Femasys Inc

This proposal seeks shareholder approval to amend the Company’s certificate of incorporation to authorize the board to effect a reverse stock split at any ratio between 1‑for‑2 and 1‑for‑25, chosen at the board’s discretion prior to May 1, 2027. Management’s stated principal objective is to cure noncompliance with Nasdaq’s minimum $1.00 bid price rule (the Company received a delisting notice and later an extension), by reducing the number of shares outstanding to raise the per‑share trading price. The board argues the reverse split could broaden institutional investor interest, reduce relative transaction costs for brokers and investors, and potentially reduce administrative expenses tied to a large share count. The board retains discretion to determine the Final Ratio and to abandon the transaction at any time before filing the Certificate of Amendment, which gives management flexibility to time the action based on market conditions but concentrates decision authority with insiders. The company discloses concrete risks: the split may not achieve a sustained price increase; it increases the pool of authorized but unissued shares (enabling future dilution without further shareholder approval); it may create odd‑lot holdings and could exacerbate volatility via short squeezes or speculative trading; and holders may experience dilution if the company issues new shares following the split. The proposal is procedural in form but has material strategic and capital markets consequences because it is intended to preserve Nasdaq listing and to influence future financing capability and investor base. Stockholder approval is by a simple majority of votes cast, and the board recommends a vote FOR the proposal, framing it as in the best interests of the company and its stockholders given the Nasdaq compliance risk. Sophisticated investors should weigh the potential immediate benefit of regaining compliance and improved market perception against the asymmetric risks of increased authorized shares, possible subsequent dilution, and the fact that the actual ratio will be selected unilaterally by the board within a wide range.

This management proposal asks shareholders to pre‑approve issuances of common stock that may result from conversion of senior secured convertible notes and exercise of multiple series of warrants issued in a November 2025 private placement and a March 2026 amendment, specifically to the extent that anti‑dilution or price‑adjustment clauses would lower the effective conversion or exercise prices below Nasdaq’s Minimum Price. The company originally issued Notes convertible at $0.73 and warrants with exercise prices above the Nasdaq Minimum Price, but these instruments include anti‑dilution and price adjustment provisions and the Notes accrue PIK interest, which can materially increase the number of shares issuable over time. Nasdaq Rules 5635(c) and 5635(d) (including the 20% Rule) require shareholder approval before issuing shares (or securities exercisable/convertible into shares) below the Nasdaq Minimum Price beyond prescribed caps, and require approval for issuances to directors/officers on below‑market terms; this proposal is structured to secure that approval prospectively. Management frames the request as necessary to preserve the economic intent of the November private placement and the amendment (including issuance of Series D‑1 warrants) and to avoid operational limitations (an Exchange Cap) that would otherwise restrict share issuances upon future conversion or exercise. The board discloses dilutionary impacts and the risk that approval permits additional dilution of existing holders, and that director/officer participation creates potential conflicts of interest, though beneficial ownership limitations are described in the filing. Approving this proposal reduces the company’s execution risk for the financing arrangement but transfers dilutionary risk to existing stockholders; rejecting it would limit the company’s ability to issue shares in excess of the Exchange Cap if anti‑dilution adjustments occur, potentially undermining the private placement’s benefits and its cash/financing plans. The board recommends a vote FOR, citing compliance with Nasdaq rules and operational flexibility as the rationale; investors should weigh the financing benefits and Nasdaq rule compliance against longer‑term dilution and governance considerations, including insider participation and the mechanics of PIK interest that increase conversion exposure over time.

This procedural management proposal requests shareholder authorization to adjourn the Special Meeting—if votes are insufficient to approve the Reverse Stock Split or Issuance proposals—so the board and management can continue soliciting proxies. The adjournment allows more time to canvass holders, solicit additional support, and possibly convert previously opposing or abstaining votes, which can be material when passing proposals decided by a simple majority of votes cast. While routine in contested or close-vote situations, the adjournment authority can be used strategically to postpone a final vote and continue outreach; the company notes that if this adjournment proposal is approved, the Special Meeting could be adjourned without votes on the substantive proposals to seek to change holders’ votes. The board argues this is in the company’s and stockholders’ interest because it increases the chance of approving proposals intended to preserve Nasdaq listing and financing outcomes. Investors should be aware this authority could be used to delay resolution and extend solicitation expenses, and that approval effectively empowers the proxy holders to act to extend the meeting. The board recommends voting FOR the adjournment to permit additional solicitation time if needed; stockholders who oppose the substantive proposals should consider that a vote FOR adjournment would give management more time to seek to persuade them to change their votes.