.0 million were initially classified as restricted cash for financial reporting purposes due to contractual stipulations that specify the types of expenses the money can be spent on and how it must be allocated. The conversion feature was evaluated in accordance with ASC 815,Derivatives and Hedging (ASC 815), determined to represent an embedded derivative, and was bifurcated and classified as part of stockholders’ deficit as of December 31, 2025. See Note 6 - Fair Value of Financial Instruments for a description of the accounting treatment for the Adjuvant Purchase Rights. As of December 31, 2025, the Adjuvant Notes are recorded in the consolidated balance sheet as convertible notes, net – Adjuvant – Related Party with a total balance of $32.8 million. The balance is comprised of $22.5 million in principal and $10.3 million in accrued interest. As of December 31, 2024, the Adjuvant Notes were recorded in the consolidated balance sheet as convertible notes, net – Adjuvant – Related Party with a total balance of $30.8 million. The balance was comprised of $22.5 million in principal and $8.3 million in accrued interest.

Term Notes

Original SSNs and Exchanged SSNs

The Company entered into eight Securities Purchase Agreements (SPAs) between December 2022 and September 2023 with certain investors; each of the agreements was materially similar. Pursuant to each SPA, the Company agreed to sell in a registered direct offering (i) unsecured 8.0% senior subordinated notes with the maturity dates and aggregate issue prices (ii) warrants to purchase the listed number of shares of the Company’s Common Stock (including prefunded Common Stock Warrants as a part of the September 2023 SPA) and (iii) Series D Preferred Stock (the Preferred Shares; December 2022 SPA only) (collectively, the Original Senior Subordinated Notes, or Original SSNs). Additionally, the conversion rate and warrant strike price are subject to adjustment upon the issuance of other securities (as defined in each SPA) below the stated conversion rate and strike price at issuance.

On December 1, 2023, the Company entered into restructuring agreements with the holders of the Original SSNs, pursuant to which the Company and each holder agreed to, among other things, to (i) change the governing law and jurisdiction of the Original SSNs from New York to Delaware and (ii) reissue the Original SSNs (the Exchanged SSNs) under Section 3(a)(9) exemption of the Securities Act of 1933, as amended (the Restructuring Agreements). The maturity date of the Exchanged SSNs is December 1, 2026. No new consideration was paid and, other than the maturity date, no other terms of the Original SSNs were changed in conjunction with the Restructuring Agreements.

Assuming the applicable conversion price per share, the Exchanged SSNs could be converted into 596,772,762 shares of Common Stock as of December 31, 2025.

The Exchanged SSNs’ interest rates are subject to increase to 12% upon an event of default and the Exchanged SSNs have no Company right to prepayment prior to maturity; however, the Company has the option to redeem the Exchanged SSNs at a redemption premium of 32.5%. The purchasers of the Exchanged SSNs can also require the Company to redeem their respective Exchanged SSNs a) at the respective premium rate tied to the occurrence of certain subsequent transactions, and b) in the event of subsequent placements (as defined). Also, pursuant to the terms of the Restructuring Agreements, purchasers have certain rights to participate in subsequent issuances of the Company’s securities, subject to certain exceptions. The conversion price for the Exchanged SSNs was $0.0154 as of December 31, 2025.

The Company evaluated the Original SSNs in accordance with ASC 480 and determined that the Original SSNs were all liability instruments at issuance. The applicable Original SSNs were then evaluated in accordance with the requirements of ASC 825 and the Company concluded that they were not precluded from electing the fair value option for the applicable Original SSNs.

Pursuant to the Restructuring Agreements, the Company evaluated the Exchanged SSNs under ASC 470, and concluded that the exchange represented a non-substantial modification of the Original SSNs. Accordingly, the Company accounted for the Exchanged SSNs as a modification of the Original SSNs rather than as an extinguishment which would require derecognizing the fair value of Original SSNs and related accumulated other comprehensive loss and replacing them with the fair Exchanged SSNs.

The Company also evaluated the warrants in accordance with ASC 480 and ASC 815 and as of both December 31, 2025 and 2024, the warrants are recorded in equity.

As described in Note 8 – Convertible and Redeemable Preferred Stock and Stockholders’ Deficit, on August 22, 2025, the Company entered into Exchange Agreements with certain SSN holders providing for the exchange of a portion of the SSNs due in the aggregate original principal and accrued interest amount of approximately $1.2 million into an aggregate 1,208 shares of Series G-1 Shares. The exchange was accounted for as a partial debt extinguishment via delivery of other financial assets and the difference between the fair value of the extinguished debt and the fair value of the Series G-1 Shares at issuance of an immaterial amount was recorded as an increase to capital contribution during the year ended December 31, 2025.

Aditxt Notes and Warrants

On April 8, 2025, the Company entered into a securities purchase agreement (the Aditxt April SPA) with Aditxt providing for the sale and issuance of senior subordinated convertible notes due in the aggregate original principal amount of $2.3 million (the Aditxt April Note) and warrants to purchase an aggregate of 149,850,150 shares of Common Stock (the Aditxt April Warrants)(collectively, the Aditxt April Offering). The Company waived Aditxt’s default under the terms of the A&R Merger Agreement (as defined in Note 7 – Commitments and Contingencies) due to the full Fifth Parent Investment, as defined in the Fifth Amendment to the A&R Merger Agreement, entered into on March 22, 2025 (the Fifth Amendment) not being made by the deadline set forth in the Fifth Amendment.

On June 26, 2025, the Company entered into a securities purchase agreement (the Aditxt June SPA) with Aditxt providing for the sale and issuance of senior subordinated convertible notes due in the aggregate original principal amount of $1.4 million (the Aditxt June Note, or together with the Aditxt April Note, the Aditxt Notes) and warrants to purchase an aggregate of 92,407,592 shares of Common Stock (the Aditxt June Warrants) (collectively, the Aditxt June Offering).

In both the Aditxt April Offering and the Aditxt June Offering, Aditxt paid approximately $650 for each $1,000 of the principal amount of the notes and warrants and the Company issued a total of 242,257,742 warrants to purchase shares of Common Stock with an exercise price of $0.0154. In each of the Aditxt April Notes and the Aditxt June Notes, the notes are unsecured senior subordinated notes, have an interest rate of 8%, and mature three years from the respective issuance dates. The net proceeds after the offering costs to the Company from the Aditxt April Offering and Aditxt June Offering were approximately $2.4 million. Assuming the applicable conversion price per share, the Aditxt Notes could be converted into 255,055,275 shares of Common Stock as of December 31, 2025.

The Aditxt April Notes’ and the Aditxt June Notes’ interest rates are subject to increase to 12% upon an event of default and they have no Company right to prepayment prior to maturity; however, the Company has the option to redeem the respective notes at a redemption premium of 32.5%. Aditxt can also require the Company to redeem the notes a) at the respective premium rate tied to the occurrence of certain subsequent transactions, and b) in the event of subsequent placements (as defined in the respective SPAs). Also, pursuant to the terms of the respective SPAs, Aditxt has certain rights to participate in subsequent issuances of the Company’s securities, subject to certain exceptions, and the shares of Company Common Stock underlying the Aditxt April Offering and the Aditxt June Offering are unregistered. Additionally, the conversion rate and warrant strike price are subject to adjustment upon the issuance of other securities (as defined in the respective SPAs) below the stated conversion rate and strike price at issuance.

The Company evaluated the Aditxt April Notes and Aditxt June Notes in accordance with ASC 480 and determined that the notes were all liability instruments at issuance. The notes were then evaluated in accordance with the requirements of ASC 825 and the Company concluded that they were not precluded from electing the fair value option.

The Company also evaluated the Aditxt April Warrants and the Aditxt June Warrants in accordance with ASC 480 and ASC 815 and as of December 31, 2025 the warrants are recorded in equity.

Summary of Exchanged SSNs and Warrants at Issuance (December 2022 to September 2023 and April to June 2025):

Short-term Debt

Insurance Premium Finance Agreement

In June 2024, the Company entered into an insurance premium finance agreement with First Insurance Funding (FIF) to finance a portion of the year’s Directors and Officers (D&O) and general insurance policies. The total amount financed was $0.4 million at an annual interest rate of 8.57%. The Company made nine equal payments, commencing in July 2024. The Company recorded the total financed amount as a short-term debt on the consolidated balance sheet as of December 31, 2024. The interest expense, included in other expense, net, in the consolidated statement of operations, was immaterial for the year ended December 31, 2024.

In June 2025, the Company entered into an insurance premium finance agreement with FIF to finance a portion of its current year’s D&O and general insurance policies. The total amount financed was $0.4 million at an annual interest rate of 7.82%. The Company will make eight equal payments, commencing in August 2025. The Company recorded the total financed amount as a short-term debt on the consolidated balance sheet. The interest expense, included in other expense, net, in the consolidated statement of operations, was immaterial for the year ended December 31, 2025.

5. Balance Sheet Details

Prepaid and Other Current Assets

Prepaid and other current assets consist of the following (in thousands):

Property and Equipment, Net

Property and equipment, net, consists of the following (in thousands):

Depreciation expense for property and equipment was immaterial in each of the years ended December 31, 2025 and 2024.

Intangible Asset, Net

Intangible asset, net, consists of the following (in thousands):

The intangible asset relates entirely to the asset acquired with the SOLOSEC asset acquisition and as described further in Note 7 – Commitments and Contingencies, the useful life is based on the SOLOSEC IP patent expiration. Amortization expense was $0.5 million and $0.6 million during the years ended December 31, 2025 and 2024, respectively. Amortization expense is expected to be approximately $0.3 million in each subsequent year until the intangible asset is fully amortized, which will be in approximately 14.4 years. As described in Note 2 – Summary of Significant Accounting Policies, the intangible asset value is adjusted at each reporting date in conjunction with the mark-to-market adjustment of the contingent liabilities, which could impact the expected amortization. The initial intangible asset fair value was $16.1 million at acquisition and the adjustment for the years ended December 31, 2025 and 2024 were net reductions to the intangible balance of $4.8 million and $5.9 million, respectively.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

Other current liabilities

Other current liabilities consist of the following (in thousands):

6. Fair Value of Financial Instruments

Fair Value of Financial Liabilities

The following table is a summary of the Company’s convertible debt instruments as of December 31, 2025 and 2024, respectively (in thousands):

The following tables summarize the Company’s derivative liabilities as of December 31, 2025 and 2024 as discussed in Note 8 – Convertible and Redeemable Preferred Stock and Stockholders’ Deficit (in thousands):

Change in Fair Value of Level 3 Financial Liabilities

The following tables summarize the changes in Level 3 financial liabilities related to Baker Notes, Exchanged SSNs, and Aditxt Notes measured at fair value on a recurring basis for the year ended December 31, 2025 (in thousands):

The following tables summarize the changes in Level 3 financial liabilities related to Baker Notes, Exchanged SSNs, and Aditxt Notes measured at fair value on a recurring basis for the year ended December 31, 2024 (in thousands):

The following table summarizes the changes in Level 3 financial liabilities related to derivative liabilities measured at fair value on a recurring basis for the year ended December 31, 2025 (in thousands):

The following table summarizes the changes in Level 3 financial liabilities related to derivative liabilities measured at fair value on a recurring basis for the year ended December 31, 2024 (in thousands):

Valuation Methodology

Baker Notes

The fair value of the Baker Notes is determined using a Monte Carlo simulation-based model and is subject to uncertainty due to the assumptions used in the model. The fair value of the Baker Notes is sensitive to these estimated inputs made by management that are used in the calculation. The Monte Carlo simulation takes into account several embedded features and factors and management inputs, including the exercise of the repurchase rights, the Company’s future revenues, meeting certain debt covenants, the maturity term of the note and dissolution. For the dissolution scenario, the cost approach, an adjusted net asset value method was used to determine the net recoverable value of the Company, including an estimate of the fair value of the Company’s intellectual property. The estimated fair value of the Company’s intellectual property was valued using a relief from royalty method which required management to make significant estimates and assumptions related to forecasts of future revenue, and the selection of the royalty (5.0%) and discount (17.0%) rates. The key unobservable inputs used in the valuation include a risk-free rate of 3.53%, a discount rate of 12.5%, a revenue weighted-average cost of capital of 16.4%, a revenue volatility of 130%on an annual basis, and an event probability of 95% for the Baker Notes to be repurchased by September 2026.

Exchanged SSNs and Aditxt Notes

The fair value of the Exchanged SSNs and Aditxt Notes issued, as described in Note 4 – Debt, were determined by estimating the fair value of the Market Value of Invested Capital (MVIC) of the Company on a going-concern basis. This was estimated using a form of the market approach where comparable market revenue multiples were selected and applied to the Company’s forward revenue forecast to ultimately derive a MVIC indication. An OPM was then applied to value the Exchanged SSNs by allocating the estimated MVIC through the Company’s capital structure including the more senior notes payoff in a hypothetical exit event. Under the OPM, each debt or equity class is modeled as a call option with a distinct claim on the total value of the Company. The option’s exercise price is based on the Company’s total value available for each participating security holder. By constructing a series of options in which the exercise price is set at incremental levels of value, which correspond to the value necessary for each level of debt or equity to participate, we determined the incremental option value of each series. When multiplied by the percentage of ownership of each class participating, the result is the incremental value allocated to each class under that series. The key unobservable inputs used in the valuation include the revenue based multiple ranging from 2.3x to 3.0x, a risk-free rate of 3.61%, an equity volatility of 80%, a time to expiration of 88 days, and a discount for lack of marketability of 31% for certain instruments.

Purchase Rights

The Purchase Rights are recorded as derivative liabilities in the consolidated balance sheets. The Purchase Rights are valued using an OPM, like a Black-Scholes model, with changes in the fair value being recorded in the consolidated statements of operations. The assumptions used in the OPM are considered level 3 assumptions and include, but are not limited to, the MVIC, the cumulative equity value of the Company as a proxy for the exercise price and the expected term the Purchase Rights will be held prior to exercise and a risk-free interest rate. The key unobservable inputs used in the valuation of the Purchase Rights were the same as those used for the Exchanged SSNs and Aditxt Notes as described aforementioned.

Warrants

Warrants are classified as equity and the Company re-evaluates the classification of its warrants at the close of each reporting period to determine their proper balance sheet classification. The warrants are valued using an OPM based on the applicable assumptions, which include the exercise price of the warrants, time to expiration, expected volatility of our peer group, risk-free interest rate, and expected dividends. The assumptions used in the OPM are considered level 3 assumptions and include, but are not limited to, the MVIC, the cumulative equity value of the Company as a proxy for the exercise price, the expected term the warrants will be held prior to exercise, a risk-free interest rate, and probability of change of control event. Additionally, because the warrants are re-priced under certain provisions in the agreements, at each re-pricing event the Company must value the warrants using a Black-Scholes model immediately prior to and immediately following the re-pricing event. The incremental fair value is recorded as an increase to accumulated deficit and additional paid-in capital, in accordance with ASC 470. The key unobservable inputs used in the valuation of warrants were the same as those used the Exchanged SSNs and Aditxt Notes as described aforementioned.

SOLOSEC Asset Acquisition Intangible Asset and Contingent Liabilities

The total consideration for the SOLOSEC asset acquisition included an up-front payment (paid at closing), sales-based payments to be paid over the next 15 years (the Earnout Term) in each year in which SOLOSEC adjusted net revenue is over a specified threshold, a $10.0 million one-time payment once the cumulative SOLOSEC adjusted net revenues reach $100 million, and assumption of quarterly royalty payments based on SOLOSEC net revenue. As discussed in Note 7 – Commitments and Contingencies, the fair value of the consideration is attributed to the SOLOSEC product line and was therefore recorded as an intangible asset.

The fair value of the total consideration, including cash paid and future sales-based payments, is determined using a Monte Carlo simulation model, which assumes the Company’s revenue follows a geometric Brownian motion. Using specific revenue factors, including expected growth, risk adjustments, and revenue volatility, future revenues were simulated through the Earnout Term to assess whether sales-based payments would be triggered in each relevant period, as stipulated by the SOLOSEC Asset Purchase Agreement. The average output of the Monte Carlo simulations for each period provides the expected payment value, which is then discounted to its present value to derive the fair value of future sales-based payments and recorded as contingent liabilities. The discount rate is based on (i) the risk-free rate, plus (ii) a credit spread reflecting the Company’s interest-bearing debt, (iii) an additional spread to account for credit migration as of the valuation date, and (iv) a further incremental spread to reflect that the contingent liabilities is subordinated obligations relative to the Company’s other debt obligations.

The fair value of the total consideration, including cash paid and future sales-based payments, is determined using a Monte Carlo simulation model, which assumes the Company’s revenue follows a geometric Brownian motion. Using specific revenue factors, including expected growth, risk adjustments, and revenue volatility, future revenues were simulated through the Earnout Term to assess whether sales-based payments would be triggered in each relevant period, as stipulated by the SOLOSEC Asset Purchase Agreement. The average output of the Monte Carlo simulations for each period provides the expected payment value, which is then discounted to its present value to derive the fair value of future sales-based payments and recorded as contingent liabilities. The discount rate is a market index rate based on the Company’s credit risk.

The fair value of the SOLOSEC contingent liabilities is subject to uncertainty due to the assumptions made by management that are used in the Monte Carlo simulation-based model. These factors include the estimated future SOLOSEC net revenue, the risk-neutral revenue calculation and simulation assumptions, payment timing, and the discount rate. The key unobservable inputs used in the valuation include a risk-free rate of 4.4%, and a revenue volatility of 128%.

The fair value of the SOLOSEC contingent liabilities will be updated at each reporting period using the methodology described above. Any changes to the fair value will be recorded as an adjustment to the carrying value of both the contingent liabilities and the SOLOSEC IP intangible asset as per ASC 323,Investments – Equity Method and Joint Ventures (ASC 323). Periodic intangible amortization will also be prospectively updated based on the new fair value of the SOLOSEC IP.

7. Commitments and Contingencies

Asset Acquisition and Contingent Liabilities

SOLOSEC

The Company reviewed the SOLOSEC acquisition in accordance with ASC 805,Business Combinations (ASC 805), including applying the screen test. In accordance with ASC 805, the Company engaged a third-party valuation specialist to estimate the fair value for the SOLOSEC IP as well as for the total consideration. Per the valuation, the fair value of the SOLOSEC IP exceeded 90% of the total consideration, which indicates that the screen test failed. Further, the Company did not acquire any substantive processes, which indicates that the acquisition is an asset acquisition rather than a business combination. The Company recorded the fair value of the future sales-based payments as contingent liabilities in accordance with ASC 450,Contingencies(ASC 450) and the fair value of the total consideration plus the transaction costs as an intangible asset in accordance with ASC 350,Intangibles (ASC 350).

Per the Transition Services Agreement (TSA) entered into in conjunction with the SOLOSEC asset acquisition, the Company expected to purchase finished goods inventory from the seller at a pre-defined price through the earlier of November 2026 or when the Company provides a 10-day notice of termination. The total expected commitment was approximately $3.7 million; however, the quantities to be purchased can be negotiated if both parties agree. The Company concluded that the inventory purchase commitment does not meet the definition of a derivative under ASC 815. During the years ended December 31, 2025 and 2024, there were approximately $1.3 million and $0.3 million in purchases under this commitment, respectively.

The Company expected to purchase up to approximately $2.1 million during the year ending December 31, 2026 under this commitment. The Company evaluated this purchase commitment to determine whether a loss existed based on the difference between the contractual purchase price and the estimated net realizable value of the inventory expected to be purchased. Based on this assessment, the Company recorded a $0.3 million loss on purchase commitment for the amounts that the Company had submitted for purchase as of the date of filing, which was included in cost of goods sold in the consolidated statement of operations during the year ended December 31, 2025 with a corresponding liability recorded in the other current liabilities in the consolidated balance sheet as of December 31, 2025. The remaining $1.8 million of potential purchases under the TSA does not currently meet the definition of a firm purchase commitment as the Company has the ability to negotiate the purchase amount or terminate the TSA as discussed above. As a result, no liability has been recorded for this portion of the expected purchases. The Company will continue to reassess the expected purchases and related realizable values of the inventory under the TSA each reporting period and will record additional losses if and when they become probable and reasonably estimable.

The TSA also required the seller to provide transitional support services until the Company fully established SOLOSEC operations; the Company was obligated to pay an immaterial amount quarterly for these services. The Company is also obligated to pay a quarterly royalty, in amounts equal to a certain percentage of the SOLOSEC net revenue, beginning July 14, 2024. There areno minimum quarterly or annual royalty payment amounts. Such royalty costs were $0.1 million in each of the years ended December 31, 2025 and 2024. As of December 31, 2025, $0.1 million and $4.6 million related to the future payments related to the SOLOSEC acquisition, including sales-based payments, one-time payment, and quarterly royalty payments, was included in contingent liabilities – current and contingent liabilities – noncurrent, respectively, in the consolidated balance sheet. Such amounts were $0.2 million and $9.3 million, respectively, as of December 31, 2024.

Operating Leases

Fleet Lease

In December 2019, the Company and Enterprise FM Trust (the Lessor) entered into a Master Equity Lease Agreement whereby the Company leases vehicles to be delivered by the Lessor from time to time with various monthly costs depending on whether the vehicles are delivered for a term of 24 or 36 months, commencing on each corresponding delivery date. The leased vehicles are for use by eligible employees of the Company’s commercial operations team. As of December 31, 2025, there were a total of 19 leased vehicles.

The Company determined that the leased vehicles are accounted for as operating leases under ASC 842,Leases(ASC 842). In May and June 2024, the Company extended the lease term by an additional 12 months for vehicles with initial terms of 24 months. The Company determined that such extensions were accounted for as modifications; the Company reassessed the lease classification and the incremental borrowing rate on the modification date and accounted for these modifications accordingly.

In the second and third quarter of 2025, the Company replaced the leased vehicles; the vehicles have a lease term of 24 months. In conjunction with the new leases, the Company assessed the incremental borrowing rate and also determined that the leased vehicles should be accounted for as operating leases under ASC 842.

Other Contractual Commitments

In November 2019, the Company entered into a supply and manufacturing agreement with a third-party to manufacture PHEXX, with potential to manufacture other product candidates, in accordance with all applicable current good manufacturing practice regulations. There were approximately $2.0 million in purchases under the supply and manufacturing agreement for each of the years ended December 31, 2025 and 2024.

Related Party Transactions

Windtree

On March 20, 2025, Windtree Therapeutics, Inc. (Windtree) and the Company entered into a License and Supply Agreement, as amended on March 28, 2025 (collectively, the Windtree License and Supply Agreement), wherein Windtree agreed to become a manufacturer and supplier of PHEXX. The Company expects to significantly reduce its COGS once the Company begins selling PHEXX manufactured under the Windtree License and Supply Agreement. The Company will not have any financial obligations until submitting a binding forecast six months prior to the scheduled manufacturing date. Because Saundra Pelletier, the Company’s CEO, is also on the board of Windtree, the Company evaluated the relationship between the entities and determined that Windtree is a related party of the Company. During the year ended December 31, 2025, there were no transactions with Windtree.

Aditxt

Aditxt was considered a related party of the Company during the year ended December 31, 2025 because Saundra Pelletier, the Company’s Chief Executive Officer, served as a member of Aditxt’s Board of Directors from June 9, 2025 until September 23, 2025. Ms. Pelletier’s term expired on that date.

Merger

On July 14, 2024, the Company entered into an Amended and Restated Agreement and Plan of Merger (the A&R Merger Agreement) with Aditxt, Inc. (Aditxt), pursuant to which Aditxt was expected to acquire the Company in an all-stock transaction. The A&R Merger Agreement was amended several times, including the Sixth Amendment to the A&R Merger Agreement, entered into on August 26, 2025 (the Sixth Amendment). The Sixth Amendment was entered into to(i) amend section 1.5 and 3.1(b)(ii) to update the definition of “Unconverted Company Preferred Stock” to include Series G-1 Shares; (ii) amend section 1.6 to update the definition of “Company Shareholder Approval” to include the outstanding shares of Company Common Stock (including all of the Company’s Preferred Stock, on the basis and to the extent it is permitted to so vote) entitled to vote thereon and each series of the Unconverted Company Preferred Stock; (iii) amend section 6.23 to clarify that the Company will assist in obtaining Exchange Agreements (as defined in the A&R Merger Agreement, as amended) to exchange Company convertible notes and purchase rights for an aggregate of not more than 89,021 shares of Parent Preferred Stock from the applicable Company shareholders; (iv) amend section 7.2(j) to change the number of dissenting shares to no more than 5,932,818 shares of Common Stock or 202 shares of Preferred Stock; (v) add a new section 7.2(k) to require waivers from each holder of the Company’s E-1 Convertible Preferred Stock, with respect to the last sentence of Section 2, the entirety of Section 6, any price adjustment provisions that may be triggered under Section 8(a)(ii), Section 12(c), and Section 12(d) of the Series E-1 Certificate of Designations; and (vi) to replace, in its entirety, the Certificate of Designations for Exchanged Parent Preferred Stock included as Exhibit C to the A&R Merger Agreement.

On October 20, 2025, the Company terminated the A&R Merger Agreement after the proposed merger was not approved by the Company’s stockholders. No termination fee or other cash consideration was paid by either party, and no further obligations remain under the agreement.

Notes

As discussed in Note 4 – Debt, on April 8, 2025 and June 26, 2025, the Company entered into two securities purchase agreements with Aditxt (the Aditxt April Note and the Aditxt June Note). Under these agreements the Company issued senior subordinated convertible notes in the aggregate original principal amount of $3.7 million and warrants to purchase up to 242,257,742 shares of the Company’s Common Stock. The notes bear interest at 8%, mature three years from issuance, and were issued at a discount of $650 per $1,000 of principal. Net cash proceeds to the Company were approximately $2.4 million. The warrants have an exercise price of $0.0154 per share.

Adjuvant

Because Adjuvant has significant voting power due to its increased beneficial ownership limitation, the Company evaluated the relationship between the entities and determined that Adjuvant is a related party of the Company. Except for the exchange from the Adjuvant Notes to Series G-1 Shares as described in Note 8 – Convertible and Redeemable Preferred Stock and Stockholders’ Deficit and the Adjuvant Third Amendment as described and defined in Note 4 – Debt, no other transactions occurred between the two entities in 2025.

Contingencies

From time to time the Company may be involved in various lawsuits, legal proceedings, or claims that arise in the ordinary course of business. As of December 31, 2025, there were no other claims or actions pending against the Company which management believes have a probable, or a reasonably possible, probability of an unfavorable outcome other than the TherapeuticsMD, Inc. (TherapeuticsMD) dispute as described below.

During the year ended December 31, 2025, the Company settled a portion of its trade payables with vendors, which resulted in a $3.1 million reduction in trade payables and a $2.5 million reduction in accrued expenses. However, the Company may receive trade payable demand letters from other vendors that could lead to potential litigation. As of December 31, 2025, approximately 77% of the Company’s trade payables were greater than 90 days past due.

On December 14, 2020, a trademark dispute captioned TherapeuticsMD, Inc. v Evofem Biosciences, Inc., was filed in the U.S. District Court for the Southern District of Florida against the Company, alleging trademark infringement of certain trademarks owned by TherapeuticsMD under federal and state law (Case No. 9:20-cv-82296). On July 18, 2022, the Company settled the lawsuit with TherapeuticsMD, with certain requirements which were required to be performed by July 2024 (the Settlement Timeline), including changing the name of PHEXXI. The Company failed to meet the terms of the settlement agreement by the Settlement Timeline. As a result, the Company is currently working with TherapeuticsMD on resolution of this issue. In September 2024, the Company filed an application for a new name PHEXX, which was approved by the FDA in April 2025. In accordance with ASC 450, the Company has accrued the present value of the probable settlement amounts remaining payable over the next several years, which was $0.4 million and $0.8 million as of December 31, 2025 and 2024, respectively, as a component of contingent liabilities in the consolidated balance sheets.

As of December 31, 2025, the Company has received multiple letters from purported Company stockholders demanding that the Company’s board of directors take action on behalf of the Company to remedy allegations regarding the Company’s disclosures to shareholders with respect to various alleged omissions of material information in both its preliminary proxy statement filed September 23, 2024 and definitive proxy statement filed September 8, 2025 relating to the A&R Merger Agreement, as amended, and demands made under Section 220 of the DGCL for books and records related to the transaction and disclosures in the proxy statement. The Company believes all such demands are without merit. Furthermore, on October 20, 2025, the Company held a Special Meeting of Stockholders. After the Company’s stockholders did not approve the transactions contemplated by the A&R Merger Agreement, the Company delivered a notice of termination to Aditxt notifying it that the Company was exercising its right to terminate the A&R Merger Agreement effective October 20, 2025. The termination was in accordance with (i) Section 8.1(b)(ii), which allows either party to terminate the A&R Merger Agreement if the Merger shall not have been consummated on or before 5:00 p.m. Eastern Time, on September 30, 2025, and (ii) as per Section 8.1(b)(iv), which allows either party to terminate the A&R Merger Agreement if the Company Shareholder Approval shall not have been obtained at a duly held Company Shareholders Meeting at which a vote was taken on the approval of the Agreement and the Transactions, including the Merger.

As a result of the termination of the A&R Merger Agreement, all other ancillary agreements related to the A&R Merger Agreement, with the exception of the obligations under the Non-Disclosure Agreement, entered into by and between the Company and Aditxt, as of October 23, 2023, terminated concurrently with the termination of the A&R Merger Agreement. No consideration was paid in connection with the termination.

On September 27, 2024, Future Pak, LLC, as agent for the purchasers (in such capacity, the Future Pak Designated Agent) provided a Notice of Event of Default and Reservation of Rights (the Notice of Default) relating to the Baker Bros. Purchase Agreement, as amended, by and among the Company, Designated Agent, as certain guarantors and the purchasers. The Notice of Default claims that by entering into arrangements to repay certain existing obligations, including obligations owed to the U.S. Department of Health and Human Services, an Event of Default has occurred under Section 9.1(e) of the Baker Bros. Purchase Agreement. According to the Notice of Default, the Future Pak Designated Agent has accelerated repayment of the outstanding principal balance owed by the Company under the Baker Bros. Purchase Agreement. If all purchasers exercise the Section 5.7 Option, the repurchase price would be equal to $106.8 million.

On October 27, 2024, the Future Pak Designated Agent sent an amended and supplemented notice to the Notice of Default which adds additional claims of default based on the Company’s current repayment agreements of existing obligations, including obligations owed to the U.S. Department of Health and Human Services, an Event of Default has occurred under Section 9.1(e) of the Baker Bros. Purchase Agreement. Furthermore, the Amended Notice stated that, because the events of default described in the Amended Notice of Default are not the certain prior events of default listed in the Forbearance Agreement (the Specified Defaults), the Future Pak Designated Agent and the holders of the senior secured promissory notes described in the Baker Bros. Purchase Agreement thereby provided notice to the Company that the Forbearance Agreement is terminated as of October 27, 2024. The Company strongly disagrees with the Future Pak Designated Agent’s claim that any Event of Default has occurred.

On November 8, 2024, the Future Pak Designated Agent sent an amended and supplemented notice tothe Notices (the Third Amended Notice of Default) which adds new claims of default based on (i) the Company’s failure to maintain a cash position of $1.0 million or greater, as required under Section 5(b) of the Forbearance Agreement (ii) the Company’s failure to deliver financial and operating reports in accordance with the timeline required under the Section 8.1(n) of the Baker Stock Purchase Agreement, and (iii) to clarify the outstanding balance under the notes of the Baker Stock Purchase Agreement plus all accrued and unpaid interest thereon, in the sum of approximately $107.0 million as opposed to the Repurchase Price as defined in the Fourth Amendment. The Company intends to vigorously contest any attempt by the Future Pak Designated Agent and the purchasers to exercise their default rights and remedies under the Baker Bros. Purchase Agreement.

Intellectual Property Rights

In 2014, the Company entered into an amended and restated license agreement (the Rush License Agreement) with Rush University Medical Center (Rush University), pursuant to which Rush University granted the Company an exclusive, worldwide license of a patent and certain know-how related to its vaginal pH modulator technology (US6706276, the Rush Patent). Pursuant to the Rush License Agreement, until the expiration of the Rush Patent, the Company was obligated to pay Rush University an earned royalty during the patent term, calculated as a mid-single digit percentage of PHEXX net sales (the Rush Royalty). In September 2020, the Company entered into the first amendment to the Rush License Agreement, pursuant to which the Company agreed to pay a minimum annual royalty amount of $0.1 million to the extent the earned royalties did not equal or exceed $0.1 million commencing January 1, 2021 until the expiration of the patent, including any granted Patent Term Extensions (PTEs).

The Rush Patent would expire on March 6, 2021 (the Original Expiration Date) if no PTE was obtained. Rush University filed an application for PTE in July 2020, which would extend the expiration date of the Rush Patent to March 6, 2026 if granted. Multiple Orders Granting Interim Extension (OGIEs) were received from the U.S. Patent and Trademark Office (USPTO) while the PTE was under evaluation. The last OGIE expired on March 6, 2025.

Because the USPTO had granted multiple OGIEs to Rush University, between the date of the original PTE application (July 2020) and the final OGIE expiration (March 2025), the Company determined it was probable that the PTE extending the expiration to March 6, 2026 would be granted. Therefore, the Company accrued a total of $2.8 million related to the Rush Royalty as a contingent liability after the Original Expiration Date in accordance with ASC 450, of which $0.9 million was paid in good faith and $1.9 million was unpaid and was included in accrued expenses in the consolidated balance sheet as of December 31, 2024.

During the first quarter of 2025, the Company’s legal counsel ascertained that no further OGIEs were granted after March 6, 2025 and the PTE had also still not been granted. As a result, the Company discontinued accruing the Rush Royalty since, based on the new information, the Company deemed it remote that the PTE would ultimately be granted. Amounts previously accrued under the rush License Agreement were still being assessed at that time and as such, no adjustments were made. No royalty costs were recorded for the year ended December 31, 2025. For the year ended December 31, 2024, $0.8 million of Rush Royalty costs were recorded in cost of goods sold.

Furthermore, in August 2025 the FDA confirmed that the relevant active ingredient covered by the Rush Patent had previously been used in other FDA-approved products and, as such, no PTE should be granted, the Company and its legal counsel determined that the Rush Patent expired on the Original Expiration Date and as such it is no longer probable that the Company will be required to pay any expenses related to the Rush Royalty accrued after that date. The Company reversed the outstanding accrued Rush Royalty contingent liability of $1.9 million during the year ended December 31, 2025. Because the gain was material to cost of goods sold, the amount was presented separately on the consolidated statement of operations as a gain on change in accounting estimates on contingent royalty liability.

If the Company determines to pursue a refund of the estimated royalties paid but not earned per its current analysis, it could potentially receive a refund of $0.9 million from Rush University (the amount paid for royalties accrued after the Original Expiration Date). Conversely, if Rush University pursues payment of the amounts accrued but not paid for the time covered by the OGIEs, the maximum liability that the Company could incur is approximately $2.3 million. Based on the current analysis, the Company could have an additional gain of up to $0.9 million or a loss of up to $2.3 million.

Our vaginal pH modulator (PHEXX) remains protected in the U.S. by fourOrange Bookpatents which are solely-owned by Evofem.

8. Convertible and Redeemable Preferred Stock and Stockholders’ Deficit

Warrants

In April and June 2020, pursuant to the Baker Bros. Purchase Agreement, as discussed in Note 4 - Debt, the Company issued warrants to purchase up to 2,731 shares of Common Stock in a private placement at an exercise price of $4,575 per share. The Second Baker Amendment provides that the exercise price of the Baker Warrants will equal the conversion price of the Baker Notes. The exercise price of the Baker warrants was $0.0154 per share as of December 31, 2025.

In May 2022, the Company completed an underwritten public offering (the May 2022 Public Offering) which included the issuance of common warrants to purchase 362,640 shares of Common Stock at a price to the public of $93.75 and the issuance of common warrants to purchase 205,360 shares of Common Stock at a price to the public of $93.63 (the May 2022 Common Stock Warrants). The May 2022 Common Stock Warrants were exercisable beginning on May 24, 2022 and have afive-year term. Due to features in the May 2022 Common Stock Warrants, including dilution adjustments requiring strike price resets, additional warrants have been periodically issued as required in the warrant agreements. As of December 31, 2025, there were 894,194 May 2022 Common Stock Warrants outstanding with an exercise price of $0.0154.

In June 2022, as required by the Second Baker Amendment, the Company issued the June 2022 Baker Warrants to purchase up to 582,886 shares of the Company’s Common Stock. The June 2022 Baker Warrants have an exercise price of $93.75 per share and afive-year term and were exercisable beginning June 28, 2022. The June 2022 Baker Warrants also contain customary 4.99% and 19.99% limitations on exercise provisions. The exercise price and number of shares issuable upon exercise of the June 2022 Baker Warrants is subject to adjustment for certain dilutive issuances, stock splits and similar recapitalization transactions. The exercise price of these warrants was $0.0154 per share as of December 31, 2025.

In February, March, April, July, August, and September 2023, pursuant to the Exchanged SSNs as discussed in Note 4 – Debt, the Company issued warrants to purchase up to 1,152,122 shares of the Company’s Common Stock at an exercise price of $2.50 per share, up to 2,615,383 shares of the Company’s Common Stock at an exercise price of $1.25 per share, and up to 22,189,349 shares of the Company’s Common Stock at an exercise price of $0.13 per share. The exercise price of these warrants was $0.0154 per share as of December 31, 2025. During the second quarter of 2025, pursuant to the Aditxt Notes, as discussed in Note 4 – Debt, the Company issued warrants to purchase up to 242,257,742 shares of the Company’s Common Stock at an exercise price of $0.0154 per share.

As of December 31, 2025, warrants to purchase up to 263,062,099 shares of the Company’s Common Stock remain outstanding at a weighted average exercise price of $0.18 per share. In accordance with ASC 815*,*the warrants are classified as equity instruments as of both December 31, 2025 and 2024. During the first quarter of 2024, the Company obtained waivers from a majority of the convertible instrument holders, removing the requirement for shares to be reserved for conversion of their instruments, which will prevent the instruments from needing to be liability classified due to an insufficient number of authorized shares going forward. The Company will continue to re-evaluate the classification of its warrants at the close of each reporting period to determine the proper balance sheet classification for them. These warrants are summarized below:

Preferred Stock

Effective December 15, 2021, the Company amended and restated its certificate of incorporation, under which the Company is currently authorized to issue up to 5,000,000 shares of total preferred stock. The certificate of incorporation was further amended several times, most recently on August 22, 2025 in order to authorize various series of convertible and redeemable preferred stock; authorized series currently include convertible and redeemable preferred stock designated for Series B-1 and B-2, Series C, Series E-1, Series F-1, Series G-1, and nonconvertible and redeemable preferred stock (Series D), par value $0.0001 per share.

Convertible and Redeemable Preferred Stock

On August 7, 2023, the Company filed a Certificate of Designation of Series E-1 Convertible Preferred Stock (E-1 Certificate of Designation), par value $0.0001 per share (the Series E-1 Shares). On June 30, 2025, the holders of a majority of issued and outstanding shares of the Series E-1 Shares approved by written consent in lieu of a meeting the Amended and Restated Certificate of Designations of Series E-1 Convertible Preferred Stock (the A&R E-1 Certificate of Designations). The Company’s Board of Directors also approved the A&R E-1 Certificate of Designations on June 30, 2025. The A&R E-1 Certificate of Designations increases the number of total authorized shares from 2,300 to 10,000 in order to authorize a sufficient number of shares for the payment of dividends in kind in the form of additional shares of Series E-1 Shares and update certain definitions. The A&R E-1 Certificate of Designations became effective on September 30, 2025. The Series E-1 Shares are convertible into shares of Common Stock at a conversion price of $0.40 per share, as adjusted, and are both counted toward quorum on the basis of and have voting rights equal to the number of shares of Common Stock into which the Series E-1 Shares are then convertible. The Series E-1 Shares are senior to all Common Stock with respect to preferences as to dividends, distributions, and payments upon a dissolution event. In the event of a liquidation event, the Series E-1 Shares are entitled to receive an amount per share equal to the Black Scholes Value as of the liquidation event plus the greater of 125% of the conversion amount (as defined in the Certificate of Designation) and the amount the holder of the Series E-1 Shares would receive if the shares were converted into Common Stock immediately prior to the liquidation event. If the funds available for liquidation are insufficient to pay the full amount due to the holders of the Series E-1 Shares, each holder will receive a percentage payout. The Series E-1 Shares were entitled to dividends at a rate of 10% per annum (which increased as per the provision below as of April 1, 2025) or 12% upon a triggering event. On the 18-month anniversary of the initial issuance date for the Series E-1 convertible preferred stock, the dividend rate increased by 30% and will increase another 30% on the first day of each subsequent quarter until no E-1 Shares remain outstanding. Dividends are payable in shares of Common Stock and may, at the Company’s election, be capitalized and added to the principal balance of Series E-1 Shares monthly. The Series E-1 Shares also have a provision that allows them to be converted to Common Stock at a conversion rate equal to the Alternate Conversion Price (as defined in the Certificate of Designation) times the number of shares subject to conversion times the 25% redemption premium in the event of a Triggering Event (as defined in the Certificate of Designation) such as in a liquidation event. The Series E-1 Shares are mandatorily redeemable in the event of bankruptcy. Series E-1 Shares rank higher than all shares of the Company’s Common Stock and Series F-1 Shares (defined below) with respect to the preferences as to dividends and any distributions and payments upon the liquidation, dissolution, and winding up of the Company.

On August 7, 2023, certain investors party to the Exchanged SSNs exchanged $1.8 million total in principal and accrued interest under the outstanding convertible promissory notes for 1,800 shares of Series E-1 Shares (the August 2023 Preferred Stock Transaction). Per the Series E-1 Convertible Preferred Stock Certificate of Designation, the conversion rate can also be adjusted in several future circumstances, such as on certain dates after the exchange date and upon the issuance of additional convertible securities with a lower conversion rate or in the instance of a Triggering Event. As such, the conversion price has been adjusted several times and was $0.0154 as of December 31, 2025. The Series E-1 Shares are classified as mezzanine equity within the consolidated balance sheets in accordance with ASC 480 because of a fixed 25% redemption premium upon a Triggering Event and no mandatory redemption feature. During each of the years ended December 31, 2025 and 2024, $0.1 million in deemed dividends were recorded as an increase to the Series E-1 Shares outstanding.

On December 11, 2023, the Company filed a Certificate of Designation of Series F-1 Convertible Preferred Stock (F-1 Certificate of Designation), par value $0.0001 per share (the Series F-1 Shares). An aggregate of 95,000 shares was authorized. The Series F-1 Shares are convertible into shares of Common Stock at a conversion price of $0.0635 per share and do not have the right to vote on any matters presented to the holders of the Company’s Common Stock. The Series F-1 Shares are senior to all Common Stock and subordinate to the Series E-1 Shares with respect to preferences as to distributions and payments upon a dissolution event. In the event of a liquidation event, the Series F-1 Shares are entitled to receive an amount per share equal to the Black Scholes Value as of the liquidation event plus the greater of 125% of the conversion amount (as defined in the F-1 Certificate of Designation) and the amount the holder of the Series F-1 Shares would receive if the shares were converted into Common Stock immediately prior to the liquidation event. If the funds available for liquidation are insufficient to pay the full amount due to the holders of the Series F-1 Shares, each holder will receive a percentage payout. The Series F-1 Shares are not entitled to dividends. The Series F-1 Shares also have a provision that allows them to be converted to Common Stock at a conversion rate equal to the Alternate Conversion Price (as defined in the F-1 Certificate of Designation) times the number of shares subject to conversion times the 25% redemption premium in the event of a Triggering Event (as defined in the F-1 Certificate of Designation) such as in a liquidation event. The Series F-1 Shares are mandatorily redeemable in the event of bankruptcy. In June 2024, the Required Holders, as defined in the F-1 Certificate of Designation, approved an amended and restated certificate of designation (the Amended F-1 Certificate of Designation) to the Company’s certificate of designation designating the rights, preferences, and limitations of the Company’s Series F-1 Shares. Series F-1 Shares rank higher than all shares of the Company’s Common Stock with respect to the preferences as to dividends and any distributions and payments upon the liquidation, dissolution, and winding up of the Company. The Amended F-1 Certificate of Designation provides for the removal of the conversion price adjustment provisions previously included and changed the conversion price to $0.0154.

On December 21, 2023, the Company issued a total of 22,280 Series F-1 Shares to certain investors pursuant to an exchange transaction,613 of the Series F-1 Shares were issued in exchange for warrants to purchase up to 9,972,074 shares of the Company’s Common Stock and 21,667 Series F-1 Shares to exchange a partial value of the outstanding purchase rights. Immediately subsequent to the exchange transaction, the holders of the Series F-1 Shares exchanged their Series F-1 Shares for Aditxt’s Series A-1 preferred stock, and as a result, Aditxt currently holds the Company’s Series F-1 Shares.

During the second half of 2024, as part of the funding requirement by Aditxt pursuant to the A&R Merger Agreement, the Company issued a total of 4,000 Series F-1 Shares to Aditxt for an aggregate purchase price of $4.0 million. Additionally, Aditxt also paid the Company $1.0 million in May 2024 in conjunction with signing the Reinstatement and Fourth Amendment to the Merger Agreement. The 4,000 Series F-1 Shares were recorded at fair value with the variance between the immaterial fair value and the total $5.0 million cash received being recorded as additional paid-in-capital in the consolidated balance sheet. As discussed in Note 7 – Related Party Transactions, Aditxt currently holds all outstanding Series F-1 Shares. Accordingly, transactions related to the Series F-1 Preferred Stock are considered related-party transactions under ASC 850.

On August 22, 2025, the Company filed a Certificate of Designations creating the Series G-1 Preferred Stock (G-1 Certificate of Designations) (the Series G-1 Shares). The Company’s Board of Directors approved the G-1 Certificate of Designations on August 22, 2025 and the G-1 Certificate of Designations became effective upon filing with the State of Delaware on the same day. Subsequently on August 22, 2025, the Company entered into Exchange Agreements with certain investors (the G-1 Investors) providing for the exchange of certain SSNs and a portion of the Adjuvant Notes due in the aggregate original principal and accrued interest amount of approximately $1.6 million into an aggregate 1,573 shares of Series G-1 Shares (collectively, the G-1 Offering). The Series G-1 Shares entitles the holder thereof to vote together with the common shareholders as a single class and to cast that number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible. Each of the Series G-1 Shares has a stated value of $1,000 per share and is convertible into shares of Common Stock at a rate determined by dividing (i) the stated value of such Series G-1 Shares plus any declared and unpaid dividends on such shares by (ii) the conversion price of $0.0154 per share, subject to adjustment as provided in the Certificate of Designations. The Certificate of Designations also provides that in the event of certain Triggering Events (as defined below), any holder may, at any time, convert any or all of such holder’s Series G-1 Shares at a conversion rate equal to the product of (i) the Alternate Conversion Price (as defined below) and (ii) the quotient of (x) the 25% redemption premium multiplied by (y) the amount of Series G-1 Shares subject to such conversion. Triggering Events include, among others, (i) a failure to timely deliver shares of Common Stock, upon a conversion, (ii) a suspension of trading or the failure to be traded or listed on an eligible market for five consecutive days or more, (iii) the failure to pay any dividend to the holders of Series G-1 Shares when required, (iv) the failure to remove restrictive legends when required, (v) proceedings for a bankruptcy, insolvency, reorganization or liquidation, which are not dismissed with 30 days, (vi) commencement of a voluntary bankruptcy proceeding, and (vii) final judgments against the Company for the payment of money in excess of $0.1 million. Alternate Conversion Price means the lowest of(i) the applicable conversion price the in effect, (ii) 80% of the VWAP of the Common Stock on the trading day immediately preceding the delivery of the applicable conversion notice, (iii) 80% of the VWAP of the Common Stock on the trading day of the delivery of the applicable conversion notice and (iv) 80% of the price computed as the quotient of (I) the sum of the VWAP of the Common Stock for each of the three (3) trading days with the lowest VWAP of the Common Stock during the fifteen (15) consecutive trading day period ending and including the trading day immediately preceding the delivery of the applicable conversion notice, divided by (II) three (3). Each holder of Series G-1 Shares is entitled to receive dividends at a rate of 8% per annum, paid in the form of Common Stock or paid-in-kind as additional shares of Series G-1 Shares, at the Company’s discretion (the Series G-1 Dividends) payable to the holders of the Series G-1 Shares on a monthly basis.

The fair value of the Series G-1 Shares issued was determined by estimating the fair value of the MVIC of the Company on a going-concern basis. This was estimated using a form of the market approach where comparable market revenue multiples were selected and applied to the Company’s forward revenue forecast to ultimately derive a MVIC indication. An OPM was then applied to value the Series G-1 Shares by allocating the estimated MVIC through the Company’s capital structure including the more senior notes payoff in a hypothetical exit event. Under the OPM, each debt or equity class is modeled as a call option with a distinct claim on the total value of the Company. The option’s exercise price is based on the Company’s total value available for each participating security holder. By constructing a series of options in which the exercise price is set at incremental levels of value, which correspond to the value necessary for each level of equity to participate, we determined the incremental option value of each series. When multiplied by the percentage of ownership of each equity class participating, the result is the incremental value allocated to each class under that series.

As discussed in Note 12 – Subsequent Events, on March 5, 2026 the Company issued a total of 5,844,156 shares of the Company’s Common Stock upon conversion of 90 Series G-1 Shares pursuant to the provisions in the G-1 Certificate of Designations.

Common Stock

Effective September 14, 2023, the Company further amended its amended and restated certificate of incorporation to increase the number of authorized shares of Common Stock to 3,000,000,000 shares.

Purchase Rights

On September 15, 2022, the Company entered into certain exchange agreements with the Adjuvant Purchasers and purchasers of certain other notes to exchange, upon request, the Purchase Rights for an aggregate of 942,080 shares of the Company’s Common Stock. The number of right shares for each Purchase Right is initially fixed at issuance, but subject to certain customary adjustments for certain dilutive Company equity issuances until the second anniversary of issuance. These Purchase Rights expire on June 28, 2027. Refer to Note 6 - Fair Value of Financial Instruments for the accounting treatment of the Purchase Rights. In 2023, the Company subsequently signed an additional agreement with the holders of the Purchase Rights upon which the total aggregate value of the Purchase Rights is fixed at $24.7 million, to be paid in a variable number of shares based on the current exercise price. On December 21, 2023, the Company issued 21,667 shares of the Series F-1 Shares in exchange for a partial value of certain purchase rights, as described above.

In connection with issuances of the Exchanged SSNs, during the year ended December 31, 2024, the Company increased the number of outstanding Purchase Rights by 1,133,836,815, due to the reset of their exercise price. This was recorded as a loss on issuance of financial instruments as an immaterial amount in the consolidated statements of operations. No such exercise price reset occurred during the year ended December 31, 2025. The exercise price will be further adjusted if any other convertible instruments have price resets. In addition, the Company issued 13,329,571 and 69,875,000 shares of Common Stock upon the exercise of certain Purchase Rights during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, Purchase Rights to receive 1,505,819,328 shares of the Company’s Common Stock remained outstanding.

Common Stock Reserved for Future Issuance

Common Stock reserved for future issuance, on a one-for-one basis, is as follows in common equivalent shares as of December 31, 2025:

9. Stock-based Compensation

Equity Incentive Plans

No equity awards were issued in either year presented. The following table summarizes stock-based compensation expense related to stock options granted to employees, non-employee directors and consultants included in the consolidated statements of operations as follows (in thousands):

The 2012 Equity Incentive Plan (the 2012 Plan) provided for the issuance of Restricted Stock Awards, Restricted Stock Units, or non-qualified and incentive Common Stock options to its employees, non-employee directors and consultants, from its authorized shares. In general, the options expireten years from the date of grant and generally vest either (i) over afour-year period, with 25% exercisable at the end of one year from the employee’s hire date and the balance vesting ratably thereafter or (ii) over athree-year period, with 25% exercisable at the grant date and the balance vesting ratably thereafter. No further awards may be issued under the 2012 Plan.

On September 15, 2014, the Company’s board of directors adopted, and stockholders approved, the 2014 Equity Incentive Plan, which was amended and restated on each of May 8, 2018, February 26, 2019, and February 21, 2021 (the Amended and Restated 2014 Plan). Per the terms of the Amended and Restated 2014 Plan, the shares reserved will automatically increase on each January 1 through 2024, by an amount equal to the smaller of (i)4% of the number of shares of Common Stock issued and outstanding on the immediately preceding December 31; or (ii) an amount determined by our board of directors. There was no increase to the shares reserved under the plan on January 1, 2023 or 2024. No further awards may be issued under the Amended and Restated 2014 Plan as it expired in September 2024.

On July 24, 2018, upon the recommendation by the Compensation Committee, the Company’s board of directors adopted the Evofem Biosciences, Inc. 2018 Inducement Equity Incentive Plan (the Inducement Plan). Under the Inducement Plan, as amended, the number of authorized shares total 666 shares. The only persons eligible to receive awards under the Inducement Plan are individuals who satisfy the standards for inducement grant recipients under Nasdaq Marketplace Rule 5635(c)(4), generally, a person not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the Company.

On October 3, 2025, the Company’s board of directors approved, and the Company’s stockholders approved at the November 26, 2025 annual meeting, the 2025 Equity Incentive Plan (the 2025 Plan), with a maximum of 50,000,000 shares available for issuance. Per the terms of the 2025 Plan, the shares reserved will automatically increase on each January 1 through 2035, by an amount equal to the smaller of (i)4% of the number of shares of Common Stock issued and outstanding on the immediately preceding December 31; or (ii) an amount determined by our board of directors. Due to this provision, an additional 5,067,437 shares were added to the total number of authorized shares on January 1, 2026. No grants have been made under the 2025 Plan.

Stock Options

The following table summarizes share option activity for the year ended December 31, 2025:

As of December 31, 2025, there is an immaterial amount of unrecognized stock-based compensation expense for employee stock options which will be fully amortized by the end of the first quarter of 2026, assuming all unvested options become fully vested.

There wereno stock-based compensation awards issued for the years ended December 31, 2025 and 2024.

**10. Employee Benefits **

The Company has a defined contribution 401(k) plan (401(k) Plan) for all qualifying employees. Employees are eligible to participate in the plan beginning on the first day of the month following their three-month anniversary of employment. Under the terms of the 401(k) Plan, employees may make voluntary contributions as a percentage of their compensation. The Company makes a safe-harbor contribution of 3.0% of each employee’s gross earnings, subject to Internal Revenue Service limitations. During each of the years ended December 31, 2025 and 2024, the Company made safe-harbor contributions of approximately $0.2 million.

11. Income Taxes

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (OBBBA). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The enactment of the OBBBA allowed the Company to amortize previously capitalized domestic research and development costs, which increased the taxable net operating loss for the year ended December 31, 2025. As a result of the Company’s full valuation allowance and overall loss position, no current or deferred income tax expense was recorded for the period. Accordingly, the OBBBA did not have a material impact on the Company’s total income tax provision for the year ended December 31, 2025. The Company continues to evaluate the elective provisions of the law and the potential effects of such elections on its consolidated financial statements.

The Company is subject to taxation in the U.S. and various states jurisdictions. Tax years since inception remain open to examination by the major taxing jurisdictions. The Company’s consolidated income (loss) before income tax expense for the years ended December 31, 2025 and 2024 were generated by the domestic jurisdiction as follows (in thousands). There is no consolidated pretax income or loss generated by foreign operations for the periods indicated.

The income tax expense for the years ended December 31, 2025 and 2024 consisted of the following (in thousands):

The reconciliation of the income tax expense to the amount computed by applying 21% statutory U.S. federal income tax rate to income (loss) before income tax expense; and the Company’s effective tax rate to the statutory tax rate after to the adoption of ASU 2023-09 is as follows (in thousands):

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. The Company’s net deferred tax assets arising from its taxable subsidiaries consisted of the following components as of December 31, 2025 and 2024 (in thousands):

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. Generally, the ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on historical performance and future expectations, management has determined a valuation allowance is needed in respect to its ending deferred tax assets.

Net operating losses, and tax credit carryforwards as of December 31, 2025 are as follows (in thousands):

Net operating losses, and tax credit carryforwards as of December 31, 2024 are as follows:

The cash paid for income taxes (net of refunds) during the year was as follows (in thousands):

The following table summarized the activity related to the Company’s gross unrecognized tax benefits as of December 31, 2025 and 2024 (in thousands):

The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits, and uncertain income tax positions must meet a more likely than not recognition threshold to be recognized. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the consolidated statements of operations. There were no accrued interest and penalties associated with unrecognized tax benefits as of December 31, 2025. The Company does not anticipate a significant change in its uncertain tax benefits over the next 12 months.

Management believes it is more likely than not that all significant tax positions taken to date would be sustained by the relevant taxing authorities. Furthermore, the Company has not recognized any tax benefits to date because the Company has established a full valuation allowance for its deferred tax assets due to uncertainties as to their ultimate realization.

Pursuant to Internal Revenue Code (IRC) sections 382 and 383, use of the Company’s net operating losses (NOLs) and research and development credit carryforwards may be limited if a cumulative change in ownership of more than 50.0% (by value) occurs within a rolling three-year period. The Company completed a formal Section 382 analysis through the period ended December 31, 2019, and determined it experienced ownership changes in 2010 and 2018. Accordingly, the Company has reduced its deferred tax asset for NOLs and research and development tax credits by the estimated impact of IRC sections 382 and 383 as of December 31, 2019. Any future ownership changes could further impact the utilization of the NOLs and research and development tax credits, however given the full valuation allowance this would not result in an impact to the Company’s income tax expense.

12. Subsequent Events

On March 5, 2026, the Company issued a total of 5,844,156 shares of the Company’s Common Stock upon conversion of 90 Series G-1 Shares pursuant to the provisions in the G-1 Certificate of Designations.