Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

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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 platform 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 the Company's existing product, currently marketed with FDA approval as ClearUP Sinus Pain Relief, for the treatment of sinus pain and congestion. The Company's second platform is a research-stage platform directed to vagus nerve stimulation, which is currently undergoing clinical evaluation. The Company is headquartered in Fremont, California.

2. Summary of Significant Accounting Policies

The accompanying condensed balance sheet as of December 31, 2023, which has been derived from audited financial statements, and the unaudited interim condensed financial statements as of September 30, 2024, and for the three and nine months ended September 30, 2024 and September 30, 2023, have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all accounting entries and adjustments (including normal, recurring adjustments) considered necessary for a fair presentation of the financial position and the results of operations for the interim periods have been made. Operating results for the three and nine months ended September 30, 2024are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024.

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The Company complies with the requirements of Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 340-10-S99-1. The Company capitalizes incremental legal, professional, accounting, and other third-party fees that are directly associated with an equity or debt offering as other current assets. As of September 30, 2024 the balance of deferred offering costs is $112thousand and consists of legal and accounting fees paid in connection with the filing of Form 1-A in August 2024 and the Equity Distribution Agreementdiscussed further in Footnote 9 Common Stock below. If the Company consummates an equity offering, the deferred financing costs will be allocated to additional paid-in capital. If the Company consummates a debt offering, the deferred financing costs will be recorded as a discount to the debt. The costs relating to the Equity Distribution Agreement are reclassified to additional paid in capital on a pro-rata basis when the Company completes offerings under the Equity Distribution Agreement.

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3. Financial Instruments and Fair Value Measurements

Cash equivalents - Cash equivalents of $2.1million as of September 30, 2024and $3.2million as of December 31, 2023, consisted of money market funds. Money market funds are classified as Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

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 nine months ended September 30, 2024compared to the year ended December 31, 2023. The Company evaluates transfers between levels at the end of each reporting period. There were notransfers of financial instruments between levels during the nine months ended September 30, 2024and the year ended December 31, 2023.

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4. Inventory, net (in thousands)

Depreciation expense was $1thousand for each of the three month periods ended September 30, 2024 and 2023, and was $3thousand and $6thousand for the nine months ended September 30, 2024and 2023, respectively.

6. Commitments and Contingencies

Lease

The Company executed a noncancelable operating lease for approximately 9,091square feet of office space in Hayward, California in November 2021 as its headquarters. The lease was set to expire in October 2025. The Company was obligated to pay, on a pro-rata basis, real estate taxes and operating costs related to the premises. Upon lease execution, the Company evaluated the lease and determined it should be capitalized as an operating lease. As there was no interest rate implicit in the lease, the Company estimated the incremental borrowing rate at 6% based on the rate available under its revolving credit line, as well as an assessment of the Company's risk based on its financial position at the time and its potential to obtain a collateralized loan for a period similar to the lease term. The lease was terminated effective May 31, 2024. The Company incurred termination fees of $77thousand, which were partially offset by a remaining security deposit of $16thousand. The Company recorded a loss of $60thousand in connection with the lease termination, which is included in other expense in the statement of operations.

Lease costs for the three and nine months ended September 30, 2024were zeroand $84thousand, respectively, and for the three and nine months ended September 30, 2023were $50thousand and $151thousand, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities were zeroand $87thousand for the three and nine months ended September 30, 2024, respectively, which is included in operating activities in the statement of operations. Cash paid for amounts included in the measurement of operating lease liabilities were $51thousand and $154thousand for the three and nine months ended September 30, 2023, respectively, which is included in operating activities in the statement of operations.

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 $1thousand per month and the agreement terminates on December 1, 2024. After expiration of the initial term, the agreement will automatically renew on a month to month basis until terminated by either party upon 30 days' advance written notice.

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ALOM Fulfillment Services Agreement

On November 25, 2022, the Company entered into a Fulfillment Services Agreement (the "ALOM Agreement"), with ALOM Technologies Corporation ("ALOM"). Pursuant to the ALOM Agreement, commencing on November 28, 2022, ALOM began providing, on a non-exclusive basis, certain assembly, procurement, storage, returns, and fulfillment services to our end customers and retailers within the United States. During the term of the ALOM Agreement, ALOM shall provide the services in accordance with purchase orders issued by us from time to time. The consideration payable by us to ALOM for services rendered under the ALOM Agreement will be calculated and invoiced based on fixed hourly rates and fixed unit pricing, as applicable, subject to certain exceptions; provided that, commencing April 1, 2023, we became subject to $25thousand minimum monthly purchase requirement. The ALOM Agreement had a three-yearinitial term, with automatic annual renewals, and could be terminated for convenience by either party upon sixty dayswritten notice to the other party. On March 5, 2024, the ALOM Agreement was amended to waive hourly account management charges and minimum monthly purchase requirements for the period from January 2024 through June 2024, and to extend the initial term of the agreement to December 31, 2024. The ALOM Agreement was terminated effective August 1, 2024. The Company terminated the Agreement for convenience, in accordance with the terms of the ALOM Agreement, in furtherance of its efforts to continue to reduce both direct and indirect costs associated with product manufacturing and distribution. The Company did not incur any material early termination penalties in connection with the termination of the ALOM Agreement. The Company is now utilizing third-party logistics and storage services from alternate suppliers without material minimums and has established in-house assembly and testing capabilities. The Company completed the transition with no disruptions to service and expects current capacity will be sufficient to meet demand for the foreseeable future.

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 September 30, 2024, the Company has remaining commitments to pay a total of $231thousand for milestones not yet achieved. The remaining payments are expected to be incurred over the next six months.

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 noliabilities for contingent matters as of September 30, 2024.

7. Other Accrued Expenses (in thousands)

8. Preferred Stock

There were no series of preferred stock designated and noshares issued or outstanding at September 30, 2024 and December 31, 2023.

The Company's board of directors is authorized, without action by its stockholders, to designate and issue up to 10,000,000shares of preferred stock in one or more series, and to fix the voting rights, designations, powers, preferences, the relative, participating, optional or other special rights, if any, and any qualifications, limitations and restrictions thereof, applicable to the shares of any series of preferred stock that they may designate in the future.

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9. Common Stock

At September 30, 2024and December 31, 2023, there were 6,243,403and 1,466,092shares of Company common stock issued and outstanding, respectively.

On February 13, 2023, the Company sold 200,000shares of its common stock in an underwritten public offering at a price of $25per share, less underwriting discounts and commissions, resulting in gross proceeds to the Company of $5.0million. The net proceeds to the Company, after deducting the underwriting discount and commissions and expenses paid by the Company, was approximately $3.6million. In addition, pursuant to the underwriting agreement entered into in connection with the offering, the Company granted the underwriter a 45-day option to purchase up to an additional 30,000shares of common stock, solely to cover over-allotments. This option expired in March 2023, and the underwriter did not exercise its option to purchase any additional shares prior to such expiration. Additionally, as partial consideration for services rendered in connection with the offering, the Company issued warrants to purchase an aggregate of 10,000shares of Company common stock to designees of ThinkEquity LLC ("ThinkEquity"). The designees paid an aggregate of $100for the warrants. The warrants have an initial exercise price of $31.25per share, have a term of four yearsfrom the commencement of sales in the offering, and are exercisable commencing six monthsfrom closing.

On July 11, 2023, the Company sold 325,000shares of its common stock to certain investors at a price of $5.50per share, resulting in gross proceeds to the Company of approximately $1.8million. Net proceeds to the Company, after deducting placement agent fees and offering expenses paid by the Company, was approximately $1.5million. As compensation for services rendered by the placement agent, the Company paid the placement agent a cash fee of 8.0% of the aggregate gross proceeds of the offering (amounting to $143thousand) at closing, as well as $90thousand for the reimbursement of certain expenses. Additionally, as partial consideration for services rendered in connection with the offering, the Company issued the placement agent unregistered warrants to purchase an aggregate of 13,000shares of Company common stock, representing 4.0% of the aggregate shares sold in the offering. The warrants have an initial exercise price of $6.60per share (equal to 120% of the offering price per share), have a term of five yearsfrom the commencement of sales in the offering, and are exercisable commencing six monthsfrom closing.

On July 19, 2023, the Company sold 512,500shares of its common stock to certain investors at a price of $4.00per share, resulting in gross proceeds to the Company of approximately $2.1million. Net proceeds to the Company, after deducting placement agent fees and offering expenses paid by the Company, was approximately $1.7million. As compensation for services rendered by the placement agent, the Company paid the placement agent a cash fee of 8.0% of the aggregate gross proceeds of the offering (amounting to $164thousand) at closing, as well as $60thousand for the reimbursement of certain expenses. Additionally, as partial consideration for services rendered in connection with the offering, the Company issued the placement agent unregistered warrants to purchase an aggregate of 20,500shares of common stock, representing 4.0% of the aggregate shares sold in the offering. The warrants have an initial exercise price of $4.80per share (equal to 120% of the offering price per share), have a term of five yearsfrom the commencement of sales in the offering, and are exercisable commencing six monthsfrom closing.

On August 9, 2023, the Company sold 331,730shares of its common stock to certain investors at a price of $4.10per share, resulting in gross proceeds to the Company of approximately $1.4million. Net proceeds to the Company, after deducting placement agent fees and offering expenses paid by the Company, was approximately $1.1million. As compensation for services rendered by the placement agent, the Company paid the placement agent a cash fee of 8.0% of the aggregate gross proceeds of the offering (amounting to approximately $109thousand) at closing, as well as $60thousand for the reimbursement of certain expenses. Additionally, as partial consideration for services rendered in connection with the offering, the Company issued the placement agent unregistered warrants to purchase an aggregate of 13,270shares of Company common stock, representing 4.0% of the aggregate shares sold in the offering. The warrants have an initial exercise price of $4.92per share (equal to 120% of the offering price per share), have a term of five yearsfrom the commencement of sales in the offering, and are exercisable commencing six monthsfrom closing.

Effective August 23, 2023, the Company's board of directors approved a reverse stock split of the Company's issued and outstanding shares of common stock, par value $0.0001per share, at a ratio of 1-for-100. 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 100. The Company issued onewhole 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. As a result, nofractional shares were issued in connection with the reverse stock split and nocash 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 100and multiplying the exercise or conversion price thereof by 100, 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

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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 the common stock, as well as the warrants outstanding and exercise prices thereof, have been retroactively restated to give effect to the reverse stock split.

On May 13, 2024, the Company sold 4,710,000shares of its common stock, together with an aggregate of 4,710,000Series A warrants (the "Series A Warrants") to purchase up to 4,710,000shares of common stock and 7,065,000Series B warrants (the "Series B Warrants" and collectively with the Series A Warrants, the "Common Warrants") to purchase up to 7,065,000shares of common stock, to certain investors in a registered public offering. Each share of common stock was sold together with one Series A Warrant and one and a half Series B Warrants at a combined price of $0.85per share and Common Warrants, resulting in gross proceeds to the Company of approximately $4million. Net proceeds to the Company, after deducting placement agent fees and offering expenses paid by the Company, was approximately $3.3million. The net proceeds were allocated between the common stock and Common Warrants issued in the offering based on the relative fair values, which were $1.4million and $1.9million, respectively. Each of the Common Warrants are exercisable immediately upon issuance and have an exercise price of $0.85per share, subject to certain adjustments. The Series A Warrants will expire one year from the date of issuance and the Series B Warrants will expire five years from the date of issuance. As compensation for services rendered by the placement agent, the Company paid the placement agent a cash fee of 7.0% of the gross proceeds of the offering (amounting to approximately $280thousand) at closing, as well as $100thousand for the reimbursement of certain expenses. Additionally, as partial consideration for services rendered in connection with the offering, the Company issued the placement agent registered warrants to purchase an aggregate of 188,400shares of Company common stock, equal to 4.0% of the aggregate shares of common stock sold in the offering. The placement agent warrants have an initial exercise price of $0.935per share (equal to 110% of the combined offering price per share and Common Warrants), have a term of five yearsfrom the commencement of sales in the offering, and are exercisable commencing six monthsfrom closing.

On September 13, 2024 the Company entered into an Equity Distribution Agreement (the "Distribution Agreement") with Maxim Group LLC, 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 3% of the aggregate gross proceeds from each sale of shares. The Company also agreed to reimburse Maxim for certain specified fees and expenses of up to $40thousand, plus an additional $5thousand for each bringdown, as provided in the Distribution Agreement. The agreement will terminate upon the earlier of (i) the sale of all shares of common stock having an aggregate offering price of $10million; (ii) twenty four months from the date of the agreement; (iii) the mutual termination of the agreement upon fifteen days' prior written notice; and (iv) as otherwise permitted therein. During September 2024, the Company sold a total of 59,811shares of its common stock pursuant to the Distribution Agreement with gross proceeds of $18thousand. The Company paid Maxim $545in commissions. Net proceeds to the Company, after deducting commissions and offering expenses paid by the Company, was approximately $15thousand.

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 September 30, 2024, nodividends on common stock had been declared by the Company. At September 30, 2024 and December 31, 2023, the Company had reserved shares of common stock for issuance as follows:

10. 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 1-for-100reverse stock split wherein, per the terms of the agreements, the number of shares of common stock issuable upon exercise of each of the warrants outstanding at that time was reduced by dividing the quantity outstanding by 100and the exercise price of each such warrant was multiplied by 100. No other terms of the warrants were changed as a result of the reverse stock split.

In July 2021, the Company entered into a consulting agreement, pursuant to which warrants to purchase 500shares of common stock were granted and an additional warrants to purchase 500shares of common stock were granted in November 2021. The warrants are exercisable upon issuance, have an exercise price of $104per share and have a term of five years. The consulting agreement was effective as of February 2021, had an initial monthly fee of $5thousand and a term of two years. The agreement was amended in May of 2022 to increase the monthly payment to $7.5thousand. Currently, the agreement is automatically renewing on a month-to-month basis until

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terminated by either party. The warrant issuances are indexed to, and settled in, the Company's own common stock and were classified within stockholders' equity.

In November 2021, the Company issued warrants to purchase 1,727shares of common stock to designees of ThinkEquity, the underwriter of the Company's initial public offering. The warrants may be exercised at any time on or after May 9, 2022, have an exercise price of $625per share and have a term of five years. The warrant issuances are indexed to and settled in the Company's own common stock and were classified within stockholders' equity.

In February 2023, the Company issued warrants to purchase 10,000shares of common stock to designees of ThinkEquity, the underwriter of the underwritten public offering of 200,000shares of Company common stock that closed in February 2023. The designees paid an aggregate of $0.1thousand for the warrants. The warrants may be exercised at any time on or after August 7, 2023, have an exercise price of $31.25per share, and have a term of four years commencing 180 days following the commencement of sales in the offering. The warrant issuances were indexed to and settled in the Company's own stock and were classified within stockholders' equity.

In July and August 2023, the Company issued warrants to purchase a total of 47,670shares of common stock to Maxim Group LLC ("Maxim"), the placement agent for each of the three public offerings of the Company's common stock completed during the period. The warrants are exercisable at any time beginning six monthsafter the closing date of the applicable equity offering and expire five yearsfrom the commencement of sales under the applicable offering. Of the warrants issued in the offerings, 13,000are exercisable beginning on January 11, 2024at a price of $6.60per share; 20,500are exercisable beginning on January 19, 2024at a price of $4.80per share; and 13,270are exercisable beginning on February 9, 2024at a price of $4.92per share.

The Company estimated the value of the warrants in 2023 using the Black-Scholes options valuation model. The fair value of the warrants issued in February 2023 was $195thousand and was recognized as issuance costs of the common stock issued in the underwritten public offering and was classified within stockholders' equity. The fair value of the warrants issued in July and August 2023 totaled $168thousand and was recognized as issuance costs of the common stock issued in the three public offerings during the period and was classified within stockholders' equity.

In May 2024, in connection with the sale of 4,710,000shares of common stock, the Company issued Series A Warrants to purchase an aggregate of 4,710,000shares of common stock and Series B Warrants to purchase an aggregate of 7,065,000shares of common stock to the purchasers of the stock. The warrants are exercisable upon issuance and have an exercise price of $0.85per share. The Series A Warrants expire on May 13, 2025and the Series B Warrants expire on May 14, 2029. Additionally, the Company issued warrants to purchase 188,400shares of common stock to Maxim, the placement agent for the public offering of the Company's securities. The placement agent warrants are exercisable at any time beginning six months after the closing date of the equity offering and expire five yearsfrom the from the commencement of sales under the offering.

The Company estimated the value of the warrants issued to the placement agent in May 2024 using the Black-Scholes options valuation model. The fair value of the warrants issued in May 2024 was $70thousand and was recognized as issuance costs of the common stock issued in the public offering and was classified within stockholders' equity.

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A summary of the Company's outstanding warrants as of September 30, 2024 is as follows:

11. Equity Incentive Plans

In 2017, the Company adopted its 2017 Equity Incentive Plan (the "2017 Plan").

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"). Options granted under the 2021 Plan may be Incentive Stock Options or Non-statutory Stock Options, as determined by the Compensation Committee of the Company's board of directors, who is responsible for administering the 2021 Plan. Stock Purchase Rights may also be granted under the 2021 Plan. The term shall be no more than ten yearsfrom the date of grant thereof. In the case of an Incentive Stock Option granted to an optionee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the option shall be five yearsfrom the date of grant or such shorter term as may be provided in the option Agreement. To the extent outstanding awards under the 2021 Plan are forfeited or lapse unexercised, the shares of common stock subject to such awards will be available for future issuance under the 2021 Plan. The 2021 Plan provides that additional shares will automatically be added to the shares authorized for issuance under the 2021 Plan on January 1 of each year. The number of shares added each year will be equal to the lesser of: (i) 5.0% of the outstanding shares of the Company's common stock on December 31st of the preceding calendar year or (ii) such number of shares determined by the board of directors, in its discretion. On January 1, 2023, 4,839shares were automatically added to the number of shares authorized for issuance under 2021 Plan (an increase equal to 5% of the number of the outstanding shares of Company common stock as of December 31, 2022). On January 1, 2024, 73,304shares were automatically added to the number of shares authorized for issuance under 2021 Plan (an increase equal to 5% of the number of the outstanding shares of Company common stock as of December 31, 2023).

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 92,376shares to 1,000,000shares. The Company's Board of Directors unanimously approved the adoption of the A&R 2021 Plan, subject to stockholder approval, on June 15, 2024, and the Company's stockholders approved the A&R 2021 Plan at the Company's 2024 Annual Meeting of Stockholders held on August 9, 2024.

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 10% of the voting power of all classes of stock of the Company or any parent or subsidiary of the Company, the exercise price shall be no less than 110% of the fair market value per share on the date of grant; (ii) granted to any other employee, the per share exercise price shall be no less than 100% of the fair market value per share on the date of grant. In the case of a non-statutory stock option (i) granted to an employee who, at the time of grant of such option, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary of the Company, the exercise price shall be no less than 110% of the fair market value per share on the date of grant; (ii) granted to any other service provider, the per share exercise price shall be no less than 100% of the fair market value per share on the date of grant. Notwithstanding the foregoing, options may be granted with a per

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share exercise price other than as required above pursuant to a merger or other corporate transaction.

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.

As of September 30, 2024, there were 928,412shares of common stock available for issuance under the 2021 Plan.

Stock options granted under the Company's equity incentive plans generally vest over four yearsfrom the date of grant.

The weighted-average exercise price as of September 30, 2024for stock options outstanding and stock options exercisable was $28.34and $150.22, respectively. The weighted average remaining contractual life as of September 30, 2024for stock options outstanding and stock options exercisable was 8.97and 6.46years, respectively.

There were norestricted stock awards outstanding during the year ended December 31, 2023.

Stock-Based Compensation

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12. Net Loss per Share

13. Subsequent Events

Sales of Common Stock Pursuant to the Equity Distribution Agreement

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