Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐o No ☒x

Inability to continue as a going concern;

Inability to raise additional capital, under favorable terms or at all;

Inability to successfully attract partners and enter into collaborations on acceptable terms;

Failure to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates due to limited financial resources;

Inability to develop and commercialize our product candidates;

Failure or delay in starting, conducting and completing clinical trials or obtaining United States Food and Drug Administration, ~~(FDA)~~or FDA, or foreign regulatory approval for our product candidates in a timely manner;

A change in the FDA’s primary oversight responsibility;

A change in regulatory requirements for our product candidates, including the development pathway pursuant to ~~the FDA’s~~ Section 505(b)(2);

of the Federal Food, Drug, and Cosmetic Act, or the FDA's 505(b)(2) pathway;

Unsuccessful clinical ~~trials~~trial outcomes stemming from clinical trial designs, failure to enroll a sufficient number of patients, higher than anticipated patient dropout rates, failure to meet established clinical endpoints, undesirable side effects and other safety concerns;

Negative publicity concerning the safety and efficacy of our product candidates, or of product candidates being developed by others that share characteristics similar to our candidates;

Inability to demonstrate sufficient efficacy of our product candidates;

Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensing agreement;

Monetary obligations and other requirements in connection with our exclusive, in-license agreements covering the ~~critical~~ patents and related intellectual property related to our product candidates;

Developments by our competitors that make our product candidates less competitive or obsolete;

Dependence on third parties to conduct clinical trials and to manufacture product candidates;

Dependence on third parties to supply clinical supplies and raw materials, drugs and other materials required to produce a finished product and to produce the quantities needed;

Failure of our product candidates, if approved, to gain market ~~and distribute products;~~

A reduction in demand for contraceptives caused by an elimination of current requirements that health insurance plans cover and reimburse certain FDA-cleared or approved contraceptive products without cost sharing;

Lack of precedent to help assess whether health insurance plans will cover our product candidates;

The reimbursement environment relating to our product candidates at the time we obtain regulatory approval, if ever;

Difficulty in introducing branded products in a market made up of generic products;

Inability to adequately protect or enforce our, or our licensor’s, intellectual property rights;

Lack of patent protection for the active ingredients in certain of our product candidates which could expose ~~our products~~those product candidates to competition from other formulations using the same active ~~ingredients.~~

ingredients;

Higher risk of failure associated with product candidates in ~~preclinical~~pre-clinical stages of development that may lead investors to assign them little to no value and make these assets difficult to fund;

Disputes or other developments concerning our intellectual property rights;

Actual and anticipated fluctuations in our quarterly or annual operating results;

Price and volume fluctuations in the stock market, and in our stock in particular, which could subject us to securities class-action litigation;

Failure to maintain the listing of the Company’s common stock on the Nasdaq Capital Market or another nationally recognized exchange;

Litigation or public concern about the safety of our potential products;

Strict government regulations on our business, including various fraud and abuse laws, including, without limitation, the U.S. federal Anti-Kickback Statute, the U.S. federal False Claims Act and the U.S. Foreign Corrupt Practices Act;

Regulations governing the production or marketing of our product candidates;

Loss of, or inability to attract, key personnel; and

Increased costs as a result of operating as a public company, and substantial time devoted by our management to compliance initiatives and corporate governance practices.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

All forward-looking statements in this report are current only as of the date of this report. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events, except as required by law.

TABLE OF CONTENTS

			~~Page~~

	Page
PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)	1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32 30

Item 4.	Controls and Procedures	32 30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	34 31

Item 1A.	Risk Factors	34 31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35 32

Item 3.	Defaults Upon Senior Securities	35 32

Item 4.	Mine Safety Disclosures	35 32

Item 5.	Other Information	35 32

Item 6.	Exhibits	36 32

	SIGNATURES	39 34


PART I.	FINANCIAL INFORMATION

~~PART I.FINANCIAL INFORMATION~~

Item 1. Consolidated Financial Statements (Unaudited).

Daré Bioscience, Inc. and Subsidiaries

Consolidated Balance Sheets

June 30,
2018

December 31,
2017

(unaudited)

Assets

Current assets

Cash and cash equivalents
$
12,446,524

$
7,559,846

Other receivables

24,644

284,206

Prepaid expenses

347,409

311,571

Other current assets

—

193,495

Total current assets

12,818,577

8,349,118

Property and equipment, net

7,910

—

Goodwill

—

5,187,519

Other non-current assets

657,031

723,191

Total assets
$
13,483,518

$
14,259,828

Liabilities and stockholders’ equity

Current liabilities

Accounts payable and accrued expenses
$
1,265,238

$
966,653

Total current liabilities

1,265,238

966,653

Deferred rent

317

392

Total liabilities

1,265,555

967,045

Commitments and contingencies (Note 8)

Stockholders' equity (deficit)

Preferred stock, $0.01 par value, 5,000,000 shares authorized

None issued and outstanding

—

—

Common stock: $0.0001 par value, 120,000,000 shares authorized, 11,422,161 and 6,047,161 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively

1,142

605

Accumulated other comprehensive loss

(59,311
)

(18,080
)
Additional paid-in capital

35,754,872

25,541,210

Accumulated deficit

(23,478,740
)

(12,230,952
)
Total stockholders' equity

12,217,963

13,292,783

Total liabilities and stockholders' equity
$
13,483,518

$
14,259,828



	June 30, 2019			December 31, 2018
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	5,630,569		$	6,805,889
Other receivables	493,019			31,037
Prepaid expenses	437,958			403,097
Total current assets	6,561,546			7,240,023
Property and equipment, net	7,081			9,396
Other non-current assets	692,305			577,968
Total assets	$	7,260,932		$	7,827,387
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	632,118		$	459,705
Accrued expenses	1,341,811			631,351
Total current liabilities	1,973,929			1,091,056
Other liabilities	203,948			9,711
Total liabilities	2,177,877			1,100,767
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized; None issued and outstanding	—			—
Common stock, $0.0001 par value; 120,000,000 shares authorized; 16,683,411 and 11,422,161 shares issued and outstanding, respectively	1,668			1,143
Accumulated other comprehensive loss	(97,024		)	(96,728		)
Additional paid-in capital	41,942,062			35,791,972
Accumulated deficit	(36,763,651		)	(28,969,767		)
Total stockholders' equity	5,083,055			6,726,620
Total liabilities and stockholders' equity	$	7,260,932		$	7,827,387

See accompanying notes to interim consolidated financial statements.

Daré Bioscience ~~Inc.~~ , Inc. andSubsidiaries

ConsolidatedStatementsofOperationsandComprehensiveLoss

~~(Unaudited)~~

Three months ended June 30,

Six months ended June 30,

2018

2017

2018

2017

Operating expenses:

General and administrative

$
1,157,174

$
476,047

$
2,460,363

$
676,711

Research and development expenses

2,217,622

3,576

3,304,275

31,376

License expenses

250,000

—

350,000

—

Impairment of goodwill

—

—

5,187,519

—

Total operating expenses

3,624,796

479,623

11,302,157

708,087

Loss from operations

(3,624,796
)

(479,623
)

(11,302,157
)

(708,087
)
Other income (expense)

42,626

(18,570
)

54,370

(33,970
)
Net loss

$
(3,582,170
)

$
(498,193
)

$
(11,247,787
)

$
(742,057
)
Foreign currency translation adjustments

$
(27,485
)

$
—

$
(41,231
)

$
—

Comprehensive loss

$
(3,609,655
)

$
(498,193
)

$
(11,289,018
)

$
(742,057
)
Loss per common share - basic and diluted

$
(0.32
)

$
(0.55
)

$
(1.13
)

$
(0.82
)
Weighted average number of common shares outstanding:

Basic

11,422,161

910,000

10,031,249

910,000

(Unaudited)



	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
Operating expenses
General and administrative	$	1,307,379		$	1,157,174		$	2,584,559		$	2,460,363
Research and development expenses	2,512,572			2,217,622			4,205,963			3,304,275
License expenses	162,500			250,000			275,000			350,000
Impairment of goodwill	—			—			—			5,187,519
Total operating expenses	3,982,451			3,624,796			7,065,522			11,302,157
Loss from operations	(3,982,451		)	(3,624,796		)	(7,065,522		)	(11,302,157		)
Other income	30,001			42,626			61,232			54,370
Net loss	$	(3,952,450	)	$	(3,582,170	)	$	(7,004,290	)	$	(11,247,787	)
Deemed dividend from trigger of down round provision feature	(789,594		)	—			(789,594		)	—
Net loss to common shareholders	$	(4,742,044	)	$	(3,582,170	)	$	(7,793,884	)	$	(11,247,787	)
Foreign currency translation adjustments	$	(7,917	)	$	(27,485	)	$	(296	)	$	(41,231	)
Comprehensive loss	$	(4,749,961	)	$	(3,609,655	)	$	(7,794,180	)	$	(11,289,018	)
Loss per common share - basic and diluted	$	(0.29	)	$	(0.32	)	$	(0.57	)	$	(1.13	)
Weighted average number of common shares outstanding:
Basic and diluted	16,105,252			11,422,161			13,776,643			10,031,249

See accompanying notes to interim consolidated financial statements.

~~The operations presented in the interim consolidated financial statements and accompanying notes for the three and six months ended June 30, 2018 represent the operations of the Company following the~~ ~~Cerulean/Private Daré stock purchase transaction,~~ and for the three and six months ended June 30, 2017 represent the operations of the Company when it was private, making a comparison between periods difficult. See Note 1, “Organization of the Business,” of the Notes to the Interim Consolidated Financial Statements (Unaudited) appearing in this report for a discussion of the Cerulean/Private Daré stock purchase transaction.

Daré Bioscience, Inc. and Subsidiaries

Consolidated Statements of ~~Cash Flows~~

Stockholders’ Equity

(Unaudited)

Six months ended June 30,

2018

2017

Operating activities:

Net loss

$
(11,247,787
)

$
(742,057
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

288

—

Stock-based compensation

18,547

6

Acquired in-process research and development

452,000

Impairment of goodwill

5,187,519

—

Changes in operating assets and liabilities, net impact of acquisition:

Other receivables

259,562

—

Prepaid expenses

(35,838
)

—

Other current assets

193,495

—

Other assets and deferred charges

66,160

—

Accounts payable and accrued expenses

298,585

550,666

Interest payable

—

33,976

Deferred rent

(75
)

(2,800
)
Net cash used in operating activities

(4,807,544
)

(160,209
)
Investing activities:

Purchases of property and equipment

(8,200
)

—

Acquisition of Pear Tree

(452,000
)

—

Net cash used in investing activities

(460,200
)

—

Financing activities:

Net proceeds from issuance of common stock and warrants

10,195,653

—

Proceeds from issuance of convertible promissory notes

—

155,000

Net cash provided by financing activities

10,195,653

155,000

Effect of exchange rate changes on cash and cash equivalents

(41,231
)

—

Net change in cash and cash equivalents

4,886,678

(5,209
)
Cash and cash equivalents, beginning of period

7,559,846

44,614

Cash and cash equivalents, end of period

$
12,446,524

$
39,405



Three Months Ended June 30, 2019
				Additional		Accumulated other						Total
	Common stock			paid-in		comprehensive			Accumulated			stockholders'
	Shares	Amount		capital		loss			deficit			equity
Balance at March 31, 2019	11,422,161	$	1,143	$	35,889,940	$	(89,107	)	$	(32,021,607	)	$	3,780,369
Stock-based compensation	—	—		111,351		—			—			111,351
Issuance of common stock via public offering, net	5,261,250	525		5,151,177		—			—			5,151,702
Deemed dividend from trigger of down round provision	—	—		789,594		—			(789,594		)	—
Net loss	—	—		—		—			(3,952,450		)	(3,952,450		)
Foreign currency translation adjustments	—	—		—		(7,917		)	—			(7,917		)
Balance at June 30, 2019	16,683,411	$	1,668	$	41,942,062	$	(97,024	)	$	(36,763,651	)	$	5,083,055

Six Months Ended June 30, 2019
				Additional		Accumulated other						Total
	Common stock			paid-in		comprehensive			Accumulated			stockholders'
	Shares	Amount		capital		loss			deficit			equity
Balance at December 31, 2018	11,422,161	$	1,143	$	35,791,972	$	(96,728	)	$	(28,969,767	)	$	6,726,620
Stock-based compensation	—	—		209,319		—			—			209,319
Issuance of common stock via public offering, net	5,261,250	525		5,151,177		—			—			5,151,702
Deemed dividend from trigger of down round provision	—	—		789,594		—			(789,594		)	—
Net loss	—	—		—		—			(7,004,290		)	(7,004,290		)
Foreign currency translation adjustments	—	—		—		(296		)	—			(296		)
Balance at June 30, 2019	16,683,411	$	1,668	$	41,942,062	$	(97,024	)	$	(36,763,651	)	$	5,083,055

See accompanying notes to interim consolidated financial statements.

~~The operations presented in the interim consolidated financial statements and accompanying notes for the six months ended June 30, 2018 represent the operations of the Company following the~~ ~~Cerulean/Private Daré stock purchase transaction,~~ and for the six months ended June 30, 2017 represent the operations of the Company when it was private, making a comparison between periods difficult. See Note 1, “Organization of the Business,” of the Notes to the Interim Consolidated Financial Statements (Unaudited) appearing in this report for a discussion of the Cerulean/Private Daré stock purchase transaction.

Daré Bioscience, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(Unaudited)



Three Months Ended June 30, 2018
					Additional			Accumulated other						Total
	Common stock				paid-in			comprehensive			Accumulated			stockholders'
	Shares	Amount			capital			loss			deficit			equity
Balance at March 31, 2018	11,422,161	$	1,142		$	35,747,609		$	(31,826	)	$	(19,896,570	)	$	15,820,356
Stock-based compensation	—	—			9,423			—			—			9,423
Public offering costs	—	—			(2,160		)	—			—			(2,160		)
Net loss	—	—			—			—			(3,582,170		)	(3,582,170		)
Foreign currency translation adjustments	—	—			—			(27,485		)	—			(27,485		)
Balance at June 30, 2018	11,422,161	$	1,142		$	35,754,872		$	(59,311	)	$	(23,478,740	)	$	12,217,963

Six Months Ended June 30, 2018
				��	Additional			Accumulated other						Total
	Common stock				paid-in			comprehensive			Accumulated			stockholders'
	Shares	Amount			capital			loss			deficit			equity
Balance at December 31, 2017	6,047,161	$	605		$	25,541,210		$	(18,080	)	$	(12,230,953	)	$	13,292,782
Stock-based compensation					18,547			—			—			18,547
Issuance of common stock	375,000	37			1,037,727			—			—			1,037,764
Net proceeds from issuance of common stock and warrants	5,000,000	500			9,157,388			—			—			9,157,888
Net loss	—	—			—			—			(11,247,787		)	(11,247,787		)
Foreign currency translation adjustments	—	—			—			(41,231		)	—			(41,231		)
Balance at June 30, 2018	11,422,161	$	1,142		$	35,754,872		$	(59,311	)	$	(23,478,740	)	$	12,217,963

See accompanying notes to interim consolidated financial statements.

Daré Bioscience, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



	Six months ended June 30,
	2019			2018
Operating activities:
Net loss	$	(7,004,290	)	$	(11,247,787	)
Non-cash adjustments reconciling net loss to operating cash flows:
Depreciation	2,315			288
Stock-based compensation	209,319			18,547
Non-cash lease expenses	10,549			—
Acquired in-process research and development	—			452,000
Impairment of goodwill	—			5,187,519
Changes in operating assets and liabilities:
Other receivables	(461,982		)	259,562
Prepaid expenses	(34,861		)	(35,838		)
Other current assets	—			193,495
Other non-current assets	79,063			66,160
Accounts payable	172,413			9,739
Accrued expenses	710,459			288,846
Other liabilities	(9,711		)	(75		)
Net cash used in operating activities	(6,326,726		)	(4,807,544		)
Investing activities:
Purchases of property and equipment	—			(8,200		)
Acquisition of Pear Tree and Hydra asset	—			(452,000		)
Net cash used in investing activities	—			(460,200		)
Financing activities:
Net proceeds from issuance of common stock and warrants	5,151,702			10,195,653
Net cash provided by financing activities	5,151,702			10,195,653
Effect of exchange rate changes on cash and cash equivalents	(296		)	(41,231		)
Net change in cash and cash equivalents	(1,175,320		)	4,886,678
Cash and cash equivalents, beginning of period	6,805,889			7,559,846
Cash and cash equivalents, end of period	$	5,630,569		$	12,446,524
Supplemental disclosure of non-cash operating and financing activities:
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	231,698		—
Deemed dividend from trigger of down round provision	$	789,594		—

See accompanying notes to interim consolidated financial statements.

Daré Bioscience, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

~~1. Organization and Description of the Business~~


1.	ORGANIZATION AND DESCRIPTION OF THE BUSINESS

Daré Bioscience, Inc., is a ~~Delaware corporation, was formed on November 28, 2005.~~clinical-stage biopharmaceutical company committed to the advancement of innovative products for women’s health. Daré Bioscience, Inc. and its wholly owned subsidiaries ~~Daré Bioscience Operations, Inc., Daré Bioscience Australia Pty LTD, and Pear Tree Pharmaceuticals, Inc.,~~ operate in one segment. ~~The term~~In this report, the “Company” ~~as used herein~~ refers collectively to Daré Bioscience, Inc. and its wholly owned subsidiaries, unless otherwise stated or the context otherwise requires.

~~The Company is~~ ~~a clinical-stage biopharmaceutical company committed to the advancement of innovative products for women’s reproductive health.~~

The Company is driven by a mission to identify, develop and bring to market a diverse portfolio of differentiated therapies that expand treatment options, improve outcomes and facilitate convenience for women, primarily in the areas of contraception, vaginal health, sexual health and fertility. The ~~Company’s~~Company's business strategy is to license or otherwise acquire the rights to differentiated ~~reproductive health~~ product candidates in women's health, some of which have existing clinical proof-of-concept data, and to ~~take~~advance those candidates through ~~advanced stages of~~ clinical ~~development.~~

~~On July 19, 2017, the Company completed its business combination~~development and regulatory approval alone or in collaboration with Daré Bioscience Operations, Inc., a privately held Delaware corporation, or Private Daré, in accordance with the terms of the Stock Purchase Agreement dated as of March 19, 2017, or the Daré Stock Purchase Agreement, by and among the Company, Private Daré and the holders of capital stock and securities convertible into capital stock of Private Daré named therein, or the Private Daré Stockholders. Pursuant to the Daré Stock Purchase Agreement, each Private Daré Stockholder sold their shares of capital stock in Private Daré to the Company in exchange for newly issued shares of the Company’s common stock, and as a result, Private Daré became a wholly owned subsidiary of the Company and the Private Daré Stockholders became majority shareholders of the Company. That transaction is referred to as the Cerulean/Private Daré stock purchase transaction. In accordance with the terms of the Daré Stock Purchase Agreement, the Company changed its name from “Cerulean Pharma Inc.” to “Daré Bioscience, Inc.” References in this report to “Cerulean” refer to Cerulean Pharma Inc. prior to the closing of the Cerulean/Private Daré stock purchase transaction.

~~Since July of 2017, the~~strategic partners.

The Company has assembled a portfolio of clinical-stage and ~~preclinical-stage~~pre-clinical-stage candidates addressing unmet needs in women’s ~~reproductive~~ health. The ~~Company has used~~Company’s portfolio includes these six clinical-stage candidates:

DARE-BV1, a ~~variety of transaction structures~~novel solution-to-gel formulation containing clindamycin phosphate 2% to ~~license, acquire,~~treat bacterial vaginosis, or ~~obtain an option to acquire, the rights to these assets. The Company’s two clinical-stage assets were obtained through product license and development agreements. The first, Ovaprene®, is~~BV;

Ovaprene, a non-hormonal monthly contraceptive ~~candidate that was licensed~~intravaginal ring;

Sildenafil Cream, 3.6%, a novel cream formulation of sildenafil to treat female sexual arousal disorder, or FSAD;

DARE-HRT1, a combination bio-identical estradiol and progesterone intravaginal ring for hormone replacement therapy following menopause;

DARE-VVA1, a vaginally delivered formulation of tamoxifen to treat vulvar vaginal atrophy, or VVA, in ~~July~~patients with hormone-receptor positive breast cancer; and

DARE-FRT1, an intravaginal ring containing bio-identical progesterone for the prevention of ~~2017;~~preterm birth and for fertility support as part of an in vitro fertilization, or IVF, treatment plan.

The Company's portfolio also includes several pre-clinical stage product candidates:

ORB-204 and ORB-214, 6-month and 12-month formulations of injectable etonogestrel for contraception;

DARE-RH1, a novel approach to non-hormonal contraception for both men and women by targeting the second, Topical 5% Sildenafil Citrate Cream, is a potential treatment for Female Sexual Arousal Disorder that was licensed in February of 2018. The Company has also assembled a portfolio of preclinical candidates. In March of 2018, the Company entered into a collaborationCatSper ion channel; and ~~option agreement covering new injectable contraceptive product candidates; in April of 2018, the Company licensed the worldwide rights to a portfolio of preclinical~~

DARE-OAB1, an intravaginal ~~rings; in May of 2018, the Company acquired a company that owns the rights to a proprietary vaginal tamoxifen tablet~~ring containing oxybutynin for the treatment of ~~vulvar and vaginal atrophy; and in July of 2018, the Company acquired certain assets related to a novel target for non-hormonal contraceptives for both men and women.~~

The operations presented in the accompanying interim consolidated financial statements and in these notes for the three and six months ended June 30, 2018 represent the operations of the Company after giving effect to the Cerulean/Private Daré stock purchase transaction and as a public company. The interim consolidated financial statements and accompanying notes for the three and six months ended June 30, 2017 represent the operations of Private Daré, making a comparison between periods difficult.

overactive bladder.

The Company’s primary operations have consisted of, and are expected to continue to consist of, product research and development and advancing its portfolio of product candidates through ~~late-stage~~ clinical development orand regulatory approval.

We expect that the bulk of our development expenses over the next two years will support the advancement of our clinical-stage product candidates.

~~The~~To date, the Company has not obtained any regulatory approvals for any of its product candidates, commercialized any of its product candidates or generated any ~~revenue related to its primary business purpose to date and~~product revenue. The Company is subject to ~~a number of~~several risks common to ~~other~~ clinical-stage biopharmaceutical companies, including dependence on key individuals, competition from other companies, the need to develop commercially viable products in a timely and ~~cost effective~~cost-effective manner, and the need to obtain adequate additional ~~financing~~capital to fund the development of product candidates. The Company is also subject to ~~a number of~~several risks ~~similar~~common to other companies in the industry, including rapid technology change, regulatory

Level 1: inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: inputs other than level 1 that ~~affect the reported amounts of~~are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities.

Level 3: unobservable inputs that are supported by little or no market activity and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates includethat are significant to the fair value of ~~stock-based compensation, goodwill impairment~~the assets or liabilities.

In ~~January 2017, FASB issued ASU 2017-04,~~August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, ~~Simplifying~~Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the ~~Test~~amendments expanded the disclosure requirements relating to the analysis of stockholders' equity for ~~Goodwill Impairment (Topic 350)~~.interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The ~~guidance removes Step 2~~analysis should present a reconciliation of the ~~goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be~~beginning balance to the ~~amount by~~ending balance of each period for which a ~~reporting unit’s carrying value exceeds~~statement of income is required to be filed. This final rule was effective November 5, 2018. In accordance with the new rule, the Company added a Consolidated Statement of Stockholders' Equity in this report and elected to present a reconciliation in a single statement that shows the changes in stockholders' equity for each interim period, as well as each comparable period.

The final allocation of the purchase price was dependent on the finalization of the valuation of the fair value of assets acquired and liabilities assumed and may have differed from the amounts included in the interim consolidated financial statements. The Company retrospectively recorded purchase price adjustments at the acquisition date to increase current liabilities by $23,609 and increase current assets by $225,778, resulting in a $202,169 reduction to the original goodwill amount of approximately $12.9 million.

The Company tests its goodwill for impairment at least annually as of December 31 and between annual tests if it becomes aware of an event or change in circumstance that would indicate the carrying value may be impaired. The Company ~~tested~~tests goodwill for impairment at the entity level because it operates on the basis of a single reporting unit. A goodwill impairment is the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. When impaired, the carrying value of goodwill is written down to fair value. Any excess of the reporting unit goodwill carrying value over the fair value is recognized as impairment loss.

The Company assessed goodwill at December 31, 2017, determined there was an impairment and recognized an impairment charge of approximately $7.5 million in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2017. Further, it reduced the

~~carrying value of goodwill from approximately $12.7 million to $5.2 million on its consolidated balance sheet as of December 31, 2017.~~

The Company assessed goodwill at March 31, 2018, determined ~~that~~ there was an impairment and recognized an impairment charge of approximately $5.2 million in the interim consolidated statement of operations and comprehensive loss for the three months ended March 31, 2018. As of March 31, 2018, the goodwill carrying value ~~of goodwill~~ on the Company’s consolidated balance sheet was written off in its entirety.

~~Under the Merger Agreement, the Holders will be eligible to receive, subject to certain offsets, tiered royalties, including customary provisions permitting royalty reductions~~


5.	STOCK-BASED COMPENSATION

The table below summarizes stock option activity ~~with regard to~~under the ~~2015 Private Daré Plan and the~~Amended 2014 Plan, and related information for the six months ended June 30, ~~2018 is set forth in the table below.~~2019. The exercise price of all options granted during the six months ended June 30, ~~2018 and 2017~~2019 was equal to the market value of the Company’s common stock on the date of the grant. As of June 30, ~~2018,~~2019, unamortized stock-based compensation expense of ~~$35,123~~$1,348,159 will be amortized over a weighted average period of ~~2.33~~2.9 years.

Number of Shares

Weighted Average
Exercise Price

Outstanding at December 31, 2017 ⁽¹⁾

539,896

$
31.40

Granted

7,675

1.68

Exercised

—

—

Cancelled/expired

—

—

Outstanding at June 30, 2018 (unaudited)

547,571

$
30.98

Exercisable at June 30, 2018 (unaudited)

529,721

$
31.89

At June 30, 2019, 497,032 shares of common stock were reserved for future issuance under the Amended 2014 Plan.

~~(1)~~

~~Includes 10,149 shares subject to options granted under the 2015 Private Daré Plan that were assumed in connection with the Cerulean/Private Daré stock purchase transaction.~~



	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2018 (1)	1,635,790		$	11.08
Granted	698,000		0.79
Exercised	—		—
Canceled/forfeited	(316,832	)	24.55
Expired	(70	)	59.48
Outstanding at June 30, 2019 (unaudited) (1)	2,016,888		$	5.40
Exercisable at June 30, 2019 (unaudited)	427,702		$	21.83

(1)Includes 10,149 shares subject to options granted under the 2015 Private Daré Plan assumed in connection with the Cerulean/Private Daré stock purchase transaction.

Compensation Expense

Total stock-based compensation expense related to ~~the issuance of~~ stock ~~option awards~~options granted to employees ~~that was~~and directors recognized in the consolidated statement of operations is as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

2018

2017

2018

2017

Research and development
$
—

$
—

$
—

$
—

General and administrative

9,423

3

18,547

6

Total
$
9,423

$
3

$
18,547

$
6



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Research and development	$	26,996	$	—	$	51,699	$	—
General and administrative	84,355		9,423		157,620		18,547
Total	$	111,351	$	9,423	$	209,319	$	18,547

~~There were no stock options granted during the six months ended June 30, 2017.~~

The assumptions used in the Black-Scholes option-pricing model for stock options granted to employees and to directors in respect of board services during the six months ended June 30, ~~2018~~2019 are as follows:

Six months ended

June 30, 2018

Expected life in years

10.0

Risk-free interest rate

2.76%

Expected volatility

124%

Forfeiture rate

0.0%

Dividend yield

0.0%

Weighted-average fair value of options granted

$
1.61

~~Restricted Stock After the Cerulean/Private Daré Stock Purchase Transaction~~

The 3.14 million shares of common stock issued in connection with the Cerulean/Private Daré stock purchase transaction to the shareholders of Private Daré have not been registered with the SEC and may only be sold if registered under the Securities Act of 1933, as amended, or pursuant to an exemption from the SEC’s registration requirements. The shares held by non-affiliates became eligible for sale ~~pursuant to Rule 144 beginning~~ ~~six months after the closing date of the Cerulean/Private Daré stock purchase transaction~~.

7.~~Stockholders’ Equity~~



	Three Months Ended June 30, 2019	Six Months Ended June 30, 2019
Expected life in years	10.0	10.0
Risk-free interest rate	2.09%	2.58%
Expected volatility	123%	121%
Forfeiture rate	0.0%	0.0%
Dividend yield	0.0%	0.0%
Weighted-average fair value of options granted	$0.86	$0.75


6.	STOCKHOLDERS’ EQUITY

ATM Sales Agreement

In January 4, 2018, the Company entered into a common stock sales agreement ~~pursuant to~~under which the Company may sell up to an aggregate of $10 million in gross proceeds through the sale of shares of common stock from time to time in “at-the-market” equity offerings (as defined in Rule 415 promulgated under the Securities Act of 1933, as amended)~~, including in sales made directly on the Nasdaq Capital Market, or Nasdaq, to or through a market maker or, subject to our prior approval, in negotiated transactions.~~. The Company ~~agreed to~~will pay a commission of up to 3% of the gross proceeds of any common stock sold under this agreement plus certain legal expenses.

This agreement was amended in August 2018 to refer to the Company’s shelf registration statement on Form S-3 (File No. 333-227019) that was filed to replace the Company’s shelf registration statement on Form S-3 (File No. 333-206396) that expired on August 28, 2018.

The Company sold no shares under this agreement during either the three or six months ended June 30, 2019 or the three months ended June 30, 2018. During the six months ended June 30, 2018, the Company ~~generated~~sold an aggregate of 375,000 shares common stock under this agreement for gross proceeds of approximately $1.1 million and incurred issuance costs of ~~$270,000 under this agreement on sales of an aggregate of 375,000 shares of the Company’s common stock, all of which were sold during January and~~ $237,403.

February ~~2018.~~

2018 Underwritten Public Offering

In February ~~15,~~ 2018, the Company closed an underwritten public offering of 5.0 million shares of its common stock and warrants to purchase up to 3.5 million shares of its common stock. Each share of common stock was sold ~~together~~ with a warrant to purchase up to 0.70 of a share of the Company’s common stock. The Company granted the underwriter a 30-day over-allotment option to purchase up to an additional 750,000 shares of common stock atand/or warrants to purchase up to 525,000 shares of common stock. The underwriter exercised the option with respect to warrants to purchase 220,500 shares of common stock. The Company received gross proceeds of $10.3 million, including the proceeds from the sale of the warrants upon exercise of the underwriter’s over-allotment option, and net proceeds of approximately $9.4 million.

Common Stock Warrants

The warrants issued in the February 2018 underwritten offering initially had an exercise price of $3.00 per ~~share. The offering, including shares issued upon exercise of the underwriter’s overallotment option, generated gross proceeds of $10.3 million,~~share and ~~after the payment of expenses, the Company received net proceeds of approximately $9.4 million. The warrants~~ are exercisable ~~immediately and for a period of five years from the date of issuance.~~ through February 2023.The warrants include a price-based anti-dilution provision, which provides that, subject to certain limited exceptions, the exercise price of the warrants will be ~~adjusted downward if~~reduced each time the Company issues or sells ~~(or is deemed to issue or sell)~~ securities atfor a consideration per share less than a price ~~that is less than~~equal to the exercise price of those warrants in effect immediately prior to such issuance or sale (or deemed issuance or sale), before the expiration of the warrant term. In that case, the new exercise price of the warrants would equal the price at which the new securities are issued or sold (or are deemed to have been issued or sold).sale. In addition, subject to certain exceptions, if the Company issues, sells or enters into any agreement to issue or sell securities at a price which varies or may vary with the

market price of the shares of the Company’s common stock, the warrant holders ~~of the warrants shall~~ have the right to substitute such variable price for the exercise price of the warrant then in effect. ~~The~~These warrants are exercisable only for cash, unless ~~the~~a registration statement covering the shares issued upon exercise of ~~which~~ the ~~prospectus registering the offering was part~~warrants is not effective, ~~for the issuance of the shares underlying the warrants,~~ in which case the warrants may be exercised on a cashless basis. A registration statement covering the shares issued upon exercise of the warrants is currently effective. The Company granted the underwriters a 30-day option to purchase up to an additional 750,000 shares of its common stock and warrants to purchase up to 525,000 shares of its common stock directly from the Company at a price of $2.05 per common share and accompanying warrant. ~~The Company received an overallotment notice from the underwriter for warrants to purchase up to 220,500 shares of its common stock, which were issued on February 15, 2018.~~

~~The Company has~~ estimated the fair value of the warrants as of February 15, 2018 to be approximately $3.0 million which has been recorded in equity as of the grant date. ~~As described above at Note 3, Recently Adopted Accounting Standards, the~~The Company early adopted ASU 2017-11 ~~and~~ as ~~a result has~~of January 1, 2018 and recorded the fair value of the warrants as equity.

~~Common Stock Warrants~~

On April 11, 2019, in accordance with the anti-dilution provision of these warrants and as a result of the sale of shares in the public offering that closed on that date and which is discussed below, the exercise price of these warrants was automatically reduced to $0.98 per share. For the three and six months ended June 30, 2019 the Company recorded $0.8 million to additional paid in capital as a result of the triggering of the anti-dilution provisions.

In addition to the warrants issued in the February 2018 underwritten offering, as of June 30, 2019, there are outstanding warrants to purchase 30,333 shares of the Company’s common stock, which are further described in the table below.

No warrants were exercised during the six months ended June 30, ~~2018~~2019 or ~~2017.~~2018. As of June 30, ~~2018,~~2019, the Company had the following warrants outstanding:

Shares Underlying
Outstanding Warrants

Exercise Price

Expiration Date

169

$
177.00

August 8, 2018

2,906

$
120.40

December 1, 2021

3,737

$
120.40

December 6, 2021

17,190

$
60.50

January 8, 2020

6,500

$
10.00

April 4, 2026

3,720,500

$
3.00

February 15, 2023

3,751,002

~~8. Commitments~~



Shares Underlying Outstanding Warrants	Exercise Price		Expiration Date
2,906	$	120.40	December 1, 2021
3,737	$	120.40	December 6, 2021
17,190	$	60.50	January 8, 2020
6,500	$	10.00	April 4, 2026
3,720,500	$	0.98	February 15, 2023
3,750,833

April 2019 Underwritten Public Offering

On April 11, 2019, the Company closed an underwritten public offering of 4,575,000 shares of its common stock at a public offering price of $1.10 per share. The Company granted the underwriters a 30-day over-allotment option to purchase up to an additional 686,250 shares which was exercised in full on April 12, 2019. Including the over-allotment shares, the Company issued a total of 5,261,250 shares in the underwritten public offering, and ~~Contingencies~~

received gross proceeds of approximately $5.8 million and net proceeds of approximately $5.2 million after deducting underwriting discounts and offering expenses.


7.	LEASED PROPERTIES

Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company's leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of: (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and nonlease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

The Company's lease for its corporate headquarters (3,169 square feet of office space) commenced on July 1, 2018, has term of 37 months, and terminates on July 31, 2021. The Company has the option to extend the term of the lease for one year at the Company's discretion. The gross monthly base rent is $8,873, which increases approximately 4% per year, subject to certain future adjustments. The base rent was abated during the second month of the lease. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. The lease does not require material variable lease payments, a residual value guarantee or restrictive covenants. This is the Company’s only lease.

The lease does not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment. The Company used an incremental borrowing rate of 7% as of January 1, 2019 for the operating lease that commenced prior to that date. The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term.

As of June 30, 2019, the Company recorded a right of use asset of $193,399 in other non-current assets, and $87,859 and $116,089, respectively, in current and non-current other liabilities on the consolidated balance sheet.

As of June 30, 2019, future minimum lease payments for the Company's corporate headquarters are:



Years ending December 31:
Remainder of 2019	$	55,531
2020	112,943
2021	67,595
Total future minimum lease payments	236,069
Less: Difference between future minimum lease payments and discounted operating lease liabilities	42,669
Total operating lease liabilities	$	193,400

Operating lease costs were $27,038 and $54,076 for the three and six months ended June 30, 2019, respectively. Operating lease costs are included in general and administrative expenses in the condensed consolidated statement of operations.

Cash paid for amounts included in the measurement of operating lease liabilities were $26,620 and $53,240 for the three and six months ended June 30, 2019, respectively, and these amounts are included in operating activities in the condensed consolidated statements of cash flows.


8.	COMMITMENTS AND CONTINGENCIES

License and Research Agreements

ADVA-Tec License Agreement

In March ~~19,~~ 2017, the Company entered into a license agreement, or the ADVA-Tec License Agreement, with ADVA-Tec, Inc., or ADVA-Tec, under which the Company was granted the exclusive right to develop and commercialize Ovaprene for human contraceptive use worldwide. ~~The ADVA-Tec Agreement became effective once the Company secured the initial funding required in accordance with its terms.~~ ADVA-Tec and its affiliates own issued patents or patent applications covering Ovaprene and control proprietary trade secrets covering the manufacture of Ovaprene. As of the date of ~~these interim consolidated financial statements,~~this report, this patent portfolio includes 12nine issued U.S. patents ~~worldwide, along with 8~~and one pending U.S. patent application, and 59 granted patents and four pending patent applications in other major markets, all of which ~~in accordance with the terms of the ADVA-Tec Agreement~~ are exclusively licensed to the Company for the human contraceptive use of ~~Ovaprene. The~~Ovaprene as a human contraceptive device. Under the terms of the ADVA-Tec Agreement, the Company ~~also~~ has a right of first refusal to license these patents and patent applications for ~~purposes~~additional indications.

The following is a summary of ~~additional indications for Ovaprene. Under~~other terms of the ADVA-Tec ~~Agreement,~~ License Agreement:

Research and Development.ADVA-Tec will conduct certain research and development work as necessary to allow the Company to seek a Premarket Approval, or PMA, from the United States Food and Drug Administration, or the FDA, and will supply the Company with its requirements of Ovaprene for clinical and commercial use on commercially reasonable terms.

Under the ADVA-Tec Agreement, the Company is required to make payments of up to $14.6 million in the aggregate to ADVA-Tec based on the achievement of specified development and regulatory milestones, which include the completion of a successful Postcoital Clinical Trial Study (as defined in the ADVA-Tec Agreement); approval by the FDA to commence the Phase 3 pivotal human clinical trial; successful completion of the Phase 3 pivotal human clinical trial; the FDA’s acceptance of the filing of a

PMA for Ovaprene; the FDA’s approval of the PMA for Ovaprene; obtaining Conformité Européenne Marking of Ovaprene in at least three designated European countries; obtaining regulatory approval in at least three designated European countries; and obtaining regulatory approval in Japan. In addition, after the commercial launch of Ovaprene, the Company is also required to make royalty payments to ADVA-Tec based on aggregate annual net sales of Ovaprene in specified regions, which percentage royalty rate will vary between 1% and 10% and will increase based on various net sales thresholds. Finally, the Company is also required to make up to $20 million in the aggregate in commercial milestone payments to ADVA-Tec upon reaching certain worldwide net sales milestones.

The Company ~~is obligated to~~must use commercially reasonable efforts to develop and commercialize Ovaprene, and must meet certain minimum spending amounts per year, such amounts totaling $5.0 million in the aggregate over the first three years, to cover such activities until a final PMA is filed, or until the first commercial sale of Ovaprene, whichever occurs first.

Milestone Payments.The Company will pay ADVA-Tec: (1) up to $14.6 million in the aggregate based on the achievement of specified development and regulatory milestones; and (2) up to $20 million in the aggregate based on the achievement of certain worldwide net sales milestones. The development and regulatory milestones include: the completion of a successful postcoital clinical study, which is required before the Company can commence a Phase 3 pivotal human clinical trial; approval by the FDA to commence such Phase 3 pivotal human clinical trial; successful completion of such Phase 3 pivotal human clinical trial; the FDA’s acceptance of a PMA filing for Ovaprene; the FDA’s approval of the PMA for Ovaprene; obtaining Conformité Européenne Marking of Ovaprene in at least three designated European countries; obtaining regulatory approval in at least three designated European countries; and obtaining regulatory approval in Japan. Because these milestone payments depend upon the successful progress of

the Company’s product development programs, the Company cannot estimate with certainty when these payments will occur, if ever.

For products currently in development, future potential milestone payments based on product development are approximately $14.6 million as of June 30, 2019. Future potential milestone payments related to commercialization totaled $20 million at June 30, 2019. The Company is unable to estimate with certainty the timing on when these milestone payments will occur as these payments depend on the Company's product development programs.

Royalty Payments.After the commercial launch of Ovaprene, the Company will pay to ADVA-Tec royalties based on aggregate annual net sales of Ovaprene in specified regions, at a royalty rate that will vary between 1% and 10% and will increase based on various net sales thresholds. The Company is unable to estimate with certainty the timing on when these royalty payments will occur as these payments depend on the Company's product development programs.

Termination Rights.Unless earlier terminated, the license the Company received under the ADVA-Tec License Agreement continues on a country-by-country basis until the later of the life of the licensed patents or the ~~Company’s~~Company's last commercial sale of Ovaprene. ~~The ADVA-Tec Agreement includes~~In addition to customary termination rights for both ~~parties and provides~~parties: (A) the Company may terminate the ~~right to terminate~~agreement with or without cause in whole or on a country-by-country basis upon 60 days prior written ~~notice. In addition,~~notice; and (B) ADVA-Tec may terminate the ~~ADVA-Tec Agreement~~agreement if the Company develops or commercializes any non-hormonal ring-based vaginal contraceptive device competitive to Ovaprene or if the Company fails ~~to do any~~to: (1) in certain limited circumstances, commercialize Ovaprene in certain designated countries within three years of the ~~following: (i)~~first commercial sale of Ovaprene, (2) satisfy the annual spending obligation described above, ~~(ii)~~(3) use commercially reasonable efforts to complete all necessary pre-clinical and clinical studies required to support and submit a PMA, ~~(iii)~~(4) conduct clinical trials as set forth in the development plan that is agreed by the Company and ADVA-Tec, and as may be modified by a joint research committee, ~~where~~unless such failure is ~~not~~ caused by events outside of the Company’s reasonable control, or ~~(iv)~~(5) enroll a patient in the first non-significant risk medical device study or clinical trial as allowed by an institutional review board within six months of the production and release of Ovaprene, ~~where non-enrollment~~unless such failure is ~~not~~ caused by events outside of its reasonable control. In addition, ADVA-Tec may terminate the ADVA-Tec Agreement if the Company develops or commercializes any non-hormonal ring-based vaginal contraceptive device that is deemed competitive to Ovaprene or, in certain limited circumstances, if the Company fails to commercialize Ovaprene in certain designated countries within three years of the first commercial sale of Ovaprene.

~~Under the ADVA-Tec Agreement, the Company is required to make payments to ADVA-Tec of up to~~ $14.6 million in aggregate based on the achievement of specified development and regulatory milestones and is also required to make payments of up to $20 million in the aggregate based on the achievement of specified commercial milestones. Because these payments are dependent upon the successful progress of the Company’s product development programs, the Company is unable to estimate with certainty when these milestone payments will occur, if ever.

SST License and Collaboration Agreement

In February ~~11,~~ 2018, the Company entered into a license and collaboration agreement, or the SST License Agreement, with Strategic Science & Technologies-D, LLC and Strategic Science & Technologies, LLC, referred to collectively as ~~SST, pursuant to which the Company was required to secure an investment of at least $10 million by March 31, 2018. The Company announced that it had met this funding requirement on February 15, 2018.~~SST. The SST License Agreement provides the Company with an exclusive, royalty-bearing, sublicensable license to develop and commercialize, in all countries and geographic territories of the world, for all indications for women related to female sexual dysfunction and/or female reproductive health, including treatment of female sexual arousal disorder, or the Field of Use, SST’s topical formulation of ~~Topical 5%~~ Sildenafil ~~Citrate~~ Cream, 3.6% as it exists as of the effective date of the SST License Agreement, or any other topically applied pharmaceutical product containing sildenafil or a salt thereof as a pharmaceutically active ingredient, alone or with other active ingredients, but specifically excluding any product containing ibuprofen or any salt derivative of ibuprofen, or the Licensed Products.

~~Under the~~

The following is a summary of other terms of the SST License ~~Agreement, the~~Agreement:

Invention Ownership.The Company retains rights to inventions made by its employees, SST retains rights to inventions made by its employees, and each party shall own a 50% undivided interest in all joint inventions. ~~Each party has agreed to~~

Joint Development Committee. The parties will collaborate through a ~~Joint~~

~~Development Committee, or JDC, which shall be responsible for determining~~joint development committee that will determine the strategic objectives for, and generally ~~overseeing,~~oversee, the development efforts of both parties under the SST License Agreement. ~~Further, the~~

Development.The Company ~~has agreed to~~must use commercially reasonable efforts to develop the Licensed Products in the Field of Use in accordance with a development plan ~~contained~~ in the SST License Agreement, and to commercialize the Licensed Products in the Field of Use.

The Company is responsible for all reasonable internal and external costs and expenses incurred by SST in its performance of the development activities it must perform under the SST License ~~Agreement provides that, in consideration of the rights to be granted to the Company,~~ Agreement.

Royalty Payments.SST will be eligible to receive (1) tiered royalties based on percentages of annual net sales of Licensed Products in the single digits to the mid double digits, ~~including~~subject to customary ~~provisions permitting~~ royalty reductions and ~~offset,~~offsets, and (2) a percentage of sublicense revenue. ~~The Company is also responsible for all reasonable internal and external costs and expenses incurred by~~

Milestone Payments.SST ~~in its performance of the development activities it is required~~will be eligible to ~~perform under the SST License Agreement. Further, the SST License Agreement provides that the Company shall make milestone~~receive payments ~~to SST~~(1) ranging from $0.5 million to $18.0 million in the aggregate on achieving certain clinical and regulatory milestones in the U.S. and worldwide, and ~~an additional~~(2) between $10.0 million toand $100 million in the aggregate upon achieving certain commercial sales milestones. ~~Should~~If the

Company ~~enter~~enters into strategic development or distribution partnerships related to the Licensed Products, additional milestone payments would be due to SST.

License Term.The Company’s license received under the SST License Agreement continues on a country-by-country basis until the later of 10 years from the date of the first commercial sale of such Licensed Product or the expiration of the last valid claim of patent rights covering the Licensed Product in the Field of Use. ~~The SST License Agreement provides that each party will have customary rights to terminate~~Upon expiration (but not termination) of the SST License Agreement in a particular country, the ~~event of material uncured breach by~~Company will have a fully paid-up license under the ~~other party,~~licensed intellectual property to develop and ~~(i)~~commercialize the applicable Licensed Products in the applicable country on a non-exclusive basis.

Termination.In addition to customary termination rights for both parties: (1) prior to receipt of approval by a regulatory authority necessary for commercialization of a Licensed Product in the corresponding jurisdiction, including New Drug Application Approval, or NDA Approval, the Company ~~will have the right to~~may terminate the SST License Agreement without cause upon 90 days prior written notice to ~~SST, and (ii)~~SST; (2) following receipt of approval by a regulatory authority necessary for commercialization of a Licensed Product in the corresponding jurisdiction, including NDA Approval, the Company ~~will have a right to~~may terminate the SST License Agreement without cause upon ~~one~~ 180 days prior written ~~notice. In addition, the~~notice; and (3) SST ~~License Agreement provides SST with the right to~~may terminate the SST License Agreement with respect to the applicable Licensed Product(s) in the applicable country(ies) upon 30 days’ notice to the Company if the Company fails to use commercially reasonable efforts to perform development activities in substantial accordance with the development plan and does not cure such failure within 60 days of receipt of SST’s notice thereof.

Upon expiration (but not termination) of the SST License Agreement in a particular country, the Company shall have a fully paid-up license under the licensed intellectual property to develop and commercialize the applicable Licensed Products in the applicable country on a non-exclusive basis.

Orbis Development and Option Agreement

In March ~~12,~~ 2018, the Company entered into an exclusive development and option agreement, or the Orbis Agreement, with Orbis Biosciences, or Orbis, for the development of long-acting injectable etonogestrel contraceptive with 6- and 12-month durations (ORB-204 and ORB-214, respectively). ~~The~~Under the Orbis Agreement, the Company ~~has agreed to pay~~paid Orbis $300,000 to conduct the first stage of development work, Stage 1, as follows: $150,000 upon signing the Orbis Agreement, $75,000 at the 50% completion point, not later than 6 months following the date the Orbis Agreement was signed (which the Company paid in September 2018), and $75,000 upon delivery by Orbis of the 6-month batch, not later than 11 months following the date the Orbis Agreement was ~~signed.~~signed (which the Company paid in January 2019). Upon Orbis successfully completing Stage 1 of the development program and achieving the predetermined target milestones for Stage 1, the Company will have 90 days to instruct Orbis whether to commence the second stage of development work, Stage 2. Should the Company execute its option to proceed to Stage 2, it will ~~be obligated~~have to provide additional funding to Orbis for such activities.

The initial development on Orbis’s long-acting injectable contraceptive program was carried out under a subcontract funded by Family Health International, or FHI 360, through a grant from the Bill and Melinda Gates Foundation, or the Gates Foundation. The Gates Foundation and FHI 360 are world leaders in the funding and development of novel contraceptive products and programs. In July of 2017, the Gates Foundation announced a commitment of $375 million over three years in support of Family Planning 2020, a global public/private partnership aimed at providing access to contraception.

An injectable contraceptive is designed to provide discreet, non-implanted, protection over periods of months. Limitations of the currently marketed injectable contraceptive is that it provides contraceptive protection for only three months and can delay the ability to get pregnant for up to ten months after receiving the injection. The target product profiles of ORB-204 and ORB-214 include prolonged duration (6 to 12 months), improved ease of use, with an improved side effect profile and predictable return to fertility.

Pre-clinical studies for the 6- and 12-month formulations have been completed, ~~to date,~~ including establishing pharmacokinetics and pharmacodynamics profiles. The collaboration with Orbis will continue to advance the program through formulation optimization with the goal of achieving sustained release over the target time period.

As a result of the sale of shares of our common stock and warrants to purchase up to 525,000 shares of our common stock directly from us at a price of $2.05 per common share and accompanying warrant. We received an overallotment notice from the underwriter for warrants to purchase up to 220,500 shares of our common stock, which shares were issued on February 15, 2018.

~~Topical 5% Sildenafil Citrate Cream License and Collaboration Agreement~~

On February 11, 2018, we entered into a license and collaboration agreement, or the SST License Agreement, with SST. Under the SST License Agreement, subject to our securing an investment of at least $10.0 million by March 31, 2018, which we secured as a result of the underwritten public offering that closed on February 15, 2018 discussed above, we obtained a worldwide exclusive, royalty-bearing, sublicensable license to develop and commercialize in all countries and geographic territories of the world, for all indications for women related to female sexual dysfunction and/or female reproductive health, including treatment of female sexual arousal disorder, or the Field of Use, SST’s topical formulation of Topical 5% Sildenafil Citrate Cream as it exists as of the effective date of the SST License Agreement, or any other topically applied pharmaceutical product containing sildenafil or a salt thereof as a pharmaceutically active ingredient, alone or with other active ingredients, but specifically excluding any product containing ibuprofen or any salt derivative of ibuprofen, or the SST Licensed Products.

~~We agreed to use commercially reasonable efforts to develop the SST Licensed Products~~ in the ~~Field of Use in accordance with a development plan contained in~~offering described above, per the ~~SST License Agreement, and to commercialize the SST Licensed Products in the Field of Use.~~

SST will be eligible to receive tiered royalties based on percentages of annual net sales of the SST Licensed Products in the single digits to the mid-double digits, including customary provisions permitting royalty reductions and offset, and a percentage of sublicense revenue. We are responsible for all reasonable internal and external costs and expenses incurred by SST in its performance of the development activities it is required to perform under the SST License Agreement. Further, the SST License Agreement provides that we shall make base milestone payments to SST ranging from $0.5 million to $18.0 million on achieving certain clinical and regulatory milestones in the U.S. and worldwide, and an additional $10.0 million to $100 million upon achieving certain commercial milestones. Should we enter into strategic development or distribution partnerships related to the SST Licensed Products, additional milestone payments would be due to SST.

~~Orbis Development and Option Agreement~~

On March 12, 2018, we entered into an exclusive development and option agreement, or the Orbis Agreement, with Orbis, for the development of long-acting injectable etonogestrel contraceptive with 6- and 12-month durations (ORB-204 and ORB-214, respectively). The collaboration represents our first partnership that leverages funds and development work supported to date by investment from a donor and non-profit development community devoted to improving options in women’s reproductive health, positioning us as a committed industry partner to advance innovation that addresses global gaps in therapeutic options. We have agreed to pay Orbis $300,000 to conduct the first stage of development work, Stage 1, as follows: $150,000 upon signing the Orbis Agreement, $75,000 at the 50% completion point, not later than 6 months following the date the Orbis Agreement was signed, and $75,000 upon delivery by Orbis of the 6-month batch, not later than 11 months following the date the Orbis Agreement was signed. Upon Orbis successfully completing Stage 1 of the development program and achieving the predetermined target milestones for Stage 1, we will have 90 days to instruct Orbis whether to commence the second stage of development work, Stage 2. Should we execute our option to proceed to Stage 2, we will be obligated to provide additional funding to Orbis for such activities.

An injectable contraceptive is designed to provide discreet, non-implanted protection over periods of months. Limitations of the currently marketed injectable contraceptive is that it provides contraceptive protection for only three months and can delay the ability to get pregnant for up to ten months after receiving the injection. The target product profiles of ORB-204 and ORB-214 include prolonged duration (6 to 12 months), improved ease of use, with an improved side effect profile and predictable return to fertility.

Pre-clinical studies for the 6- and 12-month formulations have been completed to date, including establishing pharmacokinetics and pharmacodynamics profiles. The collaboration with Orbis will continue to advance the program through formulation optimization with the goal of achieving sustained release over the target time period.

~~The Orbis Agreement provides us with an option to enter into a license agreement for ORB-204 and ORB-214 should upcoming development efforts be successful.~~

~~Juniper Exclusive License Agreement~~

On April 24, 2018, we entered into an Exclusive License Agreement, or the Juniper License Agreement, with Juniper, pursuant to which Juniper granted us (a) an exclusive, royalty-bearing worldwide license under certain patent rights, either owned by or exclusively licensed to Juniper, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive, royalty-bearing worldwide license to use certain technological information owned by Juniper to make, have made, use, have used, sell, have sold, import and have imported products and processes. We are entitled to sublicense the rights granted to us under the Juniper License Agreement.

~~The following is a summary of the material~~ terms of the ~~Juniper License Agreement:~~

•~~Upfront Fee. We paid a $250,000 non-creditable upfront license fee~~warrants we issued in February 2018, their exercise price was automatically reduced from $3.00 to ~~Juniper in connection with the execution of the Juniper License Agreement.~~

•~~Annual Maintenance Fee. We will pay an annual license maintenance fee~~$0.98 per share on April 11, 2019. For additional information, see Note 6 to Juniper on each anniversary of the date of the Juniper License Agreement, the amount of which will be $50,000 for the first two years and $100,000 thereafter, and which will be creditable against royalties and other payments due to Juniper in the same calendar year but may not be carried forward to any other year.

•~~Milestone Payments~~. We are required to make potential future development and sales milestone payments of up to $43.8 million (up to $13.5 million in clinical and regulatory milestones and up to $30.3 million in sales milestones) for each product or process covered by the licenses granted under the Juniper License Agreement.

•~~Royalty Payments~~. During the royalty term, we will pay Juniper mid-single-digit to low double-digit royalties based on worldwide net sales of products and processes covered by the licenses granted under the Juniper License Agreement. In lieu of such royalty payments, we will pay Juniper a low double-digit percentage of all sublicense income that we receive for the sublicense of rights under the Juniper License Agreement to a third party. The royalty term, which is determined on a country-by-country basis and product-by-product basis (or process-by-process basis), begins with the first commercial sale of a product or process in a country and terminates on the latest of (1) the expiration date of the last valid claim within the licensed patent rights with respect to such product or process in such country, (2) 10 years following the first commercial sale of such product or process in such country, and (3) when one or more generic products for such product or process are commercially available in such country, except that if there is no such generic product by the 10th year following the first commercial sale in such country, then the royalty term will terminate on the 10 year anniversary of the first commercial sale in such country.

•~~Efforts~~. We are required to use commercially reasonable efforts to develop and make at least one product or process available to the public, which efforts include achieving specific diligence requirements by specific dates specified in the Juniper License Agreement.

•~~Term~~. Unless earlier terminated, the term of the Juniper License Agreement will continue on a country-by-country basis until the later of (1) the expiration date of the last valid claim within such country, or (2) 10 years from the date of first commercial sale of a product or process in such country. Upon expiration (but not earlier termination) of the Juniper License Agreement, the licenses granted thereunder will convert automatically to fully-paid irrevocable licenses. Juniper may terminate the Juniper License Agreement (1) upon 30 days’ notice for our uncured breach of any payment obligation under the Juniper License Agreement, (2) if we fail to maintain required insurance, (3) immediately upon our insolvency or the making of an assignment for the benefit of our creditors or if a bankruptcy petition is filed for or against us, which petition is not dismissed within 90 days, or (4) upon 60 days’ notice for any uncured material breach by us of any of our other obligations under the Juniper License Agreement. We may terminate the Juniper License Agreement on a country-by-country basis for any reason by giving 180 days’ notice (or 90 days’ notice if such termination occurs prior to receipt of marketing approval in the United States). If Juniper terminates the Juniper License Agreement for the reason described in clause (4) above or if we terminate the Juniper License Agreement, Juniper will have full access including the right to use and reference all product data generated during the term of the Juniper License Agreement that is owned by us.

~~Pear Tree Pharmaceuticals Acquisition~~

On April 30, 2018, we entered into an Agreement and Plan of Merger, the Merger Agreement, with Pear Tree, Daré Merger Sub, Inc., our wholly-owned subsidiary, or Merger Sub, and Pear Tree stockholders’ representatives. The transactions contemplated by the Merger Agreement closed on May 16, 2018, and as a result, Pear Tree became our wholly owned subsidiary. We acquired Pear Tree to secure the rights to develop PT-101, a proprietary vaginal formulation of tamoxifen, as a potential treatment for vulvar and vaginal atrophy.

Under the Merger Agreement, upon the closing of the merger, if the Positive Consideration Amount (as defined below) exceeded the Negative Consideration Amount (as defined below), certain former and continuing Pear Tree service providers and former holders of Pear Tree’s capital stock, or the Holders, would have been entitled to receive an amount of cash equal to such excess, and if the Negative Consideration Amount exceeded the Positive Consideration Amount, then we would be able to offset such excess from future payments that would otherwise be due to the Holders, including the potential payment of $75,000 due on the one-year anniversary of the closing. The Negative Consideration Amount exceeded the Positive Consideration Amount by approximately $132,000. As such, approximately $132,000 will be offset from future payments that would otherwise be due to the Holders. Under the Merger Agreement, Positive Consideration Amount means the sum of $75,000 and the cash and cash equivalents held by Pear Tree at closing, and Negative Consideration Amount means the sum of (i) certain Pear Tree indebtedness and transaction expenses, (ii) transaction expenses of the stockholders’ representatives, and (iii) amounts payable under Pear Tree’s management incentive plan.

Under the Merger Agreement, the Holders will be eligible to receive, subject to certain offsets, tiered royalties, including customary provisions permitting royalty reductions and offset, based on percentages of annual net sales of certain products subject to license agreements we assumed, and a percentage of sublicense revenue. We must also make payments to the Holders that are contingent on achieving certain clinical, regulatory and commercial milestones, and may be paid, in our sole discretion, in cash or shares of our common stock. The parties made customary representations, warranties, and covenants in the Merger Agreement, including provisions regarding indemnification.

~~Financial Operations Overview~~

~~The results of our operations discussed in this section and the operations presented in the~~unaudited interim consolidated financial statements ~~and accompanying notes for the three and six months ended June 30, 2018 represent our operations after giving effect to the Cerulean/Private Daré stock purchase transaction~~. The interim consolidated financial statements and accompanying notes for the three and six months ended June 30, 2017 represent the operations of Private Daré, making a comparison between periods difficult.

contained in this report.



	DARÉ BIOSCIENCE, INC. (Exact Name of Registrant as Specified in its Charter)

Delaware	~~Commission File No. 001-36395~~	~~20-4139823~~
(State or Other Jurisdiction of Incorporation)	Commission File No. 001-36395	20-4139823 (IRS Employer Identification No.)

3655 Nobel Drive, Suite 260 San Diego, CA (Address of Principal Executive Offices)	(858) 926-7655 (Registrant’s telephone number, including area code)	92122 (Zip Code)
~~11119 North Torrey Pines Road, Suite 200, La Jolla, CA 92037~~
(Former name, former address and former fiscal year, if changed since last report)

Purchase Consideration	(in thousands)
Fair value of shares issued	$	20,625
Unamortized fair value of Cerulean options		3,654
Fair value of total consideration	$	24,279
Assets acquired and liabilities assumed
Cash and cash equivalents	$	9,918
Prepaid expense and other current assets		1,915
Accounts payable		(233	)
Total assets acquired and liabilities assumed		11,600
Goodwill	$	12,679



		Daré Bioscience, Inc.

Date: August ~~13, 2018~~ 14, 2019	By:	/s/ Sabrina Martucci Johnson
		Sabrina Martucci Johnson
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: August ~~13, 2018~~ 14, 2019	By:	/s/ Lisa Walters-Hoffert
		Lisa Walters-Hoffert
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

☒

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	DARE	Nasdaq Capital Market

	June 30, 2018			December 31, 2017
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	12,446,524		$	7,559,846
Other receivables		24,644			284,206
Prepaid expenses		347,409			311,571
Other current assets		—			193,495
Total current assets		12,818,577			8,349,118
Property and equipment, net		7,910			—
Goodwill		—			5,187,519
Other non-current assets		657,031			723,191
Total assets	$	13,483,518		$	14,259,828
Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued expenses	$	1,265,238		$	966,653
Total current liabilities		1,265,238			966,653
Deferred rent		317			392
Total liabilities		1,265,555			967,045
Commitments and contingencies (Note 8)
Stockholders' equity (deficit)
Preferred stock, $0.01 par value, 5,000,000 shares authorized
None issued and outstanding		—			—
Common stock: $0.0001 par value, 120,000,000 shares authorized, 11,422,161 and 6,047,161 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		1,142			605
Accumulated other comprehensive loss		(59,311	)		(18,080	)
Additional paid-in capital		35,754,872			25,541,210
Accumulated deficit		(23,478,740	)		(12,230,952	)
Total stockholders' equity		12,217,963			13,292,783
Total liabilities and stockholders' equity	$	13,483,518		$	14,259,828

	Six months ended June 30,
	2018			2017
Operating activities:
Net loss	$	(11,247,787	)	$	(742,057	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		288			—
Stock-based compensation		18,547			6
Acquired in-process research and development		452,000
Impairment of goodwill		5,187,519			—
Changes in operating assets and liabilities, net impact of acquisition:
Other receivables		259,562			—
Prepaid expenses		(35,838	)		—
Other current assets		193,495			—
Other assets and deferred charges		66,160			—
Accounts payable and accrued expenses		298,585			550,666
Interest payable		—			33,976
Deferred rent		(75	)		(2,800	)
Net cash used in operating activities		(4,807,544	)		(160,209	)
Investing activities:
Purchases of property and equipment		(8,200	)		—
Acquisition of Pear Tree		(452,000	)		—
Net cash used in investing activities		(460,200	)		—
Financing activities:
Net proceeds from issuance of common stock and warrants		10,195,653			—
Proceeds from issuance of convertible promissory notes		—			155,000
Net cash provided by financing activities		10,195,653			155,000
Effect of exchange rate changes on cash and cash equivalents		(41,231	)		—
Net change in cash and cash equivalents		4,886,678			(5,209	)
Cash and cash equivalents, beginning of period		7,559,846			44,614
Cash and cash equivalents, end of period	$	12,446,524		$	39,405

	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2017 ⁽¹⁾		539,896	$	31.40
Granted		7,675		1.68
Exercised		—		—
Cancelled/expired		—		—
Outstanding at June 30, 2018 (unaudited)		547,571	$	30.98
Exercisable at June 30, 2018 (unaudited)		529,721	$	31.89

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Research and development	$	—	$	—	$	—	$	—
General and administrative		9,423		3		18,547		6
Total	$	9,423	$	3	$	18,547	$	6

	Six months ended
	June 30, 2018
Expected life in years		10.0
Risk-free interest rate	2.76%
Expected volatility	124%
Forfeiture rate	0.0%
Dividend yield	0.0%
Weighted-average fair value of options granted	$	1.61



Potentially dilutive securities	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Stock options	2,190,360	547,571	2,190,360	547,571
Warrants	3,750,833	3,751,002	3,750,833	3,751,002
Total	5,941,193	4,298,573	5,941,193	4,298,573

	Three months ended June 30,						Change
	2018			2017			Dollars
Operating expenses:
General and administrative expense	$	1,157,174		$	476,047			681,127
Research and development expenses		2,217,622			3,576			2,214,046
License expenses		250,000			—			250,000
Total operating expenses		3,624,796			479,623			3,145,173
Loss from operations		(3,624,796	)		(479,623	)		(3,145,173	)
Other income (expense)		42,626			(18,570	)		61,196
Net loss	$	(3,582,170	)	$	(498,193	)		(3,083,977	)
Other comprehensive loss:
Foreign currency translation adjustments	$	(27,485	)	$	—			(27,485	)
Comprehensive loss	$	(3,609,655	)	$	(498,193	)		(3,111,462	)


2.	GOING CONCERN


3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


4.	ACQUISITIONS


9.	GRANT AWARD



	Three months ended June 30,						Dollar
	2019			2018			Change
Operating expenses:
General and administrative expense	$	1,307,379		$	1,157,174		$	150,205
Research and development expenses	2,512,572			2,217,622			294,950
License expenses	162,500			250,000			(87,500		)
Total operating expenses	3,982,451			3,624,796			357,655
Loss from operations	(3,982,451		)	(3,624,796		)	(357,655		)
Other income	30,001			42,626			(12,625		)
Net loss	(3,952,450		)	(3,582,170		)	(370,280		)
Deemed dividend from trigger of down round provision feature	(789,594		)	—			(789,594		)
Net loss to common shareholders	(4,742,044		)	(3,582,170		)	(1,159,874		)
Other comprehensive loss:
Foreign currency translation adjustments	(7,917		)	(27,485		)	19,568
Comprehensive loss	$	(4,749,961	)	$	(3,609,655	)	$	(1,140,306	)

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