| Business, basis of presentation, new accounting standards and summary of significant accounting policies | 1. Business, basis of presentation, new accounting standards and summary of significant accounting policies General TherapeuticsMD, Inc. (the “Company”), a Nevada
corporation, and its consolidated subsidiaries are referred to collectively in this Annual Report on Form 10-K (“2023 10-K
Report”) as “TherapeuticsMD,” “we,” “our” and “us.” This 2023 10-K Report
includes trademarks, trade names and service marks, such as TherapeuticsMD ® ® ® ® ® ® 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 ANNOVERA ® 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
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 $80.0 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 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. 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. 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 under the Transaction Agreement 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 reduced 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 was paid to us. We and Mayne Pharma settled the $1.5 million of consideration due to Mayne 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. As the parties agreed, during the second quarter of 2023, Mayne Parma
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. 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 consolidated financial statements. Assets and liabilities associated with the commercial business are classified as assets and liabilities
of discontinued operations in our consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in
Note 2. 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.
● 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 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 were paid in accordance with their
employment agreements and separation agreements as previously disclosed. As of December 31, 2022 and 2023, 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 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 and Accounting 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. vitaCare Divestiture On 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 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 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. 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 2023 and 2022. Going concern 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 the TherapeuticsMD for
the purchase of the Transferred Assets under the Transaction Agreement 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. 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. On November 15,
2023 Rubric drew down an additional 1,000,000 shares of Common Stock at a price per share equal to $2.28. We received gross proceeds of
$2.0 million from the drawdown, before expenses. 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 believes its estimated allowances for payer rebates and wholesale distributor fees are
reasonable and intends to resolve this matter through the process outlined in the Transaction Agreement. Given the recent receipt of
Mayne Pharma’s allowance calculation and the nature of the estimates involved, 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.
As of December 31, 2023, the Company believes no additional accrual
is required for amounts that may be owed for the allowance for returns under the 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 changes to estimated amounts owed or amounts due from Mayne Pharma that may be material. If Mayne Pharma’s sales of IMVEXXY, BIJUVA, or ANNOVERA
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 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. The accompanying consolidated financial statements do not include any
adjustments that might be necessary if we are unable to continue as a going concern. A. Basis of presentation The consolidated financial statements and related notes include our
parent company and all wholly owned subsidiaries. The consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the Unites States of America (“U.S. GAAP”). Our fiscal year-end is as of and for the year ended December
31st for each year presented. All intercompany transactions among our businesses have been eliminated. As part of the transformation and as a result of the vitaCare divestiture
and the Mayne Transaction, historical results of commercial operations for all periods prior to the Closing Date have been reflected as
discontinued operations in the consolidated financial statements. Assets and liabilities associated with the commercial business are classified
as assets and liabilities of discontinued operations in the consolidated balance sheet. Additional disclosures regarding discontinued
operations are provided in Note 2 of these consolidated financial statements. Certain amounts in the notes to the consolidated financial statements
may not add due to rounding. Certain prior period amounts have been reclassified to conform to current-period presentation. B. New accounting standards Adoption of new accounting standards In December 2023, the Financial Accounting Standards Board (“FASB”)
issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.” ASU 2023-09 enhances the transparency
and decision 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 effective for the Company in its income tax
disclosure included in its 2025 Annual Report on Form 10-K and will be applied on a prospective basis. However, retrospective application
is permitted. Early adoption is also permitted. The Company is evaluating the impact of ASU 2023-09 on the Company's income tax disclosures
and on its consolidated financial statements. C. Discontinued Operations Discontinued operations comprise activities that were disposed of at
the end of the period, represent a separate major line of business that can be clearly distinguished for operational and financial reporting
purposes and represent a business shift having a major effect on the Company’s operations and financial results according to Accounting
Standard Codification (“ASC”) Topic 205, Presentation of Financial Statements. An adjustment has been made to the consolidated
statements of operations for the twelve months ended December 31, 2023 and 2022 to reclassify commercial activities and vitaCare activities
to discontinued operations as both components, in the aggregate, represented a business shift that will have a major effect on the Company’s
operations and financial results. No amounts for shared general and administrative operating support expense were allocated to discontinued
operations. As required by the terms of the Financing Agreement, the proceeds from both transactions were used to fully repay our outstanding
debt borrowings. 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. Additionally,
the related assets and liabilities have been reported as assets and liabilities of discontinued operations in the Company’s consolidated
balance sheet as of December 31, 2023 and 2022. For additional information, see Note 2 - Discontinued Operations. D. Estimates and assumptions The preparation of consolidated financial statements in conformity
to 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 financial statements and the reported amounts of revenue and expenses during the
reporting period. We evaluate our estimated 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. E. Cash and Restricted Cash For the purpose of the statements of cash flows, all highly liquid
investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these
investments approximates fair value. We maintain cash at financial institutions that at times may exceed
the Federal Deposit Insurance Corporation (“FDIC”) insured limits of $0.25 million per bank. We have never experienced any
losses related to these funds. Restricted cash was comprised of escrowed funds deposited with a bank
relating to the vitaCare Divestiture. All restrictions were lifted in March 2023. F. Fair Value Measurements Fair value is the price to sell an asset or transfer a liability and
therefore represents an exit price in the principal market (or in the absence of a principal market, the most advantageous market). It
represents a market-based measurement that contemplates a hypothetical transaction between market participants at the measurement date. The unique characteristics of an asset or liability and the availability
of observable prices affect the number of valuation approaches and/or techniques used in a fair value analysis. We measure fair value
using observable and unobservable inputs. We give the highest priority to quoted prices (unadjusted) in active markets for identical assets
or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). We apply the following fair value hierarchy:
● Level 1 - Quoted prices (unadjusted) in active markets for
identical assets and liabilities.
● Level 2 - Quoted prices in non-active markets or in active
markets for similar assets or liabilities, observable inputs other than quoted prices; and inputs that are not directly observable but
are corroborated by observable market data.
● Level 3 - Inputs that are unobservable. The carrying amount of our cash, restricted cash, accounts receivable,
accounts payable and accrued expenses approximate their fair value because of the short-term maturity of such instruments, which are considered
Level 1 under the fair value hierarchy. G. Fixed assets Fixed assets are carried at cost less accumulated depreciation and
amortization. We charge maintenance costs, which do not significantly extend the useful lives of the respective assets, and repair costs
to operating expenses as incurred. We compute depreciation using the straight-line method over the estimated useful lives of the related
assets, which range from three to seven years. Leasehold improvements are depreciated over the shorter of their useful life or the term
of the lease. Long-lived assets held and used by us, including fixed assets, are assessed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. We capitalize software and software development costs incurred to create
and acquire computer software for internal use, principally related to software coding and application development. We begin to capitalize
software development costs when both the preliminary project stage is completed, and it is probable that the software will be used as
intended. Capitalized software costs include only external direct costs and services utilized in developing or obtaining computer software.
Capitalized software costs are amortized on a straight-line basis when placed into service over the estimated useful life, generally five
to seven years. H. License rights and other
intangibles assets We record license rights and other intangible assets at cost, which
includes external costs, consisting primary of legal costs, incurred in securing our patents and trademarks. License rights costs related to ANNOVERA were amortized until December
30, 2022 over the useful life over which the license rights would contribute directly or indirectly to our cash flows. The cost was amortized
using the straight-line method as the pattern of economic benefit could not be reliably determined. On December 30, 2022, we assigned
our ANNOVERA license to Mayne Pharma and included the remaining ANNOVERA license cost of $30.2 million in our calculation of the gain
on sale of assets. In addition, amortization of license rights of $3.0 million for 2022 was reclassified to discontinued operations. Intangible assets subject to amortization, such as patents, are amortized
over the useful life of the patent using the straight-line method. If the patent is not granted, we write off any capitalized patent costs
at that time. Intangible assets not subject to amortization, such as trademarks, are perpetual and have indefinite lives. We review license rights and other intangible assets subject to amortization
on a periodic basis to determine whether events and circumstances would indicate impairment or warrant a revision to their remaining useful
lives. We assess other intangible assets not subject to amortization for potential impairment at least annually during the fourth quarter
of each year, or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of the
intangible assets below their carrying value. I. Segment reporting We manage and operate as one business, which prior to December 2022
was focused on creating and commercializing products targeted exclusively for women and after we signed Mayne License Agreement, is focused
on collecting royalties from licensing our products. Our business is led by our chief executive officer. We do not operate separate lines
of business with respect to any of our products, and we do not prepare discrete financial information with respect to separate products.
Accordingly, we view our business as one reportable operating segment. J. Revenue recognition We determine the amount of revenue to be recognized through application
of the following steps:
● Identification of the contract with a customer;
● Identification of the performance obligations in the contract;
● Determination of the transaction price;
● Allocation of the transaction price to the performance obligations in the contract; and
● Recognition of revenue when or as we satisfy the performance obligations. A performance obligation is a promise in a contract to transfer a product
or service to a customer. A good or service is considered to be transferred when the customer receives the goods or service or obtains
control, and we treat shipping as a fulfillment activity rather than as a separate obligation. We generally recognize revenue at a point
in time when all of our performance obligations under the terms of a contract are satisfied. Revenue is recognized upon transfer of control
of promised products or services in an amount that reflects the consideration we expect to receive in exchange for those products or services.
The collectability of consideration on the contract is reasonably assured before revenue is recognized. To the extent that customer payment
has been received before all recognition criteria are met, these revenues are initially deferred in other accruals on the balance sheet
and the revenue is recognized in the period that all recognition criteria have been met.
License revenue License arrangements may consist of non-refundable upfront license
fees, exclusive licensed rights to patented or patent pending technology, and various performance or sales milestones and future product
royalty payments. Some of these arrangements may include multiple performance obligations. Non-refundable up-front fees that are not contingent
on any future performance by us, and do not require continuing involvement on our part, are recognized as revenue when the right to use
functional intellectual property is transferred to the customer. On December 30, 2022, we granted an exclusive license to commercialize
our prescription products and assigning the Company’s 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. As part of the transformation that included the Mayne
License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated
financial statements for all periods prior to the Closing Date. As of December 31, 2022, we are no longer directly engaged in the sale
of prescription products.
Under the terms of the Mayne License Agreement, we received $140 million
at closing and we are eligible to receive additional payments in the aggregate of up to an additional $30 million, based on the achievement
of sales milestones (collectively, the “Milestone Amounts”). The proceeds at closing were allocated between consideration
for the sale of ANNOVERA and the initial license fee for the Licensed Products, as the sale of ANNOVERA was accounted for under ASC 610-20,
Gains and Losses from Derecognition of Nonfinancial Assets in arriving at the gain on disposal (see Note 2), while the license grant of
the other products were recognized under the provisions of ASC 606, Revenue from Contracts with Customers, as a license of functional
intellectual property. The proceeds were allocated among the Licensed Products on the relative net present value of forecasted future
product sales from those products. The Milestone Amounts will be recognized, as applicable, in subsequent periods based on actual product
sales that exceed the respective net sales milestones as such variable consideration is constrained by the occurrence of the subsequent
sales. Our royalty revenue in 2023 primarily related to royalties provided
for under the Mayne License Agreement based on Mayne Pharma’s sales of the licensed products subject to that agreement. Under the
Mayne License Agreement, the Company is entitled to earn royalties on net sales of all of the Licensed Products at a royalty rate of (i)
8% on the first $80 million of net sales of the Licensed Products and (ii) 7.5% on net sales of all of the Licensed Products after the
first $80 million of net sales. The royalty rate is subject to a 2% reduction upon the earlier to occur of (i) the expiration or revocation
of the last valid claim covering a Licensed Product, and (ii) a generic product launch (a “LOE”). We are entitled to minimum
annual royalties beginning with the year ending December 31, 2023 ($3 million annual minimum) and continuing with 3% annual increases
through the year ending December 31, 2034 (the “Minimum Annual Royalty”). The total Minimum Annual Royalty we are entitled
to is $42.6 million, and this total amount was allocated among the Licensed Products on the relative net present value of forecasted future
product sales from those products. The portion allocated to consideration for the sale of ANNOVERA was attributed towards the gain on
disposal of that asset. For the remaining portion allocated to the license grants for the other products, we determined that the minimum
guarantee underlying the Minimum Annual Royalty should be treated as fixed consideration and recognized under ASC 606 at the point in
time when the license was transferred. Since the Minimum Annual Royalty will be received in annual installments through 2034, we determined
the transaction price allocated under ASC 606 contained a significant financing component, and we therefore determined the initial royalty
revenue and corresponding receivable based on the present value of the allocated Minimum Annual Royalty. The present value was calculated
using a discount rate of 10.45%, based on the credit characteristics of Mayne Pharma and the timing of future payments, and the value
will be accreted to full value through the earlier of January 1, 2034 or a LOE. This royalty receivable is a contract asset as of December
31, 2022 and 2023, and is further subject to offset by Mayne Pharma (see L. Contract Assets and Liabilities below).
Royalty revenue earned in excess of the Minimum Annual Royalty will
be recognized under ASC 606, which pr |
