Evofem Biosciences (EVFM) Risk Analysis

It is possible that one or more of our stockholders may publicly voice opposition to our financing strategy and/or certain aspects of our corporate governance and strategy, or undertake a proxy contest to reconstitute our board. Proxy contests have been waged against many companies in the biopharmaceutical industry over the last several years. If faced with a proxy contest or other type of stockholder activism, we may not be able to respond successfully to the contest or other type of activism which would be disruptive to our business. Even if we are successful, our reputation and/or business could be adversely affected by a proxy contest or other form of stockholder activism because: - responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, disrupting operations and diverting the attention of management and employees;   - perceived uncertainties as to our company and future strategic direction may result in the loss of potential financing, acquisitions, collaboration, in-licensing or other business opportunities, and may make it more difficult to attract and retain qualified personnel and business partners; and   - if individuals are elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively and timely implement our strategic plan and create additional value for our stockholders. Any or all of these activities could cause our stock price to decline or experience periods of volatility, and could be particularly problematic as our company seeks to establish itself as a profitable commercial enterprise in a challenging environment.

Provisions in our amended and restated certificate of incorporation, our bylaws or Delaware law may discourage, delay, or prevent a merger, acquisition or other change in control stockholders may consider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. These provisions could also limit the price investors might be willing to pay in the future for shares of our Common Stock, thereby depressing the market price of our Common Stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions might frustrate or prevent any attempts by our stockholders to replace or remove the current management by making it more difficult for our stockholders to replace members of our board of directors. These provisions include the following: - a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;   - prohibiting our stockholders from calling a special meeting of stockholders or acting by written consent other than unanimous written consent;   - permitting our board of directors to issue additional shares of our preferred stock, with such rights, preferences, and privileges as they may designate, including the right to approve an acquisition or other changes in control;   - establishing an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;   - providing that our directors may be removed only for cause;   - providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and   - requiring the approval of our board of directors or the holders of a supermajority of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.

We are a "smaller reporting company" under SEC regulations. For so long as we remain a smaller reporting company, we will be permitted to and intend to rely on exemptions from certain disclosure requirements applicable to other public companies that are not smaller reporting companies. These exemptions include: - for so long as we remain a smaller reporting company with annual revenues of less than $100 million per year and a public float value as of our most recently completed second fiscal quarter of less than $700 million, not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; and   - reduced disclosure obligations regarding executive compensation. We cannot predict whether investors will find our Common Stock less attractive if we rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and the price of our Common Stock price may be more volatile.

Sales of a substantial number of shares of our Common Stock in the public market could occur. These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our Common Stock. Future issuances of our securities may cause additional reduction in the percentage interests of our current stockholders in the voting power, liquidation value, our book and market value, and in any future earnings. As of February 28, 2026, there were approximately 3,324 shares of our Common Stock subject to outstanding options which have been registered on registration statements on Form S-8. Furthermore, as of February 28, 2026, there were an aggregate of 1,395,303,768 shares reserved for issuance under potential conversions of convertible notes, purchase rights, preferred shares, warrants and all other derivatives, exclusive of instruments for which the reservation requirement was waived by the respective holders. We have granted (or are required to grant) certain of our security holders registration rights pursuant to our agreements with these holders, including agreements requiring us to register for resale the shares of our Common Stock issued upon the conversion or exercise of our convertible notes and related warrants. The issuance or resale of our Common Stock issued to our security holders upon conversion of convertible notes or upon exercise of our warrants or options could cause the market price of our Common Stock to decline. In addition, the increase in the number of issued shares of our Common Stock issuable upon conversion of our convertible notes or upon exercise of our warrants may have an incidental anti-takeover effect in that these additional shares could be used to dilute the stock ownership of parties seeking to obtain control of us. The resulting increased number of issued shares could discourage the possibility of, or render more difficult, certain mergers, tender offers, proxy contests or other change of control or ownership transactions.

In the past, we have issued Common Stock, convertible securities (such as convertible notes) and warrants in order to raise capital. We have also issued Common Stock as compensation for services and incentive compensation for our employees, directors and certain vendors. We have shares of Common Stock reserved for issuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes in the future. Our issuance of additional Common Stock, convertible securities, options and warrants could affect the rights of our stockholders, could reduce the market price of our Common Stock or could result in adjustments to exercise prices of outstanding warrants (resulting in these securities becoming exercisable for, as the case may be, a greater number of shares of our Common Stock), or could obligate us to issue additional shares of Common Stock to certain of our stockholders.

The SEC has adopted regulations which generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our Common Stock on the OTCID is presently less than $5.00 per share and therefore we are considered a "penny stock" company according to SEC rules. The "penny stock" designation requires any broker-dealer selling our securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker-dealers to solicit purchases of our Common Stock and therefore reduce the liquidity of the public market for our shares. Moreover, as a result of apparent regulatory pressure from the SEC and the Financial Industry Regulatory Authority (FINRA), a growing number of broker-dealers decline to permit investors to purchase and sell or otherwise make it difficult to sell shares of penny stocks. The "penny stock" designation may have a depressive effect upon our Common Stock price.

Our Common Stock trades exclusively on OTCID. Securities quoted on OTC markets generally have lower trading volumes, fewer market makers, and greater price volatility than securities listed on national securities exchanges. As a result, the market for our Common Stock may be less liquid and more volatile. Limited trading volume and liquidity may make it difficult for investors to buy or sell shares at desired times or prices and may result in wider bid-ask spreads. Reduced liquidity may also increase the risk of significant price fluctuations in response to relatively small trades or news events. In addition, limited market liquidity and the absence of exchange listing may adversely affect our ability to raise additional capital and may result in reduced analyst coverage and institutional investor interest.

Our Common Stock is currently quoted for public trading on the OTCID under the symbol "EVFM". The market price for our Common Stock is volatile and may fluctuate significantly in response to a number of factors, many of which we cannot control, such as potential irregularity in financial results from quarter to quarter, political developments related to women's reproductive rights and contraception, the content and tone of media coverage and commentary, or changes in securities analysts' recommendations, any of which could cause the price of our Common Stock to fluctuate substantially. Each of these factors, among others, could harm your investment in our securities and could result in your being unable to resell any of our securities that you purchase at a price equal to or above the price you paid. In addition, the stock market in general and the market for biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to companies operating performance. The market price for our Common Stock may be influenced by many factors, including: - failure to timely file future required filings;   - the loss of key personnel;   - the results of our efforts to commercialize PHEXX, SOLOSEC, or any other products, particularly in the event of a rebrand;   - the results of our efforts to acquire or in-license products;   - commencement or termination of any collaboration or licensing arrangement;   - disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technology;   - announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures and capital commitments;   - additions or departures of key management personnel;   - variations in our financial results or those of companies that are perceived to be similar to us;   - new products, product candidates or new uses for existing products introduced or announced by our competitors, and the timing of these introductions or announcements;   - results of clinical trials of product candidates of our competitors;   - general economic and market conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies, wars, terrorism and political unrest, outbreak of major disease, boycotts and other business restrictions;   - regulatory or legal developments in the U.S. and other countries;   - changes in the structure of healthcare payment systems;   - conditions or trends in the biotechnology and biopharmaceutical industries;   - actual or anticipated changes in earnings estimates, development timelines or recommendations by securities analysts;   - announcement or expectation of additional financing efforts and related debt and equity issuances;   - sales of Common Stock by us or our stockholders in the future, as well as the overall trading volume of our Common Stock;   - stockholder activism;   - any stockholder derivative actions; and   - other factors described in this "Risk Factors" section. Broad market fluctuations may adversely affect the trading price or liquidity of our Common Stock. In the past, following periods of volatility in companies' stock prices, securities class-action litigation has often been instituted against such companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management's attention and resources, which could materially and adversely affect our business and financial condition.

The Company's Common Stock was moved to and began trading on the Over-the-Counter Integrated Disclosure (OTCID), the new basic reporting market tier launched by the OTC Markets Group, at market open on July 1, 2025. OTC Markets has certain continued listing standards that we must meet to maintain our listing on the OTCID. There can be no assurance that there will be an active market for our shares of Common Stock either now or in the future. Market liquidity will depend on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. As a result, holders of our securities may not find purchasers for our securities should they to desire to sell them.

Since inception, we have incurred significant operating losses. As of December 31, 2025, we had a working capital deficit of $69.5 million and an accumulated deficit of $897.4 million. We have financed our operations to date primarily through the issuance of preferred stock, Common Stock and warrants, cash received from private placement transactions, the issuance of convertible notes and, to a lesser extent, product sales. Accordingly, if we are unable to raise additional capital, or if we otherwise become unable to satisfy our obligations as they become due, we may become insolvent and face the risk of bankruptcy and other adverse action by our existing and future creditors. Further, we may currently, or in the future, be operating in the "zone of insolvency" as described under Delaware law, which is our jurisdiction of incorporation. Generally, a corporation's directors owe a fiduciary duty to the corporation's shareholders and not to its creditors. However, when a corporation is operating in the "zone of insolvency," some courts have concluded that the fiduciary duty of directors may shift to include creditors. Delaware courts have taken the position that directors of a corporation operating in the zone of insolvency continue to owe a fiduciary duty to the corporation's stockholders but also owe such duty to its creditors. Accordingly, our management and directors may be required to consider their duties with regard to both stockholders and creditors in their decision making processes.

We are currently authorized to issue 3,000,000,000 shares of Common Stock under our amended and restated certificate of incorporation. As of February 28, 2026, we have issued 126,685,925 shares of Common Stock and 1,395,303,768 shares of Common Stock were committed for issuance giving effect to the assumed exercise of all outstanding warrants, options, purchase rights and the assumed conversion of all issued and outstanding convertible notes after accounting for the security holders who have waived the requirement for shares to be reserved for conversion of their instruments. Certain outstanding convertible securities contain price adjustment provisions that may result in the issuance of additional shares if we complete future financings at prices below the applicable conversion or exercise price. As a result, the number of authorized but unissued shares of Common Stock available for future issuance may be insufficient to support additional equity financings or strategic transactions without first obtaining stockholder approval to increase the number of authorized shares. There can be no assurance that stockholders would approve such an amendment to our certificate of incorporation. If we are unable to increase our authorized share capital when needed, our ability to raise capital, refinance indebtedness, or consummate a merger or other strategic transaction could be materially adversely affected.