UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023March 31, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission File Number: 001-00100
TherapeuticsMD, INC.Inc.
(Exact name of Registrant as specified in its Charter)
| Nevada | 87-0233535 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
951 Yamato Road, Suite 220 Boca Raton, Florida | 33431 | |
(Address of principal executive offices) | (Zip Code) | |
561-961-1900
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading symbol | Name of each exchange on which registered | ||
Common Stock, par value $0.001 per share | TXMD | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the Registrant is a shell company (as defined in Rule As of Table of Contents i TherapeuticsMD, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except per share data) The accompanying notes are an integral part of these condensed consolidated financial statements. TherapeuticsMD, Inc. and Subsidiaries Condensed Consolidated Statements of (Unaudited - in thousands, except per share data) The accompanying notes are an integral part of these condensed consolidated financial statements. TherapeuticsMD, Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity (Unaudited - in thousands) The accompanying notes are an integral part of these condensed consolidated financial statements. TherapeuticsMD, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited - in thousands) The accompanying notes are an integral part of these condensed consolidated financial statements. TherapeuticsMD, Inc. and Subsidiaries Notes to the Condensed Consolidated Financial Statements (Unaudited) 1. Business, basis of presentation, new accounting standards and summary of significant accounting policies General TherapeuticsMD, Inc. (the “Company”), a Nevada corporation, and its condensed consolidated subsidiaries are referred to collectively in this Quarterly Report on Form TherapeuticsMD was previously a women’s healthcare company with a mission of creating and commercializing innovative products to support the lifespan of women from pregnancy prevention through menopause. In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. On December 30, 2022 (the “Closing Date”), we completed a transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company (“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, in which we and our subsidiaries (i) granted Mayne Pharma an exclusive license to commercialize our IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands (collectively, the “Licensed Products”) in the United States and its possessions and territories, (ii) assigned to Mayne Pharma our exclusive license to commercialize In a License Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Mayne License Agreement”), we granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories. Under the Mayne License Agreement, Mayne Pharma will pay us milestone payments of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million. Further, Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80.0 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date. The royalty rate will decrease to 2.0% on a Under the Transaction Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Transaction Agreement”), we sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including, with the Population Council’s consent, our exclusive license from the Population Council to commercialize ANNOVERA (the “Transferred Assets”). The total consideration from Mayne Pharma to TherapeuticsMD for the purchase of the Transferred Assets and the grant of the licenses under the Mayne Transaction Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment (as defined below) and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended. The acquisition of net working capital was determined in accordance with the Transaction Agreement and included significant estimates which could change materially for a period of up to two years following the Closing Date. On the Closing Date, TherapeuticsMD and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement (the “Mayne License Agreement Amendment”). Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay us approximately $1.0 million in prepaid royalties on the Closing Date. The prepaid royalties As part of the transformation that included the Mayne License Agreement, historical results of commercial operations for all periods prior to the Closing Date have been reflected as discontinued operations in our condensed consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2 of our condensed consolidated financial statements. We also have license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S. In July 2018, we entered into a license and supply agreement (the “Knight License Agreement”) with Knight Therapeutics Inc. (“Knight”) pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel. Knight obtained regulatory approval for IMVEXXY and BIJUVA and began commercialization efforts in 2024. In connection with our transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022. Severance obligations for all employees other than executive officers were paid in full in January 2023 and severance obligations for terminated executive officers We have engaged external consultants who support our relationship with current partners and assist with certain financial, legal, and regulatory matters and the continued wind-down of our historical business operations. On August 15, 2023, we entered into a master services agreement with JZ Advisory Group, pursuant to which Joseph Ziegler would serve as our Principal Financial Officer. On August 17, 2023 Michael C. Donegan notified us of his decision to resign from the positions of Principal Financial and Accounting Officer of our Company effective as of August 17, 2023. Mr. Ziegler succeeded Mr. Donegan as Principal Financial and Accounting Officer as of the date of Mr. Donegan’s resignation. Going concern Following the transaction with Mayne Pharma, our primary source of revenue is from royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. We may need to raise additional capital to provide additional liquidity to fund our operations until we become cash flow positive. To address our capital needs, we may pursue various equity and debt financing and other alternatives. The equity financing alternatives may include the private placement of equity, equity-linked, or other similar instruments or obligations with one or more investors, lenders, or other institutional counterparties or an underwritten public equity or equity-linked securities offering. Our ability to sell equity securities may be limited by market conditions, including the market price of our common stock, and our available authorized shares. To the extent that we raise additional capital through the sale of such securities, the ownership interests of our existing stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. If we are not successful in obtaining additional financing, we could be forced to discontinue or curtail our business operations, sell assets at unfavorable prices, or merge, consolidate, or combine with a company with greater financial resources in a transaction that might be unfavorable to us. On May 1, 2023, we entered into a Subscription Agreement (the “Subscription Agreement”) with Rubric Capital Management LP (“Rubric”), pursuant to which we agreed to sell to Rubric, or one or more of its affiliates, up to an aggregate of 5,000,000 shares of our common stock, par value $0.001 per share (our “Common Stock”), from time to time during the term of the Subscription Agreement in separate draw-downs at our election. On June 29, 2023, we issued and sold 312,525 shares of Common Stock at a price per share equal to $3.6797 pursuant to the Subscription Agreement. We received gross proceeds of $1.15 million from the draw down, before expenses. In February 2024, the Company received Mayne Pharma’s calculation of allowance for payer rebates and wholesale distributor fees pursuant to the As of March 31, 2024, the Company believes no additional accrual is required for amounts that may be owed for the allowance for returns under the If Mayne Pharma’s sales of The accompanying Basis of presentation We prepared the condensed consolidated financial statements included in this As part of the transformation as a result of the Mayne Transaction, historical results of commercial operations for all periods prior to the Closing Date have been reflected as discontinued operations in the condensed consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in the condensed consolidated balance Revenues, expenses, assets, liabilities, and equities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year. In our opinion, all adjustments necessary for a fair New accounting standards Adoption of new accounting standards In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU Increase of authorized shares On June 26, 2023, at our combined 2022 and 2023 Annual Meeting, our stockholders approved an amendment to our Amended and Restated Articles of Incorporation to increase the number of authorized shares of Common Stock from 12 million shares to 32 million shares. Estimates and assumptions The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. We evaluate our estimates and assumptions based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ, at times in material amounts, from these estimates under different assumptions or conditions. Significant accounting policies The significant accounting policies we use for quarterly financial reporting are disclosed in Note 1 of the 2. Discontinued Operations As discussed in Note 1, we changed our business in 2022 by licensing our products to receive royalties and future sales related milestone payments, after granting an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands in the United States and assigning our exclusive license to commercialize ANNOVERA to Mayne Pharma. This plan represented a strategic shift having a major effect on our operations and financial results. Upon our conversion from a commercial pharmaceutical company to a licensing only company with the consummation of the Mayne Transaction, we classified all direct revenues, costs and expenses related to commercial operations, within income (loss) from discontinued operations, net of tax, in the condensed consolidated statements of Additionally, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in our condensed consolidated balance sheets as of As described in Note 1, the acquisition of net working capital The following table presents results of discontinued operations (in thousands): Operating loss from discontinued operations The following table presents the carrying amounts of the classes of assets and liabilities of discontinued operations as of 3. Prepaid and other current assets Our prepaid and other current assets consisted of the following as of 4. The following provides information about our license rights and other intangible assets, net as of We recorded, in continuing operations, amortization expense related to patents of Our intangible assets subject to amortization are expected to be amortized as follows (in thousands): 5. Accrued expenses and other current liabilities Other accrued expenses and other current liabilities consisted of the following (in thousands): 6. Commitments and contingencies Mayne Pharma Agreement Mayne Pharma paid us approximately $12.1 million at closing on December 30, 2022, for the acquisition of net working capital, subject to certain adjustments as determined in accordance with the Transaction Agreement. While the Transaction Agreement In September The Company’s estimate of the allowance for payer rebates and wholesale distributor fees was determined in accordance with the Transaction Agreement The As of March 31, 2024, the Company believes no additional accrual is required for amounts that Population Council License Agreement Under the terms of our license agreement with the Population Council, Inc. (the “Population Council License Agreement”), we paid the Population Council a milestone payment of $20.0 million in 2018, which was within 30 days following the approval by the FDA of the New Drug Application (“NDA”) for ANNOVERA, and $20.0 million in 2019 following the first commercial batch release of ANNOVERA. The aggregate $40.0 million of milestone payments were recorded as license rights. The Population Council was also eligible to receive future payments upon the achievement of certain commercial sales milestones of ANNOVERA. On December 30, 2022, we assigned the ANNOVERA license to Mayne Pharma. Our rights and obligations under the Population Council License Agreement have been transferred to Mayne Pharma and may revert back to us upon the occurrence of certain events. Legal proceedings In February 2020, we received a Paragraph IV certification notice letter (the “IMVEXXY Notice Letter”) regarding an Abbreviated New Drug Application (“ANDA”) submitted to the FDA by Teva Pharmaceuticals USA, Inc. (“Teva”). The ANDA seeks approval from the FDA to commercially manufacture, use, or sell a generic version of the 4 mcg and 10 mcg doses of IMVEXXY. In the IMVEXXY Notice Letter, Teva alleges that TherapeuticsMD patents listed in the FDA’s Orange Book that claim compositions and methods of IMVEXXY (the “IMVEXXY Patents”) are invalid, unenforceable, and/or will not be infringed by Teva’s commercial manufacture, use, or sale of its proposed generic drug product. The IMVEXXY Patents identified in the IMVEXXY Notice Letter expire in 2032 or 2033. In April 2020, we filed a complaint for patent infringement against Teva in the United States District Court for the District of New Jersey arising from Teva’s ANDA filing with the FDA. We are seeking, among other relief, an order that the effective date of any FDA approval of Teva’s ANDA would be a date no earlier than the expiration of the IMVEXXY Patents and equitable relief enjoining Teva from infringing the IMVEXXY Patents. Teva has filed its answer and counterclaim to the complaint, alleging that the IMVEXXY Patents are invalid and not Beginning on December 30, 2022 and per the Mayne License Agreement, Mayne Pharma is responsible for all enforcement of our patents, including the litigation discussed above with respect to Teva. From time to time, we are involved in other litigations and proceedings in the ordinary course of business. We are currently not involved in any other litigations and proceedings that we believe would have a material effect on our condensed consolidated financial condition, results of operations, or cash flows. Off-balance As of Employment agreements In connection with our transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 30, 2022. Severance obligations for all employees other than executive officers were paid in full in the first quarter of 2023. As of 7. Stockholders’ equity Warrants As of Share-based compensation payment plans As of The following table summarizes the status of our outstanding and exercisable options and related transactions The following table summarizes the status of our RSUs and related transactions The following table summarizes the status of our PSUs and related transactions Share-based payment compensation cost Share-based payment compensation expense for PSUs is based on 100% vesting which was a part of the termination benefits for all employees who were terminated in 2022. We recorded share-based payment award compensation costs related to previously issued options, RSU and PSUs, as well as shares of common stock issued under our As of The unrecognized compensation cost as of 8. Revenue Pursuant to the Mayne License Agreement, the Company granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories. Pursuant to the Mayne License Agreement, Mayne Pharma will make 9. Income taxes We do not expect to pay any significant federal or state income taxes as a result of (i) the losses recorded during the We recorded a full valuation allowance of the net operating losses for the 10. Income (Loss) per common share The following table sets forth the computation of basic and diluted (loss) per common share Since we reported a net loss from continuing operations for the The following table sets forth the outstanding securities as of the periods presented which were not included in the calculation of diluted earnings per common share during the respective 11. Related parties On August 23, 2022, we appointed Mr. Justin Roberts as a director to fill a newly created vacancy on our Board of Directors. Mr. Roberts was elected to serve as a director at our combined 2022 and 2023 Annual Meeting held on June 26, 2023. Mr. Roberts will serve until our next Annual Meeting of Stockholders or until his successor is duly elected or appointed or his earlier death or resignation. As a director of our Company, Mr. Roberts is entitled to receive compensation in the same manner as our other 12. Business concentrations TherapeuticsMD was previously a women’s healthcare company with a mission of creating and commercializing innovative products to support the lifespan of women from pregnancy prevention through menopause. In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. As part of the transformation that included the Mayne License Agreement, historical results of commercial operations for all periods prior to the Closing Date have been reflected as discontinued operations in our condensed consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2. For the three As of Item 2. Management’s discussion and analysis of financial condition and results of operations The following discussion should be read in conjunction with our Certain amounts in the following discussion may not add due to rounding, and all percentages have been calculated using unrounded amounts. Forward-looking statements This 10-Q Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve substantial risks and uncertainties. For example, statements regarding our operations, financial position, debt position, liquidity, business strategy, and other plans and objectives for future operations, and assumptions and predictions about future cost reduction strategies, expenses and royalties are all forward-looking statements. These statements are generally accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “potential(ly),” “continue,” “forecast,” “predict,” “plan,” “may,” “will,” “could,” “would,” “should,” “expect,” or the negative of such terms or other comparable terminology. We have based these forward-looking statements on our current expectations and projections about future events. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date of this 10-Q Report, and we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning. These forward-looking statements are inherently subject to known and unknown risks and uncertainties. Actual results or experience may differ materially from those expected or anticipated in the forward-looking statements. We do not undertake to update any forward-looking statements or to publicly announce the results of any revisions to any statements to reflect new information or future events or developments, except as required by law or by the rules and regulations of the SEC. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. Factors that could cause or contribute to such differences include, but are not limited to, our liquidity requirements, supply chain issues, management transitions, risks related to our licensing agreements, market and general economic factors, and the other risks discussed in Part I, Item 1A of our Our company TherapeuticsMD was previously a women’s healthcare company with a mission of creating and commercializing innovative products to support the lifespan of women from pregnancy prevention through menopause. In December 2022, we changed our business to become a pharmaceutical royalty company, primarily collecting royalties from our licensees. We are no longer engaged in research and development or commercial operations. On December 30, 2022 (the “Closing Date”), we completed a transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company (“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, pursuant to which we (i) granted Mayne Pharma an exclusive license to commercialize IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands (collectively, the “Licensed Products”) in the United States and its possessions and territories, (ii) assigned to Mayne Pharma our exclusive license to commercialize ANNOVERA (together with the Licensed Products, collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith. Pursuant to a License Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Mayne License Agreement”), we granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories. Pursuant to the Mayne License Agreement, Mayne Pharma will pay us one-time, milestone payments of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million. Further, Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date. The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur of (i) the expiration or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States. Mayne Pharma will pay us minimum annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below (the “Minimum Annual Royalty”). Upon the expiry of the 20-year royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products. Pursuant to a Transaction Agreement, dated December 4, 2022, between TherapeuticsMD and Mayne Pharma (the “Transaction Agreement”), we sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including our exclusive license from the Population Council to commercialize ANNOVERA (the “Transferred Assets”). The total consideration from Mayne Pharma to us for the purchase of the Transferred Assets and the grant of the licenses under the Mayne License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment (as defined below) and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended. The acquisition of net working capital was determined in accordance with the Transaction Agreement and included significant estimates which could change materially for a period of up to two years following the Closing Date. On the Closing Date, TherapeuticsMD and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement (the “Mayne License Agreement Amendment”). Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay us approximately $1.0 million in prepaid royalties on the Closing Date. The prepaid royalties This action represented a shift in our business and therefore, the related assets and liabilities associated with commercial operations are classified as discontinued operations on our condensed consolidated balance sheets and the results of operations have been presented as discontinued operations within our condensed consolidated statements of We also have license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S. In connection with our transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022. Severance obligations for all employees other than executive officers were paid in full in the first quarter of 2023 and severance obligations for terminated executive officers Going concern Following the transaction with Mayne Pharma, Our ability to sell equity securities may be limited by market conditions, including the market price of our common stock, and our available authorized shares. To the extent that we raise additional capital through the sale of such securities, the ownership interests of our existing stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. If we are not successful in obtaining additional financing, we could be forced to discontinue or curtail our business operations, sell assets at unfavorable prices, or merge, consolidate, or combine with a company with greater financial resources in a transaction that might be unfavorable to us. On May 1, 2023, we entered into a Subscription Agreement (the “Subscription Agreement”) with Rubric Capital Management LP (“Rubric”), pursuant to which we agreed to sell to Rubric, or one or more of its affiliates, up to an aggregate of 5,000,000 shares of our common stock, par value $0.001 per share (our “Common Stock”), from time to time during the term of the Subscription Agreement in separate draw-downs at Mayne Pharma paid us approximately $12.1 million at closing on December 30, 2022, for the acquisition of net working capital, subject to certain adjustments as determined in accordance with the Transaction Agreement. While the Transaction Agreement In September 2023, we revised certain accrual estimates including increasing our working capital adjustment accrual from $3.5 million to $5.5 million for amounts anticipated to be owed under the The Company’s estimate of the The Company believes its estimated allowances for payer rebates and wholesale distributor fees are reasonable. The timing and outcome of this matter is uncertain at this point. As a result, the Company cannot reasonably estimate a range of loss, and accordingly, the Company has not As of If Mayne Pharma’s sales of The accompanying Portfolio of our royalty-bearing products In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. On December 30, 2022, we granted an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands and assigning our exclusive license to commercialize ANNOVERA to Mayne Pharma. IMVEXXY (estradiol vaginal inserts), 4-µg and 10-µg This pharmaceutical product is for the treatment of moderate-to-severe dyspareunia (vaginal pain associated with sexual activity), a symptom of vulvar and vaginal atrophy due to menopause. On December 30, 2022, we granted an exclusive license to commercialize IMVEXXY in the United States and its possessions and territories to Mayne Pharma. We also have entered into licensing agreements with third parties to market and sell IMVEXXY outside of the U.S. We entered into the Knight License Agreement, with Knight pursuant to which, we granted Knight an exclusive license to commercialize IMVEXXY in Canada and Israel. We entered into the Theramex License Agreement with Theramex HQ UK Limited (“Theramex”) pursuant to which we granted Theramex an exclusive license to commercialize IMVEXXY for human use outside of the U.S., except for Canada and Israel. As of BIJUVA (estradiol and progesterone) capsules, 1 mg/100 mg This pharmaceutical product is the first and only FDA approved bioidentical hormone therapy combination of estradiol and progesterone in a single, oral capsule for the treatment of moderate-to-severe vasomotor symptoms (commonly known as hot flashes or flushes) due to menopause in women with a uterus. On December 30, 2022, we granted an exclusive license to commercialize BIJUVA in the United States and its possessions and territories to Mayne Pharma. We also have entered into the Knight License Agreement with Knight pursuant to which we granted Knight an exclusive license to commercialize BIJUVA in Canada and Israel. We have entered into the Theramex License Agreement with Theramex pursuant to which we granted Theramex an exclusive license to commercialize BIJUVA for human use outside of the U.S., except for Canada and Israel. ANNOVERA (segesterone acetate (“SA”) and ethinyl estradiol (“EE”) vaginal system) On December 30, 2022, we assigned our exclusive license to commercialize ANNOVERA to Mayne Pharma. This pharmaceutical product is a one-year ring-shaped contraceptive vaginal system (“CVS”) and the first and only patient-controlled, procedure-free, reversible prescription contraceptive that can prevent pregnancy for up to a total of 13 cycles (one year). ANNOVERA is commercially sold in the U.S. pursuant to the terms of the Population Council License Agreement. Prenatal vitamin products On December 30, 2022, we granted an exclusive license to commercialize, in the United States and its possessions and territories, our prescription prenatal vitamin product lines under our vitaMedMD brand name and authorized generic formulations of some of our prescription prenatal vitamin products under our BocaGreenMD Prenatal name to Mayne Pharma. Results of operations Three months ended As part of the transformation that included the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in our condensed consolidated financial statements for all periods prior to the Closing Date. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2 to the condensed consolidated financial statements included in this Quarterly Report. The discussion below, and the revenues and expenses discussed below, are based on and relate to our continuing operations. The following table sets forth the results of our operations (in thousands): Revenue: License and service revenue Cost of revenue Gross profit Operating expenses: Selling, general and administrative Depreciation and amortization Total operating expenses Loss from operations Other income (expense): Interest expense and other financing costs Miscellaneous income (expense) Total other income (expense), net Loss from continuing operations before income taxes Provision for income taxes Net loss from continuing operations Loss from discontinued operations, net of income taxes Net loss Revenue. As part of our transformation and the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the condensed consolidated financial statements for all periods presented. We recorded Operating expenses.Total operating expenses for the Selling, general and administrative. Selling, general and administrative expenses were Depreciation & amortization. Depreciation and amortization expense was Loss from operations. In the Other income (expense), Provision for income taxes. During the Net loss from continuing operations. For the Discontinued Operations - For additional information, see Note 2 - Discontinued Operations, in the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report. Revenue: License and service revenue Cost of revenue Gross profit Operating expenses: Selling, general and administrative Depreciation and amortization Total operating expenses Loss from operations Other income (expense): Interest expense and other financing costs Miscellaneous income (expense) Total other income (expense), net Loss from continuing operations before income taxes Provision for income taxes Net loss from continuing operations Income (loss) from discontinued operations, net of income taxes Net income (loss) Liquidity and capital resources Our primary use of cash is to fund our continued operations. We have funded our operations primarily through public offerings of our common stock and private placements of equity and debt securities, the divestiture of our former subsidiary vitaCare, and the transactions with Mayne Pharma. As of Mayne Pharma License Agreement On December 30, 2022, we granted Mayne Pharma (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories. The total consideration from Mayne Pharma to us under the Mayne License Agreement consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the transaction agreement dated December 4, 2022, and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended. Pursuant to the Mayne License Agreement, Mayne Pharma will pay us one-time, milestone payments of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million. Further, Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date. The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur of (i) the expiration or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States. Mayne Pharma will pay us minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below. Upon the expiry of the 20-year royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products. Subscription Agreement with Rubric Capital Management LP On May 1, 2023, we entered into the Subscription Agreement with Rubric, pursuant to which we agreed to sell to Rubric, or one or more of its affiliates, up to an aggregate of 5,000,000 shares of Common Stock, from time to time during the term of the Subscription Agreement in separate draw downs at our election, at a purchase price of the five-day volume-weighted average price of our common stock at the time of the sale of such shares, at an aggregate purchase price of up to $5,000,000 (collectively, the “Private Placement”). The initial draw down occurred on June 29, 2023 consisting of a sale of 312,525 shares of Common Stock at a price per share equal to $3.6797. We received gross proceeds of $1.15 million from the drawdown, before expenses. On November 15, 2023 Rubric drew down an additional 877,192 shares of Common Stock at a price per share equal to $2.2761. We received gross proceeds of $2.0 million from the drawdown, before expenses. See “Going Concern” above for further discussion related to our ability to generate and obtain adequate amounts of cash to meet our liquidity needs and our plans for to satisfy our such needs in the short-term and in the long-term. As a result, there is substantial doubt about our ability to continue as a going concern for the next twelve months from the issuance of these financial statements. Cash flows The following table reflects the major categories of cash flows for each of the periods (in thousands). Net cash used in operating activities Net cash used in investing activities Net cash provided by (used in) financing activities Net cash provided by (used in) discontinued operations Net (decrease) in cash Operating Activities from continuing Net cash Net cash For additional details, see the condensed consolidated statements of cash flows in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report. Other liquidity measures Receivable from Inventory. On December 30, 2022, Mayne Pharma acquired our inventory balance of approximately $6.6 million, which is subject to certain net working capital adjustments. Contractual obligations, off-balance sheet arrangements and purchase commitments and employment agreements Our contractual obligations and off-balance sheet arrangements are set forth below. For additional information on any of the following and other obligations and arrangements, see “Note In the ordinary course of business, we enter into agreements with third parties that include indemnification provisions, which, in our judgment, are normal and customary for companies in our industry sector. Pursuant to these agreements, we generally agree to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or omitted by us. The maximum potential amount of future payments we could be required to make under these indemnification provisions is sometimes unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of liabilities relating to these provisions is minimal. Accordingly, we had no liabilities recorded for these provisions as of In the normal course of business, we may be confronted with issues or events that may result in contingent liability. These generally relate to lawsuits, claims, environmental actions, or the actions of various regulatory agencies. We consult with counsel and other appropriate experts to assess the claim. If, in our opinion, we have incurred a probable loss as set forth by U.S. GAAP, an estimate is made of the loss and the appropriate accounting entries are reflected in our condensed consolidated financial statements. Critical accounting policies and estimates Management’s discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements included elsewhere in this 10-Q Report, which has been prepared in accordance with U.S. GAAP. We make estimates and assumptions that affect the reported amounts on our condensed consolidated financial statements and accompanying notes as of the date of the condensed consolidated financial statements. The critical accounting policies and estimates used are disclosed in Item 7 Item 3. Quantitative and qualitative disclosures about market risk As a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation S-K, we are not required to provide this information. Item 4. Controls and procedures Management’s evaluation of disclosure controls and procedures Disclosure Controls and Procedures Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, in order to allow timely decisions regarding required disclosure. Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this 10-Q Report. Based on that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures as of the end of the period covered by this 10-Q Report were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. Further, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures. Changes in internal controls over financial reporting In connection with our transformation into a pharmaceutical royalty company, we terminated our executive management team and all other During the first quarter of fiscal year 2024, we deployed a new ERP system which is anticipated to enhance our operating and financial processes over time. Processes and internal controls have been updated and are consistent with our internal control framework, and we have evaluated the operating effectiveness of related key controls. Control processes continue to be evaluated to give appropriate consideration of modifications needed to maintain the effectiveness of internal controls over financial reporting. Part II - Other Information Item 1. Legal proceedings From time to time, we are involved in litigation and proceedings in the ordinary course of our business. Other than the legal proceedings disclosed in Note Item 1A. Risk factors Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the Item 2. Unregistered sales of equity securities and use of proceeds None. Item 3. Defaults upon senior securities None. Item 4. Mine safety disclosures None. Item 5. Other information Rule 10b5-1 Trading Plans During the Item 6. Exhibits Filed herewith. Furnished herewith. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. /s/ Marlan D. Walker Chief Executive Officer /s/ Joseph Ziegler 27(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).Large Accelerated Filer ☐ ☐Accelerated filer ☐ Non-accelerated filer ☒ ☒Smaller reporting company ☒ Emerging growth company ☐ ☒November 14, 2023,May 10, 2024, there were 10,575,24011,532,443 shares of the registrant’s common stock, par value $0.001 per share, outstanding. September 30, 2023 December 31, 2022 Assets: Current assets: Cash and cash equivalents $ 10,166 $ 38,067 Restricted cash — 11,250 Royalty receivable, current portion 2,705 — Prepaid and other current assets 4,570 6,034 Total current assets 17,441 55,351 Fixed assets, net 19 78 License rights and other intangible assets, net 6,657 6,943 Right of use assets 7,055 7,580 Royalty receivable, long term 19,067 20,253 254 253 Total assets $ 50,493 $ 90,458 Liabilities and stockholders’ equity: Current liabilities: Accounts payable $ 696 $ 2,162 Accrued expenses and other current liabilities 6,928 18,846 Current liabilities of discontinued operations 6,888 25,831 Total current liabilities 14,512 46,839 Operating lease liabilities 6,740 7,369 1,189 1,107 Total liabilities 22,441 55,315 Commitments and contingencies (Note 7) Stockholders’ equity (deficit): 11 9 976,799 974,497 Accumulated deficit (948,758 ) (939,363 ) Total stockholders’ equity 28,052 35,143 Total liabilities and stockholders’ equity $ 50,493 $ 90,458 March 31,
2024 December 31,
2023 (Unaudited) Assets: Current assets: Cash and cash equivalents $ 4,338 $ 4,327 Royalty receivable, current portion 3,222 3,090 Prepaid and other current assets 3,869 4,035 Current assets of discontinued operations 94 344 Total current assets 11,523 11,796 License rights and other intangible assets, net 5,965 6,098 Right of use assets 6,687 6,873 Royalty receivable, long term 17,855 18,484 Other non-current assets 58 58 Total assets $ 42,088 $ 43,309 Liabilities and stockholders’ equity: Current liabilities: Accounts payable $ 139 $ 27 Accrued expenses and other current liabilities 2,720 3,133 Current liabilities of discontinued operations 3,609 3,694 Total current liabilities 6,468 6,854 Operating lease liabilities 6,319 6,532 Other non-current liabilities 637 636 Total liabilities 13,424 14,022 Commitments and contingencies (Note 6) Stockholders’ equity: Common stock, par value $0.001; 32,000 shares authorized, 11,532 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 11 11 Additional paid-in capital 979,028 978,917 Accumulated deficit (950,375 ) (949,641 ) Total stockholders’ equity 28,664 29,287 Total liabilities and stockholders’ equity $ 42,088 $ 43,309 1Comprehensive IncomeOperations Three Months Ended
March 31, 2024 2023 Revenue, net: License and service revenue $ 313 $ 416 Operating expenses: Selling, general and administrative 1,322 3,056 Depreciation & amortization 133 27 Total operating expenses 1,455 3,083 Loss from operations (1,142 ) (2,667 ) Other income (expense) : Interest expense and other financing costs — (50 ) Miscellaneous income 333 407 Total other income, net 333 357 Loss from continuing operations before income taxes (809 ) (2,310 ) Provision for income taxes — — Loss from continuing operations, net of income taxes (809 ) (2,310 ) Income (loss) from discontinued operations, net of income taxes 75 (1,293 ) Net loss $ (734 ) $ (3,603 ) Income (loss) per common share, basic and diluted: Continuing operations $ (0.07 ) $ (0.24 ) Discontinued operations, net 0.01 (0.13 ) Net loss per common share, basic and diluted $ (0.06 ) $ (0.37 ) Weighted average common shares, basic 11,532 9,754 Weighted average common shares, diluted 11,532 9,754 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 License and service revenue $ (53 ) $ 354 $ 800 $ 1,397 Cost of revenue — 354 — 1,397 Gross profit (loss) (53 ) — 800 — Operating expenses: Selling, general and administrative 1,590 14,246 7,427 46,367 Depreciation & amortization 130 273 285 884 Total operating expenses 1,720 14,519 7,712 47,251 Loss from operations (1,773 ) (14,519 ) (6,912 ) (47,251 ) Other (expense) income: Interest expense and other financing costs (20 ) — (115 ) — Miscellaneous income (expense) 359 (112 ) 869 (128 ) Total other income (loss), net 339 (112 ) 754 (128 ) Loss from continuing operations before income taxes (1,434 ) (14,631 ) (6,158 ) (47,379 ) Income (loss) from discontinued operations, net of income taxes (1,944 ) (14,334 ) (3,237 ) 81,674 Net income (loss) $ (3,378 ) $ (28,965 ) $ (9,395 ) $ 34,295 Income (loss) per common share, basic and diluted: Continuing operations (0.13 ) (1.58 ) (0.60 ) (5.34 ) Discontinued operations, net (0.18 ) (1.55 ) (0.32 ) 9.20 Net income (loss) per common share, basic and diluted $ (0.32 ) $ (3.13 ) $ (0.92 ) $ 3.86 Weighted average common shares, basic 10,701 9,261 10,241 8,877 Weighted average common shares, diluted 10,701 9,261 10,241 8,877 Net income (loss) $ (3,378 ) $ (28,965 ) $ (9,395 ) $ 34,295 Other comprehensive income — — — — Comprehensive income (loss): $ (3,378 ) $ (28,965 ) $ (9,395 ) $ 34,295 2 (Deficit) Common Stock Additional Paid in Accumulated Additional Shares Amount Capital Deficit Total Common Stock Paid in Accumulated Balance, January 1, 2024 11,532 $ 11 $ 978,917 $ (949,641 ) $ 29,287 Share-based compensation — — 111 — 111 Net loss — — — (734 ) (734 ) Balance, March 31, 2024 11,532 $ 11 $ 979,028 $ (950,375 ) $ 28,664 Shares Amount Capital Deficit Total Balance, January 1, 2023 9,498 $ 9 $ 974,497 $ (939,363 ) $ 35,143 9,498 $ 9 $ 974,497 $ (939,363 ) $ 35,143 Shares issued for vested restricted stock units 455 1 — — 1 455 1 — — 1 Share-based compensation — — 483 — 483 — — 483 — 483 Net loss — — — (3,603 ) (3,603 ) — — — (3,603 ) (3,603 ) Balance, March 31, 2023 9,953 $ 10 $ 974,980 $ (942,966 ) $ 32,024 9,953 $ 10 $ 974,980 $ (942,966 ) $ 32,024 Shares issued for vested restricted stock units 309 — — — — Shares issued for sale of common stock related to private placement sale 313 1 1,149 — 1,150 Share-based compensation — — 437 — 437 Net loss — — — (2,414 ) (2,414 ) Balance, June 30, 2023 10,575 $ 11 $ 976,566 $ (945,380 ) $ 31,197 Share-based compensation — — 233 — 233 Net loss — — — (3,378 ) (3,378 ) Balance, September 30, 2023 10,575 $ 11 $ 976,799 $ (948,758 ) $ 28,052 Balance, January 1, 2022 8,598 $ 9 $ 957,730 $ (1,051,360 ) $ (93,621 ) Shares issued for vested restricted stock units 71 — — — — Share-based compensation — — 2,062 — 2,062 Net loss — — — (49,021 ) (49,021 ) Balance, March 31, 2022 8,669 $ 9 $ 959,792 $ (1,100,381 ) $ (140,580 ) Shares issued for rounding up of fractional shares in connection with the reverse stock split 142 — — — — Shares issued for vested restricted stock units 44 — — — — Shares issued for sale of common stock related to employee stock purchase plan 5 — 14 — 14 Share-based compensation — — 2,219 — 2,219 Net income — — — 112,281 �� 112,281 Balance, June 30, 2022 8,860 $ 9 $ 962,025 $ (988,100 ) $ (26,066 ) Sale of common stock, net of costs 565 — 2,454 — 2,454 Shares issued for vested restricted stock units 42 — — — — Share-based compensation — — 4,306 — 4,306 Net loss — — — (28,965 ) (28,965 ) Balance, September 30, 2022 9,467 $ 9 $ 968,785 $ (1,017,065 ) $ (48,271 ) 3 Three Months Ended
March 31, 2024 2023 Cash flows from operating activities: Net loss $ (734 ) $ (3,603 ) Less: income (loss) from discontinued operations, net of tax 75 (1,293 ) Net loss from continuing operations (809 ) (2,310 ) Adjustments to reconcile net loss to net cash used in operating activities of continuing operations: Depreciation and amortization 133 27 Write-off of patents and trademarks — 59 Share-based compensation 111 483 Other 186 (60 ) Changes in operating assets and liabilities: Other assets 629 (19 ) Prepaid and other current assets 34 (1,453 ) Accounts payable 112 164 Accrued expenses and other current liabilities (413 ) (4,486 ) Lease liabilities (213 ) — Other non-current liabilities 1 (1,106 ) Total adjustments 580 (6,391 ) Net cash used in continuing operating activities (229 ) (8,701 ) Discontinued operations: Net cash provided by (used in) operating activities 240 (24,474 ) Net cash provided by financing activities — 1,106 Net cash provided by (used in) discontinued operations 240 (23,368 ) Net increase (decrease) in cash 11 (32,069 ) Cash and cash equivalents, beginning of period 4,327 49,317 Total cash and cash equivalents, end of period $ 4,338 $ 17,248 Nine Months Ended September 30, 2023 2022 Cash flows from operating activities: Net income (loss) $ (9,395 ) $ 34,295 Less: income (loss) from discontinued operations, net of tax (3,237 ) 81,674 Net loss from continuing operations (6,158 ) (47,379 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 285 884 59 — Share-based compensation 1,155 8,587 Other 525 (25 ) Changes in operating assets and liabilities: Other assets 1,185 — Prepaid and other current assets (1,241 ) 394 Accounts payable (1,466 ) (1,290 ) Accrued expenses and other current liabilities (11,918 ) 18,337 Lease liabilities (629 ) — 82 (385 ) Total adjustments (11,963 ) 26,502 Net cash used in continuing operating activities (18,121 ) (20,877 ) Cash flows from investing activities: Payment of patent related costs — (260 ) Purchase of fixed assets — (21 ) Net cash used in continuing investing activities — (281 ) Cash flows from financing activities: Proceeds from sale of common stock, net of costs 1,149 2,454 Proceeds from exercise of options and warrants — 14 Repayments of debt — (125,000 ) Payment of debt financing fees — (729 ) Net cash provided by (used in) continuing financing activities 1,149 (123,261 ) Discontinued operations: Net cash provided by (used in) operating activities (22,179 ) 117,573 Net cash provided by investing activities — 54 Net cash provided by financing activities — — Net cash provided by (used in) discontinued operations (22,179 ) 117,627 Net decrease in cash (39,151 ) (26,792 ) Cash, cash equivalents and restricted cash - continuing operations, beginning of period 49,317 65,122 Cash, cash equivalents and restricted cash - discontinued operations, beginning of period — — Total cash and restricted cash, end of period $ 10,166 $ 38,330 Supplemental disclosure of cash flow information: Interest paid $ — $ — Supplemental disclosure of noncash financing activities: Paid in kind (“PIK”) interest with corresponding increase in debt $ — $ 2,452 PIK debt financing fees with corresponding increase in debt $ — $ 16,980 Issue of warrants to lenders related to debt financing fees $ — $ 1,983 4(Unaudited)TherapeuticsMD®vitaMedMD®BocaGreenMD®vitaCareTM, IMVEXXY®BIJUVA®®, ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, these other parties.ANNOVERA®(togetherANNOVERA® (together with the Licensed Products, collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.5will reducereduced the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257 thousand per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment iswas paid to us. We and Mayne Pharma settled the $1.5 million of consideration due to Mayne Pharma for the assumed obligations under a long-term services agreement, (see the section entitled “vitaCare divestiture” below for a discussion of the long-term services agreement), including our minimum payment obligations thereunder.$0.9 payable.In July 2018, we entered into a license and supply agreement (the “Knight License Agreement”) with Knight Therapeutics Inc. (“Knight”) pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel.In September 2019, we entered into an exclusive license and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”) to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel. In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries.● ● In September 2019, we entered into an exclusive license and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”) to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel. In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries. arehave been paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 20222023 and September 30, 2023,March 31, 2024, we employed one full-time employee primarily engaged in an executive position.6vitaCare DivestitureOn April 14, 2022, we completed the divestiture of our former subsidiary vitaCare Prescription Services, Inc. (“vitaCare”) with the sale of all of vitaCare’s issued and outstanding capital stock (the “vitaCare Divestiture”). We received net proceeds of $142.6 million, after deducting transaction costs of $7.2 million, and we recognized a gain on sale of business of $143.4 million. Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the stock purchase agreement (the “Purchase Agreement”) which we received in 2023. Additionally, the Purchase Agreement provides that we may receive up to an additional$7.0 million inearn-outconsideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement; however, we do not believe this earnout will be realized. We will record the contingent consideration at the settlement amount if and when the consideration is realized or realizable.The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. The commitments under a long-term services agreement related to vitaCare were transferred to Mayne Pharma as part of the Mayne Transaction. In addition, under the Mayne License Agreement Amendment, we owed Mayne Pharma$1.5 million payable from one royalty payment. During the second quarter of 2023, Mayne Pharma held back our royalty payment and we funded an additional $0.9 million in August 2023 to settle the original $1.5 million payable.The divestiture of vitaCare was determined to be a component of discontinued operations in December 2022, when we changed our business by becoming a royalty company and as a result vitaCare activities were reclassified to discontinued operations for the nine months ended September 30, 2023 and 2022.COVID-19With multiple variant strains of theSARS-Cov-2virus and theCOVID-19disease that it causes (collectively,“COVID-19”)still circulating, we continue to be subject to risks and uncertainties in connection with theCOVID-19pandemic. The extent of the future impact of theCOVID-19pandemic on our business continues to be highly uncertain and difficult to predict.As of the date of issuance of these condensed consolidated financial statements, the future extent to which theCOVID-19pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain and difficult to predict. Even after theCOVID-19pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.On December 4, 2022, we entered into agreements with Mayne Pharma pursuant to which we granted Mayne Pharma an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products (in the United States and its possessions and territories), (ii) assign to Mayne Pharma our exclusive license to commercialize ANNOVERA in the United States and its possessions and territories, and (iii) sell certain other assets to Mayne Pharma.The total consideration from Mayne Pharma to TherapeuticsMD for the purchase of the Transferred Assets and the grant of the licenses under the Mayne License Agreement consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.7On the Closing Date, we repaid all obligations under the Financing Agreement, dated as of April 24, 2019, as amended, with Sixth Street Specialty Lending, Inc., as administrative agent, the various lenders fromtime-to-timeparty thereto, and certain of our subsidiaries party thereto from time to time as guarantors (the “Financing Agreement”) and the Financing Agreement was terminated.TheOn November 15, 2023, Rubric drew down an additional 877,192 shares of Common Stock issuedat a price per share equal to $2.2761. We received gross proceeds of $2.0 million from the drawdown, before expenses.SubscriptionTransaction Agreement was soldwhich differed significantly from the Company’s estimate of the allowances. The Company and issued without registrationMayne Pharma intend to resolve this matter through the dispute resolution process outlined in the Transaction Agreement. The Company continues to believe its estimated allowances for payer rebates and wholesale distributor fees are reasonable. The outcome of this matter is uncertain at this point. As a result, the Company cannot reasonably estimate a range of loss, and accordingly, the Company has not accrued any additional liability associated with Mayne Pharma’s allowance calculation for payer rebates and wholesale distributor fees.Securities Act of 1933,Transaction Agreement. The Company has not recorded any contingent gains or receivables for any such allowances. Management continues to monitor the unresolved and pending net working capital items as amended (the “Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule5-06of Regulation D promulgated under the Securities Act as saleschanges to accredited investors, and in reliance on similar exemptions under applicable state laws.IMVEXXY, BIJUVA, or ANNOVERALicensed Products grow more slowly than expected or decline, if the net working capital settlement with Mayne Pharma under the Transaction Agreement is greater than our current estimates, if we are unsuccessful with future financings or if the continued impact of theCOVID-19pandemic on us or the third-parties we or our licensees rely on or the supply chains related to the third-party contract manufacturers are worse than we anticipate, our existing cash reserves may be insufficient to satisfy our liquidity requirements. The potential impact of these factors in conjunction with the uncertainty of the capital markets raises substantial doubt about our ability to continue as a going concern for the next twelve months from the issuance of these financial statements. condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.20222023 Annual Report on Form(the “2022sheet.sheets. Additional disclosures regarding discontinued operations are provided in Note 2 of the condensed consolidated financial statements.82022New accounting standards or “s” were assessed 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.” ASU 2023-09 enhances the transparency and determined todecision usefulness of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 will be either not applicable or did not haveeffective for the Company in its income tax disclosure included in its 2025 Annual Report on Form 10-K and will be applied on a materialprospective basis. However, retrospective application is permitted. Early adoption is also permitted. The Company is evaluating the impact of ASU 2023-09 on our condensedthe Company’s income tax disclosures and on its consolidated financial statements or processes.Common stock reverse stock splitOn May 6, 2022, we completed a reverse stock split of our Common Stock. As a result, shares of our outstanding Common Stock were split at a ratio of50-for-1(the “Reverse Stock Split”) with any fractional shares resulting from the Reserve Stock Split rounded up to the next whole share of Common Stock. The number of authorized shares of Common Stock was also correspondingly reduced from 600.0 million shares to 12.0 million shares to give effect to the Reverse Stock Split. Additionally, all rights to receive shares of Common Stock under outstanding warrants, options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) were adjusted to give effect to the Reverse Stock Split. Furthermore, remaining shares of Common Stock available for future issuance under share-based payment award plans and our employee stock purchase plan were adjusted to give effect to the Reverse Stock Split. Pursuant to Section 78.209 of the Nevada Revised Statutes, the approval of our stockholders was not required for our Board of Directors to effectuate the Reverse Stock Split.All historical numbers of shares of Common Stock and per share data have been adjusted to give effect to the Reverse Stock Split. Additionally, since the Common Stock par value was unchanged, historical amounts for Common Stock and additionalpaid-incapital have been adjusted to give effect to the Reverse Stock Split.9accompanying notes to the consolidated financial statements included in our 20222023 10-K report.10-Kreport and in the section below.comprehensive incomeoperations for all periods As required by the terms of the Financing Agreement, proceeds from the Mayne Transaction and the VitaCare Divestiture were used to fully repay our outstanding debt borrowings, and as a result interest expense and amortization of deferred financing costs as well as expense for accretion of Series A Preferred Stock and loss on extinguishment of debt are included within income (loss) from discontinued operations, net of tax (as disclosed below).September 30, 2023March 31, 2024 and December 31, 2022.The total consideration from Mayne Pharma consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of $12.1 million for2023.subject to certain adjustments, (iii) a cash payment of approximately $1.0 million for prepaid royaltiesby Mayne Pharma was determined in connectionaccordance with the Mayne LicenseTransaction Agreement Amendment and (iv)included significant estimates which could change materially for a period of up to two years following the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.The determinationRefer to Note 6 for a further discussion of net working capital includes significant estimates which could change materially for a period of up to two years following the Closing Date. On March 29, 2023, we received Mayne Pharma’s closing net working capital calculation which differed significantly from our estimate of closing net working capital. We believe that our estimate of net working capital is reasonable and intend to resolve this matter through the process outlined in the Transaction Agreement. During the three months ended September 30, 2023, we revised certain estimates pertaining to contracts we were a party to when we were an operating company. These included an incremental accrual of approximately$2 million for net working capital adjustments related to the Transaction Agreement.10 Three Months Ended
March 31, 2024 2023 General and administrative expenses $ 55 $ 335 Total operating expenses 55 335 (55 ) (335 ) Other income (expense), net 130 (958 ) Total other income (expense), net 130 (958 ) Income (loss) from discontinued operations, net $ 75 $ (1,293 ) Three months ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Product revenue, net $ (833 ) $ 20,562 $ (833 ) $ 67,413 Cost of goods sold — 3,434 — 11,991 Gross profit (833 ) 17,128 (833 ) 55,422 Operating expenses: Selling and marketing — 19,129 — 61,703 General and administrative (39 ) 3,107 296 8,157 Research and development — 1,112 — 4,092 Depreciation & amortization — 8 — 36 Total operating expenses (39 ) 23,356 296 73,988 Operating loss from discontinued operations (794 ) (6,228 ) (1,129 ) (18,566 ) Other income (expense), net (1,150 ) (8,106 ) (2,108 ) 100,240 Total other income (expense), net (1,150 ) (8,106 ) (2,108 ) 100,240 Net income (loss) from discontinued operations $ (1,944 ) $ (14,334 ) $ (3,237 ) $ 81,674 September 30, 2023March 31, 2024 and December 31, 20222023 (in thousands): March 31,
2024 December 31,
2023 Assets: Accounts receivable $ 94 $ 344 Liabilities: Accrued expenses and other current liabilities $ 3,609 $ 3,694 September 30, 2023 December 31, 2022 Liabilities: Current liabilities: Accounts payable $ 113 $ 12,243 Accrued expenses and other current liabilities 6,775 13,588 Total current liabilities $ 6,888 $ 25,831 September 30, 2023March 31, 2024 and December 31, 20222023 (in thousands): September 30, 2023 December 31, 2022 Insurance $ 632 $ 1,167 Rent receivable 429 — Capitalized legal 2,334 2,334 Other 1,175 2,533 Prepaid and other current assets $ 4,570 $ 6,034 11 March 31,
2024 December 31,
2023 Insurance $ 231 $ 253 Capitalized legal 2,334 2,334 Other 1,304 1,448 Prepaid and other current assets $ 3,869 $ 4,035 Fixed assetsOur fixed assets, net consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Furniture and fixtures $ 931 $ 931 Computer and office equipment 1,167 1,168 Computer software 375 375 Leasehold improvements 49 49 Fixed assets 2,522 2,523 Less: accumulated depreciation and amortization (2,503 ) (2,445 ) Fixed assets, net $ 19 $ 78 We recorded, in continuing operations, depreciation expense of $0.0 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively, and depreciation expense of $0.0 million and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively.5. Licensed rights and other intangible assetsSeptember 30, 2023March 31, 2024 and December 31, 20222023 (in thousands): September 30, 2023 December 31, 2022 Gross
Carrrying
Amount Accumulated
Amortization Net Gross
Carrrying
Amount Accumulated
Amortization Net Intangible assets subject to amortization: Hormone therapy drug patents $ 6,224 $ 1,824 $ 4,400 $ 6,225 $ 1,598 $ 4,627 Hormone therapy drug patents applied and pending approval 1,936 — 1,936 1,995 — 1,995 Intangible assets subject to amortization 8,160 1,824 6,336 8,220 1,598 6,622 Intangible assets not subject to amortization: Trademarks/trade name rights 321 — 321 321 — 321 License rights and other intangible assets, net $ 8,481 $ 1,824 $ 6,657 $ 8,541 $ 1,598 $ 6,943 March 31, 2024 December 31, 2023 Gross Carrying
Amount Accumulated
Amortization Net Gross Carrying
Amount Accumulated
Amortization Net Intangible assets subject to amortization: Hormone therapy drug patents $ 6,819 $ 2,004 $ 4,815 $ 6,818 $ 1,871 $ 4,947 Hormone therapy drug patents applied and pending approval 841 — 841 842 — 842 Intangible assets subject to amortization 7,660 2,004 5,656 7,660 1,871 5,789 Intangible assets not subject to amortization: Trademarks/trade name rights 309 — 309 309 — 309 License rights and other intangible assets, net $ 7,969 $ 2,004 $ 5,965 $ 7,969 $ 1,871 $ 6,098 $0.1 million$133 thousand and $0.1 million$7 thousand for the three months ended September 30,March 31, 2024 and 2023, and 2022respectively.,respectively, and amortization expense related to patents of $0.2 million and $0.4 million for the nine months ended September 30, 2023 and 2022,respectively.Year ending December 31, 2023 $ 110 2024 439 2025 438 2026 438 2027 438 Thereafter 2,537 Total $ 4,400 12Year ending December 31, 2024 $ 400 2025 445 2026 445 2027 445 2028 446 Thereafter 2,634 Total $ 4,815 6. March 31,
2024 December 31,
2023 Payroll and related costs $ 538 $ 762 Professional fees 325 489 Operating lease liabilities 1,483 1,473 Other accrued expenses and current liabilities 374 409 Accrued expenses and other current liabilities $ 2,720 $ 3,133 September 30, 2023 December 31, 2022 Payroll and related costs $ 332 $ 8,748 Accrued contract termination costs 1,632 4,700 Research and development expenses — 978 Professional fees 273 415 Operating lease liabilities 1,464 1,390 Prepaid royalty — 1,011 Other accrued expenses and current liabilities 3,227 1,604 Accrued expenses and other current liabilities $ 6,928 $ 18,846 7.and such payment is subjectcalls for much of the net working capital to certain adjustmentsbe trued-up shortly after the Closing Date in 2023, for a period of up to two yearsDate. DuringDate in the three months endedcase of payer rebates and wholesale distributor fees and two years following the Closing Date in the case for allowance for returns, net working capital amounts will be adjusted to arrive at final net working capital under the Transaction Agreement. 30, 2023, we revisedincreased certain estimates;accrual estimates including an incrementalincreasing our working capital adjustment accrual of approximately$2adjustments relatedallowances remaining to be trued up..Pursuant to which establishes the process for the determination of net working capital. In February 2024, the Company received Mayne License Agreement Amendment,Pharma’s calculation of allowance for payer rebates and wholesale distributor fees which differed significantly from the Company’s estimate of the allowances. The Company and Mayne Pharma also paid us approximately $1.0 millionintend to resolve this matter through the dispute resolution process outlined in prepaid royalties on the Closing Date. Transaction Agreement.prepaid royalties will reduceCompany believes its estimated allowances for payer rebates and wholesale distributor fees are reasonable. The timing and outcome of this matter is uncertain at this point. As a result, the first four quarterly paymentsCompany cannot reasonably estimate a range of loss, and accordingly, the Company has not accrued any additional liability associated with Mayne Pharma’s allowance calculation for payer rebates and wholesale distributor fees.would have otherwise been payable pursuantmay be owed for the allowance for returns. The Company has not recorded any contingent gains or receivables for any such allowances. Management continues to monitor the Mayne License Agreement by an amount equalunresolved and pending net working capital items as changes to $257,250 per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment is paid to us.Additionally, weestimated amounts owed Mayne Pharma$1.5 million payable from one royalty payment. During the second quarter of 2023, Mayne Pharma held back our royalty payment and we funded an additional$0.9million in August 2023 to settle the original$1.5 millionpayable. We recognized $(0.1) million and $0.8 million in royalty revenuesor amounts due from Mayne Pharma during the three and nine months ended September 30, 2023, respectively.13$2.3 million$2,334 thousand in prepaid expenses and other current assets as of September 30, 2023,March 31, 2024, for the IMVEXXY Paragraph IV legal proceeding since we believe that we will successfully prevail in this legal proceeding. Upon the successful conclusion of the legal proceeding, the related capitalized legal costs will be reclassified to patents, in license rights and other intangible assets, net, in the accompanying condensed consolidated balance sheets, and such costs will be amortized over the remaining useful life of the patents. If we are unsuccessful in this legal proceeding, then the related capitalized legal costs for this legal preceding and any unamortized IMVEXXY patent costs that were previously capitalized will be immediately expensed in the period in which we become aware of an unsuccessful legal proceeding.In September 2023, one of our former contractors retained to market Annovera under Title X, filed a lawsuit that accused us of breach of contract. We answered their complaint and filed breach of contract counterclaims.September 30, 2023March 31, 2024 and December 31, 2022 we had2023 there were noSeptember 30, 2023,March 31, 2024, we employ one full-time employee primarily engaged in an executive position. We have engaged external consultants who support our relationship with current partners and assist with certain financial, legal, and regulatory matters and the continued wind-down of our historical business operations. The separation of our former InterimCo-ChiefExecutive Officers, former Interim Chief Financial Officer and other executives from TherapeuticsMD was each a termination without “Good Cause,” as defined in their respective employment agreements. In the aggregate, as of September 30, 2023,March 31, 2024, we have accrued severance liabilities for executive termination obligations of $1.6 million.$169 thousand.148. (deficit)September 30, 2023,March 31, 2024, the following table summarizes the status of our outstanding and exercisable warrants and related transactions since December 31, 20222023 (in thousands, except weighted average exercise price and weighted average remaining contractual life data): Warrants Outstanding and exercisable Warrants Weighted Average
Exercise Price Aggregate Intrinsic Value Weighted Average
Remaining Contractual
Life (in Years) As of January 1, 2022 536 $ 13.10 $ 2,427 9.3 Exercised (435 ) — (634 ) (4.5 ) Expired (2 ) — — — As of September 30, 2023 99 $ 66.61 $ 1,793 6.5 Warrants Outstanding and exercisable Warrants Weighted
Average Exercise
Price Aggregate
Intrinsic
Value Weighted
Average
Remaining
Contractual Life
(in Years) As of January 1, 2024 99 $ 66.61 $ — 6.5 As of March 31, 2024 99 $ 66.61 $ — 6.3 September 30, 2023, 382,207March 31, 2024, 112,699 shares of common stock were subject to outstanding awards under our share-based payment award plans and inducement grants (calculated using the base number of PSUs that may vest). As of September 30, 2023, 392,504March 31, 2024, 394,669 shares of common stock were available for future grants of share-based payment awards under the TherapeuticsMD, Inc. 2019 Stock Incentive Plan.(each adjusted to account for the Reverse Stock Split) since December 31, 20222023 (in thousands, except weighedweighted average exercise price and weighted average remaining contractual life data): Outstanding Exercisable Options
Awards Weighted
Average
Exercise
Price Aggregate
Intrinsic
Value Weighted
Average
Remaining
Contractual
Life
(in Years) Options
Awards Weighted
Average
Exercise
Price Aggregate
Intrinsic
Value Weighted
Average
Remaining
Contractual
Life
(in Years) As of January 1, 2023 172 $ 228.28 — 3.6 170 $ 229.43 — 3.6 Granted — — — — — — — — Exercised — — — — — — — — Cancelled/Forfeited — — — — — — — — Expired (92 ) 206.54 — — (90 ) 206.54 — — As of September 30, 2023 80 $ 253.31 — 3.2 80 $ 253.31 — 3.2 Outstanding Exercisable Options
Awards Weighted
Average
Exercise
Price Aggregate
Intrinsic
Value Weighted
Average
Remaining
Contractual
Life
(in Years) Options
Awards Weighted
Average
Exercise
Price Aggregate
Intrinsic
Value Weighted
Average
Remaining
Contractual
Life
(in Years) As of January 1, 2024 72 $ 258.55 $ — 3.0 73 $ 258.46 $ — 3.0 Expired (3 ) 252.50 — — — — — — As of March 31, 2024 69 $ 258.80 $ — 2.9 70 $ 258.69 $ — 2.9 (each adjusted to account for the Reverse Stock Split) since December 31, 20222023 (in thousands, except weighedweighted average grant date fair value): RSUs awards outstanding RSUs Weighted
Average
Grant Date
Fair Value Aggregate
Intrinsic
Value As of January 1, 2023 57 $ 14.57 $ 318.63 Granted 163 4.82 — Vested (136 ) — — Cancelled/Forfeited — — — Unvested as of September 30, 2023 84 $ 8.12 $ 253.67 15 RSUs awards outstanding RSUs Weighted
Average
Grant Date
Fair Value Aggregate
Intrinsic
Value As of January 1, 2024 40 $ 9.67 $ 89.60 Vested (2 ) 23.42 — As of March 31, 2024 38 $ 9.01 $ 86.39 for each for the following years (each adjusted to account for the Reverse Stock Split) since December 31, 20222023 (in thousands, except weighedweighted average grant date fair value): Outstanding PSUs (1) Weighted
Average
Grant Date
Fair Value Aggregate
Intrinsic
Value Unvested as of January 1, 2023 19 $ 52.15 $ 107.55 Granted — — — Vested (5 ) — — Cancelled/Forfeited — — — Unvested, as of September 30, 2023 14 $ 50.87 $ 43.71 Outstanding PSUs (1) Weighted
Average
Grant Date
Fair Value Aggregate
Intrinsic
Value Unvested, as of January 1, 2024 14 $ 50.87 $ 32.57 Vested (7 ) 60.50 16.16 Cancelled/Forfeited (2 ) 58.68 — Unvested, as of March 31, 2024 5 $ 34.50 $ 11.92 (1) The number of PSUs represents the base number of PSUs that may vest. $0.2 million$111 thousand and $4.3 million$483 thousand for the three months ended September 30,March 31, 2024 and 2023, and 2022,respectively, and $1.2 million and $8.5 million for the nine months ended September 30, 2023 and 2022,September 30, 2023,March 31, 2024, we had $0.4 million$177 thousand of unrecognized share-based payment award compensation cost related to unvested options, RSUs and PSUs as well as shares issuable under our ESPP, which may be adjusted for future changes in forfeitures and is included as additionalSeptember 30, 2023March 31, 2024 of $0.4 million$177 thousand is expected to be recognized as share-based payment award compensation over a weighted average period of 0.60.7 years.9.16We reported revenue of ($0.1) million in the third quarter of 2023 due to changes in estimates of revenue amounting to ($0.3) million subject to royalty due to TXMD by Mayne. Additionally, a portion of this adjustment is due to reallocations of revenue to other income (expense). On a quarterly basis, we reallocate royalty revenue proportionately between operating revenue for the amounts related to our licensed intellectual property and other income for royalties related to intellectual property we sold.10.Incomeninethree months ended September 30,March 31, 2024 and 2023, and 2022, (ii) additional losses expected for the remainder of 20232024 or losses recorded in 2022,2023, or (iii) net operating losses carry forwards from prior years.ninethree months ended September 30, 2023March 31, 2024 and 2022.2023. Accordingly, there were no provisions for income taxes for the ninethree months ended September 30, 2023March 31, 2024 and 2022.2023. Additionally, as of September 30, 2023March 31, 2024 and December 31, 2022,2023, we maintain a full valuation allowance for all deferred tax assets.11.(each adjusted to account for the Reverse Stock Split) for the periods presented (in thousands, except per share amounts): Three Months Ended
March 31, 2024 2023 Numerator: Net loss from continuing operations $ (809 ) $ (2,310 ) Income (loss) from discontinued operations, net of income taxes 75 (1,293 ) Net loss $ (734 ) $ (3,603 ) Denominator: Weighted average common shares for basic loss per common share 11,532 9,754 Effect of dilutive securities — — Weighted average common shares for diluted loss per common share 11,532 9,754 Income (loss) per common share, continuing operations Basic $ (0.07 ) $ (0.24 ) Diluted $ (0.07 ) $ (0.24 ) Income (loss) per common share, discontinued operations Basic $ 0.01 $ (0.13 ) Diluted $ 0.01 $ (0.13 ) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (loss) from continuing operations $ (1,434 ) $ (14,631 ) $ (6,158 ) $ (47,379 ) Net income (loss) from discontinued operations (1,944 ) (14,334 ) (3,237 ) 81,674 Net income (loss) $ (3,378 ) $ (28,965 ) $ (9,395 ) $ 34,295 Denominator: Weighted average common shares for basic loss per common share 10,701 9,261 10,241 8,877 Effect of dilutive securities — — — — Weighted average common shares for diluted loss per common share 10,701 9,261 10,241 8,877 Basic $ (0.13 ) $ (1.58 ) $ (0.60 ) $ (5.34 ) Diluted (0.13 ) (1.58 ) (0.60 ) (5.34 ) Basic $ (0.18 ) $ (1.55 ) $ (0.32 ) $ 9.20 Diluted (0.18 ) (1.55 ) (0.32 ) 9.20 ninethree months ended September 30,March 31, 2024 and 2023, and 2022, our potentially dilutive securities are deemed to be anti-dilutive, accordingly, there was no effect of dilutive securities. Therefore, our basic and diluted loss per common share and our basic and diluted weighted average common shares are the same for the ninethree months ended September 30, 2023March 31, 2024 and 2022.17ninethree months ended September 30,March 31, 2024 and 2023 and 2022 (in thousands): As of March 31, 2024 2023 Stock options 69 103 RSUs 38 177 PSUs 5 19 Warrants 99 225 211 524 September 30, 2023 2023 2022 Stock options 80 197 RSUs 84 301 PSUs 14 100 Warrants 99 411 277 1,009 12.2022,2023, filed with the Securities and Exchange Commission on May 1, 2023,April 29, 2024, but he has elected not to receive any compensation for his service as ashare.share and also paid certain affiliates of Rubric approximately $3.0 million as a make-whole payment pursuant to the subscription agreements previously entered into between us and Rubric. On June 29, 2023, we issued and sold 312,525 shares of Common Stock to Rubric at a price per share equal to $3.6797 pursuant to the Subscription Agreement and received gross proceeds of $1.15 million, before expenses. On November 15, 2023 Rubric drew down an additional 877,192 shares of Common Stock at a price per share equal to $2.2761. We received gross proceeds of $2.0 million from the drawdown, before expenses.13.and nine months ended September 30, 2023,March 31, 2024, 100% of license revenue related to Mayne Pharma, Theramex and Theramex.September 30, 2023,March 31, 2024, we had a royalty receivable of $2.7 million$3,222 thousand relating to the short-term portion of receivable from Mayne Pharma, and Theramex and $19.1 millionKnight and $17,855 thousand relating to the long-term portion of royalty receivable which includes royalties recognized from the minimum annual royalty that Mayne Pharma is obligated to pay to us under the Mayne License Agreement.Agreement.14. Subsequent eventsOn November 10, 2023, we delivered a drawdown notice (the “Notice”) to Rubric under the terms of the Subscription Agreement. Pursuant to the Notice, we agreed to sell 877,192 shares of Common Stock to Rubric at a price per share of $2.28, for total gross proceeds of approximately $2.0 million. The settlement of the transaction is expected to occur on the third trading day following the delivery of the Notice in accordance with the terms of the Subscription Agreement.1820222023 Annual Report on Form 10-K (“2022 2023 10-K Report”), and the condensed consolidated financial statements and related notes in Item 1, Financial Statements, appearing elsewhere in this Quarterly Report on Form 10-Q (“10-Q Report”). The following discussion may contain forward-looking statements, and our actual results may differ materially from the results suggested by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2022 2023 10-K Report under the heading “Risk Factors.” We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.2022 2023 10-K Report, as updated and supplemented by Part II, Item 1A of this 10-Q Report.19will reducereduced the first four quarterly payments that would have otherwise been receivedpayable pursuant to the Mayne License Agreement by an amount equal to $257 thousand per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment iswas paid to TherapeuticsMD. In addition, under the Mayne License Agreement Amendment, we owedus. We and Mayne Pharma settled the $1.5 million payable from one royalty payment. Duringof consideration due to Mayne for the assumed obligations under a long-term services agreement, including our minimum payment obligations thereunder. As the parties agreed, during the second quarter of 2023, Mayne PharmaParma held back our royalty payment of $0.6 million and we funded an additional $0.9 million in August 2023 to settle the original $1.5 million payable.comprehensive incomeoperations for all periods presented. See Note 2 -– Discontinued Operations to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.In July 2018, we entered into a license and supply agreement (the “Knight License Agreement”) with Knight Therapeutics Inc. (“Knight”) pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel.● In July 2018, we entered into a license and supply agreement (the “Knight License Agreement”) with Knight Therapeutics Inc. (“Knight”) pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel. Knight obtained regulatory approval for IMVEXXY and BIJUVA and began commercialization efforts in 2024. 20● In September 2019, we entered into an exclusive license and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”) to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel. In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries. In September 2019, we entered into an exclusive license and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”) to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel. In 2021, Theramex secured regulatory approval for BIJUVA in certain European countries and began commercialization efforts in those countries.will behave been paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 20222023 and September 30, 2023,March 31, 2024, we employed one full-time employee primarily engaged in an executive position. We have engaged external consultants, including certain former members of our management team, who support our relationship with current partners and assist with certain financial, legal and regulatory matters and the continued wind-down of our historical business operations.vitaCare DivestitureOn April 14, 2022, we completed the divestiture of vitaCare Prescription Services, Inc. (“vitaCare”) with the sale of all vitaCare’s issued and outstanding capital stock (the “vitaCare Divestiture”). We received net proceeds of $142.6 million, net of transaction costs of $7.2 million, and we recognized a gain on sale of business of $143.4 million. Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the stock purchase agreement between us and GoodRx, Inc. (the “Purchase Agreement”), which was recorded as restricted cash in the condensed consolidated balance sheets until the cash was released to us. The restricted cash was held by an escrow agent and was released to us in March 2023. Additionally, we may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement, however we do not believe this earnout will be realized. We will record the contingent consideration at the settlement amount when the consideration is realized or realizable.The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. Our commitments under a long-term services agreement related to vitaCare were transferred to Mayne Pharma as part of the Mayne Transaction. In addition, under the Mayne License Agreement Amendment, we owed Mayne Pharma $1.5 million payable from one royalty payment. During the second quarter of 2023, Mayne Pharma held back our royalty payment and we funded an additional $0.9 million in August 2023 to settle the original $1.5 million payable.The pre-divesture operations of vitaCare were reclassified to discontinued operations in December 2022 when we transitioned to becoming a royalty company and licensed our products to Mayne Pharma.COVID-19With multiple variant strains of the SARS-Cov-2 virus and the COVID-19 disease that it causes (collectively, “COVID-19”) still circulating, we continue to be subject to risks and uncertainties in connection with the COVID-19 pandemic. The extent of the future impact of the COVID-19 pandemic on our business continues to be highly uncertain and difficult to predict.As of the date of the filing of this 10-Q Report, the future extent to which the COVID-19 pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain and difficult to predict. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.On December 4, 2022, we entered into agreements with Mayne Pharma pursuant to which we (i) granted Mayne Pharma an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products (in the United States and its possessions and territories), (ii) assigned to Mayne Pharma our exclusive license to commercialize ANNOVERA in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma.21The total consideration we received from Mayne Pharma for the purchase of the Transferred Assets and the grant of the licenses under the Mayne License Agreement consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.On the Closing Date, we repaid all obligations under the Financing Agreement, dated as of April 24, 2019, as amended, with Sixth Street Specialty Lending, Inc., as administrative agent, the various lenders from time-to-time party thereto, and certain of our subsidiaries party thereto from time to time as guarantors (the “Financing Agreement”) and the Financing Agreement was terminated.we changed our business to become a royalty company, currently receivingprimary source of revenue is from royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. We may need to raise additional capital to provide additional liquidity to fund our operations until we become cash flow positive. To address our capital needs, we are pursuingmay pursue various equity and debt financing and other alternatives. The equity financing alternatives may include the private placement of equity, equity-linked, or other similar instruments or obligations with one or more investors, lenders, or other institutional counterparties or an underwritten public equity or equity-linked securities offering.the election of the Company.our election. On June 29, 2023, we issued and sold 312,525 shares of Common Stock at a price per share equal to $3.6797 pursuant to the Subscription Agreement. We received gross proceeds of $1.15 million from the draw down, before expenses. TheOn November 15, 2023 Rubric drew down an additional 877,192 shares of Common Stock issued pursuantat a price per share equal to $2.2761. We received gross proceeds of $2.0 million from the Subscriptiondrawdown, before expenses.was soldcalls for much of the net working capital to be trued-up shortly after the Closing Date in 2023, for a period of one year following the Closing Date in the case of payer rebates and issued without registrationwholesale distributor fees and two years following the Closing Date in the case for allowance for returns, net working capital amounts will be adjusted to arrive at final net working capital under the Securities Act of 1933, as amended (the “Securities Act”), in reliance onTransaction Agreement.exemptions provided by Section 4(a)(2)Transaction Agreement. In December 2023, we made a $5.5 million payment to Mayne Pharma to settle certain working capital amounts that were required to be trued-up shortly after the Closing Date, excluding the allowance for returns, allowance for payer rebates, and allowance for wholesale distributor fees.Securities Act as transactionsallowance for payer rebates and wholesale distributor fees was determined in accordance with the Transaction Agreement which establishes the process for the determination of net working capital. In February 2024, the Company received Mayne Pharma’s calculation of allowance for payer rebates and wholesale distributor fees which differed significantly from the Company’s estimate of the allowances. The Company and Mayne Pharma intend to resolve this matter through the dispute resolution process outlined in the Transaction Agreement.involving a public offeringaccrued any additional liability associated with Mayne Pharma’s allowance calculation for payer rebates and Rule 5-06wholesale distributor fees.Regulation D promulgatedMarch 31, 2024, the Company believes no additional accrual is required for amounts that may be owed for the allowance for returns under the Securities ActTransaction Agreement. The Company has not recorded any contingent gains or receivables for any such allowances. Management continues to monitor the unresolved and pending net working capital items as saleschanges to accredited investors, and in reliance on similar exemptions under applicable state laws.estimated amounts owed or amounts due from Mayne Pharma may be material.IMVEXXY, BIJUVA,Licensed Products grow more slowly than expected or ANNOVERA are delayed,decline, if the net working capital settlement with Mayne Pharma under the Transaction Agreement is greater than our current estimates, if we are unsuccessful with future financings or if the continued impact ofsupply chains related to the COVID-19 pandemic on us or the third parties we rely on isthird-party contract manufacturers are worse than we anticipate, our existing cash reserves may be insufficient to satisfy our liquidity requirements. The potential impact of these factors in conjunction with the uncertainty of the capital markets raises substantial doubt about our ability to continue as a going concern for the next twelve months from the issuance of these financial statements. condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.22 As part of the FDA’s approval of IMVEXXY, we committed to conduct a post-approval observational study to evaluate the risk of endometrial cancer in post-menopausal women with a uterus who use a low-dose vaginal estrogen unopposed by a progestogen.September 30, 2023,March 31, 2024, no IMVEXXY sales had been made through the Theramex and Knight licensing agreements.agreement.The FDA has also asked the sponsors of other vaginal estrogen products to participate in the observational study. In connection with the observational study, we would have been required to provide progress reports to the FDA on an annual basis. The obligation to conduct this study was transferred to Mayne Pharma as part of the Mayne License Agreement. As part of the approval of ANNOVERA, the FDA has required a post-approval observational study be performed to measure the risk of venous thromboembolism. We agreed to perform and pay the costs and expenses associated with this post-approval study, provided that if the costs and expenses associated with such post-approval study exceed $20.0 million, half of such excess will offset against royalties or other payments owed by us under the Population Council License Agreement. In August 2021, we filed a supplemental New Drug Application (“NDA”) with the FDA to modify the testing specifications for ANNOVERA to allow increased consistency of supply of ANNOVERA. In May 2022, the FDA approved the supplemental NDA for ANNOVERA. Our obligations to perform the post-approval study have been transferred to Mayne Pharma as part of the Mayne License Agreement.23September 30, 2023March 31, 2024 compared with three months ended September 30, 2022March 31, 2023In December 2022, we granted an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products and assigned our exclusive license to commercialize ANNOVERA to Mayne Pharma, which resulted in a business shift that had a major effect on our operations and financial results. Three months ended September 30, 2023 2022 $ (53 ) $ 354 — 354 (53 ) — 1,590 14,246 130 273 1,720 14,519 (1,773 ) (14,519 ) (20 ) — 359 (112 ) 339 (112 ) (1,434 ) (14,631 ) — — (1,434 ) (14,631 ) (1,944 ) (14,334 ) $ (3,378 ) $ (28,965 ) Three Months Ended
March 31, 2024 2023 Revenue: License and service revenue $ 313 $ 416 Operating expenses: Selling, general and administrative 1,322 3,056 Depreciation and amortization 133 27 Total operating expenses 1,455 3,083 Loss from operations (1,142 ) (2,667 ) Other income (expense): Interest expense and other financing costs — (50 ) Miscellaneous income (expense) 333 407 Total other income, net 333 357 Loss from continuing operations before income taxes (809 ) (2,310 ) Provision for income taxes — — Net loss from continuing operations (809 ) (2,310 ) Income (loss) from discontinued operations, net of income taxes 75 (1,293 ) Net loss $ (734 ) $ (3,603 ) 24License and service revenue.$(0.1) million$313 thousand in license revenue for the thirdfirst quarter of 2023,2024, primarily from the Mayne License Agreement, offset by adjustments described below in the third quarter of 2023, compared to $0.4 million$416 thousand in sales to another licenseelicense revenue from the Mayne License Agreement for the third quarter of 2022.We report royalty revenue in excess of the contractual minimums each quarter totaling approximately $0.1 million in the thirdfirst quarter of 2023. Royalties reported as license revenue for intellectual propertyThe decrease is primarily attributable to changes in sales of licensed by us totaled approximately $(0.1) million and royalties reported as other income for intellectual property we sold totaled approximately $0.1 million in the third quarter of 2023.products.We are reporting license revenue of ($0.1) million in the third quarter of 2023 due to product sales adjustments reported by our licensed partners amounting to ($0.2) million. Additionally, a portion of this adjustment is due to reallocations of license revenue to other income (expense). On a quarterly basis, we reallocate royalty revenue proportionately between operating revenue for the amounts related to our licensed intellectual property and other income for royalties related to intellectual property we sold.thirdfirst quarter of 20232024 were $1.7 million,$1,455 thousand, a decrease of $12.8 million,$1,628 thousand, or 88.2%52.8%, compared to the thirdfirst quarter of 2022.2023. This decrease was due to the transitiondown-sizing of our business from a manufacturing and commercialization businessfollowing our transition to a royalty-based business with limited infrastructure.business.$1.6 million$1,322 thousand for the thirdfirst quarter of 2023,2024, a decrease of $12.7 million,$1,734 thousand, or 88.8%56.7%, compared to the thirdfirst quarter of 2022.2023. This decrease was due to the transition ofincreased efficiencies realized following our business from a manufacturing and commercialization businesstransition to a royalty-based business.$0.1 million$133 thousand for the thirdfirst quarter of 2023, a decrease2024, an increase of $0.1 million,$106 thousand, or 52.4%392.6%, compared to the thirdfirst quarter of 2022. This decrease was due to the transition2023. In 2024, this balance is entirely comprised of our business from a manufacturingamortization of license rights and commercialization business to a royalty-based business.intangible assets.thirdfirst quarter of 2023,2024, we had a loss from operations of $1.8 million,$1,142 thousand, as compared to a loss from operations of $14.5 million$2,667 thousand for the thirdfirst quarter of 2022.2023. This change was primarily due toreflects the transitionstreamlining of our business from a manufacturing and commercialization business toincreased efficiencies realized as a royalty-based business and the associated decrease in expenses.business.net. net. During the thirdfirst quarter of 2023,2024, we had other income of $0.3 million$333 thousand compared to other expenseincome of $0.1 million$357 thousand in the thirdfirst quarter of 2022.2023. This change was due to thereflects our transition of our business from a manufacturing and commercialization business to a royalty-based business. Royalties reported as other income for intellectual property we soldlicensed by us totaled approximately $0.1 million$295 thousand in the thirdfirst quarter of 2023.2024.thirdfirst quarter of 20232024 and 2022,2023, we recorded no provision for income taxes for continuing operations.thirdfirst quarter of 2023,2024, we had a net loss of $1.4 million,$809 thousand, or $0.13$0.07 per basic and diluted common share, compared to a net loss of $14.6 million,$2,310 thousand, or $1.58$0.24 per basic and diluted common share, for the thirdfirst quarter of 2022.2023. RevenuesNet income from discontinued operations were $(0.8) millionwas $75 thousand for the thirdfirst quarter of 2023, a decrease of $21.4 million as2024, compared to the third quarter of 2022. Operating expensesa net loss from discontinued operations were $0.0 million inof $1,293 thousand for the thirdfirst quarter of 2023, a decrease2023. This change reflects the continued wind-down of $23.4 million, as compared to the third quarter of 2022. Net income (loss) from discontinued operations for the third quarter of 2023 was $1.9 million, a decrease of $12.4 million as compared to the third quarter of 2022.our legacy business.Results of operationsNine months ended September 30, 2023 compared with nine months ended September 30, 2022In December 2022, we granted an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products and assigned our exclusive license to commercialize ANNOVERA to Mayne Pharma, which resulted in a business shift that had a major effect on our operations and financial results.25As part of the transformation that included the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in our condensed consolidated financial statements for all periods prior to the Closing Date. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2 to the condensed consolidated financial statements included in this Quarterly Report.The discussion below, and the revenues and expenses discussed below, are based on and relate to our continuing operations.The following table sets forth the results of our operations (in thousands): Nine months ended September 30, 2023 2022 $ 800 $ 1,397 — 1,397 800 — 7,427 46,367 285 884 7,712 47,251 (6,912 ) (47,251 ) (115 ) — 869 (128 ) 754 (128 ) (6,158 ) (47,379 ) — — (6,158 ) (47,379 ) (3,237 ) 81,674 $ (9,395 ) $ 34,295 Revenue. As part of our transformation and the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the condensed consolidated financial statements for all periods presented.License and service revenue. We recorded $0.8 million in license revenue for the first nine months of 2023, primarily from the Mayne License Agreement partially offset by adjustments described below, compared to $1.4 million in sales to another licensee during the first nine months of 2022.We report royalty revenue in excess of the contractual minimums each quarter totaling approximately $1.0 million year-to-date. Royalties reported as license revenue for intellectual property licensed by us totaled approximately $0.5 million and royalties reported as other income for intellectual property we sold totaled approximately $0.5 million year-to-date. On a quarterly basis, we reallocate royalty revenue proportionately between operating revenue for the amounts related to our licensed intellectual property and other income for royalties related to intellectual property we sold.Operating expenses. Total operating expenses for the first nine months of 2023 were $7.7 million, a decrease of $39.5 million, or 83.7%, compared to the first nine months of 2022. This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business with limited infrastructure.26Selling, general and administrative. Selling, general and administrative expenses were $7.4 million for the first nine months of 2023, a decrease of $38.9 million, or 84.0%, compared to the first nine months of 2022. This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business.Depreciation & amortization. Depreciation and amortization expenses were $0.3 million for the first nine months of 2023, a decrease of $0.6 million, or 67.8%, compared to the first nine months of 2022. This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business.Loss from operations. For the first nine months of 2023, we had a loss from operations of $6.9 million, as compared to a loss from operations of $47.3 million, for the first nine months of 2022. This change was primarily due to the transition of our business from a manufacturing and commercialization business to a royalty-based business and the associated decrease in expenses.Other income (expense), net. During the first nine months of 2023 we had other income of $0.8 million as compared to a other expense of $0.1 million during the first nine months of 2022. This increase was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business. Other income represents interest income from banks accounts as well the present value of the minimum royalty receivables recorded compared to actual minimum royalties received and other miscellaneous items.Provision for income taxes. During the first nine months of 2023 and 2022, we recorded no provision for income taxes for continuing operations.Net loss from continuing operations. For the first nine months of 2023, we had a net loss of $6.2 million, or $0.60 per basic and diluted common share, compared to a loss of $47.4 million, or $5.34 per basic and diluted common share, for the first nine months of 2022.Discontinued Operations - Revenues from discontinued operations were $(0.8) million for the first nine months of 2023, a decrease of $68.2 million as compared to the first nine months of 2022. Operating expenses from discontinued operations were $0.3 million for the first nine months of 2023, a decrease of $73.7 million, as compared to the first nine months of 2022. Net loss from discontinued operations for the first nine months of 2023 was $3.2 million, a decrease of $84.9 million as compared to the first nine months of 2022.For additional information, see Note 2 - Discontinued Operations, in the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report.September 30, 2023,March 31, 2024, we had cash and cash equivalents totaling $10.2 million.$4,338 thousand. We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation insured limits of $0.25 million$250 thousand per bank. We have never experienced any losses related to these funds.vitaCare DivestitureOn April 14, 2022, we completed the vitaCare Divestiture. We may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement, however we do not believe this earnout will be realized. We utilized $120.0 million of net proceeds from the vitaCare Divestiture to make a prepayment of the loans under the Financing Agreement.27During the three months ended September 30, 2023, we revised certain estimates pertaining to contracts we were a party to when we were an operating company. These included an incremental accrual of approximately $2 million for net working capital adjustments related to the Transaction Agreement. Nine Months Ended September 30, 2023 2022 $ (18,121 ) $ (20,877 ) — (281 ) 1,149 (123,261 ) (22,179 ) 117,627 $ (39,151 ) $ (26,792 ) Three Months Ended
March 31, 2024 2023 Net cash used in operating activities $ (229 ) $ (8,701 ) Net cash provided by (used in) discontinued operations 240 (23,368 ) Net increase (decrease) in cash $ 11 $ (32,069 ) 28operations. operations. For the first ninethree months of 2023,2024, net cash used in operating activities was $18.1 million,$229 thousand, compared to net cash used in operating activities of $20.9 million$8,701 thousand for the first ninethree months of 2022.2023. This decrease of $2.8 million$8,472 thousand or 13.2%97.4%, was primarily due to a $41.2 million$1,501 thousand decrease in our net loss from continuing operations following our transition from a manufacturing and commercialization business to a royalty-based business offset by a $38.5 million decreasecombined with the pay-down of current liabilities in non-cash expenses as compared to the first nine months of 2022.prior-year period.Investing Activities from continuing operations. used in investing activities for the first nine months of 2023 was $0.0 million, compared to net cash used in investing activities of $0.3 million for the first nine months of 2022. This change was due our transition from a manufacturing and commercialization business to a royalty-based business.Financing Activities from continuingprovided by (used in) discontinued operations.For the first nine months of 2023, net cash received from financing activities was $1.2 million, compared to net cash used by financing activities of $123.3 million for the first nine months of 2022, reflecting the sale of common stock during the first nine months of 2023 and the payments of outstanding long-term debt during the first nine months of 2022.used in discontinued operations. Net cash used inprovided by operating activities from discontinued operations for the first ninethree months of 20232024 was $22.2 million$240 thousand as compared to net cash provided byused in operating activities of $117.6 million$23,368 thousand for the first ninethree months of 2022.2023. This change relates primarily to expenses incurred and the payment of current liabilities associated with our transition from a manufacturing and commercialization business to a royalty-based business. Net cash provided by investing activities from discontinued operations was $0.0 million for the first nine months of 2023 and $0.1 million for the first nine months of 2022. Net cash provided by financing activities from discontinued operations was $0.0 million for the first nine months of 2023 and 2022.Mayne. Mayne. On December 30, 2022, Mayne Pharma acquired our accounts receivable balance of approximately $29.3 million which is subject to certain working capital adjustments. As of September 30, 2023,March 31, 2024, we had a royalty receivable of $2.7 million$3,113 thousand relating to the short-term portion of receivable from Mayne Pharma and $19.1 million$17,855 thousand relating to the long-term portion of royalty receivable which includes royalties recognized from the Minimum Annual Royalty. See Note 1 Business, basis of presentation, new accounting standards and summary of significant accounting policies (Revenue Recognition) to the condensed consolidated financial statements included in this Quarterlyour 2023 10-K Report.7.6. Commitments and Contingencies” to the condensed consolidated financial statements included in this 10-Q Report.September 30, 2023March 31, 2024 and December 31, 2022.2023.29-– Management’s discussion and analysis of financial condition and results of operations – Critical accounting policies and estimates in our 2022 2023 10-K Report.30employees.employees, except for our former General Counsel and current Chief Executive Officer. As of September 30, 2023,March 31, 2024, we employed one full-time employee primarily engaged in an executive position. We have engaged external consultants who support our relationship with current partners and assist with certain financial, legal and regulatory matters and the continued wind-down of our historical commercial business operations. As a result of these changes, we have updated our risk assessment and design of internal controls over financial reporting that align with reduced transaction volume and reliance on external consultants to manage the day-to-day operations of the Company. The Company is and will continue to evaluate changes to processes, information technology systems and other components of internal controls over financial reporting as part of its ongoing business transformation activities, and as a result, controls may be periodically changed. The Company believes, however, that it will be able to maintain sufficient controls over its financial reporting throughout this transformation process.7,6, Commitments and contingencies in Part I, Item 1, Financial Statements, appearing elsewhere in this 10-Q Report, we are not involved in any legal proceeding that we believe would have a material effect on our business or financial condition.2022 2023 10-K Report under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price. There have been no material changes to our risk factors since the 2022 2023 10-K Report.On November 10, 2023, we delivered a drawdown notice (the “Notice”) to Rubric undertermsthree months ended March 31, 2024, none of the Subscription Agreement. Pursuant to the Notice, we agreed to sell 877,192 shares of Common Stock to Rubric at a price per share of $2.28, for total gross proceeds of approximately $2.0 million. The settlement of the transaction is expected to occur on the thirdCompany’s directors or officers adopted or terminated any Rule 10b5-1 trading day following the delivery of the Noticearrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in accordance with the terms of the Subscription Agreement.The Common Stock issued pursuant to the Subscription Agreement will be sold and issued without registration under the Securities Act, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506Item 408 of Regulation D promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.S-K).31Exhibit
No. Description 10.1†31.1† Master Service Agreement, dated August 15, 2023, between TherapeuticsMD, Inc. and JZ Advisory Group.31.1†Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) 31.2† Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) 32.1†† Section 1350 Certification of Chief Executive Officer 32.2†† Section 1350 Certification of Principal Financial Officer 101† Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q 104† Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set † †† 32Date: May 10, 2024 TherapeuticsMD, Inc. Date: November 14, 2023 TherapeuticsMD, Inc. Marlan D. Walker
(Principal Executive Officer) Joseph Ziegler Joseph ZieglerPrincipal Financial and Accounting Officer 33