Valion Bio, Inc 10-Q for FY2025 Q1
Valion Bio, Inc. (VBIO)
About this 10-Q
Valion Bio, Inc filed this 10-Q on May 15, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $70K
- down 79.0% from $334K a year earlier
- Net loss
- $1.5M
- compared with a net loss of $1.48M a year earlier
- Diluted EPS
- -$2.52
- compared with -$17.15 a year earlier
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
OR
Commission file number:
(Exact name of registrant as specified in its charter)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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Title of Each Class |
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Name of Each Exchange on Which Registered The |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of the Exchange Act (Check one):
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No
As of May 12, 2025,
Table of Contents
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PART I - FINANCIAL INFORMATION |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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PART II - OTHER INFORMATION |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our condensed financial statements included in this Quarterly Report on Form 10‑Q are as follows:
This Quarterly Report on Form 10‑Q (this "Report") for the quarter ended March 31 2025, should be read in conjunction with the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 21, 2025.
The accompanying condensed financial statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10‑Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2025 are not necessarily indicative of the results that can be expected for the full year.
1
Tivic Health Systems, Inc.
Condensed Balance Sheets (Unaudited)
March 31, 2025 and December 31, 2024
(in thousands, except share and per share data)
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March 31, |
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December 31, |
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2025 |
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2024 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventory, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Deferred offering costs |
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Licensed technology |
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— |
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Other assets |
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— |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Other accrued expenses |
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Total current liabilities |
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Total liabilities |
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid in capital |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
2
Tivic Health Systems, Inc.
Condensed Statements of Operations (Unaudited)
Three Months Ended March 31, 2025 and 2024
(in thousands, except share and per share data)
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Three Months Ended |
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March 31, |
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2025 |
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2024 |
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Revenue |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Other income: |
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Interest income |
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— |
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Total other income |
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— |
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Net loss |
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$ |
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$ |
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Net loss per share attributed to common stockholders- basic and diluted |
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$ |
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$ |
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Weighted-average number of shares - basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
3
Tivic Health Systems, Inc.
Condensed Statements of Stockholders’ Equity (Unaudited)
Three Months Ended March 31, 2025 and 2024
(in thousands except share and per share data)
For the Three Months Ended March 31,2025
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Additional |
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Total |
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Preferred Stock |
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Common Stock |
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Paid-in |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balances at January 1, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of stock for consideration of licensed technology |
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Issuance of common stock for equity line of credit |
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Issuance of common stock in lieu of fractional shares for stock split |
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Exercise of warrants |
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— |
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Stock-based compensation |
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— |
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— |
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Net loss |
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Balances at March 31, 2025 |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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For the Three Months Ended March 31, 2024
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Additional |
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Total |
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Preferred Stock |
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Common Stock |
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Paid-in |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balances at January 1, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of common stock for restricted stock award |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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Balances at March 31, 2024 |
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— |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
4
Tivic Health Systems, Inc.
Condensed Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 2025 and 2024
(in thousands)
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Three Months Ended |
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March 31, |
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2025 |
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2024 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
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$ |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock- based compensation |
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Depreciation |
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Amortization of right-of-use asset |
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— |
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Inventory allowances |
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— |
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( |
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Changes is operating assets and liabilities: |
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Accounts receivable |
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Inventory |
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( |
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Prepaid expenses and other current assets |
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( |
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Accounts payable |
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( |
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Accrued expenses |
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( |
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Lease liabilities |
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— |
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( |
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Other Assets |
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( |
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— |
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Net cash used in operating activities |
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Cash flows from investing activities |
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Acquisition of licensed technology |
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( |
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— |
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Net cash used in investing activities |
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— |
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Cash flows from financing activities |
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Proceeds from warrant exercises |
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— |
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Offering costs in advance of sale of common stock |
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Net cash provided by (used in) financing activities |
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Net decrease in cash and cash equivalents |
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Cash and cash equivalents |
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Beginning of period |
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End of period |
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$ |
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$ |
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Supplemental disclosure on noncash investing and financing activities |
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Issuance of common and preferred stock in exchange for license |
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$ |
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$ |
— |
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Issuance of common stock for equity line of credit commitment fee |
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$ |
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$ |
— |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
5
Tivic Health Systems, Inc.
Notes to Unaudited Condensed Financial Statements
(amounts are as indicated)
1. Formation and Business of the Company
Tivic Health Systems, Inc. (the “Company”) was incorporated in the state of California on September 22, 2016 for the purpose of developing and commercializing non-invasive bioelectronic medicine. In June 2021, the Company was reincorporated as a Delaware corporation. The Company’s first commercial product is a handheld design that interfaces non-invasively with the trigeminal, sympathetic, and other facial and cranial nerve structures, currently marketed with FDA approval as ClearUP Sinus Pain Relief, for the treatment of sinus pain and congestion. The Company is developing a research-stage platform directed to vagus nerve stimulation, which is currently undergoing clinical evaluation and optimization. In February 2025, the Company acquired a worldwide exclusive license from Statera Biopharma, Inc. ("Statera") to the late-stage TLR5 agonist Entolimod™ for the treatment of Acute Radiation Syndrome ("ARS"). In addition, the Company acquired an exclusive option to license five additional indications and clinical use cases for Entolimod and its derivative, Entolasta. In March 2025, the Company exercised its option to license Entolimod for the treatment of neutropenia. With the introduction into the biopharma market in early 2025 through the licenses acquired from Statera, the Company is a diversified therapeutics company harnessing the power of the immune and autonomic nervous systems to fight disease and restore health. The Company is headquartered in Fremont, California.
2. Summary of Significant Accounting Policies
Basis of Presentation
Going Concern Uncertainty
During the three months ended March 31, 2025 and 2024, the Company incurred a net loss of $
Future capital requirements will depend upon many factors, including, without limitation, progress with developing, manufacturing and marketing our technologies and product candidates; the time and costs involved in obtaining regulatory approvals for our product candidates; the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights; our ability to execute our strategy to expand our business, including through the closing of potential acquisitions or licenses and integrating new business into our own; our ability to establish collaborative arrangements; completion of any acquisitions or other strategic transactions; marketing activities and competing technological and market developments, including regulatory changes and overall economic conditions in our target markets. Our ability to generate revenue and achieve profitability requires us to successfully market and secure purchase orders for our products and services through new and existing sales channels, and from customers currently identified in our pipeline as well as new customers. We also will be required to efficiently manufacture and deliver on those purchase orders. These activities, including our planned research and development efforts, may require significant uses of working capital. There can be no assurance that we will generate revenue and cash as expected in our current business plan.
6
The Company recognizes it will need to raise additional capital to continue research and development and to fund its planned operations, including to execute on its strategy to expand its business, complete pre-clinical and clinical trials and, if regulatory approval is obtained, commercialize any future products. The Company may seek additional funds through equity or debt offerings and/or borrowings under notes payable, lines of credit or other sources. The Company does not know whether additional financing will be available on commercially acceptable terms, or at all, when needed. If adequate funds are not available or are not available on commercially acceptable terms, the Company's ability to fund its operations, support the growth of its business or otherwise respond to competitive pressures could be significantly delayed or limited, which could materially adversely affect its business, financial conditions, or results of operations.
Reverse Stock Split
Effective March 7, 2025, the Company implemented a reverse stock split of its issued and outstanding shares of common stock, par value $
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ materially from those estimates. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents. As of March 31, 2025 and December 31, 2024, cash and cash equivalents totaled $
Accounts Receivable
Inventory
Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Inventories are reviewed periodically to identify slow-moving inventory based on anticipated sales activity. As of each March 31, 2025 and December 31, 2024, the reserve for obsolescence was $
7
Deferred Offering Costs
Business Combination
The Company follows the guidance in ASC 805, Business Combinations, for determining the appropriate accounting treatment for asset acquisitions. ASU No. 2017-01, Clarifying the Definition of a Business, provides an initial fair value screen to determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets. If the initial screening test is not met, the set is considered a business based on whether there are inputs and substantive processes in place. Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an asset acquisition, the accounting treatment is derived.
If the acquisition is deemed to be a business, the purchase method of accounting is applied. Identifiable assets acquired and liabilities assumed at the acquisition date are recorded at fair value. If the transaction is deemed to be an asset acquisition, the cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and allocated to the individual assets and liabilities based on relative fair values.
Property and Equipment
Property and equipment are recorded at cost net of accumulated depreciation. Depreciation is computed on a straight-line method over the estimated useful lives of the assets, to
Impairment of Long-Lived Assets
The Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of these asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. When indications of impairment are present and the estimated undiscounted future cash flows from the use of these assets is less than the assets’ carrying value, the related assets will be written down to fair value. There were
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
Revenue Recognition
The Company recognizes revenue from product sales in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”). The standard applies to all contracts with customers, except contracts that are within scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.
8
Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are in within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inceptions, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
The Company sells its products through direct sales and resellers. Revenue is recognized when control of the promised goods is transferred to the customers or the resellers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction.
The Company may receive payments at the onset of the contract and before goods have been delivered. In such instances, the Company records a deferred revenue liability. The Company recognizes these contract liabilities as revenue after the revenue criteria are met. As of March 31, 2025 and December 31, 2024, the contract liability related to the Company’s deferred revenues was
The Company relies on third parties to have procedures in place to detect and prevent credit card fraud, as the Company has exposure to losses from fraudulent charges. The Company records the losses related to chargebacks as incurred.
The Company has also elected to exclude from the measurement of the transaction price sales taxes remitted to governmental authorities.
The table below presents revenue by channel for the three months ended March 31, 2025 and 2024 (in thousands):
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Three Months Ended March 31, |
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Product Revenue by Sales Channel |
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2025 |
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2024 |
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Product Revenue |
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Direct-to-consumer |
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$ |
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$ |
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Reseller |
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Returns |
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( |
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Revenue |
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$ |
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$ |
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Sales Tax
Sales tax collected from customers and remitted to governmental authorities is accounted for on a net basis and therefore, is excluded from net sales.
Shipping and Handling
Shipping and handling fees paid by customers are recorded in revenue, with the related expenses recorded in cost of sales. There were
Shipping costs for delivery of product to customers in the three months ended March 31, 2025 and 2024 were $
Product Warranty
The Company generally offers a
9
Returns
The Company estimates a reserve for future product returns based on several factors, including historical returns as a percentage of revenue, an understanding of the reasons for past returns and any other known factors that indicate a return is imminent. Reserves for sales returns are estimated and recorded in the same period as the underlying revenue recognition as a deduction to arrive at net product sales and as a liability classified as “Other Accrued Expenses” on the balance sheet. As of March 31, 2025 and December 31, 2024, the reserve for sales returns was $
Research and Development Expenses
Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, materials, supplies, depreciation on and maintenance of research equipment, the cost of services provided by outside contractors, and the allocable portions of facility costs, such as rent, utilities, insurance, repairs and maintenance, depreciation, and general support services. All costs associated with research and development are expensed as incurred unless there is an alternative future use.
Sales and Marketing Expenses
Sales and marketing expenses are expensed as incurred and consist primarily of personnel costs, merchandising, customer service and targeted online marketing costs, such as display advertising, keyword search campaigns, search engine optimization and social media and offline marketing costs such as television, radio and print advertising. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation expense. Advertising and other promotional costs to market the Company’s products and services amounted to $
Stock-Based Compensation
The Company accounts for stock-based compensation arrangements with employees and non-employee consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options. The fair value method requires the Company to estimate the fair value of stock-based payment awards to employees and non-employees on the date of grant using an option pricing model.
Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black-Scholes option-pricing model and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The Company measures equity-based compensation awards granted to non-employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period.
Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend yield, expected term, risk-free rate of return, and the estimated fair value of the underlying common stock. Due to the lack of company-specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to the Company, including stage of product development and focus on the life science industry. Changes to the group are made on an as needed basis to ensure it remains representative of the Company. The Company uses the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company uses an assumed dividend yield of
Segment Reporting
Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker ("CODM") in deciding how to allocate resources and assess performance. The Company's CODM is the , who reviews the Company's operations and manages its business as a operating segment.
10
Net Loss per Common Share
The Company computes net loss per share of common stock in conformity with the two-class method required for participating securities. Diluted net loss per share is computed similar to basic net loss per share, except that the denominator is increased to include the number of additional shares for the potential dilutive effects of warrants, convertible preferred stock and stock options outstanding during the period calculated in accordance with the treasury stock method, or the two-class method, whichever is more dilutive. For all periods presented, basic and diluted net loss per share is the same, as inclusion of any additional share equivalents would be anti-dilutive.
Concentration of Credit Risk and Other Risks and Uncertainties
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents include a checking account and a money market account held at one national financial institution in the United States. At times, such deposits may be in excess of insured limits. Management believes that the financial institution at which the Company holds its deposits is financially sound, and accordingly, minimal credit risk exists with respect to the financial institution. The Company has not experienced any losses on its deposits of cash and cash equivalents. As of March 31, 2025 and December 31, 2024, the Company had cash and cash equivalents balances exceeding FDIC insured limits by $
The Company extends credit to customers in the normal course of business and performs credit evaluations of its customers. Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the financial statements.
During the three months ended March 31, 2025 the majority, or
For the three months ended March 31, 2025, the Company had
The ongoing conflicts between Russia and Ukraine as well as Israel and Hamas, certain other macroeconomic factors including tariffs, inflation, and rising interest rates, have contributed to economic uncertainty. Additionally, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. Furthermore, it is possible that U.S. policy changes, including planned or proposed budget cuts at the federal government level, could increase market volatility in the coming months. These factors, amongst other things, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. We will continue to monitor material impacts on our business strategies and operating results.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)- Disaggregation of Income Statement Expenses. The guidance applies to all public business entities and becomes effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The guidance requires improved disclosures about expenses, including the types of expenses in commonly presented expense captions (such as cost of sales, SG&A and research and development) which will allow investors to better understand the components of an entity's expenses. In January 2025, the FASB issued ASU 2025-01 to further clarify the effective date as the first annual reporting period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. We do not believe that ASU 2024-03 will have a material impact on our financial reporting.
11
3. Financial Instruments and Fair Value Measurements
The Company’s financial instruments consist of money market funds. The following tables show the Company’s cash equivalents carrying value and fair value at March 31, 2025 and December 31, 2024 (in thousands):
|
|
As of March 31, 2025 (unaudited) |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
Quoted |
|
|
Significant |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
Priced in |
|
|
other |
|
|
Significant |
|
|||||
|
|
|
|
|
|
|
|
active |
|
|
observable |
|
|
unobservable |
|
|||||
|
|
Carrying |
|
|
Fair |
|
|
markets |
|
|
inputs |
|
|
inputs |
|
|||||
|
|
Amount |
|
|
Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||
|
|
As of December 31, 2024 |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
Quoted |
|
|
Significant |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
Priced in |
|
|
other |
|
|
Significant |
|
|||||
|
|
|
|
|
|
|
|
active |
|
|
observable |
|
|
unobservable |
|
|||||
|
|
Carrying |
|
|
Fair |
|
|
markets |
|
|
inputs |
|
|
inputs |
|
|||||
|
|
Amount |
|
|
Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||
Cash equivalents – Cash equivalents of $
Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
There have been no changes to the valuation methodologies utilized by the Company during the three months ended March 31, 2025 compared to the year ended December 31, 2024. The Company evaluates transfers between levels at the end of each reporting period. There were
4. Inventory, net (in thousands)
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
|
|
(unaudited) |
|
|
|
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Inventory at cost |
|
|
|
|
|
|
||
Less reserve for obsolescence |
|
|
( |
) |
|
|
( |
) |
Inventory, net |
|
$ |
|
|
$ |
|
||
12
|
|
March 31, |
|
|
December 31, |
|
||
Computers and equipment |
|
$ |
|
|
$ |
|
||
Manufacturing tools and dies |
|
|
|
|
|
|
||
Total property and equipment |
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense was $
6. Statera License Agreement
On February 11, 2025, the Company entered into an exclusive license agreement (the “License Agreement”) with Statera Biopharma, Inc. ("Statera"), whereby the Company acquired (i) an exclusive worldwide license to the patented Toll-like Receptor 5 (“TLR5”) agonist lead program of Statera known as Entolimod (the “Licensed Molecules”) as it relates to the Acute Radiation Syndrome (“ARS”) indication (the “Initial Indication”) and (ii) an exclusive option (the “Exclusive Option”) to acquire the exclusive worldwide license to additional indications, including lymphocyte exhaustion, immunosenescence, neutropenia and/or for use as a vaccine adjuvant (the “Subsequent Indications”) and to the TLR5 agonist follow-on program of Statera known as Entolasta.
Under the terms of the License Agreement, Statera has granted the Company an exclusive worldwide license, with the right to grant and authorize sublicenses, under Statera’s patents, trademarks, know-how and other intellectual property, to develop, test, make, have made, use, sell, offer for sale, import and otherwise exploit Entolimod as it relates to the Initial Indication during the term of the License Agreement.
As consideration for the License Agreement, the Company agreed to pay Statera a license fee of $
The License Agreement further provides the Company with the Exclusive Option to expand the Initial Indications to include the treatment of the Subsequent Indications or to expand the use from a single agent to include uses as vaccine adjuvant, or several or all of them, at any time during the term of the License Agreement, and on one or more occasions, at its discretion. As part of exercise of the Exclusive Option, the license grant would be expanded to include uses of Entolasta, in addition to Entolimod, both for ARS and for the Subsequent Indications for which the Company has exercised its Exclusive Option.
In conjunction with the License Agreement, Statera additionally transferred to the Company the title to fifteen kilograms (15kg) of frozen manufactured Entolimod drug substance and drug product lots and associated quality records associated with their production and applicable verification records (the “Materials”). In connection with this acquisition of ownership of the Materials, the Company will be negotiating a $
The License Agreement also includes a buyout provision (the “Buyout”) by which the Company maintains the right to acquire from Statera at any time all right, title and interest in and to all technology licensed or otherwise subject to the Exclusive Option under the License Agreement. Should the Company elect to invoke this buyout right, it must provide Statera with a buyout payment equal to (a) the lesser of (i) the aggregate amount of payments due to Statera for achievement of all milestone events (described below), less the amount of payments paid for the achievement of one or more of such milestone events, and (ii) an amount negotiated in good faith and mutually agreed by the parties in writing as representing the risk adjusted net present value of the aggregate royalties that would have been payable absent such exercise; less (b) the amount of payments paid or payable by the Company to extinguish an existing lien on the licensed technology.
The Company makes certain judgments to determine whether transactions should be accounted for as acquisitions of assets or as business combinations. If it is determined that substantially all of the fair value of gross assets acquired in a transaction is concentrated in a single asset (or a group of similar assets), the transaction is treated as an acquisition of assets. The Company evaluates the inputs, processes, and outputs associated with the acquired set of activities and assets. If the assets in a transaction include an input and a substantive process that together significantly contribute to the ability to create outputs, the transaction is treated as an acquisition of a business. The Company's assessments concluded that the transactions pursuant to the Statera License Agreement constitute an asset acquisition.
13
The Company determined the acquisition constituted an acquisition of assets instead of a business combination as substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets, and therefore, the acquisition was not considered a business. In transactions accounted for as acquisitions of assets, no goodwill is recorded and contingent consideration, such as payments upon achievement of various developmental, regulatory and commercial milestones, generally is not recognized at the acquisition date. In an asset acquisition, up front payments allocated to in-process research and development ("IPRD") projects at the acquisition date are expensed unless there is an alternative future use. In addition, product development milestones are expensed upon achievement. As the Company is recording the transaction as an asset acquisition under ASC 805, the contingent payments will be recognized upon achievement and at that time will be expensed to in-process research and development, or capitalized, depending on the determination if there is alternative future use of the purchase. Transaction costs of approximately $
The License Agreement obligates the Company to develop and commercialize the licensed products, at its own cost and expense, inclusive of licensed products with respect to any Subsequent Indications obtained upon exercise of an Exclusive Option.
Event |
|
Payment |
|
|
Validation of current inventory of Materials for distribution and sales |
|
$ |
|
|
Filing of BLA with FDA for Acute Radiation Syndrome |
|
|
|
|
Total Acute Radiation Syndrome Development Milestones |
|
$ |
|
|
Upon exercise of an Exclusive Option with respect to one or more Subsequent Indications, the following corresponding applicable milestones and milestone payments, payable in in either the cash or Company stock (at the sole discretion of the Company), become obligations of the Company as well:
Event |
|
Payment |
|
|
File IND and Initiate Phase 2 Clinical Study for Neutropenia |
|
$ |
|
|
Phase III Completion - successfully meets endpoint required to secure FDA approval for treatment of Neutropenia |
|
|
|
|
File BLA with FDA and achieve FDA Approval for Neutropenia |
|
|
|
|
File IND and Initiate Phase 2 study of Lymphocyte Exhaustion |
|
|
|
|
Phase III Completion - successfully meets endpoint required by FDA for treatment of Lymphocye Exhaustion |
|
|
|
|
File BLA with FDA and achieve FDA Approval for Lymphocyte Exhaustion |
|
|
|
|
IND approval and initiation of Phase 3 study as a Vaccine Adjuvant |
|
|
|
|
File US BLA with FDA and achieve FDA Approval for use as a Vaccine Adjuvant |
|
|
|
|
Total Potential Development Milestones for additional Indications (as applicable) |
|
$ |
|
|
Pursuant to the License Agreement, in the event that the Company exercises its Exclusive Option with respect to one or more Subsequent Indications, the Company may elect, in its sole discretion, to accelerate any of the milestone payments in advance of the milestone achievements.
On March 28, 2025, the Company notified Statera of its election to exercise its Exclusive Option to acquire the exclusive worldwide license to the neutropenia indication for Entolimod under the License Agreement (the “Neutropenia Option”) and to accelerate the first milestone payment of $
As a result of the Company’s exercise of the Neutropenia Option, the Company is obligated to develop and commercialize the expanded licensed products related to the neutropenia indication, at its own cost and expense, including to meet those milestones discussed above, and is obligated to pay the milestone payments, other than the Neutropenia Option, upon accomplishing each such milestone.
14
7. Commitments and Contingencies
Lease
In June 2024, the Company entered into a short-term rental agreement for office space located in Fremont, California. The Company evaluated the agreement and determined the short-term rental agreement does not meet the criteria for capitalization. Monthly rent payments required are $
Exclusive License Agreement – Statera BioPharma
As discussed above in Note 6, the Company is obligated to make certain payments to Statera pursuant to the License Agreement, upon the achievement of certain commercialization milestones.
Purchase Commitments
The Company has entered into multiple contracts related to the development of Tivic's ncVNS technology, including a collaboration and research support agreement and a research study to substantiate clinical indications that have potential to be addressed by Tivic's patent-pending ncVNS system. The contracts require milestone payments to be made upon the successful completion of certain deliverables. As of March 31, 2025, the Company has remaining commitments to pay a total of $
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when future expenditures are probable and such expenditures can be reasonably estimated. The Company recorded
8. Other Accrued Expenses (in thousands)
|
|
March 31, |
|
|
December 31, |
|
||
Legal and professional fees |
|
$ |
|
|
$ |
|
||
Financing fees |
|
|
|
|
|
— |
|
|
Delaware franchise tax |
|
|
|
|
|
— |
|
|
Research study costs |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other accrued expenses |
|
$ |
|
|
$ |
|
||
9. Preferred Stock
The Company’s board of directors is authorized, without action by its stockholders, to designate and issue up to
There were no series of preferred stock designated and
On February 10, 2025, in connection with the License Agreement, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series A Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware, pursuant to which
15
Dividend Rights - to the extent that dividends are paid to holders of the Company's common stock, holders of Series A Preferred Stock shall be entitled to participate in such dividends on an as-if-converted-to-common-stock basis, without regard to the Beneficial Ownership Limitation (as defined below).
Voting Rights - the Series A Non-Voting Preferred Stock has no voting rights. Provided, however, that so long as any shares of Series A Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series A Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Charter or bylaws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, in each case if any such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Charter or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further shares of Series A Preferred Stock, or (iii) enter into any agreement with respect to any of the foregoing
Conversion Features - each share of Series A Preferred Stock is convertible into
Redemption Rights - shares of Series A Preferred Stock are not redeemable.
Liquidation Rights - in the event of the liquidation, dissolution, or winding up of the affairs of the Company, whether voluntary or involuntary, holders of Series A Preferred Stock shall rank on parity with common stockholders as to the distributions of assets.
Beneficial Ownership Limitation - a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of the Series A Preferred Stock, the “Beneficial Ownership Limitation” shall initially be set at
On February 11, 2025, in connection with and as consideration for the License Agreement, the Company entered into a Securities Purchase Agreement with Statera, pursuant to which the Company issued and sold to Statera an aggregate of (i)
On March 31, 2025, in connection with the Company's exercise of the Neutropenia Option pursuant to the License Agreement and as consideration for the exercise of its option to accelerate the first milestone payment of $
As of March 31, 2025, there were approximately
16
10. Common Stock
At March 31, 2025 and December 31, 2024, there were
Effective March 7, 2025, the Company implemented a reverse stock split of its issued and outstanding shares of common stock, par value $
On
On September 13, 2024 the Company entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Maxim Group LLC (“Maxim”), pursuant to which the Company may offer and sell, from time to time, through or to Maxim, as sales agent or principal, shares of its common stock. The Company will pay Maxim a commission of
On February 11, 2025, in connection with, and as consideration for, the License Agreement ,the Company entered into a Securities Purchase Agreement with Statera, pursuant to which it issued and sold to Statera an aggregate of (i)
17
On March 18, 2025, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Mast Hill Fund, L.P. (“Mast Hill”), pursuant to which the Company will have the right, but not the obligation, to sell to Mast Hill, and Mast Hill will have the obligation to purchase from the Company, up to $
On March 31, 2025, in connection with the Company's exercise of the Neutropenia Option pursuant to the License Agreement and as consideration for the exercise of its option to accelerate the first milestone payment of $
Common stockholders are entitled to dividends if and when declared by the Board of Directors, subject to the rights of the preferred stockholders. As of March 31, 2025,
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Warrants to purchase common stock |
|
|
|
|
|
|
||
Options issued and outstanding |
|
|
|
|
|
|
||
Restricted stock units outstanding |
|
|
|
|
|
|
||
Shares available for future incentive plan grants |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
11. Common Stock Warrants
Historically, the Company has entered into warrant agreements in connection with certain consulting agreements and equity offerings. In August 2023, the Company implemented a
In July 2021, the Company entered into a consulting agreement, pursuant to which warrants to purchase
In November 2021, the Company issued warrants to purchase
In February 2023, the Company issued warrants to purchase
18
In July and August 2023, the Company issued warrants to purchase an aggregate of
In May 2024, in connection with the sale of
The Company estimated the value of the warrants issued to the placement agent in May 2024 using the
The fair value of the warrants issued to the placement agent in 2024 was estimated on the date of grant using the following assumptions:
|
|
2024 |
||
|
|
Minimum |
|
Maximum |
Expected life (in years) |
|
|
||
Expected volatility |
|
|
||
Risk-free interest rate |
|
|
||
Dividend yield |
|
|
||
A summary of the Company’s outstanding warrants as of March 31, 2025 is as follows:
Class of Shares |
|
Number of Warrant Shares |
|
|
Exercise Price of Warrants |
|
|
Expiration Date of Warrants |
||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Common Stock |
|
|
|
|
$ |
|
|
|||
Total |
|
|
|
|
|
|
|
|
||
During the three months ended March 31, 2025, a total of
12. Equity Incentive Plans
In 2017, the Company adopted its 2017 Equity Incentive Plan (the “2017 Plan”).
19
On November 10, 2021, the 2017 Plan terminated and was replaced by the 2021 Plan (defined below), and future issuances of incentive instruments will be governed by the 2021 Plan. To the extent that outstanding awards under the 2017 Plan are forfeited or lapse unexercised, the shares of common stock subject to such awards will no longer be available for future issuance.
2021 Equity Incentive Plan
In 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”). The plan allows for the issuance of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, stock bonus awards and performance-based awards. Awards granted under the 2021 Plan are determined by the Compensation Committee of the Company’s board of directors, who is responsible for administering the 2021 Plan. The term for stock options shall be no more than
Amended and Restated 2021 Equity Incentive Plan
On August 9, 2024, the Company adopted its Amended and Restated 2021 Equity Incentive Plan (the “A&R 2021 Plan”), which amends and restates the 2021 Plan in full to, amongst other things, increase the number of shares of common stock authorized for issuance thereunder from
As of March 31, 2025, there were
Stock Options
In the case of an incentive stock option (i) granted to an employee who, at the time of grant of such option, owns stock representing more than
The options may include provisions permitting exercise of the option prior to full vesting. Any unvested shares upon termination shall be subject to repurchase by the Company at the original exercise price of the option. Stock options granted under the Company’s equity incentive plans generally vest over four years from the date of grant.
20
The following table summarizes the stock option award activity for the three months ended March 31, 2025:
|
|
Outstanding |
|
|
Exercisable |
|
||
January 1, 2025 |
|
|
|
|
|
|
||
Granted |
|
|
— |
|
|
|
— |
|
Vested |
|
|
— |
|
|
|
|
|
Canceled or expired |
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
March 31, 2025 |
|
|
|
|
|
|
||
The weighted-average exercise price as of March 31, 2025 for stock options outstanding and stock options exercisable was $
Restricted Stock Awards
The following table summarizes the restricted stock award activity for the three months ended March 31, 2025:
|
|
|
|
Weighted-Average |
|
||
|
|
Number of |
|
Grant Date |
|
||
|
|
Shares |
|
Fair Value Per Share |
|
||
January 1, 2025 |
|
|
|
$ |
|
||
Issuance of restricted common stock |
|
|
— |
|
$ |
- |
|
Vested |
|
|
( |
) |
$ |
|
|
Cancelled |
|
|
— |
|
$ |
- |
|
March 31, 2025 |
|
|
— |
|
$ |
- |
|
The fair value of restricted stock awards vested during the each of the three months ended March 31, 2025 and 2024 was $
Restricted Stock Units
The following table sets forth the status of the Company's non-vested restricted stock units issued to employees:
|
|
Number of |
|
|
Weighted- |
|
||
Non-vested as of January 1, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
— |
|
|
$ |
— |
|
Cancelled |
|
|
— |
|
|
$ |
— |
|
Non-vested as of March 31, 2025 |
|
|
|
|
$ |
|
||
The fair value of restricted stock units granted during the three months ended March 31, 2025 was $
21
Total Stock-Based Compensation
Total stock-based compensation recorded in the condensed statements of operations is allocated as follows (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Research and development |
|
$ |
|
|
$ |
|
||
Sales and marketing |
|
|
|
|
|
— |
|
|
General and administrative |
|
|
|
|
|
|
||
Total stock-based compensation |
|
$ |
|
|
$ |
|
||
13. Net Loss per Share
The Company applies the two-class method in calculating the net loss per share amounts which requires net loss to be allocated between the common and convertible preferred stockholders based on their respective right to receive dividends. Accordingly, the Company’s basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Net loss attributable to common stockholders is equal to the Company’s net loss.
Basic earnings per share ("EPS") is calculated by dividing net income, less any dividends, accretion or decretion, redemption or induced conversion on our Series Preferred Stock, by the weighted average number of shares outstanding during the reported period.
In computing diluted EPS, we adjust the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the Series A Preferred Stock. Such add-back would also include any adjustments to equity in the period to accrete the Series A Preferred Stock to its redemption price, or recorded upon a redemption or induced conversion. We adjust the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from potential shares resulting from the issuance of the Series A Preferred Stock, restricted stock units, and stock options.
The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the periods presented due to their antidilutive effect:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Warrants to purchase common stock |
|
|
|
|
|
|
||
Common stock options issued and outstanding |
|
|
|
|
|
|
||
Restricted stock units issued and outstanding |
|
|
|
|
|
— |
|
|
Series A Preferred Stock |
|
|
|
|
|
— |
|
|
Total |
|
|
|
|
|
|
||
14. Segment Information
Tivic Health is a diversified therapeutics company harnessing the power of the immune and autonomic nervous systems to fight disease and restore health. Tivic's bioelectronic program is developing non-invasive medical devices that optimize key stimulation parameters for the vagus nerve. Tivic's new biopharma program is focused on the advancing its first drug product candidate, Entolimod, into manufacturing, conducting process validation utilizing the output of such manufacturing, filing the associated Biologic License Application with the FDA, with the intent to sell the biologic compounds either inside or outside of the United States. Tivic also has an FDA-approved over-the-counter device, ClearUP, that treats sinus pain and pressure, for which it is actively pursuing various monitization strategies. Revenue is derived from sales of the Company's first commercial product, ClearUP. To date, the Company manages the business activities as a operating segment. Tivic's is the Chief Operating Decision Maker ("CODM").
22
Significant expenses within loss from operations, as well as within net loss, include costs of revenue, research and development, selling and marketing and general and administrative expenses, which are each separately presented on the Company's Statements of Operations. Other segment items within net loss include interest income.
During the three months ended March 31, 2025 and 2024, all revenue is domestic revenue. To-date we have not sold our product outside of the United States.
The Company's long-lived assets consist primarily of property and equipment, all of which are located in the United States.
15. Subsequent Events
Preferred Purchase Agreement
On April 29, 2025, the Company entered into an Securities Purchase Agreement (the “Preferred Purchase Agreement”) with an investor (the “Investor”), pursuant to which, subject to the conditions set forth therein, the Company shall sell to the Investor, and the Investor shall purchase from the Company, up to
The Preferred Purchase Agreement provides that the Preferred Offering shall be conducted through six separate Tranche Closings pursuant to which, subject to satisfaction of the applicable closing conditions set forth in the Preferred Purchase Agreement, the Company shall sell and issue the Investor up to an aggregate of
In addition to the shares of Series B Preferred to be sold and issued to the Investor in the Preferred Offering, at each Tranche Closing the Company shall also issue the Investor a Warrant to purchase that number of shares of Company common stock equal to
In the event that the average closing price of the Company’s common stock during the prior three trading days preceding a Tranche Closing date shall not be equal to or greater than the Floor Price (as defined below), then the applicable Tranche Closing shall be delayed until such time as the price meets the required threshold for a period of consecutive trading days. Notwithstanding the foregoing, the Investor has the ability, subject to prior written consent of the Company, to purchase any number of shares of Series B Preferred prior to the dates of the Tranche Closings provided for in the Preferred Purchase Agreement.
The Preferred Purchase Agreement contains customary termination provisions for the Investor under certain limited circumstances and the Preferred Purchase Agreement will automatically terminate if any Tranche Closing has not occurred prior to December 31, 2025.
Craft Capital Management LLC (“Craft”) acted as placement agent to the Company in connection with the Preferred Offering. As consideration for services rendered by Craft, the Company shall pay Craft a cash fee equal to eight percent (
Designation of Series B Preferred Stock
On April 29, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series B Non-Voting
23
Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware in connection with the Preferred Offering. The Certificate of Designation became effective upon filing and designates
Ranking. The Series B Preferred ranks senior to the Company’s common stock and Series A Preferred stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Dividends. The holders of outstanding shares of Series B Preferred shall be entitled to cumulative dividends at an annual rate of
Voting.
Conversion. Subject to certain beneficial ownership limitations and, until such date that Stockholder Approval is obtained, the Exchange Cap, at any time after the issuance date, each holder of Series B Preferred shall have the right, at such holder’s option, to convert any or all of the shares of Series B Preferred held by such holder into fully paid and nonassessable shares of Company common stock. The number of shares of common stock issuable upon conversion of each share of Series B Preferred shall be equal to the quotient obtained by dividing (i) the Stated Value of such share of Series B Preferred plus all accrued and unpaid dividends thereon by (ii) the Conversion Price (as defined below) in effect on the date of conversion. The conversion price (the “Conversion Price”) in effect on any conversion date shall be equal to
Liquidation. In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of Series B Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets, funds, or proceeds available for distribution of the Company to the holders of Common Stock or any other class or series of capital stock ranking junior to the Series B Preferred upon liquidation, by reason of their ownership thereof, an amount per share equal to the greater of (i) the Stated Value plus all accrued and unpaid dividends thereon or (ii) the amount that such Holder would receive if such Holder converted all of its shares of Series B Preferred into common stock immediately prior to such liquidation, dissolution or winding up.
Redemption. The Company may, at any time and in its sole discretion, request to redeem all or any portion of the outstanding shares of Series B Preferred at a price equal to
Scorpius Statement of Work
On May 9, 2025, the Company entered into a Statement of Work (the “Scorpius SOW”) with Scorpius BioManufacturing, Inc. (“Scorpius”), pursuant to which Scorpius will serve as the primary U.S. manufacturer for the Company’s late-stage TLR5 agonist, Entolimod, for the treatment of acute radiation syndrome. Pursuant to the Scorpius SOW, Scorpius will provide the following services, among others: cell line verification, legacy process verification, GMP scale-up production, drug product fill and finish, analytical
24
development and qualification, and upstream and downstream optimization of the process. The Scorpius SOW shall be governed by the Terms and Conditions attached thereto, unless and until a Master Services Agreement is executed by and between the parties in connection with the services contemplated by the Scorpius SOW.
Pursuant to the Scorpius SOW, the Company has agreed to pay Scorpius service fees estimated to be approximately $
Equity Distribution Agreement
25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with the interim condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10‑Q (this "Quarterly Report"), as well as our audited financial statements and related notes as disclosed in our Annual Report on Form 10‑K for the fiscal year ended December 31, 2024. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part II, Item 1A “Risk Factors” or in other parts of this Quarterly Report on Form 10‑Q, as well as those identified in the “Risk Factors” section of our Annual Report on Form 10‑K for the fiscal year ended December 31, 2024, each of which Risk Factors are incorporated in this Quarterly Report on Form 10-Q by reference. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. See “Forward-Looking Statements.”
Business Overview
Tivic Health is a diversified therapeutics company harnessing the power of the immune and autonomic nervous systems to fight disease and restore health. Tivic Health’s bioelectronic program is developing non-invasive medical devices to meaningfully improve treatment options in neurologic, cardiac and autonomic-related diseases. Tivic Health currently offers a bioelectronic, FDA-approved over-the-counter device (ClearUP™) that treats sinus pain, pressure and congestion. ClearUP is available through online retailers and commercial distributors and at tivichealth.com. Tivic Health is further developing its bioelectronic portfolio with a focus on non-invasive vagus nerve stimulation.
Tivic Health’s TLR5 program focuses on immunotherapeutics about to activate underactive immune systems. The lead product candidate is the late-stage TLR5 agonist, Entolimod™, to treat acute radiation syndrome ("ARS"). The U.S. Federal Drug Administration (“FDA”) has granted Fast Track and Orphan Drug designation to Entolimod™ for the treatment of ARS. Tivic Health is also preparing to file an investigational new drug ("IND") application and to initiate a phase 2 clinical study for Entolimod™ for the treatment of neutropenia.
Tivic's VNS program includes two complementary systems. Tivic’s first commercial system is a handheld design that interfaces non-invasively with the trigeminal, sympathetic, and other facial and cranial nerve structures. This platform is the basis for Tivic’s existing product, currently marketed with FDA approval as ClearUP Sinus Pain Relief for the treatment of sinus pain and congestion.
The second is a clincal-stage system directed to non-invasive vagus nerve stimulation.
Current Commercial Product
Tivic Health currently markets one commercial product under the brand name “ClearUP Sinus Pain Relief.” ClearUP is built on our patented, handheld neuromodulation design and was developed by Tivic Health for the treatment of sinus and allergy-related conditions. It uses ultra-low current electrical waves to relieve sinus pain and congestion symptoms that are prevalent in nasal allergies, sinus infections, chronic sinusitus, cold and flu as part of sinonasal immune responses. ClearUP has been approved by the U.S. Federal Drug Administration (“FDA”) for the indications of temporary relief of sinus pain associated with allergic rhinitis and temporary relief of congestion. ClearUP is the first FDA-approved bioelectronic treatment of the foregoing indications.
The FDA initially provided clearance to our ClearUP product under a 510(k) with clinical data as an allergy treatment in January 2019. The FDA granted ClearUP a subsequent De Novo clearance in March 2021, which expanded ClearUP’s label, enabling marketing of ClearUP for allergies, sinusitis, cold, flu, and any inflammatory condition involving congestion.
A 2023 study with over 2,000 representative consumers conducted by Intellego Insights (commissioned by Tivic Health) identified that approximately 85 million U.S. adults experience inflammation-related symptoms related to allergies, congestion, head pain, and sinus issues. Of the consumers that participated in the study, 58% of sufferers try to avoid medication, if at all possible.
Customers can purchase ClearUP products directly from Tivic via our own website and through major online stores, including Amazon, Walmart, BestBuy, FSAStore and HSA Store. These channels are serviced, in part, through distribution agreements with McKesson, Cardinal Health and Cencora (previously Amerisource Bergen) or are directly managed by the Company.
26
VNS Clinical Research
Tivic has also developed a proprietary approach to precision, non-invasive cervical vagus nerve stimulation (“ncVNS”) based on our experience building evidence-based bioelectronic therapeutics. The vagus nerve is the tenth cranial nerve and the longest autonomic nerve in the body. The vagus nerve is responsible for regulating several bodily functions, including system immune responses, digestion, heart rate, breathing, cardiovascular activity, and visceral reflexes. Because the vagus nerve regulates the immune system and many organ systems associated with chronic disease, modulating activity in this nerve pathway is of significant interest in the healthcare industry.
In May 2024, we announced the final results of an initial clinical validation study with The Feinstein Institutes for Medical Research at Northwell Health (“Feinstein”). Through this collaboration, we have confirmed the effectiveness of our patent-pending non-invasive ncVNS approach, which induces responses in the autonomic, cardiac, and central nervous systems and can be expected to have clinical utility in several major disease areas. The study had the following results:
The magnitude of our ncVNS data imply potential for greater clinical effects and enhanced reproducibility than demonstrated by previous studies of non-invasive VNS devices. These results in healthy subjects suggest our ncVNS approach may have clinical utility in several patient populations including those with post-traumatic stress disorder, cardiac disease, inflammatory conditions, and ischemic stroke, among others.
Based upon these encouraging results, in May 2024, we initiated a second collaborative research study with Feinstein to identify VNS device parameters, including frequency, signal parameters, electrode placement and duration of treatment, that deliver the optimal effect on autonomic nervous system (“ANS”) function (elsewhere referred to as our "optimization study"). In September 2024, we announced approval for the contracted clinical work by Northwell Health's Institutional Review Board, required before enrollment of subjects. In October 2024, we announced enrollment of the first subject in this optimization study for our patent pending, non-invasive vagus nerve stimulation device. The results will be used to inform clinical indication priority and commercial development. Enrollment was completed in November 2024. In early 2025, following the completion of two rounds of study visits, the Company expanded the protocol to include additional parameters for optimization, leading to additional intellectual property, including those claims covered in various patent filings.
VNS Commercial Strategy
In September 2024, we announced our partnership with Fletcher Spaght, Inc ("FSI"), a leading healthcare growth strategy firm, to accelerate development of our commercial strategy for ncVNS. The firm has completed a comprehensive market assessment of our ncVNS technology drawing from outcomes from our clinical study results. FSI initially identified approximately 30 potential medical use cases for our ncVNS technology in neurologic, cardiac, psychiatric and autonomic nervous system diseases. Working closely with Tivic’s scientific and clinical leadership, the firm has identified a set of prioritized target indications with the strongest potential for market entry, based on market research, clinical reviews and interviews with key opinion leaders and payers.
We intend to overlay the results of the clinical research with our proprietary market research to prioritize targets for disease-specific trials planned for the second half of 2025.
27
Business Updates
Nasdaq Compliance
On June 28, 2024, we received a notification letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, because the closing bid price for our common stock was below $1.00 per share for 33 consecutive business days, we are not currently in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). On December 27, 2024, the Company received an additional letter from Nasdaq stating that it had not regained compliance with the Minimum Bid Price Requirement and was not eligible for a second 180-day remediation period, and that, unless it timely requested a hearing before a Hearings Panel (the “Panel”), the Company’s securities would be subject to suspension/delisting. After a hearing in front of the Panel, on March 6, 2025, the Company received a letter from the Panel granting its request for continued listing on the Nasdaq Capital Market, provided that the Company implemented a reverse stock split of its common stock on March 7, 2025 and demonstrated compliance with all such continued listing requirements for the Nasdaq Capital Market as of March 20, 2025.
On April 4, 2025, the Company received a letter from Nasdaq confirming that the Company has regained compliance with the Minimum Bid Price Requirement, as required by the Panel’s decision dated March 6, 2025. As a result, the Company’s common stock will continue to be listed on the Nasdaq Capital Market.
Reverse Stock Split - 2025
Effective March 7, 2025, we implemented a reverse stock split of our issued and outstanding shares of common stock, par value $0.0001 per share, at a ratio of 1-for-17. As a result of the reverse stock split, the total number of shares of common stock held by each stockholder of the Company were converted automatically into the number of shares of common stock equal to the number of issued and outstanding shares of common stock held by each such stockholder immediately prior to the reverse stock split divided by 17. We issued one whole share of the post reverse stock split common stock to any stockholder who otherwise would have been entitled to receive a fractional share as a result of the reverse stock split (for a total of 76 shares). As a result, no fractional shares were issued in connection with the reverse stock split and no cash or other consideration was paid in connection with any fractional shares that would otherwise have resulted from the reverse stock split. Also, all options, warrants and other convertible securities of the Company outstanding immediately prior to the reverse stock split were adjusted by dividing the number of shares of common stock into which such options, warrants and other convertible securities were exercisable or convertible by 17 and multiplying the exercise or conversion price thereof by 17, all in accordance with the terms of the plans, agreements or arrangements governing such options, warrants and other convertible securities and subject to rounding pursuant to such terms. There was no change to the par value, or authorized shares, of either the common stock or preferred stock, as a result of the reverse stock split.
All share and per share amounts for our common stock, as well as the number of shares of common stock issuable upon conversion of outstanding preferred stock and upon exercise of options and warrants outstanding, and exercise prices thereof, from dates prior to completion of the reverse stock split that are included in this Quarterly Report, including the financial statements and footnotes thereto included herein, have been retroactively restated to give effect to the reverse stock split.
Equity Line of Credit
On March 18, 2025, we entered into an Equity Purchase Agreement (the “Mast Hill Purchase Agreement”) with Mast Hill Fund, L.P. (“Mast Hill”), pursuant to which we will have the right, but not the obligation, to sell to Mast Hill, and Mast Hill will have the obligation to purchase from us, up to $25 million (the “Maximum Commitment Amount”) shares of our common stock (the “Put Shares”), at our sole discretion, over the next 24 months, subject to certain conditions precedent and other limitations.
Unless earlier terminated, the Mast Hill Purchase Agreement will remain in effect until the earlier of March 18, 2027 or the date on which Mast Hill has purchased the Maximum Commitment Amount (the “Commitment Period”). We have the right to terminate the Mast Hill Purchase Agreement at any time, subject to limitations set forth in the Mast Hill Purchase Agreement.
During the Commitment Period, we will have the right, but not the obligation, to direct Mast Hill to make a purchase of the Put Shares by delivering written notice to Mast Hill (a “Put Notice”) on any trading day (the “Put Date”) to purchase a number of Put Shares pursuant to a formula set forth in the Mast Hill Purchase Agreement. The purchase price for the Put Shares under the Mast Hill Purchase Agreement will be equal to 95% of the lowest VWAP (as defined in the Mast Hill Purchase Agreement) of our common stock on the Principal Market (as defined in the Mast Hill Purchase Agreement) on any trading day during the pricing period, and the pricing period for each sale of Put Shares will be the 5 trading days immediately after receipt of the Put Shares by Mast Hill, subject to adjustment as provided in the Mast Hill Purchase Agreement.
28
Each Put Notice shall direct Mast Hill to purchase Put Shares (i) in a minimum amount not less than $50 thousand and (ii) in a maximum amount up to $500 thousand, provide further that the number of Put Shares in each respective Put shall not exceed 100% of the average trading volume of our common stock during the 5 trading days immediately preceding the date of the Put Notice. Mast Hill’s obligation to purchase Put Shares is subject to a 4.99% beneficial ownership blocker. Additionally, pursuant to the Mast Hill Purchase Agreement,we may not sell or issue to Mast Hill more than 19.99% of the number of shares of our common stock issued and outstanding immediately prior to execution of the Mast Hill Purchase Agreement unless and until we obtain stockholder approval to issue additional shares, in accordance with applicable Nasdaq rules.
As consideration for Mast Hill’s commitment to purchase shares of our common stock under the Mast Hill Purchase Agreement, we issued Mast Hill 29,800 restricted shares of common stock following the execution of the Mast Hill Purchase Agreement (the “Commitment Shares”).
Craft Capital Management LLC acted as our placement agent in connection with this transaction. As compensation for such services, we will pay Maxim a commission of 3.0% of the aggregate gross proceeds from each sale of Put Shares under the Mast Hill Purchase Agreement.
In connection with the Mast Hill Purchase Agreement, the Company and Mast Hill also entered into a registration rights agreement, pursuant to which we agreed to file with the Commission an initial registration statement covering (i) all of the Put Shares issuable under the Mast Hill Purchase Agreement the Commitment Shares (collectively, the “Mast Hill Registrable Securities”) so as to permit the resale of such securities by Mast Hill. On May 2, 2025, we filed the registration statement with the SEC confidentially, and, after receiving notice from the SEC that they would not be reviewing it, we filed the registration statement publicly on May 9, 2025. The registration statement was declared effective by the SEC on March 13, 2025. Pursuant to the registration rights agreement, we shall keep the registration statement effective, including but not limited to pursuant to Rule 415 promulgated under the Securities Act and available for the resale by Mast Hill of all of the Mast Hill Registrable Securities covered thereby at all times until the date on which Mast Hill shall have sold all the Mast Hill Registrable Securities and the Maximum Commitment Amount has been drawn down by the Company.
The Mast Hill Purchase Agreement and registration rights agreement contain customary representations, warranties and agreements, as well as customary conditions to Mast Hill’s obligation to purchase the Put Shares.
Exclusive License Agreement – Statera BioPharma
On February 11, 2025, we entered into the License Agreement with Statera, whereby we acquired (i) an exclusive worldwide license to the patented TLR5 agonist lead program of Statera known as Entolimod (the “Licensed Molecules”) as it relates to the ARS indication (the “Initial Indication”) and (ii) an exclusive option (the “Exclusive Option”) to acquire the exclusive worldwide license to additional indications, including Lymphocyte Exhaustion, Immunosenescence, Neutropenia and/or Vaccine Adjuvant (the “Subsequent Indications”) and to the TLR5 agonist follow-on program of Statera known as Entolasta, in each case as described in more detail below. The License Agreement transaction was consummated concurrently therewith on February 11, 2025 (the “Closing Date”).
Under the terms of the License Agreement, Statera has granted the Company an exclusive worldwide license, with the right to grant and authorize sublicenses, under Statera’s patents, trademarks, know-how and other intellectual property to develop, test, make, have made, use, sell, offer for sale, import and otherwise exploit the product Entolimod as it relates to the Initial Indication during the term of the License Agreement.
As consideration for the License Agreement, we agreed to pay Statera a license fee of $1,500,000 consisting of (i) $300,000 in cash consideration and (ii) $1,200,000 in stock consideration, as described below. The Company remains liable to Statera for certain royalty payments on net sales for the ARS indication as a single agent, and, if it exercises the Exclusive Option, net sales for all Subsequent Indications, within certain royalty periods.
The License Agreement further provides us with the Exclusive Option to expand the Initial Indications to include the treatment of the Subsequent Indications or to expand the use from a single agent to include uses as vaccine adjuvant, or several or all of them, at any time during the term of the License Agreement, and on one or more occasions, at its discretion. As part of exercise of the Exclusive Option, the license grant would be expanded to include uses of Entolasta, in addition to Entolimod, both for ARS and for the Subsequent Indications.
In conjunction with the License Agreement, Statera additionally transferred to the Company the title to fifteen kilograms (15kg) of frozen manufactured Entolimod drug substance and drug product lots and associated quality records associated with their production and applicable verification records (the “Materials”). In connection with this acquisition of ownership of the Materials, we will be negotiating a $1 per year lease with an affiliate of Statera for the proper care, storage and handling of the Materials.
29
The License Agreement also includes a buyout provision (the “Buyout”) by which we maintain the right to acquire from Statera at any time all right, title and interest in and to all technology licensed or otherwise subject to the Exclusive Option under the License Agreement. Should we elect to invoke this buyout right, it must provide Statera with a buyout payment equal to (a) the lesser of (i) the aggregate amount of payments due to Statera for achievement of all milestone events (described below), less the amount of payments paid for the achievement of one or more of such milestone events, and (ii) an amount negotiated in good faith and mutually agreed by the parties in writing as representing the risk adjusted net present value of the aggregate royalties that would have been payable absent such exercise; less (b) the amount of payments paid or payable by the Company to extinguish an existing lien on the licensed technology.
The License Agreement obligates us to develop and commercialize the licensed products, at our own cost and expense, inclusive of licensed products with respect to any Subsequent Indications obtained upon exercise of an Exclusive Option. In the development and commercialization process, we are obligated to meet certain milestones, and must provide Statera with certain milestone payments, payable in either the form of cash or Company stock (at our sole discretion), upon accomplishing each milestone as outlined below.
Event |
|
Payment |
|
|
Validation of current inventory of Materials for distribution and sales |
|
$ |
750,000 |
|
Filing of BLA with FDA for Acute Radiation Syndrome |
|
|
1,000,000 |
|
Total Acute Radiation Syndrome Development Milestones |
|
$ |
1,750,000 |
|
Upon exercise of an Exclusive Option with respect to one or more Subsequent Indications, the following corresponding applicable milestones and milestone payments, payable in in either the cash or Company stock (at our sole discretion), become obligations of the Company as well:
Event |
|
Payment |
|
|
File IND and Initiate Phase 2 Clinical Study for Neutropenia |
|
$ |
500,000 |
|
Phase III Completion - successfully meets endpoint required to secure FDA approval for treatment of Neutropenia |
|
|
750,000 |
|
File BLA with FDA and achieve FDA Approval for Neutropenia |
|
|
1,500,000 |
|
File IND and Initiate Phase 2 study of Lymphocyte Exhaustion |
|
|
500,000 |
|
Phase III Completion - successfully meets endpoint required by FDA for treatment of Lymphocye Exhaustion |
|
|
750,000 |
|
File BLA with FDA and achieve FDA Approval for Lymphocyte Exhaustion |
|
|
1,500,000 |
|
IND approval and initiation of Phase 3 study as a Vaccine Adjuvant |
|
|
500,000 |
|
File US BLA with FDA and achieve FDA Approval for use as a Vaccine Adjuvant |
|
|
500,000 |
|
Total Potential Development Milestones for additional Indications (as applicable) |
|
$ |
6,500,000 |
|
Pursuant to the License Agreement, in the event that the Company exercises its Exclusive Option with respect to one or more Subsequent Indications, the Company may elect, in its sole discretion, to accelerate any of the milestone payments in advance of the milestone achievements.
On March 28, 2025, the Company notified Statera of its election to exercise its Exclusive Option to acquire the exclusive worldwide license to the neutropenia indication for Entolimod under the License Agreement (the “Neutropenia Option”) and to accelerate the first milestone payment of $500,000 related to the neutropenia indication, payable by the Company in connection with the filing of an IND and initiation of a Phase 2 clinical study for neutropenia. The payment of $500 thousand was paid in Company stock, as discussed in additional detail below.
As a result of the Company’s exercise of the Neutropenia Option, the Company is obligated to develop and commercialize the expanded licensed products related to the neutropenia indication, at its own cost and expense, including to meet those milestones discussed above, and is obligated to pay the milestone payments, other than the Neutropenia Option, upon accomplishing each such milestone.
In conjunction with the License Agreement, Statera may nominate one individual to sit on Board. Statera’s nominee must have the relevant industry experience in biopharmaceuticals, meet all requirements for service as an Independent Board Member, as defined by Nasdaq listing requirements. Approval of such Statera nominee shall be at the sole reasonable discretion of the Board.
Pursuant to the License Agreement, we agreed to hold a stockholders’ meeting within 120 days of the Closing Date to submit the approval of the conversion of shares of the Company's Series A Non-Voting Convertible Preferred Stock ("Series A Preferred Stock") into shares of Company common stock in accordance with the rules of the Nasdaq Stock Market LLC (the “Conversion Proposal”) to its stockholders for their consideration, provided, however that Statera agreed to extend the deadline to hold the stockholders' meeting
30
to June 30, 2025. In connection therewith, we have agreed to file a proxy statement on Schedule 14A with the SEC. If the requisite stockholder approval is not obtained within the time period referenced above, then we shall convene additional stockholder meetings every 90 days thereafter until the requisite stockholder approval is obtained.
Securities Purchase Agreements
On February 11, 2025, in connection with and as consideration for the License Agreement, the Company entered into a Securities Purchase Agreement with Statera, pursuant to which the Company issue and sold to Statera an aggregate of (i) 55,635 shares of Company common stock and (ii) approximately 360 shares of Series A Preferred Stock for an aggregate price of approximately $1.2 million.
On March 31, 2025, in connection with the Company's exercise of the Neutropenia Option pursuant to the License Agreement and as consideration for the exercise of its option to accelerate the first milestone payment of $500 thousand related to the neutropenia indication, and pursuant to a Securities Purchase Agreement entered into as of the same date, the Company issued $500 thousand shares of Company stock, consisting of an aggregate of 55,704 shares of common stock and approximately 131 shares of Series A Preferred Stock.
Each share of Series A Preferred Stock is convertible into approximately 588 shares of common stock, as described below. The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series A Preferred Stock are set forth in the Certificate of Designation (as defined and described below).
The Securities Purchase Agreements also provide the recipients of shares of the Series A Preferred Stock and common stock (together, the "Securities") with registration rights related to the Securities. Specifically, the Company is required to prepare and file a resale registration statement with the Commission within 60 calendar days following the closing date, with respect to the common stock and the shares of common stock underlying the Series A Preferred Stock.
Preferred Purchase Agreement
On April 29, 2025, the Company entered into an Securities Purchase Agreement (the “Preferred Purchase Agreement”) with an investor (the “Investor”), pursuant to which, subject to the conditions set forth therein, the Company shall sell to the Investor, and the Investor shall purchase from the Company, up to 8,400 shares of the Company’s newly designated Series B Non-Voting Convertible Preferred Stock (“Series B Preferred”) and warrants (“Warrants”) to purchase shares of the Company’s common stock for a total purchase price of up to $8,400,000 (the “Preferred Offering”) in several tranche closings (each, a “Tranche Closing”).
The Preferred Purchase Agreement provides that the Preferred Offering shall be conducted through six separate Tranche Closings pursuant to which, subject to satisfaction of the applicable closing conditions set forth in the Preferred Purchase Agreement, the Company shall sell and issue the Investor up to an aggregate of 8,400 shares of Series B Preferred as follows: (i) 700 shares of Series B Preferred, for $700,000, in the initial Tranche Closing, which shall be consummated upon effectiveness of the Registration Statement (defined below); (ii) 700 shares of Series B Preferred, for $700,000, in the second Tranche Closing, which shall be consummated 10 trading days after the initial Tranche Closing; (iii) 1,750 shares of Series B Preferred, for $1,750,000, in the third Tranche Closing, which shall be consummated 20 trading days after the second Tranche Closing; (iv) 1,750 shares of Series B Preferred, for $1,750,000, in the fourth Tranche Closing, which shall be consummated 20 trading days after the third Tranche Closing; (v) 1,750 shares of Series B Preferred, for $1,750,000, in the fifth Tranche Closing, which shall be consummated 20 trading days after the fourth Tranche Closing; and (vi) 1,750 shares of Series B Preferred, for $1,750,000, in the final Tranche Closing, which shall be consummated 20 trading days after the fifth Tranche Closing.
In addition to the shares of Series B Preferred to be sold and issued to the Investor in the Preferred Offering, at each Tranche Closing the Company shall also issue the Investor a Warrant to purchase that number of shares of Company common stock equal to 30% of shares of common stock issuable upon conversion in full of the shares of Series B Preferred issued at the same Tranche Closing. Each Warrant shall be immediately exercisable (subject to certain beneficial ownership limitations and Stockholder Approval), expire five years from the date of issuance, and have an initial exercise price equal to the average closing price of the Company’s common stock during the prior five trading days preceding each Tranche Closing (as may be adjusted for stock dividends, subdivisions, or combinations in the manner described in the Warrant). In the event that Warrants issued to the Investor in a subsequent Tranche Closing have a lower exercise price than the Investor’s Warrants outstanding as of such later Tranche Closing, immediately after the Tranche Closing the exercise price of all outstanding Warrants held by the Investor shall automatically be reduced to equal such lower exercise price of the Warrants issued in such Tranche Closing.
In the event that the average closing price of the Company’s common stock during the prior three trading days preceding a Tranche Closing date shall not be equal to or greater than the Floor Price (as defined below), then the applicable Tranche Closing shall be delayed
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until such time as the price meets the required threshold for a period of five consecutive trading days. Notwithstanding the foregoing, the Investor has the ability, subject to prior written consent of the Company, to purchase any number of shares of Series B Preferred prior to the dates of the Tranche Closings provided for in the Preferred Purchase Agreement.
Pursuant to the Preferred Purchase Agreement, subject to certain exceptions, for so long as any shares of Series B Preferred remain outstanding (the “ROFR Period”), the Investor will have a right of first refusal to with respect to any investment proposed to be made by any other person for each and every future variable rate transaction during the ROFR Period. Additionally, subject to certain exceptions, for so long as any the Investor holds any shares of Series B Preferred, Warrants, shares of common stock issued upon conversion of shares of Series B Preferred (“Conversion Shares”) or shares of common stock issued upon exercise of the Warrants (“Warrant Shares,” and collectively with the Series B Preferred, Warrants and Conversion Shares, the “Securities”), the Investor shall have the right to participate in any subsequent financing for up to 20% of such financing. Moreover, for so long as any shares of Series B Preferred remain outstanding, subject to certain exceptions, the Investor shall have the right to require the Company to use 25% of the proceeds received by the Company from any future financing to redeem any shares of Series B Preferred held by the Investor in accordance with the terms of the Series B Preferred Certificate of Designation.
The consummation of the transactions contemplated by the Preferred Purchase Agreement is subject to various customary closing conditions. In addition, pursuant to the Preferred Purchase Agreement, unless and until the Company obtains stockholder approval to issue additional shares in accordance with applicable Nasdaq Rules (“Stockholder Approval”), the Investor is prohibited from converting its shares of Series B Preferred and exercising its Warrants to the extent that such conversions and exercises would, in the aggregate, result in the issuance of shares of common stock exceeding 19.99% of the number of shares of Company common stock issued and outstanding on the execution date (the “Exchange Cap”). The Investor shall have no obligation to fund the second or subsequent Tranche Closings unless and until Stockholder Approval has been obtained, and the Company has agreed to file a proxy statement on Schedule 14A with the Securities and Exchange Commission (the “Commission”) to obtain Stockholder Approval no later than twenty (20) days from the execution date.
In connection with the Purchase Agreement, the Company and the Investor also entered into a registration rights agreement, pursuant to which the Company agreed to file with the Commission, no later than fifteen (15) days from the execution sate, a registration statement (the “Registration Statement”) covering the Conversion Shares and the Warrant Shares (collectively, the “Preferred Offering Registrable Securities”) so as to permit the resale of such securities by the Investor. The Company shall use commercially reasonable efforts to keep the registration statement effective, including but not limited to pursuant to Rule 415 promulgated under the Securities Act, and available for the resale by the Investor of all of the Preferred Offering Registrable Securities covered thereby at all times until the date on which the Investor shall have sold all the Preferred Offering Registrable Securities or they cease to require registration pursuant to the registration rights agreement.
The Purchase Agreement and registration rights agreement contain customary representations, warranties and agreements, as well as customary indemnification obligations of the Company.
Craft acted as placement agent to the Company in connection with the Preferred Offering. As consideration for services rendered by Craft, the Company shall pay Craft a cash fee equal to eight percent (8%) of any such funds received by the Company from the Investor pursuant to the Preferred Purchase Agreement.
Designation of Series B Preferred Stock
On April 29, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series B Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware in connection with the Preferred Offering. The Certificate of Designation became effective upon filing and designates 8,400 shares of the Company’s preferred stock as Series B Non-Voting Convertible Preferred Stock, par value $0.0001 per share.
Ranking. The Series B Preferred ranks senior to the Company’s common stock and Series A Preferred stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Dividends. The holders of outstanding shares of Series B Preferred shall be entitled to cumulative dividends at an annual rate of 10% of the Stated Value (as defined below) per share. Dividends shall accrue from the date of each such Tranche Closing, and for as long as any shares of Series B Preferred remain issued and outstanding and are payable quarterly in arrears. At the Company’s option, dividends on the Series B Preferred may be paid in (i) cash, (ii) by adding the amount of dividends payable on such date to the aggregate Stated Value of such Holder’s shares of Series B Preferred Stock (“PIK Dividends”), or (iii) any combination of cash and PIK Dividends. The “Stated Value” shall mean $1,000 per share, subject to adjustment in the event of any stock dividend (including PIK Dividends), stock
32
split, combination, recapitalization, or other similar event affecting such shares.
Voting. Except as otherwise provided by the Certificate of Designation or required by law, the Series B Preferred does not have voting rights. However, as long as any shares of Series B Preferred are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series B Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series B Preferred or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Company’s amended and restated certificate of incorporation, as amended (the “Charter”), or bylaws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, in each case if any such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series B Preferred, (ii) issue further shares of Series B Preferred, or (iii) enter into any agreement with respect to any of the foregoing.
Conversion. Subject to certain beneficial ownership limitations and, until such date that Stockholder Approval is obtained, the Exchange Cap, at any time after the issuance date, each holder of Series B Preferred shall have the right, at such holder’s option, to convert any or all of the shares of Series B Preferred held by such holder into fully paid and nonassessable shares of Company common stock. The number of shares of common stock issuable upon conversion of each share of Series B Preferred shall be equal to the quotient obtained by dividing (i) the Stated Value of such share of Series B Preferred plus all accrued and unpaid dividends thereon by (ii) the Conversion Price (as defined below) in effect on the date of conversion. The conversion price (the “Conversion Price”) in effect on any conversion date shall be equal to 90% of the lowest closing volume-weighted average price of the Company’s common stock on the Nasdaq Capital Market for the five trading days immediately preceding the date of the conversion notice delivered by the holder, subject to adjustment, provide, however, that in no event shall the Conversion Price be lower than $1.294 per share (the “Floor Price”), subject to adjustment.
Liquidation. In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of Series B Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets, funds, or proceeds available for distribution of the Company to the holders of Common Stock or any other class or series of capital stock ranking junior to the Series B Preferred upon liquidation, by reason of their ownership thereof, an amount per share equal to the greater of (i) the Stated Value plus all accrued and unpaid dividends thereon or (ii) the amount that such Holder would receive if such Holder converted all of its shares of Series B Preferred into common stock immediately prior to such liquidation, dissolution or winding up.
Redemption. The Company may, at any time and in its sole discretion, request to redeem all or any portion of the outstanding shares of Series B Preferred at a price equal to 115% of the Stated Value plus all accrued and unpaid dividends thereon by providing the holder at least 10 days prior written notice, during which 10 day period the holder thereof shall have the right to convert such holder’s shares of Series B Preferred into shares of Company common stock. Upon the closing of any equity or equity-linked financing by the Company after the issuance date, the holder shall have the right, but not the obligation, to require the Company to redeem, out of the proceeds of such financing, up to 25% of the aggregate amount of net proceeds raised in the financing, outstanding shares of Series B Preferred at a per share price equal to the Stated Value plus all accrued and unpaid dividends thereon, provided that such right shall expire 5 days after the holder receives notice from the Company of the consumption of a financing.
Scorpius Statement of Work
On May 9, 2025, the Company entered into a Statement of Work (the “Scorpius SOW”) with Scorpius BioManufacturing, Inc. (“Scorpius”), pursuant to which Scorpius will serve as the primary U.S. manufacturer for the Company’s late-stage TLR5 agonist, Entolimod, for the treatment of acute radiation syndrome. Pursuant to the Scorpius SOW, Scorpius will provide the following services, among others: cell line verification, legacy process verification, GMP scale-up production, drug product fill and finish, analytical development and qualification, and upstream and downstream optimization of the process. The Scorpius SOW shall be governed by the Terms and Conditions attached thereto, unless and until a Master Services Agreement is executed by and between the parties in connection with the services contemplated by the Scorpius SOW.
Pursuant to the Scorpius SOW, the Company has agreed to pay Scorpius service fees estimated to be approximately $2.4 million, with a total estimated investment by the Company of approximately $4.1 million, inclusive of additional pass-through costs and expenses, including for consumables and external services. The fees and costs will be payable on a milestone-based invoicing schedule tied to the completion of defined project stages and deliverables, as provided in the Scorpius SOW. Pass-through costs for raw materials, consumables, reagents, shipping, and subcontracted services will be managed by Scorpius on behalf of the Company at cost plus a 15% administrative fee. The Company is required to settle invoices within 30 days, with Scorpius reserving the right to impose monthly interest charges of 1% for undisputed amounts unpaid after 30 days. The Company will also be responsible for payment of any taxes, fees, duties or charges imposed by any governmental authority in connection with the services provided by Scorpius under the Scorpius SOW, other than on Scorpius’ net income taxes or franchise taxes.
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The Scorpius SOW includes detailed project management provisions, including the assignment of a dedicated project manager, regular project team meetings, risk management procedures, and the use of a project-dedicated site for document sharing and collaboration. The Company will own all deliverables provided by Scorpius, and intellectual property provisions specify that any foreground intellectual property generated specifically in connection with the development or manufacture of Entolimod (other than improvements to Scorpius background intellectual property and foreground intellectual property that is related primarily to the business of Scorpius generally conducted for its client) will be solely and exclusively owned by the Company. Additionally, Scorpius is required to provide monthly updates to the Company to keep it informed of progress and results of the activities in the scope of the Scorpius SOW.
Either party to the Scorpius SOW has the right to terminate the Scorpius SOW (i) upon written sixty (60) days’ written notice to other party for any reason or (ii) upon breach of a material provision of the Scorpius SOW and failure to cure within thirty (30) days’ written notice. In connection with any termination, the Company is required to pay (i) any open invoices and (ii) the documented reasonable expense incurred or irrevocably obligated related to the Scorpius SOW and Scorpius to wind down activities, plus as liquidated damages and not as a penalty, an amount equal to the greater of a 50% of the cost of the Scorpius SOW not yet performed or (b) 75% of the prices of the services for the applicable manufacturing run(s) set to be performed within sixty (60) days of termination under the Scorpius SOW.
Operational Updates
In the first three months of 2025 we hired Michael Handley, previous Chief Executive Officer, President and Chairman of Statera Biopharma as Chief Operating Officer of Tivic and President, Tivic Biopharma, a role in which he will lead the establishment of a biopharmaceutical capability within Tivic. We also continued to build and invest in developing our intellectual property portfolio.
We have continued to intentionally maintain a small core team at this stage of the Company, including managing our headcount to reduce operating expenses. We have relied, and continue to rely, heavily on third-party service providers, including marketing agencies, contract manufacturing organizations, software-as-a-service platforms, clinical research organizations, academic research partnerships, finance and accounting support, quality and regulatory support and legal support to carry out our operations.
Results of Operations
Comparison of the Three Months Ended March 31, 2025 and 2024
The following table summarizes our results of operations (in thousands):
|
|
Three Months Ended March 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
|
|
(unaudited) |
|
|||||||||
Revenue |
|
$ |
70 |
|
|
$ |
334 |
|
|
$ |
(264 |
) |
Cost of sales |
|
|
20 |
|
|
|
167 |
|
|
|
(147 |
) |
Gross profit |
|
|
50 |
|
|
|
167 |
|
|
|
(117 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
335 |
|
|
|
256 |
|
|
|
79 |
|
Sales and marketing |
|
|
179 |
|
|
|
505 |
|
|
|
(326 |
) |
General and administrative |
|
|
1,042 |
|
|
|
887 |
|
|
|
155 |
|
Total operating expenses |
|
|
1,556 |
|
|
|
1,648 |
|
|
|
(92 |
) |
Loss from operations |
|
|
(1,506 |
) |
|
|
(1,481 |
) |
|
|
(25 |
) |
Other income: |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
4 |
|
|
|
— |
|
|
|
4 |
|
Total other income |
|
|
4 |
|
|
|
— |
|
|
|
4 |
|
Net loss |
|
$ |
(1,502 |
) |
|
$ |
(1,481 |
) |
|
$ |
(21 |
) |
Revenue
Revenue is currently generated solely by the sale of our ClearUP and ancillary products, including accessories and accelerated shipping charges, and is net of return reserves. We currently sell ClearUP directly to consumers online through our own website and to resellers such as McKesson-affiliate Simply Medical, Cardinal Health and AmerisourceBergen. Through our online retailers, ClearUP is available through Amazon, McKesson, Optum Store, Walmart, Target, Best Buy, Cardinal Health and FSA/HSA Store.
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For the three months ended March 31, 2025, revenue decreased overall by $264 thousand, or 79%, compared to the same period in 2024, primarily due to a 81% decrease in the number of units sold associated with a 92% decrease in advertising spend as we focused our capital resources into securing the Statera Licensing Agreement.
We expect continued variability in sales as we manage advertising spend and seek alternative ways to monetize ClearUP.
Cost of Sales
Cost of sales consists primarily of the materials and services to manufacture our products, the internal personnel costs to oversee manufacturing and supply chain functions, and the shipment of goods to customers. Cost of sales is expected to vary on an absolute basis as sales volume increases or decreases. Cost of sales also includes inventory adjustments and reserves which may be necessary due to excess or obsolete inventory. Cost of sales is expected to fluctuate as adjustments or additional reserves become necessary.
For the three months ended March 31, 2025, cost of sales decreased by $147 thousand, or 88%, compared to the same period in 2024, primarily driven by the decrease in unit sales. Variable cost was $16 thousand, or $45.38 per unit, for the three months ended March 31, 2025, compared to $129 thousand, or $72.21 per unit, for the same period in 2024. The decrease in variable costs is due to restructuring of our supply chain with new partners completed in August 2024 and certain inventory adjustments, including scrap write-offs, that occurred in 2024. Fixed costs were $4 thousand, or $12.76 per unit, for the three months ended March 31, 2025, compared to $38 thousand, or $21.04 per unit, for the same period in 2024. The decrease in the fixed cost was primarily due to lower product support costs.
Gross Margin
Gross margin has been and will continue to be affected by, and is likely to fluctuate on a quarterly basis due to, a variety of factors, including sales volumes, product and channel mix, pricing strategies, costs of finished goods, and product return rates, new product launches and potential new manufacturing partners and suppliers. We expect our gross margin to improve with optimization of our product design and supply-chain, and increasing sales volume over which fixed and semi-fixed costs are allocated.
During the three months ended March 31, 2025, our gross margin has increased by 21% compared to the same period in 2024. The increase is due to the restructuring of our supply chain and move to a lower cost logistics provider.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred to conduct research, including the discovery, development and validation of product candidates. Research and development expenses include personnel costs, including stock-based compensation expense, third-party contractor services, including development and testing of prototype devices, and maintenance of limited in-house research facilities. We expense research and development costs as they are incurred. We expect research and development expenses to increase with the discovery and validation of new product candidates.
For the three months ended March 31, 2025, research and development expenses increased by $79 thousand compared to the same period in 2024. The increase was primarily due to additional headcount-related costs.
Sales and Marketing Expenses
Sales and marketing expenses include personnel costs and expenses for advertising and other marketing services. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation expense. We expect sales and marketing expenses to vary as we continue to support our current markets and distribution channels..
Sales and marketing expenses decreased to $179 thousand for the three months ended March 31, 2025, compared to $505 thousand for the three months ended March 31, 2024. The decrease was due to a 92% reduction in advertising spend as we we focused our capital resources into securing the Statera Licensing Agreement.
General and Administrative Expenses
General and administrative expenses include D&O insurance, personnel costs, expenses for outside professional services and other expenses. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation expense. Outside professional services
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consist of legal, finance, accounting and audit services, and other consulting fees. We expect general and administrative expenses to remain relatively flat.
For the three months ended March 31, 2025, general and administrative expenses increased by $155 thousand compared to the same period in 2024. The overall increase was the result of increases of $254 thousand in legal and other fees primarily related to our special shareholder meeting in January and our Nasdaq hearing in February, offset by decreases of $50 thousand in lease expenses due to the change in our headquarters in the second quarter of 2024 and decreases in other expenses.
Liquidity and Capital Resources
Sources of Liquidity
Since our formation in September 2016, we have devoted substantially all of our efforts to research and development, to regulatory clearance and to early market development and testing for our first product, released September 2019 in the United States, investments in product candidates deriving from our work in vagus nerve stimulation, and evaluation and conducting diligence on inorganic growth opportunities. Our focus has substantively shifted from growing the ClearUP business to advancing our biologic and bioelectronic pipeline towards commercial outcomes. We are not profitable and have incurred net losses and negative cash flows from our operations in each year since our inception. As of March 31, 2025, we had cash and cash equivalents of $0.7 million, working capital of $0.5 million and an accumulated deficit of $45.0 million. Subsequent to the end of the quarter, we received net proceeds of $1.7 million through the sale and issuance of common stock pursuant to our Equity Distribution Agreement.
We have financed our operations to date primarily through issuances of SAFE instruments, convertible notes and convertible preferred stock and the proceeds from registered offerings of our securities. In 2021, we completed our IPO, generating net proceeds to the Company of approximately $14.9 million, and we borrowed $2.6 million by issuing convertible notes payable, the outstanding balance of all of which converted into shares of our common stock in connection with our IPO.
On February 13, 2023, we completed the sale of 11,765 shares of our common stock in a firm commitment, fully underwritten registered public offering, resulting in net proceeds to the Company of approximately $3.6 million. From July 11, 2023 to August 9, 2023, we sold an aggregate of 68,779 shares of our common stock to certain investors in a series of registered public offerings, resulting in aggregate net proceeds to the Company of approximately $4.3 million. Additionally, in May 2024, we sold an aggregate of 277,059 shares of our common stock, together with Series A warrants to purchase an aggregate of 277,059 shares of common stock and Series B warrants to purchase an aggregate of 415,589 shares of common stock, to certain investors in a registered public offering, resulting in net proceeds to the company of approximately $3.3 million.
On September 13, 2024, we entered into an Equity Distribution Agreement with Maxim Group LLC ("Maxim"), pursuant to which we may offer and sell, from time to time, through or to Maxim, as sales agent or principal, up to $10 million in shares of our common stock, subject to our then current “baby shelf” limitation under General Instruction I.B.6. of Form S-3. As of March 31, 2025, we had sold an aggregate of 193,161 shares of common stock pursuant to the Distribution Agreement, for gross proceeds of $1.2 million. We paid Maxim $37 thousand in commissions in connection with such sales. In April 2025, we sold an aggregate of 172,700 shares of common stock pursuant to the agreement for gross proceeds of $1.8 million. We paid Maxim $53 thousand in commissions and $10 thousand in legal fee reimbursements for net proceeds of $1.7 million.
On March 18, 2025, we entered into the Mast Hill Purchase Agreement with Mast Hill, pursuant to which we will have the right, but not the obligation, to sell to Mast Hill up to $25 million in shares of our common stock from time to time over a two-year period, subject to certain conditions precedent and other limitations (including without limitation beneficial ownership limitations). As a condition to our ability to effect sales under the Mast Hill Purchase Agreement, the shares must be registered for resale by Mast Hill pursuant to an effective registration statement. Additionally, until such time that we have obtained stockholder approval to sell and issue shares of our common stock under the Mast Hill Purchase Agreement, in accordance with Nasdaq rules, the number of shares we may sell under the Mast Hill Purchase Agreement (including the 29,800 shares of common stock that we issued to Mast Hill as commitment shares) may not exceed 19.99% of the number of shares of our common stock issued and outstanding immediately prior to execution of the Mast Hill Purchase Agreement.
On April 29, 2025, we entered into the Preferred Purchase Agreement with the Investor, pursuant to which, subject to the conditions set forth therein, we shall sell to the Investor, and the Investor shall purchase from us, up to 8,400 shares of Series B Preferred and Warrants for a total purchase price of up to $8,400,000 in six separate Tranche Closings. The Investor's obligation to purchase shares of Series B Preferred and Warrants and to complete a Tranche Closing is subject to satisfaction of certain conditions precedent and other limitations (including without limitation beneficial ownership limitations and receipt of Stockholder Approval).
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Although we have taken measures to decrease our operating expenses, we expect that our operating expenses may increase significantly as we discover, acquire, validate and develop additional product candidates; seek regulatory approval and, if approved, proceed to commercialization of new products, including near-term investments in validation of our biologic manufacturing process, preparation of regulatory submissions to domestic and international bodies, and further activities supporting sales and commercialization of Entolimod and Entolasta; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel. Furthermore, we have incurred and will continue to incur additional costs associated with operating as a public company. Management expects to incur substantial additional operating losses for the foreseeable future to expand our markets, conduct pre-clinical and clinical trials, complete development or acquisition of new product lines, obtain regulatory approvals, launch and commercialize our products and continue research and development programs. Based on the Company’s current cash levels and burn rate, amongst other things, the Company believes its cash and financial resources may be insufficient to meet the Company’s anticipated needs for the twelve months following the date of issuance of the financial statements for the three months ended March 31, 2025, included elsewhere in this Quarterly Report, which raises substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the financial statements.
Plan of Operation and Future Funding Requirements
We have used our capital resources primarily, to date, to fund marketing and advertising for ClearUP, development of both our trigeminal and our vagus nerve platforms and product candidates, evaluating and conducting diligence on potential licensing and acquisition candidates, and the establishment of public company operating infrastructure and general operations. Although we have taken measures to decrease our operating expenses, we expect that our operating expenses may increase as we advance our vagus nerve platform and biopharma program, as well as discover, acquire, validate or develop additional product candidates; seek regulatory approval and, if approved, proceed to commercialization of new products; obtain, maintain, protect and enforce our intellectual property portfolio; hire additional personnel; and maintain compliance with material government (in addition to environmental) regulations. We plan to increase our research and development investments in our vagus nerve platform and clinical applications thereof in 2025. We also plan to increase investments in manufacturing and regulatory processes to advance the development of our licensed TLR5 agonist programs, known as Entolimod and Entolasta. Furthermore, we have incurred, and will continue to incur, costs associated with operating as a public company that we did not experience as a private company. We expect to continue to incur losses for the foreseeable future. At this time, due to the inherently unpredictable nature of research and new product adoption, the regulatory approval process, as well as other macroeconomic factors, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval and commercialize future product candidates, if at all. For the same reasons, we are also unable to predict whether we will generate significant revenue from ClearUP product sales or whether, or when, if ever, we may achieve profitability from the sales of one or more products. Clinical and preclinical development timelines, the probability of success, and costs can differ materially from expectations. In addition, we cannot forecast which product candidates may be best developed and/or monetized through future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
As previously disclosed, we encountered disruptions in our supply of various materials and components in 2022 due to the well-documented shortages and constraints in the global supply chain. Although we currently do not anticipate a supply shortage, unforeseen shortages, including as a result of tariffs and/or trade wars, may continue to pose a material risk for the Company in the near term or future. Additionally, high levels of safety stock can (and did in Q4 2024) result in the Company holding significant reserves against future obsolescence. We regularly evaluate alternative and secondary source suppliers in order to ensure that we are able to source sufficient components and materials to manufacture our products. Global supply chain shortages (especially when coupled with the increase in tariffs, inflation and other economic factors) could result in an increase in the cost of the components used in our products, which could result in a decrease of our gross margins or in us having to increase the price at which we sell our products until supply chain constraints are resolved. Additionally, in the event that we are unable to source sufficient components and materials from our current suppliers, or to develop relationships with additional suppliers, to manufacture enough of our products to satisfy demand, we may have to cease or slow down production and our business operations and financial condition may be materially harmed and we may need to alter our plan of operation.
In addition to the foregoing, we may, from time to time, consider opportunities for strategic acquisitions, licensing or business combinations that we believe will align with our growth plan, complement our product offerings and be in the best interest of the Company and our shareholders, including pursuant to the our Exclusive Option to license other indications for Entolimod pursuant to the License Agreement or our Buyout Option pursuant thereto. If any such strategic transactions are identified and pursued, a substantial portion of our cash reserves may be required to complete such transactions. If we identify an attractive opportunity that would require more cash to complete than we are willing or able to use from our cash reserves, we will consider financing options to complete the acquisition, including through equity and/or debt financings.
We have generated operating losses in each period since inception. We have incurred an accumulated deficit of $45.0 million through March 31, 2025. We expect to incur additional losses in the future as we expand both our research and development activities. Based
37
on our current cash levels and burn rate, amongst other things, we believe our cash and financial resources may be insufficient to meet our anticipated needs for the next twelve months. As a result, we expect that we will need to raise additional capital to continue operating our business and fund our planned operations, including research and development, clinical trials and, if regulatory approval is obtained, commercialization of future product candidates.
We currently sell ClearUP directly to consumers online through our own website and to resellers such as McKesson-affiliate Simply Medical, Cardinal Health and AmerisourceBergen. Through our online retailers, ClearUP is available through Amazon, McKesson, Optum Store, Walmart, Target, Best Buy, Cardinal Health and FSA/HSA Store. Our ability to grow cash flow from ClearUP will depend on executing sales partnerships, licensing the technology, or finding alternative monetization strategies that that may lead to partial or complete strategic divestiture of the business.
Longer term, our ability to grow revenue will be dependent on our ability to successfully manufacture, secure regulatory approval for, and commercialize product candidates in our pipeline, including Entolimod, Entolasta and the product candidates stemming from our VNS program.
Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through private or public equity or debt financings, collaborative or other arrangements with corporate, foundation or government funding sources, or through other sources of financing. We do not know whether additional financing will be available on commercially acceptable terms, or at all, when needed. If adequate funds are not available or are not available on commercially acceptable terms, our ability to fund our operations, support the growth of our business or otherwise respond to competitive pressures could be significantly delayed or limited, which could materially adversely affect our business, financial conditions or results of operations, and we may have to significantly delay, scale back or discontinue the development and commercialization of our products and/or future product candidates.
The timing and amount of our operating expenditures will depend largely on:
38
Until such time, if ever, as we can generate substantial revenue from product sales, we expect to fund our operations and capital funding needs through equity and/or debt financings. We may also consider entering into collaboration arrangements or selectively partnering with third parties for clinical development and commercialization. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of additional debt would result in debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations or our ability to incur additional indebtedness or pay dividends, among other items. If we raise additional funds through governmental funding, collaborations, strategic partnerships and alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could materially and adversely affect our business, financial condition, results of operations and prospects.
Cash Flows
The following table summarizes our cash flows for the period indicated (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
(unaudited) |
|
|
(unaudited) |
|
||
Cash used in operating activities |
|
$ |
(889 |
) |
|
$ |
(1,666 |
) |
Cash used in investing activities |
|
|
(526 |
) |
|
|
— |
|
Cash provided by (used in) financing activities |
|
|
82 |
|
|
|
(61 |
) |
Net decrease in cash and cash equivalents |
|
$ |
(1,333 |
) |
|
$ |
(1,727 |
) |
Operating Activities
Net cash used in operating activities for the three months ended March 31, 2025 was $889 thousand, which consisted primarily of a net loss of $1.5 million, decreased by non-cash charges of $101 thousand and a net increase of $512 thousand in our net operating assets and liabilities. The non-cash charges primarily consisted of $100 thousand stock-based compensation. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $469 thousand and a decrease in accounts receivable of $56 thousand.
Net cash used in operating activities for the three months ended March 31, 2024 was $1.7 million, which consisted primarily of a net loss of $1.5 million, offset by non-cash charges of $96 thousand and a net increase of $281 thousand in our net operating assets and liabilities. The non-cash charges primarily consisted of stock-based compensation of $54 thousand and amortization of right-of-use assets of $45 thousand. The change in our net operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $396 thousand, a decrease of $48 thousand in lease liabilities, offset by a a decrease of $100 thousand in accounts receivable.
Investing Activities
Net cash used in investing activities for the three months ended March 31, 2025 was $526 thousand, which consisted of $300 thousand of cash paid for the Statera License Agreement and transactions costs of $226 thousand. There were no investing activities for the three months ended March 31, 2024.
Financing Activities
Our financing activities provided $82 thousand of cash during the three months ended March 31, 2025, which consisted primarily of proceeds from the exercise of 7,524 common warrants with proceeds of $109 thousand. For the three months ended March 31, 2024, our financing activities used $61 thousand of cash, which consisted of offering costs paid in advance of the sale of common stock.
39
Known Trends or Uncertainties
As discussed elsewhere in this Quarterly Report, the world has continued to be affected by the ongoing conflict between Russia and Ukraine and the more recent conflict between Israel and Hamas, economic uncertainty in human capital management (“HCM”) and certain other macroeconomic factors, including evolving trade barriers and tariffs. The general consensus among economists continues to suggest that we should expect a higher recession risk to continue for the near term. Climate change continues to be an intense topic of public discussion and is adding additional challenges and financial burden due to impending preparations and changes in the customer mindset. These factors, amongst other things, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Effects of the pandemic and recent economic volatility have negatively impacted our business in various ways over recent years, including as a result of global supply chain constraints at least partially attributable to the pandemic. We will continue to monitor material impacts on our HCM strategies, including the potential of employee attrition, amongst other things.
We encountered disruptions in our supply of various materials and components in 2022 due to the well-documented shortages and constraints in the global supply chain. We experienced increased pricing, longer lead-times, unavailability of product and limited supplies, protracted delivery dates, and shortages of certain parts and supplies that were necessary components for our products. As a result, we carried increased inventory balances in 2023 and 2024 to ensure availability of necessary products and to secure pricing. The carried inventory resulted in material reserves in 2024 and may result in future reserves or write-offs as inventory ages. Although we currently do not anticipate a supply shortage will continue to pose a material risk for the Company in the near term, as a matter of business, we evaluate alternative and secondary source suppliers in order to ensure that we are able to source sufficient components and materials to manufacture our products. Global supply chain shortages (especially when coupled with inflation, tariffs, and other economic factors) could result in an increase in the cost of the components and other materials used in our products and product candidates, which could result in a decrease of our gross margins or in us having to increase the price at which we sell our products until supply chain constraints are resolved. Additionally, in the event that the price of our components or other materials increases significantly or we are unable to source sufficient components and materials from our current suppliers, or to develop relationships with additional suppliers, to manufacture enough of our products to satisfy demand, we may have to cease or slow down production and our business operations and financial condition may be materially harmed and we may need to alter our plan of operation.
Recently, the current administration has implemented, and continues to implement, significant budget cuts, eliminated grant programs and terminated a significant number of employees throughout many different sectors of the federal government. There is still significant uncertainty regarding the ultimate effects these actions may have on the industries in which we operate or our business. Disruptions at the FDA and other agencies may slow the time necessary for new devices and drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
The United States has recently implemented or threatened to implement tariffs on certain imported goods, including on certain items imported from China, Canada and and other countries. In addition, China, Canada and other countries have imposed, or threatened to impose, tariffs on a wide range of American products and placed restrictions on the export of certain items in retaliation for these American tariffs. As a result, there is a concern that the imposition of additional tariffs by the United States could result in the adoption of additional tariffs or export restrictions by China, Canada and/or other countries. This has recently led to significant volatility in the capital markets and increased economic uncertainty. Additionally, any resulting trade war could negatively impact our business. The imposition of tariffs on items imported by us from China, Canada or other countries could increase our costs and could result in lowering our gross margin on products sold.
Additionally, U.S. and global markets are continuing to experience volatility and disruption as a result of geopolitical tensions, including the ongoing military conflicts between Russia and Ukraine and Israel and Hamas. Although the length and impact of the ongoing military conflicts is highly unpredictable, the conflicts in Ukraine and Israel/Palestine could continue to lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as further supply chain interruptions. Additionally, the recent military conflict in Ukraine has led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds.
Although our business has not been materially impacted by the ongoing military conflict between Russia and Ukraine or the conflict between Hamas and Israel to date, it is impossible to predict the extent to which our operations, including the newly in-licensed TLR5 assets, or those of our suppliers and manufacturers, will be impacted in the short and long term, or the ways in which the conflict may impact our business. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business.
40
As a result of these global issues and other macroeconomic factors, as well as recent changes to our business in connection with the License Agreement with Statera, it has been difficult to accurately forecast our revenues or financial results, especially given the geopolitical issues, recent change in administration, inflation, changes in the Federal Reserve interest rate and the potential for a recession. In addition, while the potential impact and duration of these issues on the economy and our business may be difficult to assess or predict, these world events have resulted in, and may continue to result in, significant disruption of global financial markets, and may reduce our ability to access additional capital, which could negatively affect our liquidity in the future. Our results of operations could be materially below our forecasts as well, which could adversely affect our results of operations, disappoint analysts and investors, or cause our stock price to decline. Furthermore, a decrease in orders in a given period could negatively affect our revenues in future periods.
These global issues and events, as well as changes in our core business, may also have the effect of heightening many risks associated with our customers and supply chain. We may take further actions that alter our operations as may be required by federal, state, or local authorities from time to time, or which we determine are in our best interests. In addition, we may decide to postpone or abandon planned investments in our business in response to changes in our business, which may impact our ability to attract and retain customers and our rate of innovation, either of which could harm our business.
Inflation
Inflation increased significantly in 2024; although it has decreased recently. In May 2025, the Federal Reserve determined to maintain interest rates due to lack of economic certainty and future rates are unknown. Inflationary factors, such as increases in the cost of our products (and components thereof), interest rates, overhead costs and transportation costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates begin to rise again) due to supply chain constraints, consequences associated with the ongoing conflicts between Russia and Ukraine, employee availability and wage increases, trade tariffs imposed on certain products from China and other countries and increased component and services pricing.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements.
Contractual Obligations and Commitments
Office Lease
The Company previously entered into a noncancelable operating lease for approximately 9,091 square feet of office space in Hayward, California as its headquarters. The lease was set to expire in October 2025 and there was no option to renew for an additional term. The Company was obligated to pay, on a pro-rata basis, real estate taxes and operating costs related to the premises. The lease was terminated on May 31, 2024 and the Company has no further obligations with regard to the lease.
On May 30, 2024, we entered into a Co-Working Space Agreement, pursuant to which we rent office space located at 47685 Lakeview Blvd., Fremont, California for a total $1 thousand a month. The agreement had an initial term of six months, commencing June 1, 2024, after which it automatically renewed on a month to month basis until terminated.
Lease costs recorded during the three month periods ended March 31, 2025 and 2024 were zero and $51 thousand, respectively.
Statera License Agreement
On February 11, 2025, we entered into the License Agreement with Statera, whereby we acquired (i) an exclusive worldwide license to the Licensed Molecules as it relates to the Initial Indication and (ii) the Exclusive Option to acquire the exclusive worldwide license to the Subsequent Indications and to the TLR5 agonist follow-on program of Statera known as Entolasta. Additionally, on March 28, 2025, we notified Statera of our election to exercise the Neutropenia Option. As partial consideration for the license, we made certain cash payments and and issued certain shares to Statera and Avenue.
Pursuant to the License Agreement, we will be liable to Statera for certain royalty payments on net sales for the ARS indication as a single agent and the neutropenia indication, and, if we exercise the Exclusive Option with respect to other indications, net sales for all Subsequent Indications, within certain royalty period. Additionally, the License Agreement obligates us to develop and commercialize the licensed products, at our own cost and expense, inclusive of licensed products with respect to any Subsequent Indications obtained upon exercise of an Exclusive Option. In the development and commercialization process, we are obligated to meet certain milestones,
41
and must provide Statera with certain milestone payments, payable in either the form of cash or Company stock (at our sole discretion), upon accomplishing each milestone, as discussed in additional detail in Note 6 to the unaudited condensed financial statements filed with this Report.
Purchase Commitments
The Company has entered into multiple contracts related to the development of Tivic's ncVNS technology, including a collaboration and research support agreement and a research study to substantiate clinical indications that have potential to be addressed by Tivic's patent-pending ncVNS system. The contracts require milestone payments to be made upon the successful completion of certain deliverables. As of March 31, 2025, the Company has remaining commitments to pay a total of $86 thousand for milestones not yet achieved. The remaining payments are expected to be incurred over the next two months.
We enter into contracts in the normal course of business with our contract manufacturer and other vendors to assist in the manufacturing of our products and performance of our research and development activities and other services for operating purposes. These contracts generally provide for termination for convenience after expiration of an advance notice period ranging from 0 to 60 days, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments. Except as set discussed elsewhere in this Report, there have been no material changes to our previously disclosed business strategy with respect to our contractual obligations as disclosed under Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Critical Accounting Policies and Significant Judgments and Estimates
Our condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to inventory reserves, sales return reserves, stock-based compensation, and going concern. Management bases its estimates and judgments on historical experience and on various other factors, including the macro-economic factors, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The methods, estimates, and judgments used by us in applying these critical accounting policies have a significant impact on the results we report in our condensed consolidated financial statements. Our significant accounting policies and estimates are included in our Annual Report on Form 10‑K for the fiscal year ended December 31, 2024, filed with the SEC on March 21, 2025.
Information regarding our significant accounting policies and estimates can also be found in Note 2 to our condensed financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see Note 2 to our condensed financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and our Interim Chief Financial Officer, after evaluating our “disclosure controls and procedures” (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) as of the end of the period covered by this Quarterly Report (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information
42
we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, where appropriate, to allow timely decisions regarding required disclosure.
Management Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Management assessed our internal control over financial reporting as of December 31, 2024, the end of our fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Management’s assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.
In connection with this assessment, management determined that there was a material weakness in the Company’s internal controls over financial reporting due to the small size of our accounting and financial reporting team. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Due to the material weakness, management concluded that as of December 31, 2024, the Company’s internal control over financial reporting was not effective. Management reviewed the results of management’s assessment with the Audit and Risk Committee of our Board.
In order to address and resolve the weakness, the Company is evaluating the optimal accounting and finance personnel level/resources, to the extent feasible based upon the Company’s financial position, and continue to enhance its relevant processes and procedures.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and our Interim Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
43
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any legal proceedings, litigation or claims, nor are aware of any pending, threatened, or unasserted claims, which, if determined adversely to us, would have a material adverse effect on our business, financial condition, results of operations or cash flows. We may from time to time, be a party to litigation and subject to claims incident to the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Item 1A. Risk Factors
Please carefully consider the information set forth in this Quarterly Report on Form 10-Q and the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”). The risks described in our Annual Report, as well as other risks and uncertainties, could materially and adversely affect our business, results of operations, and financial condition, which in turn could materially and adversely affect the trading price of shares of our common stock. The occurrence of any of the risks discussed in such filings, or other events that we do not currently anticipate or that we currently deem immaterial, could harm our business, prospects, financial condition and results of operations. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
There have been no material updates or changes to the risk factors previously disclosed in our Annual Report; provided, however, additional risks not currently known or currently material to us may also harm our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
During the quarter ended March 31, 2025, there were no unregistered sales of our securities that were not reported in a Current Report on Form 8-K.
Repurchases
The Company did not repurchase any of the Company’s outstanding equity securities during the three months ended March 31, 2025.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended March 31, 2025,
Item 6. Exhibits
Exhibit Number |
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Exhibit description |
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Incorporated |
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Filing Date |
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Filed herewith |
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3.1 |
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X |
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44
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3.2 |
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8-K |
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3/5/2025 |
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3.3 |
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X
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4.1 |
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Form of Warrant (Helena Global Investment Opportunities 1 Ltd.). |
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8-K |
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5/2/2025 |
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10.1† |
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8-K |
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2/12/2025 |
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10.2 |
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8-K |
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2/12/2025
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10.3# |
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8-K
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2/24/2025 |
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10.4 |
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8-K |
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3/21/2025 |
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10.5 |
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8-K |
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3/21/2025 |
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10.6 |
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8-K |
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5/2/2025 |
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10.7 |
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8-K |
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5/2/2025 |
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10.8† |
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X |
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31.1 |
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X |
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31.2 |
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32.1 |
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* |
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101.INS |
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Inline XBRL Instance Document. |
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** |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
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** |
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104 |
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Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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** |
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* |
Furnished herewith. |
** |
The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. |
# |
Indicates management contract or compensatory plan. |
† |
Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit have been omitted by means of marking such portions with asterisks as the identified confidential portions are both not material and are the type of information that the registrant treats as private or confidential. The registrant agrees to supplementally furnish an unredacted copy of this exhibit to the SEC upon its request. |
45
SIGNATURE
In accordance with Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Fremont, State of California, on May 15, 2025.
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Date: May 15, 2025 |
By: |
/s/ Jennifer Ernst |
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Jennifer Ernst |
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Title: Chief Executive Officer |
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(Principal Executive Officer) |
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Date: May 15, 2025 |
By: |
/s/ Lisa Wolf |
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Lisa Wolf |
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Title: Interim Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
46
Exhibit 3.1
State of Delaware
Secretary of State
Division of Corporations
Delivered 05:53 PM 02/10/2025
FILED 05:53 PM 02/10/2025
SR 20250471633 – File Number 5976896
tivic health systems, inc.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES a NON-VOTING CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
THE UNDERSIGNED DOES HEREBY CERTIFY, on behalf of Tivic Health Systems, Inc., a Delaware corporation (the “Corporation”), that the following resolution was duly adopted by the Board of Directors of the Corporation (the “Board of Directors”), in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”), via unanimous written consent on February 9, 2025, which resolution provides for the creation of a series of the Corporation’s Preferred Stock, par value $0.0001 per share, which is designated as “Series A Non-Voting Convertible Preferred Stock,” with the preferences, rights and limitations set forth therein relating to dividends, conversion, redemption, dissolution and distribution of assets of the Corporation.
WHEREAS: the Amended and Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of Incorporation”), provides for a class of its authorized stock known as Preferred Stock, consisting of 10,000,000 shares, $0.0001 par value per share (the “Preferred Stock”), issuable from time to time in one or more series.
RESOLVED: that, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation, (i) a series of Preferred Stock of the Corporation be, and hereby is authorized by the Board of Directors, (ii) the Board of Directors hereby authorizes the issuance of 6,000 shares of “Series A Non-Voting Convertible Preferred Stock” pursuant to the terms of the Securities Purchase Agreement, dated as of the date hereof, by and among the Corporation and the initial Holders (as defined below) (the “Purchase Agreement”) and the Exclusive License Agreement, dated as of February 10, 2025, by and between the Corporation and Statera Biopharma, Inc., a Delaware corporation (the “License Agreement”), and (iii) the Board of Directors hereby fixes the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares of Preferred Stock, in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred Stock of all classes and series, as follows:
TERMS OF SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK
1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Business Day” means any day other than a Saturday, Sunday or other day on which banks in Philadelphia, PA, are authorized or obligated by Law to be closed.
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security immediately prior to 4:00 p.m., New York City time, on the principal Trading Market where such security is listed or traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting service), or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by Bloomberg, L.P., the average of the bid prices of any market makers for such security as reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Corporation.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the Corporation’s common stock, par value $0.0001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series A Non-Voting Preferred Stock in accordance with the terms hereof.
“Conversion Shares Registration Statement” means a registration statement that registers the resale of all Conversion Shares of the Holders, who shall be named as “selling stockholders” therein and meets the requirements of the Purchase Agreement.
“Exchange Act” means the Securities Exchange Act of 1934.
“Holder” means a holder of shares of Series A Non-Voting Preferred Stock.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Trading Day” means a day on which the principal Trading Market is open for business.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, OTC Markets or the New York Stock Exchange (or any successors to any of the foregoing).
2. Designation, Amount and Par Value. The series of Preferred Stock shall be designated as the Corporation’s Series A Non-Voting Convertible Preferred Stock (the “Series A Non-Voting Preferred Stock”) and the number of shares so designated shall be 6,000. Each share of Series A Non-Voting Preferred Stock shall have a par value of $0.0001 per share.
3. Dividends. Holders shall be entitled to receive, and the Corporation shall pay, dividends on shares of the Series A Non-Voting Preferred Stock (on an as-if-converted-to-Common-Stock basis, without regard to the Beneficial Ownership Limitation (as defined below)) equal to and in the same form, and in the same manner, as dividends (other than dividends on shares of the Common Stock payable in the form of Common Stock) actually paid on shares of the Common Stock when, as and if such dividends (other than dividends payable in the form of Common Stock) are paid on shares of the Common Stock. Other than as set forth in the previous sentence, no other dividends shall be paid on shares of Series A Non-Voting Preferred Stock, and the Corporation shall pay no dividends (other than dividends payable in the form of Common Stock) on shares of the Common Stock unless it simultaneously complies with the previous sentence.
4. Voting Rights.
4.1 Except as otherwise provided herein or as otherwise required by the DGCL, the Series A Non-Voting Preferred Stock shall have no voting rights. However, as long as any shares of Series A Non-Voting Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Non-Voting Preferred Stock: (i) alter or change adversely the powers, preferences or rights given to the Series A Non-Voting Preferred Stock or alter or amend this Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or Amended and Restated Bylaws of the Corporation, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of Preferred Stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Non-Voting Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further shares of Series A Non-Voting Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series A Non-Voting Preferred Stock or (iii) enter into any agreement with respect to any of the foregoing. Holders of shares of Common Stock acquired upon the conversion of shares of Series A Non-Voting Preferred Stock shall be entitled to the same voting rights as each
other holder of Common Stock, except that such holders may not vote such shares upon the proposal for Stockholder Approval (as defined below) in accordance with Rule 5635 of the listing rules of The Nasdaq Stock Market LLC.
4.2 Any vote required or permitted under Section 4.1 may be taken at a meeting of the Holders or through the execution of an action by written consent in lieu of such meeting, provided that the consent is executed by Holders representing a majority of the outstanding shares of Series A Non-Voting Preferred Stock.
5. Rank; Liquidation.
5.1 The Series A Non-Voting Preferred Stock shall rank on parity with the Common Stock as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntarily or involuntarily.
5.2 Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), each Holder shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder of Common Stock would receive if the Series A Non-Voting Preferred Stock were fully converted (disregarding for such purpose any Beneficial Ownership Limitations) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock, plus an additional amount equal to any dividends declared on but unpaid to such shares. If, upon any such Liquidation, the assets of the Corporation shall be insufficient to pay the Holders of shares of the Series A Non-Voting Preferred Stock the amount required under the preceding sentence, then all remaining assets of the Corporation shall be distributed ratably to the Holders and the holders of Common Stock in accordance with the respective amounts that would be payable on all such securities if all amounts payable thereon were paid in full. For the avoidance of any doubt, a Fundamental Transaction shall not be deemed a Liquidation unless the Corporation expressly declares that such Fundamental Transaction shall be treated as if it were a Liquidation.
6. Conversion.
6.1 Automatic Conversion on Stockholder Approval. Effective as of 5:00 p.m. Eastern time on the third Business Day after the date that the Corporation’s stockholders approve the conversion of the Series A Non-Voting Preferred Stock into shares of Common Stock in accordance with the listing rules of the Nasdaq Stock Market (the “Stockholder Approval”), each share of Series A Non-Voting Preferred Stock then outstanding shall automatically convert into a number of shares of Common Stock equal to the Conversion Ratio (as defined below), subject to the Beneficial Ownership Limitation (the “Automatic Conversion”). In determining the application of the Beneficial Ownership Limitations solely with respect to the Automatic Conversion, the Corporation shall calculate beneficial ownership for each Holder assuming beneficial ownership by such Holder of: (x) the number of shares of Common Stock issuable to such Holder in such Automatic Conversion, plus (y) any additional shares of Common Stock for which a Holder has provided the Corporation with prior written notice of beneficial ownership within 30 days prior to the date of Stockholder Approval (a “Beneficial Ownership Statement”) and assuming the conversion of all shares of Series A Non-Voting Preferred Stock held by all other Holders less the aggregate number of shares of Series A Non-Voting Preferred Stock held by all other Holders that will not convert into shares of Common Stock on account of the application of any Beneficial Ownership Limitations applicable to any such other Holders. If a Holder fails to provide the Corporation with a Beneficial Ownership Statement within 30 days prior to the date of Stockholder Approval, upon request to the Holder by the Corporation, then the Corporation shall presume the Holder’s beneficial ownership of Common Stock (excluding the Conversion Shares) to be the number of shares previously reported to the Corporation. The shares of Series A Non-Voting Preferred Stock that are converted in the Automatic Conversion are referred to as the “Converted Stock”. The Conversion Shares shall be issued as follows:
6.1.1 Converted Stock that is registered in book entry form shall be automatically cancelled upon the Automatic Conversion and converted into the corresponding amount of Conversion Shares, which shares shall be issued in book entry form and without any action on the part of the Holders, unless such Holder provides the Corporation with the account of the Holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission system (a “DWAC Delivery”).
6.1.2 Converted Stock that is issued in certificated form shall be deemed converted into the corresponding Conversion Shares on the date of Automatic Conversion and the Holder’s rights as a holder of such shares of Converted Stock shall cease and terminate on such date, excepting only the right to
receive the Conversion Shares upon the Holder tendering to the Corporation (or its designated agent) the stock certificate(s) (duly endorsed) representing such certificated Converted Stock.
6.2 Conversion at Option of Holder. Subject to Section 6.1 and Section 6.4, each share of Series A Non-Voting Preferred Stock then outstanding shall be convertible, at any time and from time to time following 5:00 p.m. Eastern time on the third Business Day after the date that the Stockholder Approval is obtained by the Corporation, at the option of the Holder thereof, into a number of shares of Common Stock equal to the Conversion Ratio, subject to the Beneficial Ownership Limitation (each, an “Optional Conversion”). Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”), duly completed and executed. Provided the Corporation’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, the Notice of Conversion may specify, at the Holder’s election, whether the applicable Conversion Shares shall be credited to the account of the Holder’s prime broker with DTC through its DWAC Delivery. The date on which an Optional Conversion shall be deemed effective (the “Conversion Date”) shall be the Trading Day that the Notice of Conversion, completed and executed, is sent via email to, and received during regular business hours by, the Corporation; provided, that the original certificate(s) (if any) representing such shares of Series A Non-Voting Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Corporation within two (2) Trading Days thereafter. In all other cases, the Conversion Date shall be defined as the Trading Day on which the original certificate(s) (if any) representing such shares of Series A Non-Voting Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Corporation. The calculations set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.
6.3 Conversion Ratio. The “Conversion Ratio” for each share of Series A Non-Voting Preferred Stock shall be 6,000 shares of Common Stock issuable upon the conversion (the “Conversion”) of each share of Series A Non-Voting Preferred Stock, subject to adjustment as provided herein.
6.4 Beneficial Ownership Limitation. Notwithstanding anything herein to the contrary, the Corporation shall not effect any conversion of any share of Series A Non-Voting Preferred Stock, including pursuant to Section 6.1, and a Holder shall not have the right to convert any portion of the Series A Non-Voting Preferred Stock pursuant to Section 6.2, to the extent that, after giving effect to such attempted conversion set forth on an applicable Notice of Conversion (as defined in the Certificate of Designation) with respect to the Series A Preferred Stock, such Holder (or any of such Holder’s affiliates or any other Person who would be a beneficial owner of Common Stock beneficially owned by the Holder for purposes of Section 13(d) or Section 16 of the Exchange Act and the applicable rules and regulations of the Commission, including any “group” of which the Holder is a member (the foregoing, “Attribution Parties”)) would beneficially own a number of shares of Common Stock in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of the Series A Non-Voting Preferred Stock subject to the Notice of Conversion or the Automatic Conversion, as applicable, with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series A Non-Voting Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to and would exceed a limitation on conversion or exercise similar to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this Section 6.4, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission, and the terms “beneficial ownership” and “beneficially own” have the meanings ascribed to such terms therein. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission. For purposes of this Section 6.4, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Corporation’s most recent periodic or annual filing with the Commission, as the case may be, (B) a more recent public announcement by the Corporation that is filed with the Commission, or (C) a more recent notice by the Corporation or the Corporation’s transfer agent to the Holder setting forth the number of shares of Common Stock then outstanding. Upon the written request of a Holder (which may be by email), the Corporation shall, within two (2) Trading Days thereof, confirm in writing to such Holder (which may be via email) the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to any actual conversion or exercise of securities of the Corporation, including
shares of Series A Non-Voting Preferred Stock, by such Holder or its Attribution Parties since the date as of which such number of outstanding shares of Common Stock was last publicly reported or confirmed to the Holder. The “Beneficial Ownership Limitation” shall initially be set at 9.9% for each Holder and its Attribution Parties and may be adjusted at the discretion of the Holder to a percentage between 4.9% and 19.9% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock pursuant to the Automatic Conversion or such Notice of Conversion (as applicable), to the extent permitted by this Section 6.3. The Corporation shall be entitled to rely on representations made to it by the Holder in any Notice of Conversion regarding its Beneficial Ownership Limitation. Notwithstanding the foregoing, by written notice to the Corporation, (i) which will not be effective until the sixty-first (61st) day after such written notice is delivered to the Corporation, the Holder may reset the Beneficial Ownership Limitation percentage to a higher percentage, not to exceed 19.9%, to the extent then applicable and (ii) which will be effective immediately after such notice is delivered to the Corporation, the Holder may reset the Beneficial Ownership Limitation percentage to a lower percentage (but in no event less than 4.9%) provided that such decrease shall not become effective until the later of (x) 5:00 p.m. Eastern time on the third Business Day after the date of the Stockholder Approval and (y) if Stockholder Approval is not obtained within six months after the initial issuance of the Series A Non-Voting Preferred Stock, the date that is three Business Days after the date that is six months after the initial issuance of the Series A Non-Voting Preferred Stock. Upon such a change by a Holder of the Beneficial Ownership Limitation, not to exceed 19.9%, the Beneficial Ownership Limitation may not be further amended by such Holder without first providing the minimum notice required by this Section 6.4. Notwithstanding the foregoing, at any time following notice of a Fundamental Transaction, the Holder may waive and/or change the Beneficial Ownership Limitation effective immediately upon written notice to the Corporation and may reinstitute a Beneficial Ownership Limitation at any time thereafter effective immediately upon written notice to the Corporation. The provisions of this Section 6.4 shall be construed, corrected and implemented in a manner so as to effectuate the intended Beneficial Ownership Limitation herein contained and the shares of Common Stock underlying the securities in excess of the Beneficial Ownership Limitation shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act.
6.5 Mechanics of Conversion.
6.5.1 Delivery of Certificate or Electronic Issuance. Upon Conversion not later than (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) after the applicable Conversion Date, or if the Holder requests the issuance of physical certificate(s), two (2) Trading Days after receipt by the Corporation of the original certificate(s) representing such shares of Series A Non-Voting Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion (the “Share Delivery Date”), the Corporation shall either: (a) deliver, or cause to be delivered, to the converting Holder a physical certificate or certificates representing the number of Conversion Shares being acquired upon the conversion of shares of Series A Non-Voting Preferred Stock, or (b) in the case of a DWAC Delivery (if so requested by the Holder), electronically transfer such Conversion Shares by crediting the account of the Holder’s prime broker with DTC through its DWAC system. If in the case of any Notice of Conversion such certificate or certificates for the Conversion Shares are not delivered to or as directed by or, in the case of a DWAC Delivery, such shares are not electronically delivered to or as directed by, the applicable Holder by the Share Delivery Date, the applicable Holder shall be entitled to elect to rescind such Notice of Conversion by written notice to the Corporation at any time on or before its receipt of such certificate or certificates for Conversion Shares or electronic receipt of such shares, as applicable, in which event the Corporation shall promptly return to such Holder any original Series A Non-Voting Preferred Stock certificate delivered to the Corporation and such Holder shall promptly return to the Corporation any Common Stock certificates or otherwise direct the return of any shares of Common Stock delivered to the Holder through the DWAC system, representing the shares of Series A Non-Voting Preferred Stock unsuccessfully tendered for conversion to the Corporation. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Corporation’s principal Trading Market with respect to the Common Stock as in effect on the Conversion Date.
6.5.2 Obligation Absolute. Subject to Section 6.4 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.5.1, the Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Series A Non-Voting Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged
violation of law by such Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares. Subject to Section 6.4 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.5.1, in the event a Holder shall elect to convert any or all of its Series A Non-Voting Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Series A Non-Voting Preferred Stock of such Holder shall have been sought and obtained by the Corporation, and the Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the value of the Conversion Shares into which would be converted the Series A Non-Voting Preferred Stock which is subject to such injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Corporation shall, subject to Section 6.4 and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6.5.1, issue Conversion Shares upon a properly noticed conversion.
6.5.3 Reservation of Shares Issuable Upon Conversion. The Corporation covenants that at all times it will reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series A Non-Voting Preferred Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series A Non-Voting Preferred Stock, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments of Section 7) upon the conversion of all outstanding shares of Series A Non-Voting Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable and, if the Conversion Shares Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Conversion Shares Registration Statement (subject to such Holder’s compliance with its obligations under the Purchase Agreement and applicable securities laws).
6.5.4 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A Non-Voting Preferred Stock, no certificates or scrip for any such fractional shares shall be issued and no cash shall be paid for any such fractional shares. Any fractional shares of Common Stock that a Holder of Series A Non-Voting Preferred Stock would otherwise be entitled to receive shall be aggregated with all fractional shares of Common Stock issuable to such Holder and any remaining fractional shares shall be rounded up to the nearest whole share. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Non-Voting Preferred Stock the Holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.
6.5.5 Transfer Taxes. The issuance of certificates for shares of the Common Stock upon conversion of the Series A Non-Voting Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the registered Holder(s) of such shares of Series A Non-Voting Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.
6.6 Status as Stockholder. Upon each Conversion Date, (i) the shares of Series A Non-Voting Preferred Stock being converted shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a holder of such converted shares of Series A Non-Voting Preferred Stock shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation. In all cases, the Holder shall retain all of its rights and remedies for the Corporation’s failure to convert Series A Non-Voting Preferred Stock. In no event shall the Series A Non-Voting Preferred Stock convert into shares of Common Stock prior to the Stockholder Approval.
7. Certain Adjustments.
7.1 Stock Dividends and Stock Splits. If the Corporation, at any time while this Series A Non-Voting Preferred Stock is outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of this Series A Non-Voting Preferred Stock) with respect to the then outstanding shares of Common Stock; (B) subdivides outstanding shares of Common Stock into a larger number of shares; or (C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, then the Conversion Ratio shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately after such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately before such event (excluding any treasury shares of the Corporation). Any adjustment made pursuant to this Section 7.1 shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.
7.2 Fundamental Transaction. If, at any time while this Series A Non-Voting Preferred Stock is outstanding, (A) the Corporation effects any merger or consolidation of the Corporation with or into another Person or any stock sale to, or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, share exchange or scheme of arrangement) with or into another Person (other than such a transaction in which the Corporation is the surviving or continuing entity and its Common Stock is not exchanged for or converted into other securities, cash or property), (B) the Corporation effects any sale, lease, transfer or exclusive license of all or substantially all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which more than 50% of the Common Stock not held by the Corporation or such Person is exchanged for or converted into other securities, cash or property, or (D) the Corporation effects any reclassification of the Common Stock or any compulsory share exchange pursuant (other than as a result of a dividend, subdivision or combination covered by Section 7.1) to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Series A Non-Voting Preferred Stock the Holders shall have the right to receive, in lieu of the right to receive Conversion Shares, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”). For purposes of any such subsequent conversion, the determination of the Conversion Ratio shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall adjust the Conversion Ratio in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holders shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Series A Non-Voting Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new certificate of designations with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The terms of any agreement to which the Corporation is a party and pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 7.2 and insuring that this Series A Non-Voting Preferred Stock (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. The Corporation shall cause to be delivered to each Holder, at its last address as it shall appear upon the stock books of the Corporation, written notice of any Fundamental Transaction at least 10 calendar days prior to the date on which such Fundamental Transaction is expected to become effective or close.
7.3 Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
8. Redemption. The shares of Series A Non-Voting Preferred Stock shall not be redeemable; provided, however, that the foregoing shall not limit the ability of the Corporation to purchase or otherwise deal in such shares to the extent otherwise permitted hereby and by law.
9. Transfer. A Holder may transfer any shares of Series A Non-Voting Preferred Stock together with the accompanying rights set forth herein, held by such holder without the consent of the Corporation; provided that such transfer is in compliance with applicable securities laws. The Corporation shall in good faith (a) do and perform, or cause to be done and performed, all such further acts and things, and (b) execute and deliver all such other agreements, certificates, instruments and documents, in each case, as any holder of Series A Non-Voting Preferred Stock may reasonably request in order to carry out the intent and accomplish the purposes of this Section 9. The transferee of any shares of Series A Non-Voting Preferred Stock shall be subject to the Beneficial Ownership Limitation applicable to the transferor as of the time of such transfer.
10. Series A Non-Voting Preferred Stock Register. The Corporation shall maintain at its principal executive offices (or such other office or agency of the Corporation as it may designate by notice to the Holders in accordance with Section 11), a register for the Series A Non-Voting Preferred Stock, in which the Corporation shall record (a) the name, address, and electronic mail address of each holder in whose name the shares of Series A Non-Voting Preferred Stock have been issued and (b) the name, address, and electronic mail address of each transferee of any shares of Series A Non-Voting Preferred Stock. The Corporation may deem and treat the registered Holder of shares of Series A Non-Voting Preferred Stock as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes. The Corporation shall keep the register open and available at all times during business hours for inspection by any holder of Series A Non-Voting Preferred Stock or his, her or its legal representatives.
11. Notices. Any notice required or permitted by the provisions of this Certificate of Designation to be given to a Holder of shares of Series A Non-Voting Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the Delaware General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.
12. Book-Entry; Certificates. The Series A Non-Voting Preferred Stock will be issued in book-entry form; provided that, if a Holder requests that such Holder’s shares of Series A Non-Voting Preferred Stock be issued in certificated form, the Corporation will instead issue a stock certificate to such Holder representing such Holder’s shares of Series A Non-Voting Preferred Stock. To the extent that any shares of Series A Non-Voting Preferred Stock are issued in book-entry form, references herein to “certificates” shall instead refer to the book-entry notation relating to such shares.
13. Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders, other than as expressly set forth herein. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver by the Corporation or a Holder must be in writing. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the Holders of Series A Non-Voting Preferred Stock granted hereunder may be waived as to all shares of Series A Non-Voting Preferred Stock (and the Holders thereof) upon the written consent of the Holders of not less than a majority of the shares of Series A Non-Voting Preferred Stock then outstanding, provided, however, that the Beneficial Ownership Limitation applicable to a Holder, and any provisions contained herein that are related to such Beneficial Ownership Limitation, cannot be modified, waived or terminated without the consent of such Holder, provided further, that any proposed waiver that would, by its terms, have a disproportionate and materially adverse effect on any Holder shall require the consent of such Holder(s).
14. Severability. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, then such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof.
15. Status of Converted Series A Non-Voting Preferred Stock. If any shares of Series A Non-Voting Preferred Stock shall be converted or redeemed by the Corporation, such shares shall, to the fullest extent permitted by applicable law, be retired and cancelled upon such acquisition, and shall not be reissued as a share of Series A Non-Voting Preferred Stock. Any share of Series A Non-Voting Preferred Stock so acquired shall, upon its retirement and cancellation, and upon the taking of any action required by applicable law, resume the
status of authorized but unissued shares of preferred stock and shall no longer be designated as Series A Non-Voting Preferred Stock.
16. Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, Tivic Health Systems, Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Stock to be duly executed by its Chief Executive Officer on February 10, 2025.
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tivic health systems, INC. |
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/s/ Jennifer Ernst |
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Jennifer Ernst |
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CEO |
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ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK)
The undersigned Holder hereby irrevocably elects to convert the number of shares of Series A Non-Voting Preferred Stock indicated below, represented in book-entry form, into shares of common stock, par value $0.0001 per share (the “Common Stock”), of Tivic Health Systems, Inc., a Delaware corporation (the “Corporation”), as of the date written below. If securities are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) filed by the Corporation with the Secretary of State of the State of Delaware on February 10, 2025.
As of the date hereof, the number of shares of Common Stock beneficially owned by the undersigned Holder (together with such Holder’s Attribution Parties), including the number of shares of Common Stock issuable upon conversion of the Series A Non-Voting Preferred Stock subject to this Notice of Conversion, but excluding the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series A Non-Voting Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to a limitation on conversion or exercise similar to the limitation contained in Section 6.4 of the Certificate of Designation, is _____. For purposes hereof, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable regulations of the Commission.
CONVERSION CALCULATIONS:
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For DWAC Delivery, please provide the following:
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[HOLDER]
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State of Delaware
Secretary of State
Division of Corporations
Delivered 01:34 PM 05/13/2025
FILED 01:34 PM 05/13/2025
SR 20252243127 - File Number 5976896
TIVIC HEALTH SYSTEMS, INC.
CERTIFICATE OF CORRECTION
OF THE
CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS AND LIMITATIONS
OF
SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK
Pursuant to Section 103(f) of the
General Corporation Law of the State of Delaware
Tivic Health Systems, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify that:
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The name of the Corporation is Tivic Health Systems, Inc. |
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That a Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Stock (the “Certificate”) was filed by the Corporation with the Secretary of State of Delaware on February 10, 2025 and the Certificate requires correction as permitted by Section 103 of the DGCL. |
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The inaccuracy or defect of the Certificate to be corrected is the Conversion Ratio for each share of Series A Non-Voting Preferred Stock (“Series A Preferred”). Due to a clerical error, the Conversion Ratio was stated to be 6,000 shares of common stock issuable upon conversion of each share of Series A Preferred; the correct Conversion Ratio is 10,000 shares of common stock issuable upon conversion of each share of Series A Preferred. |
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Section 6.3 of the Certificate is corrected to read as follows: 6.3 Conversion Ratio. The “Conversion Ratio” for each share of Series A Non-Voting Preferred Stock shall be 10,000 shares of Common Stock issuable upon the conversion (the “Conversion”) of each share of Series A Non-Voting Preferred Stock, subject to adjustment as provided herein. |
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Correction to be signed by duly executed by its Interim Chief Financial Officer on May 13, 2025.
TIVIC HEALTH SYTEMS, INC.
By: _/s/ Lisa Wolf____________________
Name: Lisa Wolf
Title: Interim Chief Financial Officer
Exhibit 3.3
Delaware
The First State
I, CHARUNI PATIBANDA-SANCHEZ, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF “TIVIC HEALTH SYSTEMS, INC.”, FILED IN THIS OFFICE ON THE TWENTY-NINTH DAY OF APRIL, A.D. 2025, AT 5:06 O`CLOCK P.M.
State of Delaware
Secretary of State
Division of Corporations
Delivered 05:06 PM 04/29/2025
FILED 05:06 PM 04/29/2025
SR 20251870999 - File Number 5976896
tivic health systems, inc.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
THE UNDERSIGNED DOES HEREBY CERTIFY, on behalf of Tivic Health Systems, Inc., a Delaware corporation (the “Corporation”), that the following resolution was duly adopted by the Board of Directors of the Corporation (the “Board of Directors”), in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”), via unanimous written consent on April 27, 2025, which resolution provides for the creation of a series of the Corporation’s Preferred Stock, par value $0.0001 per share, which is designated as “Series B Non-Voting Convertible Preferred Stock,” with the preferences, rights and limitations set forth therein relating to dividends, conversion, redemption, dissolution and distribution of assets of the Corporation.
WHEREAS: the Amended and Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of Incorporation”), provides for a class of its authorized stock known as Preferred Stock, consisting of 10,000,000 shares, $0.0001 par value per share (the “Preferred Stock”), issuable from time to time in one or more series.
RESOLVED: that, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation, (i) a series of Preferred Stock of the Corporation be, and hereby is authorized by the Board of Directors, (ii) the Board of Directors hereby authorizes the issuance of 8,400 shares of “Series B Non-Voting Convertible Preferred Stock” pursuant to the terms of the Securities Purchase Agreement, dated as of the date hereof, by and among the Corporation and the initial Holders (as defined below) (the “Purchase Agreement”) and (iii) the Board of Directors hereby fixes the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares of Preferred Stock, in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred Stock of all classes and series, as follows:
TERMS OF SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK
1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Business Day” means any day other than a Saturday, Sunday or other day on which banks in New York, NY, are authorized or obligated by Law to be closed.
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security immediately prior to 4:00 p.m., New York City time, on the principal Trading Market where such security is listed or traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting service), or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by Bloomberg, L.P., the average of the bid prices of any market makers for such security as reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Corporation.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the Corporation’s common stock, par value $0.0001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Corporation or any of its Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series B Preferred Stock in accordance with the terms hereof.
“Conversion Shares Registration Statement” means a registration statement that registers the resale of all Conversion Shares of the Holders, who shall be named as “selling stockholders” therein and meets the requirements of the Purchase Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Holder” means a holder of shares of Series B Preferred Stock.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Principal Market” means the NASDAQ Capital Market.
“Stated Value” shall mean $1,000 per share, subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events occurring after the Original Issue Date with respect to the Series B Preferred Stock.
“Trading Day” means a day on which the principal Trading Market is open for business.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, OTC Markets or the New York Stock Exchange (or any successors to any of the foregoing).
2. Designation, Amount and Par Value. The series of Preferred Stock shall be designated as the Corporation’s Series B Non-Voting Convertible Preferred Stock (the “Series B Preferred Stock”) and the number of shares so designated shall be 8,400. Each share of Series B Preferred Stock shall have a par value of $0.0001 per share.
3. Dividends. From and after the first date of issuance of any Tranche (as defined in the Purchase Agreement) of Series B Preferred Stock (the “Original Issue Date”), each Holder shall be entitled to receive dividends (“Dividends”), which Dividends shall be computed on the basis of a 360-day year and the actual number of days elapsed in each month and shall be payable in arrears on the first Trading Day of each Fiscal Quarter (each, an “Dividend Date”) with the first Dividend Date being the first Trading Day of the initial Fiscal Quarter commencing after the Original Issue Date.
(a) Out of funds legally available for the payment of dividends or as otherwise legally permitted, at all times in accordance with restrictions set forth under California and Delaware law, dividends shall be payable on each Dividend Date, to each record holder of Series B Preferred Stock on the applicable Dividend Date, by adding the amount of Dividends payable on such Dividend Date to the aggregate Stated Value of such Holder’s shares of Series B Preferred Stock (“PIK Dividends”) on the applicable Dividend Date or elect a combination of Cash Dividends and PIK Dividends. The Corporation shall deliver a written notice (each, an “Dividend Election Notice”) to each Holder of the Series B Preferred Stock on or prior to the fifth (5th) Trading Day immediately prior to the applicable Dividend Date (each, an “Dividend Notice Due Date”) (the date such notice is delivered to all of the Holders, the “Dividend Notice Date”) which notice either (A) confirms that Dividend to be paid on such Dividend Date shall be paid entirely in Cash Dividends or (B) elects to effect a PIK Dividend or a combination of Cash Dividends and PIK Dividends and specifies the amount of Dividend that shall be a Cash Dividend and the amount of Dividend, if any, that shall be a PIK Dividend. Notwithstanding the foregoing, until such time as the Corporation notifies each Holder of a change in such election, the Dividend payments hereunder shall be paid as PIK Dividends. In the event the Corporation elects to change such election to a Cash Dividend or combination of Cash Dividends and PIK Dividends, in accordance with the provisions above, the Corporation shall notify the Holder prior to the fifth (5th) Trading Day immediately prior to the applicable Dividend Date on which the Corporation elects to make a Dividend payment hereunder as a Cash Dividend or a combination of Cash Dividends and PIK Dividends.
(b) Prior to the payment of Dividends on a Dividend Date, Dividends on the Series B Preferred Stock shall accrue at the at the rate of ten (10)% per annum on the Stated Value of each share of Preferred Stock and be payable, upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation in accordance with Section 5, by way of inclusion of the Dividends in the Conversion Amount on each Conversion Date in accordance with Section 6 or upon any redemption in accordance with Section 7, subject at all times to and except as may be restricted by California or Delaware law.
4. Voting Rights.
(a) Except as otherwise provided herein or as otherwise required by the DGCL, the Series B Preferred Stock shall have no voting rights. However, as long as any shares of Series B Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series B Preferred Stock: (i) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock or alter or amend this Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or Amended and Restated Bylaws of the Corporation, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of Preferred Stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series B Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the
Certificate of Incorporation or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further shares of Series B Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series B Preferred Stock or (iii) enter into any agreement with respect to any of the foregoing. Holders of shares of Common Stock acquired upon the conversion of shares of Series B Preferred Stock shall be entitled to the same voting rights as each other Holder of Common Stock, except that such Holders may not vote such shares upon the proposal for Stockholder Approval (as defined below) in accordance with Rule 5635 of the listing rules of The Nasdaq Stock Market LLC.
(b) Any vote required or permitted under Section 4(a) may be taken at a meeting of the Holders or through the execution of an action by written consent in lieu of such meeting, provided that the consent is executed by Holders representing a majority of the outstanding shares of Series B Preferred Stock.
5. Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the Holders of shares of Series B Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the Holders of Common Stock and any other class or series of capital stock of the Corporation (collectively, the “Junior Stock”), an amount per share equal to the greater of (i) the Stated Value plus all accrued and unpaid Dividends thereon or (ii) the amount that such Holder would receive if such Holder converted all of its shares of Series B Preferred Stock into Common Stock immediately prior to such liquidation, dissolution or winding up. If, upon any such liquidation, dissolution or winding up, the assets and funds available for distribution among the Holders of the Series B Preferred Stock shall be insufficient to permit the payment to such Holders of the full preferential amount aforesaid, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the Holders of the Series B Preferred Stock in proportion to the amount that each such Holder is entitled to receive. After the payment of the full amount of the liquidation preference to which they are entitled, the Holders of Series B Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation. The consolidation or merger of the Corporation with or into any other corporation or entity, or the sale or transfer of all or substantially all of the assets of the Corporation, shall not be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 5.
6. Conversion. The Holders of Series B Preferred Stock shall have the following conversion rights:
(a) Optional Conversion. At any time after the Original Issue Date, each Holder of Series B Preferred Stock shall have the right, at such Holder's option, to convert any or all of the shares of Series B Preferred Stock held by such Holder into fully paid and nonassessable shares of Common Stock. The number of shares of Common Stock issuable upon conversion of each share of Series B Preferred Stock shall be equal to the quotient obtained by dividing (i) the Stated Value of such share of Series B Preferred Stock plus all accrued and unpaid Dividends thereon (the “Conversion Amount”) by (ii) the Conversion Price (as defined below) in effect on the date of conversion. Such conversion shall be effected by the surrender of the certificate or certificates representing the shares of Series B Preferred Stock to be converted, duly endorsed or assigned in blank to the Corporation or in such other form as the Corporation may reasonably require, at the principal office of the Corporation or the office of the transfer agent for the Series B Preferred Stock, accompanied by written notice of conversion in the form attached as Annex A hereto (the “Notice of Conversion”) specifying the number of shares of Series B Preferred Stock to be converted and the name or names in which such Holder wishes the certificate or certificates for Common Stock to be issued.
(b) Conversion Price. Subject to adjustment as provided herein, the conversion price (the "Conversion Price") in effect on any conversion date shall be equal to 90% of the lowest closing
volume-weighted average price (the "VWAP") of the Common Stock on the Nasdaq Stock Market (or such other national securities exchange on which the Common Stock is then listed) for the five Trading Days immediately preceding the date of the conversion notice delivered by the Holder of Series B Preferred Stock (the "Conversion Notice Date"). Notwithstanding the foregoing, the conversion price shall not be lower than $1.294 per share (the "Floor Price"), subject to adjustment as provided herein. If the Corporation issues any shares of the same class of Series B Preferred Stock at any time while any shares of Series B Preferred Stock are outstanding, the conversion price of all outstanding shares of Series B Preferred Stock shall be adjusted to the lowest conversion price of any such newly issued shares of Series B Preferred Stock.
(c) Mechanics of Conversion.
(d) Beneficial Ownership Limitation. Notwithstanding anything herein to the contrary, a Holder shall not have the right to convert any portion of the Series B Preferred Stock pursuant to Section 6(a), to the extent that, after giving effect to such attempted conversion set forth on an applicable Notice of Conversion (as defined in the Certificate of Designation) with respect to the Series B Preferred Stock, such Holder (or any of such Holder’s affiliates or any other Person who would be a beneficial owner of Common Stock beneficially owned by the Holder for purposes of Section 13(d) or Section 16 of the Exchange Act and the applicable rules and regulations of the Commission, including any “group” of which the Holder is a member (the foregoing, “Attribution Parties”)) would beneficially own a number of shares of Common Stock in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock subject to the Notice of Conversion with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series B Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties
that are subject to and would exceed a limitation on conversion or exercise similar to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission, and the terms “beneficial ownership” and “beneficially own” have the meanings ascribed to such terms therein. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission. For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Corporation’s most recent periodic or annual filing with the Commission, as the case may be, (B) a more recent public announcement by the Corporation that is filed with the Commission, or (C) a more recent notice by the Corporation or the Corporation’s transfer agent to the Holder setting forth the number of shares of Common Stock then outstanding. Upon the written request of a Holder (which may be by email), the Corporation shall, within two (2) Trading Days thereof, confirm in writing to such Holder (which may be via email) the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to any actual conversion or exercise of securities of the Corporation, including shares of Series B Preferred Stock, by such Holder or its Attribution Parties since the date as of which such number of outstanding shares of Common Stock was last publicly reported or confirmed to the Holder. The “Beneficial Ownership Limitation” shall initially be set at 4.9% for each Holder and its Attribution Parties and may be adjusted at the discretion of the Holder to a percentage between 4.9% and 19.9% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock pursuant to such Notice of Conversion, to the extent permitted by this Section 6(d). The Corporation shall be entitled to rely on representations made to it by the Holder in any Notice of Conversion regarding its Beneficial Ownership Limitation. Notwithstanding the foregoing, by written notice to the Corporation, (i) which will not be effective until the sixty-first (61st) day after such written notice is delivered to the Corporation, the Holder may reset the Beneficial Ownership Limitation percentage to a higher percentage, not to exceed 19.9%, to the extent then applicable and (ii) which will be effective immediately after such notice is delivered to the Corporation, the Holder may reset the Beneficial Ownership Limitation percentage to a lower percentage (but in no event less than 4.9%) provided that such decrease shall not become effective until the later of (x) 5:00 p.m. Eastern time on the third Business Day after the date of the Stockholder Approval and (y) if Stockholder Approval is not obtained within six months after the initial issuance of the Series B Preferred Stock, the date that is three Business Days after the date that is six months after the initial issuance of the Series B Preferred Stock. Upon such a change by a Holder of the Beneficial Ownership Limitation, not to exceed 19.9%, the Beneficial Ownership Limitation may not be further amended by such Holder without first providing the minimum notice required by this Section 6(d). Notwithstanding the foregoing, at any time following notice of a Fundamental Transaction, the Holder may waive and/or change the Beneficial Ownership Limitation effective immediately upon written notice to the Corporation and may reinstitute a Beneficial Ownership Limitation at any time thereafter effective immediately upon written notice to the Corporation. The provisions of this Section 6(d) shall be construed, corrected and implemented in a manner so as to effectuate the intended Beneficial Ownership Limitation herein contained and the shares of Common Stock underlying the securities in excess of the Beneficial Ownership Limitation shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act.
(e) Principal Market Regulation. The Corporation shall not issue any shares of Common Stock upon conversion of any shares of Series B Preferred Stock or otherwise pursuant to the terms of this Certificate of Designation if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Corporation may issue upon conversion of the shares of Series B Preferred Stock without breaching the Corporation’s obligations under the rules and regulations the listing rules of the Principal Market (the maximum number of shares of Common Stock which may be issued without violating such rules and regulations, the “Exchange Cap”), except that such limitation shall
not apply in the event that the Corporation obtains the approval of its stockholders as required by the applicable rules and regulations of the Principal Market for issuances of shares of Common Stock in excess of such amount. Until such approval is obtained, no Holder shall be issued in the aggregate, upon conversion of any shares of Series B Preferred Stock, shares of Common Stock in an amount greater than the product of (i) the Exchange Cap as of the Original Issue Date multiplied by (ii) the quotient of (1) the aggregate number of shares of Series B Preferred Stock issued to such Holder on the Original Issue Date, divided by (2) the aggregate number of shares of Series B Preferred Stock outstanding as of the Original Issue Date (with respect to each Holder, the “Exchange Cap Allocation”). In the event that any Holder shall sell or otherwise transfer any of such Holder’s shares of Series B Preferred Stock, the transferee shall be allocated a pro rata portion of such Holder’s Exchange Cap Allocation with respect to such portion of such shares of Series B Preferred Stock so transferred, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so allocated to such transferee.
(f) Conversion Adjustments. The Conversion Price and the Floor Price shall be subject to adjustment from time to time as follows:
(i) Stock Dividends and Splits. If the Corporation, at any time while the Series B Preferred Stock is outstanding, (A) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of or payment of Dividends on the Series B Preferred Stock), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Corporation, then in each case the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this clause (i) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.
(ii) Subsequent Rights Offerings. If at any time the Corporation grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder of will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder's Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation or Exchange Cap) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder's right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation or Exchange Cap, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation or Exchange Cap).
(iii) Pro Rata Distributions. If the Corporation, at any time while the Series B Preferred Stock is outstanding, distributes to all holders of Common Stock (A) evidences of its indebtedness, (B) any
security (other than a distribution of Common Stock covered by the preceding clause (i)) or (C) rights or warrants to subscribe for or purchase any security, or (D) any other asset (in each case, "Distributed Property"), then in each case the Floor Price shall be adjusted by multiplying the Floor Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP of the Common Stock on the Trading Day immediately following the date of such distribution and of which the numerator shall be such VWAP on such Trading Day less the then fair market value at such record date of the portion of the Distributed Property so distributed applicable to one outstanding share of the Common Stock as determined by the Board in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the Series B Preferred Stock of the portion of the Distributed Property so distributed and the calculation of such adjustments. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.
(iv) Fundamental Transaction. If, at any time while the Series B Preferred Stock is outstanding, (A) the Corporation effects any merger or consolidation of the Corporation with or into another entity, (B) the Corporation effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by the Corporation or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Corporation effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then, upon any subsequent conversion of the Series B Preferred Stock, the holders thereof shall have the right to receive, for each share of Common Stock that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the "Alternate Consideration"). The Corporation shall not effect any such Fundamental Transaction unless prior to or simultaneously with the consummation thereof, any successor to the Corporation, surviving entity or other person (including any purchaser of assets of the Corporation) shall assume in writing all of the obligations of the Corporation under this Certificate of Designation, in accordance with the provisions of this Certificate of Designation, and shall deliver to each Holder of Series B Preferred Stock a written notice briefly describing the Fundamental Transaction and stating that such successor, surviving entity or other person has assumed such obligations.
(v) Calculations. All calculations under this Section 6(f) shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 6(f), the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(vi) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 6(f), the Corporation at its expense will promptly compute such adjustment in accordance with the terms of this Certificate of Designation and prepare a certificate setting forth such adjustment, including a statement of the adjusted Floor Price and the number of shares of Common Stock and other securities or property issuable upon conversion of each share of Series B Preferred Stock, at least ten (10) days prior to the record date or effective date, as the case may be, of the transaction or event giving rise to such adjustment and following the record date or effective date of such transaction or event. Upon the occurrence of any such record date or effective date, the Corporation shall deliver a copy of such certificate to each Holder of Series B Preferred Stock at such Holder's last address as shown on the books of the Corporation.
(g) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series B Preferred Stock. In lieu of any fractional shares to which the Holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by the Conversion Price on the Conversion Notice Date.
(h) Reservation of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series B Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series B Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.
(i) Issuance of Certificates. As soon as practicable after the surrender of the certificate or certificates for Series B Preferred Stock and the delivery of the written notice of conversion as aforesaid, the Corporation shall issue and deliver, or cause to be issued and delivered, to the Holder or Holders thereof a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a check or wire transfer in payment of any fractional shares as provided in Section 6(g) hereof.
(j) No Reissuance of Series B Preferred Stock. In the event any shares of Series B Preferred Stock shall be converted pursuant to this Section 6 or redeemed pursuant to Section 7 hereof, the shares so converted or redeemed shall be canceled and shall not be issuable by the Corporation.
(k) Transfer taxes. The issuance of certificates for shares of the Common Stock upon conversion of the Series B Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the registered Holder(s) of such shares of Series B Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.
7. Redemption.
(a) Optional Redemption by the Corporation. The Corporation may, at any time and at its sole option, request to redeem all or any portion of the outstanding shares of Series B Preferred Stock at a price per share equal to 115% of the Stated Value plus all accrued and unpaid Dividends thereon (the "Redemption Price"), by delivering a written notice (the "Redemption Notice") to each Holder of Series B Preferred Stock at least 10 Trading Days prior to the date fixed for redemption (the "Redemption Date"). The Redemption Notice shall state (i) the Redemption Date, (ii) the number of shares of Series B Preferred Stock to be redeemed, (iii) the Redemption Price, and (iv) the place where the certificate or certificates for Series B Preferred Stock are to be surrendered for payment of the Redemption Price. During the period from the date of delivery of the Redemption Notice until the Redemption Date, each Holder of Series B Preferred Stock shall have the right to convert such Holder's shares of Series B Preferred Stock into Common Stock in accordance with Section 6 hereof.
(b) Optional Redemption upon Future Financing. Upon the closing of any equity or equity-linked financing by the Corporation after the Original Issuance Date (a "Subsequent Financing"), the Holder shall have the right, but not the obligation, to require the Corporation to redeem, out of the proceeds of such Subsequent Financing, up to twenty-five (25%) of the aggregate amount of net proceeds raised by the
Corporation in the Subsequent Financing, outstanding shares of Series B Preferred Stock at a price per share equal to the Stated Value plus all accrued and unpaid Dividends thereon (the “Subsequent Financing Redemption Price”). The Holder shall exercise such right by delivering a written notice to the Corporation within five (5) Trading Days after receiving notice from the Corporation of the terms and conditions of the Subsequent Financing, specifying the number of shares of Series B Preferred Stock to be redeemed. The Corporation shall redeem such Series B Preferred Stock within five (5) Trading Days after receiving such notice from the Holder, by paying the Subsequent Financing Redemption Price in cash.
(b) Surrender of Certificates; Payment of Redemption Price. On or before the applicable Redemption Date, each Holder of shares of Series B Preferred Stock to be redeemed on such Redemption Date, unless such Holder has exercised his, her or its right to convert such shares as provided in Section 6, shall, if a Holder of shares in certificated form, surrender the certificate or certificates representing such shares (or, if such registered Holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares of Series B Preferred Stock represented by a certificate are redeemed, a new certificate, instrument, or book entry representing the unredeemed shares of Series B Preferred Stock shall promptly be issued to such Holder.
(c) Status of Redeemed Shares. Any shares of Series B Preferred Stock that are redeemed by the Corporation pursuant to this Section 7 shall be canceled and shall not be reissued by the Corporation.
8. Notices. Any and all notices or other communications or deliveries hereunder (including, without limitation, any Redemption Notice or notice of adjustment) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or email attachment at the facsimile number or email address specified in the books and records of the Corporation as of the date of such transmission prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email attachment at the facsimile number or email address specified in the books and records of the Corporation as of the date of such transmission on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service specifying next Business Day delivery, or (iv) upon actual receipt by the party to whom such notice is required to be given, if by hand delivery. The address for such notices or communications shall be as set forth in the books and records of the Corporation.
9. Miscellaneous.
(a) Lost or Mutilated Certificates. Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of any certificates representing Series B Preferred Stock, and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Corporation, and upon surrender and cancellation of the certificate(s), if mutilated, the Corporation shall execute and deliver new certificate(s) of like tenor and date.
(b) Waiver. Any waiver by the Corporation or a Holder of Series B Preferred Stock of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation.
The failure of the Corporation or a Holder of Series B Preferred Stock to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder of Series B Preferred Stock) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver by the Corporation or a Holder of Series B Preferred Stock must be in writing.
(c) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.
(d) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
(e) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.
(f) Status of Converted or Redeemed Series B Preferred Stock. If any shares of Series B Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series B Preferred Stock.
***
IN WITNESS WHEREOF, Tivic Health Systems, Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series B Non-Voting Convertible Preferred Stock to be duly executed by its Chief Executive Officer on April 29, 2025.
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tivic health systems, INC. |
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By: |
/s/ Jennifer Ernst |
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Name: |
Jennifer Ernst |
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Title: |
CEO |
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ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK)
Reference is made to the Certificate of Designation of the Certificate of Incorporation of Tivic Health Systems, Inc., a Delaware corporation (the “Corporation”) establishing the terms, preferences and rights of the Series B Non-Voting Convertible Preferred Stock, $0.0001 par value (the “Series B Preferred Stock”) of the Corporation (the “Certificate of Designation”). In accordance with and pursuant to the Certificate of Designation, the undersigned hereby elects to convert the number of shares of Series B Preferred Stock indicated below into shares of common stock, $0.0001 value per share (the “Common Stock”), of the Corporation, as of the date specified below.
Date of Conversion: |
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Aggregate number of shares of Series B Preferred Stock to be converted: |
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Aggregate Stated Value of such shares of Series B Preferred Stock to be converted: |
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Aggregate accrued and unpaid Dividends with respect to such shares of Series B Preferred Stock to be converted: |
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AGGREGATE CONVERSION |
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Please confirm the following information: |
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Conversion Price: |
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Number of shares of Common Stock to be issued: |
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Please issue the Common Stock into which the applicable shares of Series B Preferred Stock are being converted to Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
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☐ Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
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Broker No.: ________________
Account No.: _______________
[HOLDER]
By: |
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Exhibit 10.8
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS AS PRIVATE AND CONFIDENTIAL. REDACTED INFORMATION IS INDICATED BY [***].
SOW TITLE: |
Technology Transfer and CGMP BDS and DP Manufacturing for Entolimod in E. coli |
DOCUMENT ID: |
20203 |
SOW VERSION NUMBER: |
3 |
ISSUE DATE: |
16APR2025 |
EXPIRATION DATE: |
16JUL2025 |
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CLIENT CONTACT: |
Michael K. Handley (925) 400-3123 |
COMPANY NAME: |
Tivic Health Systems, Inc. |
COMPANY ADDRESS: |
47685 Lakeview Blvd Fremont, CA 94538 |
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SCORPIUS CONTACT: |
Shari Udoff-McDonald sudoff-mcdonald@scorpiusbiologics.com (908) 335-7024 |
PROPOSAL MANAGER: |
Kyle Lauterbach |
SCORPIUS ADDRESS: |
Scorpius BioManufacturing, Inc. 1305 East Houston Street San Antonio, TX 78205 |
This Statement of Work (“SOW”) between Scorpius BioManufacturing, Inc. (“Scorpius”) and Tivic Health Systems, Inc. (“Tivic” or “Client”) is subject to the Terms and Conditions outlined within this SOW (“Terms and Conditions” or “T&Cs”) until a Master Service Agreement is executed by and between both parties. Upon execution of the Master Service Agreement, the Master Service Agreement will supersede the terms of this SOW in its entirety.
Table of Contents
Executive Summary 3
Table 1. Summary of Project Scope 3
Table 2. Project-Specific Information 4
Estimated Timeline and Pricing 5
Projected Timeline and Risk Assumptions 5
Figure 1. Estimated Project Timeline 5
Cost Estimate 7
Table 3. Total Estimated Cost 7
Table 4. Invoicing Schedule 8
Non-Technical Assumptions 11
Section 1: Project Kickoff and Program Management 12
Section 2: Technology Transfer 14
Section 3: Process Transfer Runs – Ambr250 and 25 L 16
Section 4: Analytical Method Implementation 17
Table 5. Analytical Method Implementation/Development Scope 18
Section 5: Non-CGMP Demonstration Batch 19
Table 6. Non-CGMP UBH Biosafety Testing Plan 20
Section 6: Analytical Method Qualification 21
Table 7. Analytical Method Qualification/Verification Scope 22
Section 7: 50 L CGMP Manufacturing 23
Table 8. CGMP UBH Biosafety Testing Plan 24
Table 9. Proposed Batch Testing Plan 24
Section 8: Comparability Studies (Clinical Bridging) 25
Table 10. Proposed Comparability Testing Plan 25
Section 9: Stability Studies 26
Table 11. Reference Standard Requalification Testing Plan 26
Table 12. Proposed BDS Stability Testing Plan 26
Table 13. Proposed DP Stability Testing Plan 26
Section 10: Reference Standard Dispense and Qualification 28
Table 14. Proposed. Reference Standard Qualification Testing Plan 28
Section 11: Upstream Process Development 29
Section 12: 25 L Upstream Production Batch 30
Section 13: Downstream Process Development 31
Section 14: DP Manufacturing 33
Project Approval and Authorization 34
Revision History 35
Terms and Conditions 36
2
Executive Summary
Scorpius BioManufacturing, Inc (“Scorpius”) is providing this Statement of Work (“SOW”) to Tivic Health Systems, Inc.(“Tivic” or “Client”) outlining the general scope, estimated timeline, and estimated costs in support of technology transfer, analytical method implementation and qualification, and Current Good Manufacturing Practice (“CGMP”) bulk drug substance (“BDS”) and drug product (“DP”) manufacturing for Entolimod, a proprietary recombinant derivative of the Salmonella FliC flagellin protein (collectively referred to as the “Project”).
We look forward to the opportunity to partner with Tivic in its mission to positively impact patients’ lives. Services covered in this SOW are summarized in Table 1
Table 1. Summary of Project Scope
Section |
Objective |
Tech Transfer and Manufacturing (Stage 1) |
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Technology Transfer |
Efficiently and collaboratively transfer relevant knowledge, data, and materials to Scorpius to facilitate execution of the scoped services |
Ambr250/ Process Transfer Batch |
Transfer Tivic’s fermentation process into Scorpius’ facility and generate material for transfer activities |
Legacy Process Confirmation (Stage 2) |
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Work Package 2 |
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Analytical Method Implementation |
Implement Client’s product-specific release and stability-indicating methods at Scorpius |
50 L Non-CGMP Demonstration Batch |
Scale the process to the final CGMP production scale in the Process Development lab to show successful scale-up and readiness for CGMP manufacturing |
GMP Production (Stage 3) |
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Analytical Method Qualification |
Demonstrate that analytical procedures for release and stability-indicating assays are suitable for their intended purpose and Phase-appropriate |
50 L CGMP Manufacturing |
Manufacture and release CGMP-compliant BDS |
Reference Standard Dispense and Qualification |
Establish and qualify a reference standard using Tivic’s optimized manufacturing process |
Comparability Study (Clinical Bridging) |
Assess the comparability of BDS from the CGMP manufacturing batch against previously generated clinical material for clinical bridging |
Stability Studies |
Assess the stability of Client’s BDS and DP and requalify reference standard annually |
DP Manufacturing (Outsourced) |
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Drug Product Manufacturing |
Manufacture DP from Client-provided BDS and from Scorpius’ CGMP BDS batch |
Process Modernization (Stage 4) |
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Upstream Process Development |
Develop a robust and scalable fermentation process for Tivic’s E. coli MCB |
3
Section |
Objective |
25 L Upstream Production Run |
Execute an upstream production run to demonstrate the scalability of the optimized fermentation process and generate material for development activities |
Downstream Process Development |
Develop recovery and purification processes for improved robustness, scalability, yields, and/or product quality |
Table 2. Project-Specific Information
Product Name |
Product Classification |
Entolimod |
recombinant |
Indication |
Regulatory Status |
Cell Expression |
Localization |
Acute Radiation Syndrome |
Phase 2 |
Microbial |
Intracellular/Soluble |
4
Estimated Timeline and Pricing
Projected Timeline and Risk Assumptions
Figure 1. Estimated Project Timeline
[***]
Timeline/Risk Assumptions:
The Projected Timeline shown above (the “Projected Timeline”) is an estimate. The Projected Timeline provides the estimated timing for the critical path activities included in this SOW. Transfer and scale-up to GMP manufacturing of the legacy process is shown in solid blue. DP manufacturing is shown in green. Process Development of a modernized process is shown in light blue.
The Projected Timeline assumes unconstrained capacity from a resource and asset perspective and does not depict optional activities. The Projected Timeline additionally assumes that material lead times will not cause delays. The Projected Timeline is further subject to change based on start date, availability, scope amendments, and individual Client requests. Upon verbal award, Scorpius will assess the Project’s scope against current capacity based on an expected start date to confirm availability to support. The following Project-specific assumptions were used to develop the timeline above:
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Cost Estimate
Pricing Assumptions:
Table 3. Total Estimated Cost
Section |
Scorpius Service Fee |
Estimated Consumables |
Estimated External Services |
Estimated Section Price |
Tech Transfer and Manufacturing (Stage 1) |
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Technology Transfer |
$70,000 |
N/A |
N/A |
$70,000 |
ambr250/Process Transfer Batch |
$119,000 |
$20,000 |
N/A |
$139,000 |
Subtotal: |
$189,000 |
$20,000 |
$0 |
$209,000 |
Legacy Process Confirmation (Stage 2) |
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Analytical Method Implementation |
$155,000 |
$44,000 |
N/A |
$199,000 |
50 L non-CGMP Demonstration Batch |
$242,000 |
$249,000 |
$40,000 |
$531,000 |
Subtotal: |
$397,000 |
$293,000 |
$40,000 |
$730,000 |
GMP Production (Stage 3) |
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Analytical Method Qualification |
$240,000 |
$55,000 |
$10,000 |
$305,000 |
50 L CGMP Manufacturing Batch |
$575,000 |
$271,000 |
$40,000 |
$886,000 |
CGMP Columns and Resins |
N/A |
$271,000 |
N/A |
$271,000 |
Reference Standard Dispense and Qualification |
$43,000 |
$6,000 |
$70,000 |
$119,000 |
Comparability Study (Clinical Bridging) |
$30,000 |
$6,000 |
$100,000 |
$136,000 |
Subtotal: |
$888,000 |
$609,000 |
$220,000 |
$1,717,000 |
Stability Studies (Not Included) |
$550,000 |
N/A |
$40,000 |
$590,000 |
Process Modernization (Stage 4) |
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Upstream Process Development (Work Package 2) |
$360,000 |
$55,000 |
N/A |
$415,000 |
25 L Upstream Production Batch (Work Package 2) |
$66,000 |
$17,000 |
N/A |
$109,000 |
7
8
Section |
Scorpius Service Fee |
Estimated Consumables |
Estimated External Services |
Estimated Section Price |
Downstream Process Development (Work Package 2) |
$490,000 |
$44,000 |
N/A |
$534,000 |
Subtotal: |
$916,000 |
$142,000 |
$0 |
$1,058,000 |
DP Manufacturing (Outsourced) |
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Non-CGMP DP Fill |
$23,000 |
TBD |
$150,000 |
$173,000 |
CGMP DP Fill |
$35,000 |
TBD |
$230,000 |
$265,000 |
Subtotal: |
$58,000 |
$0 |
$380,000 |
$438,000 |
Total Estimated Investment: |
$2,448,000 |
$1,038,000 |
$640,000 |
$4,126,000 |
Table 4. Invoicing Schedule
Section |
Scorpius Service Fee1,2 |
Invoice Amount |
Invoice Event |
Tech Transfer and Manufacturing (Stage 1) |
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Technology Transfer |
$70,000 |
$209,000 |
Signature of SOW 3 |
ambr250/Process Transfer Batch |
$139,000 |
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Legacy Process Confirmation (Stage 2) |
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Analytical Method Implementation |
$155,000 |
$77,500 |
Start of Stage 2 3 |
$77,500 |
Method Transfer Summary Delivery |
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50 L non-CGMP Demonstration Batch |
$242,000 |
$121,000 |
Start of Stage 2 3 |
$121,000 |
CoT Delivery |
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GMP Production (Stage 3) |
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Analytical Method Qualification |
$240,000 |
$120,000 |
Start of Stage 3 3 |
$96,000 |
Draft AMQ Protocol Delivery |
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$24,000 |
Draft AMQ Report Delivery |
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50 L CGMP Manufacturing Batch |
$575,000 |
$172,500 |
Start of Stage 3 3 |
$115,000 |
Draft BOM Delivery |
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$115,000 |
Draft Upstream BR Delivery |
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$115,000 |
Bulk Fill |
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$57,500 |
Batch Disposition |
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Reference Standard Dispense and Qualification |
$43,000 |
$21,500 |
Start of Stage 3 3 |
$21,500 |
Draft RSQ Report Delivery |
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Comparability Study (Clinical Bridging) |
$30,000 |
$15,000 |
Start of Stage 3 3 |
$15,000 |
Draft Comp Report Delivery |
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DP Manufacturing (Outsourced) |
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Non-CGMP DP Fill |
$23,000 |
$11,500 |
Start of non-GMP Manufacturing |
9
Section |
Scorpius Service Fee1,2 |
Invoice Amount |
Invoice Event |
|
|
$11,500 |
CoT Delivery |
CGMP DP Fill |
$35,000 |
$17,500 |
Start of CGMP Manufacturing |
$17,500 |
CoA Delivery |
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Process Modernization (Stage 4) |
|||
Upstream Process Development |
$360,000 |
$180,000 |
Start of Stage 4 3 |
$144,000 |
Draft Upstream Plan Delivery |
||
$36,000 |
Draft USPD Report Delivery |
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25 L Upstream Production Batch |
$66,000 |
$33,000 |
Start of Stage 4 3 |
$33,000 |
Data Summary Delivery |
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Downstream Process Development |
$490,000 |
$245,000 |
Start of Stage 4 3 |
$196,000 |
Draft Downstream Plan Delivery |
||
$49,000 |
Draft DSPD Report Delivery |
||
Stability Studies (Not Included) |
$550,000 |
TBD |
Covered under separate SOW4 |
Total Service Fees: |
$2,448,000 |
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|
Estimated Consumables (including 8.25% Texas sales tax)2,5: |
$1,038,000 |
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Estimated External Services2,6: |
$640,000 |
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Total Estimated Investment: |
$4,126,000 |
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Total Due Upon Signature SOW 3 |
$209,000 |
Total Due Upon Start of Stage 2 3 |
$198,500 |
Total Due Upon Start of Stage 3 3 |
$335,500 |
Total Due Upon Start of Stage 4 3 |
$458,000 |
1Scorpius reserves the right to revise quoted costs to account for changes in initial scope, revisions in protocols, modifications of testing plans, final review of test methods, requests for additional data or reports, undocumented requirements, or any unforeseen difficulty in executing the Project. The additional work may be added upon written agreement and will be documented in a Change Order.
2Service Fees do not include pass-through costs such as raw materials, consumables, reagents, shipping, and subcontracted services. Scorpius will procure and manage these items/services on behalf of Client at Client’s cost plus a 15% administrative fee. Delivery of final product is Ex Works (IncoTerms 2020) as outlined in the T&Cs/Master Service Agreement. 3All service fees invoiced at Signature of SOW are non-refundable.
4Stability costs are not included in the Total Estimated Investment; stability costs will be captured in separate SOW(s) or Change Order upon finalization of scope.
5Estimated consumables costs will be prepaid at SOW signature for Sections invoiced at Signature of SOW. All remaining estimated consumables costs will be invoiced at the start of each Stage. All estimates are inclusive of administrative fees. Any difference between the actual cost and estimated cost will be reconciled at the conclusion of activities. Consumable estimates for production batches currently include resins; once resin type and volume is finalized, costs may be adjusted via Change Order.
6Estimated external service costs will be invoiced as incurred by Scorpius. Client direct invoicing is subject to confidential pricing terms negotiated between the third-party vendor and Scorpius. Estimates are inclusive of administrative fees.
10
Non-Technical Assumptions
employees.
11
Tech Transfer and Manufacturing (Stage 1)
Section 1: Project Kickoff and Program Management
Objective: Establish a clear roadmap for project execution, ensuring alignment of goals, roles, and responsibilities among all stakeholders to facilitate seamless and successful project delivery.
Assumptions:
Activities:
12
Deliverables from Scorpius:
13
Section 2: Technology Transfer
Objective: Efficiently and collaboratively transfer relevant knowledge, data, and materials to Scorpius to facilitate execution of the scoped services.
Assumptions:
Activities:
o Cells must originate from a fully characterized MCB manufactured in compliance with pertinent ICH guidance and be provided along with CoA and CoC. In addition, Tivic will provide copies of biosafety test results, including ID (e.g., API 20), sequence integrity of gene of interest (e.g., restriction map analysis) and bacteriophage, as well as documentation outlining the history of the cell line, including origin, type, manipulations undergone, and summary of raw materials used (“Documentation”). All Documentation provided by Tivic to Scorpius shall remain the property of Tivic and/or its licensors, and the transfer of such Documentation shall constitute a non-exclusive license from Tivic to Scorpius to use the Documentation for the sole purpose of the activities undertaken for the Project. If any raw materials were of animal origin, an understanding of the controls used and TSE/BSE statement will be provided to Scorpius. If additional testing is required on the transferred cell bank, Client will be responsible for the costs.
including appropriate back-up stock.
Deliverables from Client:
14
15
Deliverables from Scorpius:
1. Facility fit analysis summary
Section 3: Process Transfer Runs – Ambr250 and 25 L
Objective: Execute Tivic’s existing manufacturing process using the ambr®250 system and 50-L single-use fermentor to demonstrate performance, reproducibility, and successful transfer into Scorpius’ facility.
Assumptions:
[***]
Activities:
o Harvest material (i.e., cell paste) will be frozen and used for initiation of downstream process transfer and appropriate development activities. Generated materials (in- process and final DS) feeding analytical method implementation/development will be suitably purified using the transferred downstream process. A portion of the 50 L material will also be forward processed in a representative-scale downstream process.
Deliverables:
1. Data summary
Legacy Process Establishment (Stage 2)
Section 4: Analytical Method Implementation
Objective: Implement Client’s product-specific release and stability-indicating methods at Scorpius.
Assumptions:
Activities:
Scorpius’ previous experience.
Table 5. Analytical Method Implementation/Development Scope
Assay |
Implementation |
Development |
Titer (harvest) |
X |
- |
A280 (SoloVPE) |
X |
- |
Bioassay1 |
- |
- |
CE-SDS (R/NR) |
X |
- |
SDS-PAGE |
X |
|
cIEF |
X |
- |
SE-HPLC |
X |
- |
RP-HPLC |
X |
- |
Residual DNA (qPCR) |
- |
X |
Residual HCP (ELISA) |
X |
- |
Residual Nickel |
- |
X |
Residual IPTG2 |
- |
X |
1Costs are not currently included but may be added once method requirements are provided.
2Assay will be outsourced to Scorpius-qualified 3rd-party vendor. Costs are not currently included.
Deliverables:
Section 5: Non-CGMP Demonstration Batch
Objective: Manufacture a demonstration batch at the 50 L scale in the PD lab to de-risk scale-up and ensure readiness for CGMP manufacturing.
Assumptions:
Activities:
o Harvest, in-process, and release testing plans will be developed by Scorpius and Tivic. Testing of unprocessed bulk harvest (UBH) material will be performed by a 3rd-party CTO according to Table 6, while Scorpius or 3rd-party vendor will perform the in- process and release testing proposed in Table 9. Current costs assume that in-process testing will only be performed on the last cycle of each step, where applicable. Material will not be formally released by Scorpius QA.
Table 6. Non-CGMP UBH Biosafety Testing Plan
Attribute |
Test Method |
Testing Site |
Virus Testing |
Bacteriophage Testing |
CTO |
Deliverables:
GMP Production (Stage 3)
Section 6: Analytical Method Qualification
Objective: Demonstrate that analytical procedures for release and stability-indicating assays are suitable for their intended purpose and Phase-appropriate.
Assumptions:
Activities:
Table 7. Analytical Method Qualification/Verification Scope
Assay |
Qualification |
Verification |
Titer (harvest) |
X |
- |
A280 (SoloVPE) |
X |
- |
Bioassay1 |
- |
- |
CE-SDS (R/NR) |
X |
- |
cIEF |
X |
- |
SE-HPLC |
X |
- |
RP-HPLC |
X |
- |
Residual DNA (qPCR) |
X |
- |
Residual HCP (ELISA) |
X |
- |
Residual Nickel |
X |
- |
Residual IPTG2 |
X |
- |
Appearance |
- |
X |
pH |
- |
X |
Osmolality3 |
- |
X |
Endotoxin |
- |
X |
Bioburden3 |
- |
X |
1Costs are not currently included but may be added once method requirements are provided.
2Assay may be outsourced to Scorpius-qualified 3rd-party vendor. Costs are not currently included.
3Assays may be outsourced to Scorpius-qualified 3rd-party vendor. Pass-through costs have been included for budgetary purposes.
Deliverables:
Section 7: 50 L CGMP Manufacturing
Objective: Manufacture and release CGMP compliant BDS.
Assumptions:
o If additional cycles are required and downstream purification takes longer than anticipated, per-batch costs may increase and be captured under a Change Order.
Activities:
Table 8. CGMP UBH Biosafety Testing Plan
Attribute |
Test Method |
Testing Site |
Viability |
Viability |
Scorpius |
Genetic Stability |
DNA Sequencing |
CTO |
Retention of Recombinant Construct |
CTO |
|
Virus Testing |
Bacteriophage Testing |
CTO |
Table 9. Proposed Batch Testing Plan
|
BDS |
DP |
||
Assay |
In-Process |
Release |
In-Process |
Release |
Titer (harvest) |
X |
- |
- |
- |
A280 (SoloVPE) |
X |
X |
X |
X |
Cell based Bioassay1 |
- |
X |
- |
X |
CE-SDS (R/NR) |
X |
X |
- |
X |
cIEF |
- |
X |
- |
X |
SE-HPLC |
X |
X |
- |
X |
RP-HPLC |
X |
X |
- |
X |
Residual DNA (qPCR) |
X |
X |
- |
- |
Residual HCP (ELISA) |
X |
X |
- |
- |
Appearance |
- |
X |
- |
X |
pH |
- |
X |
X |
X |
Osmolality2 |
- |
X |
- |
X |
Endotoxin |
X |
X |
- |
X |
Bioburden2 |
X |
X |
- |
- |
Residual Silicon2 |
- |
X |
- |
X |
Residual Kanamycin |
- |
X |
|
X |
Residual IPTG |
- |
X |
- |
- |
Residual Nickel3 |
X |
X |
- |
- |
1Costs are not currently included but may be added once method requirements are provided.
2Methods may be outsourced to Scorpius-qualified 3rd-party vendor and managed by Scorpius. Pass-through costs have been included for budgetary purposes.
3Method may be outsourced to Scorpius-qualified 3rd-party vendor. Costs are not currently included.
Note: The testing plan shown above is for discussion purposes only and will be finalized in a client-approved Sampling Plan to meet the requirements of Tivic’s program. The final testing plan will be mutually agreed upon between Scorpius and Tivic.
Deliverables:
Section 8: Comparability Studies (Clinical Bridging)
Objective: Assess the comparability of BDS from the CGMP manufacturing batch against previously generated clinical material for clinical bridging.
Assumptions:
require development, the additional costs will be captured via Change Order.
Activities:
1. Scorpius or a 3rd-party laboratory will perform the testing outlined Table 10 under protocol. Applicable release tests from the CGMP manufacturing batch will be included as part of the comparability testing plan.
Table 10. Proposed Comparability Testing Plan
Attribute |
Test Method |
Testing Site |
Primary Structure |
Intact Mass (R/NR Native) |
CTO |
Peptide Mapping (LC/MS) |
CTO |
|
Disulfide Bond Mapping |
CTO |
|
Free Thiol Analysis |
Scorpius |
|
N- & C-Terminal Sequence |
CTO |
|
Product Impurities (Aggregates/Fragments) & Higher Order Structure |
Dynamic Light Scattering (DLS) |
Scorpius |
SEC-MALS |
CTO |
|
Circular Dichroism (CD; near and far UV) |
Scorpius |
|
Differential Scanning Calorimetry (DSC) |
Scorpius |
|
Release Testing |
See Table 91 |
Scorpius |
1Potency and product quality method will be included in the testing plan
Deliverables:
Section 9: Stability Studies
Objective: Assess the stability of Client’s BDS and DP.
Assumptions:
analytical methods. Data will not be QA-reviewed.
Activities:
1. Scorpius will perform the stability testing outlined below. The exact stability testing plans will be defined in Client-approved stability protocols and follow the general guidance of ICH Q1A.
Table 11. Reference Standard Requalification Testing Plan
Condition |
0M1 |
1M |
3M |
6M |
9M |
12M |
18M |
24M |
36M |
Long-term |
X |
- |
- |
- |
- |
X |
- |
X |
X |
X=appearance, pH, A280, bioassay2, SE-HPLC, CE-SDS (R/NR), cIEF, RP-HPLC
1T0 results will be taken from release testing.
2Costs are not currently included but may be added once method requirements are provided.
Table 12. Proposed BDS Stability Testing Plan
Condition |
0M1 |
3M |
6M |
9M |
12M |
18M |
24M |
36M |
Long-term |
X, B, E |
X |
X |
X |
X, B, E |
X |
X, B, E |
X, B, E |
Accelerated |
X |
X |
- |
- |
- |
- |
- |
X=appearance, pH, A280, bioassay2, SE-HPLC, CE-SDS (R/NR), cIEF, RP-HPLC E=endotoxin; B=bioburden3
1T0 results will be taken from release testing.
2Costs are not currently included but may be added once method requirements are provided.
3Testing will be subcontracted; cost estimates have been included for budgetary purposes.
Table 13. Proposed DP Stability Testing Plan
Condition |
0M |
3M |
6M |
9M |
12M |
18M |
24M |
36M |
Long-term |
X, E, P, S |
X |
X |
X |
X, E, P, C |
X |
X, E, P, C |
X, E, P, S |
Accelerated |
X |
X |
- |
- |
- |
- |
- |
X=appearance, pH, A280, bioassay1, SE-HPLC, CE-SDS (R/NR), cIEF, RP-HPLC E=endotoxin; P=particulate matter by HIAC2; S=sterility2; C=CCIT2
1Costs are not currently included but may be added once method requirements are provided.
2Testing will be subcontracted and Client-managed; cost estimates are not included.
Deliverables:
Section 10: Reference Standard Dispense and Qualification
Objective: Establish and qualify a reference standard using Tivic’s optimized manufacturing
process.
Assumptions:
Activities:
Table 14. Proposed. Reference Standard Qualification Testing Plan
Attribute |
Test Method |
Testing Site |
Primary Structure |
Intact Mass (R/NR Native) |
CTO |
Peptide Mapping (LC/MS) |
CTO |
|
Disulfide Bond Mapping |
CTO |
|
Free Thiol Analysis |
Scorpius |
|
N- & C-Terminal Sequence |
CTO |
|
Product Impurities (Aggregates/Fragments) & Higher Order Structure |
Dynamic Light Scattering (DLS) |
Scorpius |
SEC-MALS |
CTO |
|
Circular Dichroism (CD; near and far UV) |
Scorpius |
|
Differential Scanning Calorimetry (DSC) |
Scorpius |
|
Release Testing |
See Table 91 |
Scorpius |
1Potency and product quality methods will be included in the testing plan.
Deliverables:
Process Modernization (Stage 4)
Section 11: Upstream Process Development
Objective: Develop a robust and scalable fermentation process for Tivic, increasing biomass while maintaining specific productivity and decreasing fermentation volume.
Assumptions:
Activities:
[***]
Deliverables:
Section 12: 25 L Upstream Production Batch
Objective: Execute an upstream production run to demonstrate the scalability of the optimized fermentation process and generate material for subsequent development activities (e.g., extraction and downstream).
Assumptions:
Activities:
1. Scorpius will execute an upstream production run at the 25 L scale using the transferred cell line and optimized upstream process to generate material for downstream process development and analytical method development/implementation. Scorpius and Tivic will jointly review upstream data from the run and agree upon the final upstream process that will be scaled up.
Deliverables:
Section 13: Downstream Process Development
Objective: Develop recovery and purification processes for improved robustness, scalability, yields, and/or product quality.
Assumptions:
Activities:
[***]
[***]
Deliverables:
Section 14: DP Manufacturing
Objective: Manufacture DP from non-CGMP and CGMP BDS batches.
Assumptions:
Activities:
Deliverables:
Project Approval and Authorization
By signing below, Tivic Health Systems, Inc. agrees to the Project details as set forth in this SOW.
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Tivic Health Systems, Inc |
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Scorpius BioManufacturing, Inc |
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/s/ Jennifer Ernst 5/9/2025 |
/s/ Joe Payne 5/9/2025 |
||||
Signature |
Date |
Signature |
Date |
||
Name: Jennifer Ernst
|
Name: Joe Payne |
||||
Title: CEO |
Title: President & COO |
||||
Revision History
Version |
Revisions |
V1 |
Added subcontracting clause to T&Cs; increased administrative fee to 15%, updating invoicing; added Project Management Section; replaced Estimated Cost Table footnotes with Pricing Assumptions; updated Invoicing Schedule. |
V2 |
Reduction in scope, pricing, and timeline to accommodate budgetary restrictions. |
V3 |
Reversal of scope, pricing, and timeline into a staged proposal with milestone payments. |
Terms and Conditions
(1) Background IP. Nothing contained herein shall affect the pre-existing rights of either party in intellectual property developed prior to the effective date of this SOW (“Background IP”). Scorpius shall not acquire any rights in Client’s Background IP utilized by Scorpius in the performance of the services under this SOW. Client, or Client’s licensor as the case may be, shall own and retain all right, title, and interest in and to all of Client’s Background IP, including, but not limited to, Entolimod any and all information, inventions, patents and other intellectual property rights owned or otherwise controlled by Client or Client’s licensor, as the case may be. The transfer of Client’s Background IP shall constitute a non-exclusive license from Client to Scorpius to use such Background IP for the sole purpose of the activities under the Project.
(2) Foreground IP. Foreground IP shall refer to any and all data, results, discovery, finding, process, improvement, method, composition of matter, article of manufacture, patentable or otherwise, that is developed, invented, reduced to practice, or otherwise generated by either party exercising its rights or carrying out its obligations under this SOW, whether directly or via its affiliates, agents, contractors or sublicensees, including all right, title and interest in and to the corresponding intellectual property rights thereafter (“Foreground IP”). As between the parties, any Foreground IP generated, developed, conceived or reduced to practice (constructively or actually) specifically in connection with the development or manufacture of any BDS or DP other than any improvements to the Scorpius
Background IP generated, developed, conceived or reduced to practice (constructively or actually) while performing or arising out of the SOW or that is Foreground IP that is related primarily to the business of Scorpius generally conducted for its clients (collectively, “Product IP”) shall be solely and exclusively owned by Client. Scorpius shall promptly disclose all Product IP to Client in writing as soon as practicable following reduction to practice.
(3) As additional consideration for the favorable financial terms and rights granted to Scorpius hereunder, Scorpius agrees to assign to Client, and hereby assigns to Client, from the moment of creation, all of Scorpius’s right, title and interest, in and to any Product IP generated, developed, conceived or reduced to practice (constructively or actually) by or on behalf of Client, its affiliates, and any sublicensees, including their employees, agents, and contractors, whether alone or jointly with Client and any of its affiliates, including their employees, agents and contractors, including all intellectual property rights therein.
Warranties. Scorpius will use commercially reasonable efforts to perform the Project in accordance with the written specifications and Project instructions expressly set forth or referenced in this SOW, and in material compliance with all applicable laws, regulations, and current Good Manufacturing Practices, as applicable. Scorpius shall perform the services under this SOW using development methods and techniques and record keeping practices that are in compliance with theapplicable SOW(s) or the Master Service Agreement THE WARRANTIES SET FORTH IN THIS ARTICLE ARE THE SOLE AND EXCLUSIVE WARRANTIES MADE BY SCORPIUS TO CLIENT. Scorpius hereby certifies to Client that Scorpius has not used, and will not use the services of any person debarred under 21 U.S.C. 335a, as amended, in any capacity in connection with any of the services or work under the SOW conducted for or on behalf of Client and that this certification may be relied upon in any applications to the FDA or any other regulatory authority. It is understood and agreed that this certification imposes a continuing obligation upon Scorpius to notify Client promptly of any change in the truth of this certification. Scorpius agrees that it shall use the materials in strict accordance with the SOW and with Client’s written instructions, and that Scorpius shall not use the materials in humans or animals. EXCEPT AS SET FORTH IN THIS ARTICLE, NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND WHATSOEVER, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.Client understands that the Services are experimental and may not yield desired results and Scorpius agrees that it shall use the materials in strict accordance with the SOW and with Client’s written instructions and that Scorpius shall not use the materials in humans or animals.
(60) days written notice thereof. In addition, either party shall be permitted to terminate the SOW in the event that the other party breaches a material provision hereunder and fails to cure such breach within thirty (30) days from the date of the written notice sent by the nonbreaching party detailing the specifics of such breach. In the event of any termination, Client shall pay (i) any open invoices and pay the greater of (a) all of its costs due for completed milestones per Table 4 (Invoicing Schedule) of the SOW; and (ii) the documented reasonable expense incurred or irrevocably obligated related to the SOW and Scorpius to wind down activities, plus as liquidated damages and not as
a penalty, an amount equal to the greater of a 50% of the cost of the SOW not yet performed or (b) 75% of the prices of the services for the applicable manufacturing run(s) set to be performed within sixty (60) days of termination under the SOW.
X. Governing Law. This SOW shall be governed by and construed under the laws of the State of Delaware USA, excluding its conflict of law provisions. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this SOW.
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jennifer Ernst, certify that:
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Date: May 15, 2025
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By: |
/s/ Jennifer Ernst |
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Jennifer Ernst |
|
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Chief Executive Officer |
|
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(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lisa Wolf, certify that:
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Date: May 15, 2025
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By: |
/s/ Lisa Wolf |
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Lisa Wolf |
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Interim Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Tivic Health Systems, Inc. (the “Company”) for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Jennifer Ernst, Chief Executive Officer of the Company, and Lisa Wolf, Interim Chief Financial Officer of the Company, do each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:
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Date: May 15, 2025 |
By: |
/s/ Jennifer Ernst |
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Jennifer Ernst |
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Chief Executive Officer |
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(Principal Executive Officer) |
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Date: May 15, 2025 |
By: |
/s/ Lisa Wolf |
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Lisa Wolf |
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Interim Chief Financial Officer |
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(Principal Financial and Accounting Officer) |