UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________
Commission File Number:
(Exact name of Registrant as specified in its Charter)
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(State or other jurisdiction |
(I.R.S. Employer Identification No.) |
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of incorporation or organization) |
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(Address of principal executive offices) |
(Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Title of Each Class |
symbol |
Name of each exchange on which registered |
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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 S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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Large Accelerated Filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 12b-2 of the Exchange Act). Yes
As of November 11, 2022, there were
Table of Contents
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Item. 1. |
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1 |
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2 |
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3 |
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4 |
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5 |
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Item 2. |
Management's discussion and analysis of financial condition and results of operations |
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Item 3. |
29 |
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Item 4. |
29 |
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Item 1. |
30 |
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Item 1A. |
30 |
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Item 2. |
31 |
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Item 3. |
31 |
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Item 4. |
31 |
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Item 5. |
31 |
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Item 6. |
32 |
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33 |
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Part I – Financial Information
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Item 1. |
Financial statements |
TherapeuticsMD, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited - in thousands, except per share data)
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September 30, 2022 |
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December 31, 2021 |
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Assets: |
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Current assets: |
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Cash |
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$ |
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$ |
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Restricted cash |
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— |
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Accounts receivable, net of allowance for credit losses of $ $ |
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Inventory |
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Prepaid and other current assets |
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Total current assets |
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Fixed assets, net |
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License rights and other intangible assets, net |
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Right of use assets |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders' deficit: |
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Current liabilities: |
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Debt, net |
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$ |
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$ |
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Lender Warrants derivative liability |
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— |
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Make-whole payment derivative liability |
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— |
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Mandatory Redeemable Preferred Stock |
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— |
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Accounts payable |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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Operating lease liabilities |
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Other non-current liabilities |
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Total liabilities |
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Commitments and contingencies (Note 9) |
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Stockholders' deficit: |
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Preferred stock, par value $ |
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and included in liabilities due to their redemption provisions |
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Common stock, par value $ (adjusted for the as of September 30, 2022 and December 31, 2021, respectively |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders' deficit |
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( |
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( |
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Total liabilities and stockholders' deficit |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
1
TherapeuticsMD, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited - in thousands, except per share data)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Revenue, net: |
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Product |
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$ |
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$ |
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$ |
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$ |
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License and service |
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— |
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Total revenue, net |
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Cost of goods sold |
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Total gross profit |
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Operating expenses: |
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Selling and marketing |
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General and administrative |
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Research and development |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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Other (expense) income: |
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Gain on sale of business |
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— |
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— |
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— |
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Expense for accretion of Mandatory Redeemable Preferred Stock |
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( |
) |
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— |
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( |
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— |
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Fair value loss on Lender Warrants derivative liability |
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( |
) |
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— |
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( |
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— |
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Loss on extinguishment of debt |
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— |
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— |
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( |
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— |
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Interest expense and other financing costs |
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( |
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( |
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( |
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( |
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Other (expense) income, net |
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( |
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( |
) |
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Total other (expense) income, net |
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( |
) |
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( |
) |
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( |
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(Loss) income before income taxes |
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( |
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( |
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( |
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(Benefit) provision for income taxes |
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( |
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— |
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— |
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Net (loss) income |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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(Loss) earnings per common share, basic |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Weighted average common shares, basic |
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(Loss) earnings per common share, diluted |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Weighted average common shares, diluted |
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Comprehensive (loss) income: |
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Net (loss) income |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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Comprehensive (loss) income |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
( |
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The accompanying notes are an integral part of these consolidated financial statements.
2
TherapeuticsMD, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Deficit
(Unaudited - in thousands)
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Additional |
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Total |
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Common Stock |
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Paid in |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Deficit |
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Balance, January 1, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Vested restricted stock units |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
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Balance, March 31, 2022 |
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( |
) |
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( |
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Rounding up of fractional shares in connection with the reverse stock split |
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— |
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— |
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— |
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— |
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Vested restricted stock units |
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— |
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— |
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— |
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— |
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Sale of common stock related to employee stock purchase plan |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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Balance, June 30, 2022 |
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( |
) |
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( |
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Sale of common stock, net of costs |
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— |
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— |
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Vested restricted stock units |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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- |
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( |
) |
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( |
) |
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Balance, September 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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Balance, January 1, 2021 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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Sale of common stock, net of costs |
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— |
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Exercise of warrants, net of cashless exercises |
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— |
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— |
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Vested restricted stock units |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
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Balance, March 31, 2021 |
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( |
) |
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( |
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Sale of common stock, net of costs |
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— |
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— |
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Exercise of warrants and options |
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— |
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— |
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Vested restricted stock units |
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— |
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— |
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— |
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— |
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Sale of common stock related to employee stock purchase plan |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
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Balance, June 30, 2021 |
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( |
) |
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( |
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Sale of common stock, net of costs |
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— |
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Exercise of options |
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— |
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— |
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— |
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Vested restricted stock units |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Balance, September 30, 2021 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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The accompanying notes are an integral part of these consolidated financial statements.
3
TherapeuticsMD, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited - in thousands)
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Nine Months Ended September 30, |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net income (loss) |
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$ |
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$ |
( |
) |
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Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Depreciation and amortization |
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Charges to provision for doubtful accounts |
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Inventory charge |
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Debt financing fees |
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Share-based compensation |
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Gain on sale of business |
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( |
) |
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— |
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Expense for accretion of Mandatory Redeemable Preferred Stock |
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— |
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Loss on extinguishment of debt |
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— |
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Other |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
) |
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Inventory |
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( |
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Prepaid and other current assets |
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( |
) |
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Accounts payable |
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( |
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( |
) |
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Accrued expenses and other current liabilities |
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Other non-current liabilities |
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( |
) |
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Total adjustments |
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( |
) |
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Net cash used in operating activities |
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( |
) |
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( |
) |
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Cash flows from investing activities: |
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Proceeds from sale of business, net of transaction costs |
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— |
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Payment of patent related costs |
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( |
) |
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( |
) |
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Purchase of fixed assets |
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( |
) |
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( |
) |
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Net cash provided by (used in) investing activities |
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( |
) |
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Cash flows from financing activities: |
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Proceeds from sale of Mandatory Redeemable Preferred Stock, net of costs |
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— |
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Proceeds from make-whole derivative |
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— |
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Proceeds from sale of common stock, net of costs |
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|
|
|
Proceeds from exercise of options and warrants |
|
|
— |
|
|
|
|
|
|
Proceeds from sale of common stock related to employee stock purchase plan |
|
|
|
|
|
|
|
|
|
Repayments of debt |
|
|
( |
) |
|
|
( |
) |
|
Payment of debt financing fees |
|
|
( |
) |
|
|
( |
) |
|
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
|
Net (decrease) increase in cash and restricted cash |
|
|
( |
) |
|
|
|
|
|
Cash and restricted cash, beginning of period |
|
|
|
|
|
|
|
|
|
Cash and restricted cash, end of period |
|
$ |
|
|
|
$ |
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
|
|
|
$ |
|
|
|
Supplemental disclosure of noncash financing activities: |
|
|
|
|
|
|
|
|
|
Paid in kind ("PIK") interest with corresponding increase in debt |
|
$ |
|
|
|
$ |
— |
|
|
PIK debt financing fees with corresponding increase in debt |
|
$ |
|
|
|
$ |
— |
|
|
Issue of warrants to lenders related to debt financing fees |
|
$ |
|
|
|
$ |
— |
|
The accompanying notes are an integral part of these consolidated financial statements.
4
TherapeuticsMD, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
(Unaudited)
|
1. |
Business, basis of presentation, new accounting standards and summary of significant accounting policies |
General
TherapeuticsMD, Inc., a Nevada corporation (the “Company”) and its consolidated subsidiaries are referred to collectively in this Quarterly Report on Form 10-Q (“10-Q Report”) as “TherapeuticsMD,” “we,” “our” and “us.” This 10-Q Report includes our trademarks, trade names and service marks, such as TherapeuticsMD®, vitaMedMD®, BocaGreenMD®, IMVEXXY®, BIJUVA® and ANNOVERA®, which are protected under applicable intellectual property laws and are the property of, or licensed to, the Company. Solely for convenience, trademarks, trade names and service marks referred to in this 10-Q Report may appear without the ®, 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.
We are 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. At TherapeuticsMD, we combine entrepreneurial spirit, clinical expertise, and business leadership to develop and commercialize health solutions that enable new standards of care for women. Our solutions range from a patient-controlled, long-lasting contraceptive to advanced hormone therapy pharmaceutical products. We also have a portfolio of branded and generic prescription prenatal vitamins under the vitaMedMD and BocaGreenMD brands. Our portfolio of products focused on women’s health allows us to efficiently leverage our sales and marketing plan to grow our recently approved products.
vitaCare Divestiture
On April 14, 2022, we completed the divestiture of 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 $
The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. In addition, upon closing of the vitaCare Divestiture, (i) we entered into a long-term services agreement with vitaCare to continue utilization of the vitaCare platform with respect to our products, and (ii) we entered into a transition services agreement with vitaCare for us to provide certain transition services to vitaCare for up to 12 months following the closing. Under the long-term services agreement, we are required to pay to vitaCare a minimum service fee for each respective annual contract year. Our estimated minimum service fee commitments for vitaCare are as follows: $
COVID-19
With 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. The ultimate global recovery from the pandemic will be dependent on, among other things, actions taken by governments and businesses to contain and combat the virus, including any variant strains, the speed and effectiveness of vaccine production and global distribution, as well as how quickly, and to what extent, normal economic and operating conditions can resume on a sustainable basis globally.
Since the early phase of the COVID-19 pandemic, we have been using substantial virtual options to ensure business continuity. We have also partnered with independent community pharmacies and multiple third-party online pharmacies and telemedicine providers that focus on contraception or menopause which provide patients real-time access to both diagnosis and treatment. We continue to support prescribers’ needs with samples and product materials through our sales force. If access is restricted, we have mailing options in place for these materials. We also have business continuity plans and infrastructure in place that allows for live virtual e-detailing of our products.
5
As part of our response to the COVID-19 pandemic, we implemented measures to reduce marketing expenses and implemented cost saving measures, which included negotiating lower fees or suspending services from third-party vendors; implementing a company-wide hiring restriction; delaying or cancelling non-critical information technology projects; and eliminating non-essential travel, entertainment, meeting, and event expenses. In addition, we implemented a significant cost savings initiative that was designed to reduce our annual operating costs in 2022, and we reduced the operating costs of the vitaCare business with the completion of the vitaCare Divestiture on April 14, 2022. See above for additional information regarding the vitaCare Divestiture.
The full impact of the COVID-19 pandemic continues to evolve. As of the date of issuance of these consolidated financial statements, the future extent to which the COVID-19 pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain. We are continuing to assess the effect of the COVID-19 pandemic on our operations by monitoring the spread of COVID-19 and the various actions implemented to combat the pandemic throughout the world. 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.
While we currently believe that our COVID-19 contingency plan has the ability to mitigate many of the negative effects of the COVID-19 pandemic on our business, the severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the duration of “social distancing” orders, the ability of our sales force to access healthcare providers to promote our products, increases in unemployment, which could reduce access to commercial health insurance for our patients, thus limiting payer coverage for our products, and the impact of the pandemic on our global supply chain, all of which remain uncertain. Our future results of operations and liquidity could be materially adversely affected by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions, uncertain demand, and the impact of any initiatives or programs that we may undertake to address financial and operations challenges that we may face.
Going concern
We incurred a loss from operations of $
On July 29, 2022, we closed on a private placement offering with Rubric Capital Management LP (the “Preferred Stock Investor”), pursuant to which we issued and sold (i)
On July 29, 2022, we entered into Amendment No. 16 to the Financing Agreement pursuant to which the maturity date of the Financing Agreement was extended to September 30, 2022, with the option to further extend the maturity date to October 31, 2022, and November 30, 2022, in each case if we receive not less than $
In connection with the closing of the private placement offering with the Preferred Stock Investor on September 30, 2022, and in accordance with Amendment No. 16 to the Financing Agreement, on September 30, 2022, we issued warrants (“Lender Warrants”) to the Lenders to purchase an aggregate of
6
On October 28, 2022, we closed on an additional private placement offering with the Preferred Stock Investor, pursuant to which we issued and sold
In connection with the closing of the private placement offering with the Preferred Stock Investor on October 28, 2022, and in accordance with Amendment No. 16 to the Financing Agreement, on October 28, 2022, we issued Lender Warrants to purchase an aggregate of
To address our capital needs, we are pursuing various equity and debt refinancing and other strategic alternatives, including the possibility that we will file for Chapter 11 protection if our equity and debt refinancing or other strategic alternatives fail prior to the maturity date of our Financing Agreement. 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. Along with considering additional financings and other strategic alternatives, we have reviewed numerous potential scenarios in connection with steps that we may take to reduce our operating expenses.
If we are unsuccessful with future financings, if the successful commercialization of ANNOVERA, IMVEXXY, or BIJUVA is delayed, or if the continued impact of the COVID-19 pandemic or issues in our supply chains related to our third-party contract manufacturers on our business is worse than we anticipate, our existing cash reserves would be insufficient to repay the entire principal balance of the Financing Agreement or satisfy our liquidity needs. The presence of these projected factors in conjunction with the uncertainty of the capital markets raises substantial doubt about the Company's 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 the Company is unable to continue as a going concern.
Common stock reverse stock split
On May 6, 2022, we completed a reverse stock split of our Common Stock. As a result,
In this 10-Q Report, all historical number 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 additional paid-in capital have been adjusted to give effect to the Reverse Stock Split.
|
A. |
Basis of presentation |
We prepared the consolidated financial statements included in this 10-Q Report following the requirements of the United States (“U.S.”) Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements can be condensed or omitted. However, except as disclosed herein, there has been no material change in the information disclosed in the notes included in our 2021 Annual Report on Form 10-K ("2021 10-K Report").
7
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 statement of the financial statements, which are of a normal and recurring nature, have been made for the interim periods reported. The information included in this 10-Q Report should be read in conjunction with the consolidated financial statements and accompanying notes included in our 2021 10-K Report. Certain amounts in the consolidated financial statements and accompanying notes may not add due to rounding, and all percentages have been calculated using unrounded amounts.
|
B. |
New accounting standards |
Adoption of new accounting standards
New accounting standards or accounting standards updates were assessed and determined to be either not applicable or did not have a material impact on the Company’s consolidated financial statements or processes.
Accounting standards issued but not yet adopted
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and Scope. In March 2020 and January 2021, Accounting Standards Update (“ASU”) 2020-04 and ASU 2021-01 were issued, respectively. These ASUs provide optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as London Interbank Offered Rate (LIBOR). These ASUs include practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. These ASUs were effective upon issuance and may be applied prospectively to contract modifications made or evaluated on or before December 31, 2022. Our debt agreements currently include the use of alternate rates when LIBOR is not available. We do not expect the change from LIBOR to an alternate rate will have a material impact to our financial statements and, to the extent we enter into modifications of agreements that are impacted by the LIBOR phase-out, we will apply such guidance to those contract modifications.
Other recently issued accounting standards not yet adopted by us are not expected, upon adoption, to have a material impact on our consolidated financial statements or processes.
|
C. |
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.
|
D. |
Significant accounting policies |
The significant accounting policies we use for quarterly financial reporting are disclosed in Note 1, Business, basis of presentation, new accounting standards and summary of significant accounting policies of the accompanying notes to the consolidated financial statements included in our 2021 10-K Report, and in the section below.
Restricted Cash
Restricted cash is comprised of escrowed funds deposited with a bank relating to the vitaCare Divestiture.
|
E. |
Reclassification of prior year presentation |
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported consolidated balance sheets and consolidated statements of cash flows. An adjustment has been made to the consolidated statements of operations for the three and nine months ended September 30, 2021 to reclassify vitaCare service revenue.
8
|
2. |
Accounts receivable |
The following sets forth activities in our allowance for credit losses (in thousands):
|
Balance as of January 1, 2022 |
|
$ |
|
|
|
Charges to provision for credit losses |
|
|
|
|
|
Write-off of uncollectible receivables |
|
|
( |
) |
|
Balance as of September 30, 2022 |
|
$ |
|
|
|
3. |
Inventory |
Our inventory consisted of the following (in thousands):
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
|
Raw materials |
|
$ |
|
|
|
$ |
|
|
|
Work in process |
|
|
|
|
|
|
|
|
|
Finished products |
|
|
|
|
|
|
|
|
|
Inventory |
|
$ |
|
|
|
$ |
|
|
We recorded
We rely on third parties to manufacture our finished products, and we have entered into long-term supply agreements for the manufacture of ANNOVERA, IMVEXXY, and BIJUVA. We do not have a long-term supply agreement for the manufacture of our prescription vitamins. Additionally, we do not have long-term contracts for the supply of all the active pharmaceutical ingredients (“API”) used in ANNOVERA and BIJUVA. If any suppliers of raw materials or API or any of our third-party contract manufacturers experience any difficulties, do not comply with the terms of an agreement between us, or do not devote sufficient time, energy, and care to providing our manufacturing needs, we could experience additional interruptions in the supply of our products, which may have a material adverse impact on our revenue, results of operations and financial position.
|
4. |
Prepaid and other current assets |
Our prepaid and other current assets consisted of the following (in thousands):
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
|
Insurance |
|
$ |
|
|
|
$ |
|
|
|
Paragraph IV legal proceeding costs |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Prepaid and other current assets |
|
$ |
|
|
|
$ |
|
|
|
5. |
Fixed assets |
Our fixed assets, net consisted of the following (in thousands):
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
|
Furniture and fixtures |
|
$ |
|
|
|
$ |
|
|
|
Computer and office equipment |
|
|
|
|
|
|
|
|
|
Computer software |
|
|
|
|
|
|
|
|
|
Leasehold improvements |
|
|
|
|
|
|
|
|
|
Fixed assets |
|
|
|
|
|
|
|
|
|
Less: accumulated depreciation and amortization |
|
|
|
|
|
|
|
|
|
Fixed assets, net |
|
$ |
|
|
|
$ |
|
|
We recorded depreciation expense of $
9
|
6. |
Licensed rights and other intangible assets |
The following provides information about our license rights and other intangible assets, net (in thousands):
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||||||||||||||||||
|
|
|
Gross |
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
|
|
|
||
|
|
|
Carrying |
|
|
Accumulated |
|
|
|
|
|
|
Carrying |
|
|
Accumulated |
|
|
|
|
|
||||
|
|
|
Amount |
|
|
Amortization |
|
|
Net |
|
|
Amount |
|
|
Amortization |
|
|
Net |
|
||||||
|
Licensed rights and intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License rights |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Hormone therapy drug patents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hormone therapy drug patents applied and pending approval |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
License rights and other intangible assets subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets not subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks/trade name rights |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
License rights and other intangible assets, net |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
We recorded amortization expense related to the exclusive license rights agreement with Population Council of $
|
7. |
Accrued expenses and other current liabilities |
Accrued expenses and other current liabilities consisted of the following (in thousands):
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
|
Payroll and related costs |
|
$ |
|
|
|
$ |
|
|
|
Rebates |
|
|
|
|
|
|
|
|
|
Sales returns and coupons |
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
|
|
|
|
|
|
|
Wholesale distributor fees |
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
|
|
|
|
|
|
|
|
Income taxes payable |
|
|
|
|
|
|
— |
|
|
Other accrued expenses and current liabilities |
|
|
|
|
|
|
|
|
|
Accrued expenses and other current liabilities |
|
$ |
|
|
|
$ |
|
|
We expense advertising costs when incurred, which amounted to $
|
8. |
Debt |
Our debt consisted of the following (in thousands):
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
|
Financing Agreement |
|
$ |
|
|
|
$ |
|
|
|
Less: deferred financing fees |
|
|
|
|
|
|
|
|
|
Debt, net |
|
$ |
|
|
|
$ |
|
|
Financing agreement
As of September 30, 2022, the stated interest rate under the Financing Agreement was
10
waived various Company breaches of the Financing Agreement, including breaches of the $
In May 2022, we entered into Amendment No. 10 to the Financing Agreement (“Amendment No. 10”) pursuant to which, among other amendments, (i) interest payments under the Financing Agreement were paused, such that interest on each term loan shall be payable in cash and in arrears (a) upon any prepayment of that term loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid and (b) on the maturity date, (ii) the minimum cash covenant was set at $
Also in May 2022, we entered into Amendment No. 11 (“Amendment No. 11”) to the Financing Agreement. Amendment No. 11 contains amendments to the Financing Agreement that would have gone into effect upon the satisfaction of certain conditions on or before July 13, 2022 (the “Amendment Effective Date”), including (i) the consummation of the merger with an affiliate of EW Healthcare Partners (the “Merger”), (ii) the payment in cash of (a) all accrued and unpaid interest under the Financing Agreement through and including the Amendment Effective Date and (b) all fees, costs, expenses and taxes then payable pursuant to Section 2.7 or 10.2 of the Financing Agreement, and (iii) the delivery to the administrative agent of certain customary documents with respect to the pledge of
On July 13, 2022, we entered into Amendment No. 12 to the Financing Agreement pursuant to which the maturity date of the Financing Agreement was extended to
On July 29, 2022, we entered into Amendment No. 16 to the Financing Agreement pursuant to which the maturity date of the Financing Agreement was extended to September 30, 2022, with the option for us to further extend the maturity date to October 31, 2022, and November 30, 2022, in each case if we receive not less than $
In connection with the closing of a private placement offering with the Preferred Stock Investor on September 30, 2022, and in accordance with Amendment No. 16 to the Financing Agreement, on September 30, 2022, we issued Lender Warrants to purchase an aggregate of
Subsequent to September 30, 2022, the maturity date was extended to
11
the September Lender Subscriptions Agreement have an exercise price of $
Based on the structure of the Lender Warrants, they are recorded as Lender Warrants derivative liability in the consolidated balance sheets and their carrying amounts are marked to market based on our Common Stock’s closing price at measurement date, which is considered Level 1 under the fair value hierarchy. As of September 30, 2022, the fair value of our Lender Warrants derivative liability was $
Additionally, in September 2022, we and the Lenders agreed to PIK interest of $
Debt covenants
The Financing Agreement contains customary restrictions and covenants applicable to us that are customary for financings of this type. Among other requirements, we are required to maintain a minimum unrestricted cash balance. As defined in Amendment No. 10, the minimum unrestricted cash balance was set at $
Interest and financing costs
Interest expense and other financing costs consisted of the following (in thousands):
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
|
Interest expense |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Interest prepayment fees |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Financing fees amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and other financing costs |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
9. |
Commitments and contingencies |
Minimum purchase commitments
We have manufacturing and supply agreements whereby we are required to purchase from Catalent, Inc. (“Catalent”) a minimum number of units of BIJUVA and IMVEXXY softgels during each respective annual contract year. The annual contract period for BIJUVA and IMVEXXY ends each April and July, respectively. If the minimum order quantities of BIJUVA or IMVEXXY are not met, we are required to pay a minimum commitment fee equal to
Furthermore, in connection with the vitaCare Divestiture, we entered into a long-term services agreement with vitaCare to continue utilization of the vitaCare platform with respect to our products. Under the long-term services agreement, we are required to pay to vitaCare a minimum service fee for each respective annual contract year. The annual contract period for vitaCare services ends each April.
For each of the three annual contract years ending in 2022 for BIJUVA, IMVEXXY and ANNOVERA, we have met our minimum purchase number of units in all material respects. For annual contract years ending in 2023 and thereafter for BIJUVA, IMVEXXY, ANNOVERA, and vitaCare Services, we will continue to evaluate whether we will be able to meet each annual contract year’s respective minimum purchase commitment and will record a liability for estimated minimum commitment fees if we believe that we will not be able to reasonably meet the minimum purchase commitment. We believe that minimum commitment fees that we may pay in 2022 and 2023, if any, will not have a material impact to our financial position and operating results.
12
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 infringed. In July 2021, following a proposal by Teva, the District Court entered an order temporarily staying all proceedings in the IMVEXXY litigation, which order was filed under seal. In September 2021, the District Court made available a public version of the order following the parties’ agreement to a consent motion to redact information Teva contended was confidential. The order provides that the statutory stay that prevents the FDA from granting final approval of the ANDA for 30 months from the date of the IMVEXXY Notice Letter will be extended for the number of days that the stay of the IMVEXXY litigation is in place. The length of the stay of the IMVEXXY litigation is dependent on further action by Teva. As of September 30, 2022, for the IMVEXXY Paragraph IV legal proceeding, we have incurred and recorded legal costs amounting to $
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 consolidated financial condition, results of operations, or cash flows.
Employment agreements
On September 6, 2022, our Board appointed our current interim co-chief executive officers. The separation of our former chief executive officer (“CEO”) from the Company was a termination without “Good Cause,” as defined in his employment agreement. Accordingly, our former CEO received the separation benefits provided therein, and we recorded executive officer severance expenses of $
|
10. |
Mandatory Redeemable Preferred Stock and Stockholders’ Deficit |
Rubric Capital Management LP Subscription Agreements (Sale of Mandatory Redeemable Preferred Stock and Common Stock)
On July 29, 2022, we entered into a Subscription Agreement with the Preferred Stock Investor, pursuant to which we issued and sold, in a private placement offering, (i)
On September 30, 2022, we entered into a Subscription Agreement with the Preferred Stock Investor, pursuant to which we issued and sold, in a private placement offering,
13
The Preferred Stock is not convertible into Common Stock and ranks senior to Common Stock, with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Preferred Stock has a liquidation preference equal to $
Warrants
|
|
|
Outstanding |
|
|
Exercisable |
|
||||||||||||||||||||||||||
|
|
|
Warrants |
|
|
Weighted Average Exercise Price |
|
|
Aggregate Intrinsic Value |
|
|
Weighted Average Remaining Contractual Life (in Years) |
|
|
Warrants |
|
|
Weighted Average Exercise Price |
|
|
Aggregate Intrinsic Value |
|
|
Weighted Average Remaining Contractual Life (in Years) |
|
||||||||
|
As of January 1, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
— |
|
|
|
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
|
|
|
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Expired |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
The above table includes an aggregate of Lenders Warrants to purchase
Share-based compensation payment plans
As of September 30, 2022,
14
The following table summarizes the status of our outstanding and exercisable options and related transactions (each adjusted to account for the
|
|
|
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, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
- |
|
|
|
|
|
|
Cancelled/Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
- |
|
|
|
|
|
The following table summarizes the status of our RSUs and related transactions (each adjusted to account for the
|
|
|
Outstanding |
|
|
Vested and not settled |
|
||||||||||||||||||
|
|
|
RSUs |
|
|
Weighted Average Grant Date Fair Value |
|
|
Aggregate Intrinsic Value |
|
|
RSUs |
|
|
Weighted Average Grant Date Fair Value |
|
|
Aggregate Intrinsic Value |
|
||||||
|
As of January 1, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and settled |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled/Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
The following table summarizes the status of our PSUs and related transactions (each adjusted to account for the
|
|
|
Outstanding |
|
|
Vested and not settled |
|
||||||||||||||||||
|
|
|
PSUs |
|
|
Weighted Average Grant Date Fair Value |
|
|
Aggregate Intrinsic Value |
|
|
PSUs |
|
|
Weighted Average Grant Date Fair Value |
|
|
Aggregate Intrinsic Value |
|
||||||
|
As of January 1, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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Vested and settled |
|
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( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled/Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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As of September 30, 2022 |
|
|
|
|
(1) |
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
|
|
|
(1) |
|
Share-based payment compensation cost
Share-based payment compensation cost for PSUs is based on our current assessment of the most likely probability of the Company’s achievement of certain performance goals. In connection with previously granted options, RSUs and PSUs, and shares of common stock issuable under the TherapeuticsMD, Inc. 2020 Employee Stock Purchase Plan (“ESPP”), we recorded share-based payment compensation costs of $
As of September 30, 2022, we had $
15
|
Year Ending December 31, |
|
|
|
|
|
2022 (3 months) |
|
$ |
|
|
|
2023 |
|
|
|
|
|
2024 |
|
|
|
|
|
2025 |
|
|
|
|
|
|
|
$ |
|
|
|
11. |
Revenue |
The following table provides information about disaggregated revenue by product mix and service (in thousands):
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
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Product revenue: |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
ANNOVERA |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
IMVEXXY |
|
|
|
|
|
|
|
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|
|
|
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|
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BIJUVA |
|
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Prescription vitamin |
|
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Product revenue, net |
|
|
|
|
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|
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|
|
|
|
|
|
|
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License and service |
|
|
- |
|
|
|
|
|
|
|
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|
|
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|
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|
Total revenue, net |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
We have 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. We also have entered into a licensing and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”) pursuant to which we granted Theramex an exclusive license to commercialize IMVEXXY and BIJUVA for human use outside of the U.S., except for Canada and Israel.
We recorded BIJUVA sales through the Theramex License Agreement of $
|
12. |
Income taxes |
We do not expect to pay any significant federal income taxes as a result of (i) losses expected for the remainder of 2022 or losses recorded in 2021, or (ii) net operating losses carry forwards from prior years.
For the three and nine months ended September 30, 2022, we recorded a benefit and a provision for income taxes of $
16
|
13. |
Earnings (loss) per common share |
The following table sets forth the computation of basic and diluted earnings (loss) per common share (each adjusted to account for the
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares for basic loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares for diluted loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share, basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
Earnings (loss) per common share, diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Since we reported a net loss for the three months ended September 30, 2022, and for three and nine months ended September 30, 2021, 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 three months ended September 30, 2022 and for the three and nine months ended September 30, 2021. There were
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 three months ended September 30, 2022, and three and nine months ended September 31, 2021 (in thousands):
|
|
|
As of September 30, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Stock options |
|
|
|
|
|
|
|
|
|
RSUs |
|
|
|
|
|
|
|
|
|
PSUs |
|
|
|
|
|
|
|
|
|
Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
14. |
Related parties |
A former member of our Board, J. Martin Carroll, who resigned in December 2021, is a member of Catalent’s Board. Accordingly, Catalent ceased to be a related a party to the Company in December 2021. From time to time, we have entered into agreements with Catalent and its affiliates in the normal course of business. From July 2015 to December 2021, agreements with Catalent have been reviewed by independent directors of our Company, or a committee consisting of independent directors of our Company. For manufacturing activities, Catalent billed us $
On July 29, 2022 and September 30, 2022, we entered into subscription agreements with Rubric Capital Management L.P. See Note 10, Mandatory Redeemable Preferred Stock and Stockholders’ Deficit for additional information.
On August 23, 2022, we appointed Mr. Justin Roberts as a director to fill a newly created vacancy on the Board as a result of the Board’s increase in the size of the Board by one director to a total of nine directors. Mr. Roberts will serve until the Company’s 2022 Annual Meeting of Stockholders or until his successor is duly elected or appointed or his earlier death or resignation. As a director of the Company, Mr. Roberts is entitled to receive compensation in the same manner as our other non-employee directors, described in the section entitled “Director Compensation” in our Amendment No. 1 to Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission on April 29, 2022, but he has elected not to receive any compensation for his service as a non-employee director at this time. Mr. Roberts currently serves as a Partner of the Preferred Stock Investor.
17
|
15. |
Business concentrations |
We sell our products to wholesale distributors, specialty pharmacies, specialty distributors, and chain drug stores that generally sell products to retail pharmacies, hospitals, and other institutional customers.
Customers with product revenue equal to or greater than
|
|
|
Nine Months Ended September 30, |
|
|||
|
|
|
2022 |
|
|
2021 |
|
|
Customer A |
|
* |
|
|
|
|
|
Customer B |
|
|
|
|
|
|
|
Customer C |
|
|
|
|
|
|
|
Customer E |
|
* |
|
|
|
|
|
Customer F |
|
|
|
|
* |
|
|
* Less than 10% of total product revenue |
|
|||||
Customers that accounted for
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
|
Customer B |
|
|
|
|
|
|
|
Customer C |
|
|
|
|
|
|
|
Customer D |
|
|
|
|
|
|
|
Customer G |
|
|
|
|
* |
|
|
* Balance was less than 10% of accounts receivable, gross |
|
|||||
We rely on third parties for the manufacture and supply of our products, as well as third-party logistics providers. In instances where these parties fail to perform their obligations, we may be unable to find alternative suppliers or satisfactorily deliver our products to our customers on time, if at all.
Vendors with product purchases equal to or greater than
|
|
|
Nine Months Ended September 30, |
|
|||
|
|
|
2022 |
|
|
2021 |
|
|
Catalent |
|
|
|
|
|
|
|
Vendor A |
|
|
|
|
|
|
|
Vendor B |
|
|
|
|
|
|
|
* Less than 10% of total product purchases |
|
|||||
Vendors that accounted for
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
|
Vendor E |
|
* |
|
|
|
|
|
Vendor F |
|
|
|
|
|
|
|
* Balance was less than 10% of total accounts payable |
|
|||||
18
|
16. |
Subsequent events |
On October 28, 2022, we entered into a Subscription Agreement with the Preferred Stock Investor, pursuant to which the Company issued and sold, in a private placement offering,
In connection with the closing of the private placement offering with the Preferred Stock Investor on October 28, 2022, and in accordance with Amendment No. 16 to the Financing Agreement, on October 28, 2022, we issued Lender Warrants to purchase an aggregate of
19
|
Item 2. |
Management’s discussion and analysis of financial condition and results of operations |
The following discussion should be read in conjunction with our 2021 Annual Report on Form 10-K (“2021 10-K Report”), and the consolidated financial statements and related notes in Item 1, Financial Statements, appearing elsewhere in this 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 2021 10-K Report under the heading “Risk Factors,” as updated and supplemented by Part II, Item 1A of this 10-Q Report. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law. 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, product development, and other plans and objectives for future operations, and assumptions and predictions about future product development and demand, cost reduction strategies, research and development (“R&D”), marketing, expenses and sales 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 but 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 the Financing Agreement, market and general economic factors, and the other risks discussed in Part I, Item 1A of our 2021 10-K Report, as updated and supplemented by Part II, Item 1A of this 10-Q Report.
Business overview
We are 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. At TherapeuticsMD, we combine entrepreneurial spirit, clinical expertise, and business leadership to develop and commercialize health solutions that enable new standards of care for women. Our solutions range from a patient-controlled, long-lasting contraceptive to advanced hormone therapy pharmaceutical products. We also have a portfolio of branded and generic prescription prenatal vitamins under the vitaMedMD and BocaGreenMD brands that furthers our women’s healthcare focus.
vitaCare Divestiture
On April 14, 2022, we completed the divestiture of 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, 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 (the “Purchase Agreement”), which is recorded as restricted cash in the consolidated balance sheets. The restricted cash is held by an escrow agent and will be released to us in April 2023 upon a joint written direction from the buyer and us being delivered to the escrow agent to disburse to us an amount equal to the amount of escrow funds less any amounts subject to a claim notice in accordance with the terms set forth in the Purchase Agreement. Any amounts subject to a claim notice in accordance with the terms set forth in the Purchase Agreement shall be retained by the escrow agent until each such claim subject thereto is resolved. 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. We will record the contingent consideration at the settlement amount when the consideration is realized or realizable.
20
The Purchase Agreement contains customary representations and warranties, covenants and indemnities of the parties thereto. In addition, upon closing of the vitaCare Divestiture, (i) we entered into a long-term services agreement with vitaCare to continue utilization of the vitaCare platform with respect to our products, and (ii) we entered into a transition services agreement with vitaCare for us to provide certain transition services to vitaCare for up to 12 months following the closing.
COVID-19
With 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. The ultimate global recovery from the pandemic will be dependent on, among other things, actions taken by governments and businesses to contain and combat the virus, including any variant strains, the speed and effectiveness of vaccine production and global distribution, as well as how quickly, and to what extent, normal economic and operating conditions can resume on a sustainable basis globally.
Since the early phase of the COVID-19 pandemic, we have been using substantial virtual options to ensure business continuity. We have also partnered with independent community pharmacies and multiple third-party online pharmacies and telemedicine providers that focus on contraception or menopause which provide patients real-time access to both diagnosis and treatment. We continue to support prescribers’ needs with samples and product materials through our sales force. If access is restricted, we have mailing options in place for these materials. We also have business continuity plans and infrastructure in place that allows for live virtual e-detailing of our products.
As part of our response to the COVID-19 pandemic, we implemented measures to reduce marketing expenses and implemented cost saving measures, which included negotiating lower fees or suspending services from third-party vendors; implementing a company-wide hiring restriction; delaying or cancelling non-critical information technology projects; and eliminating non-essential travel, entertainment, meeting, and event expenses. In addition, we implemented a significant cost savings initiative that was designed to reduce our annual operating costs in 2022, and we reduced the operating costs of the vitaCare business with the completion of the vitaCare Divestiture on April 14, 2022. See above for additional information regarding the vitaCare Divestiture.
The full impact of the COVID-19 pandemic continues to evolve. As of the date of issuance of these consolidated financial statements, the future extent to which the COVID-19 pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain. We are continuing to assess the effect of the COVID-19 pandemic on our operations by monitoring the spread of COVID-19 and the various actions implemented to combat the pandemic throughout the world. 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.
While we currently believe that our COVID-19 contingency plan has the ability to mitigate many of the negative effects of the COVID-19 pandemic on our business, the severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the duration of “social distancing” orders, the ability of our sales force to access healthcare providers to promote our products, increases in unemployment, which could reduce access to commercial health insurance for our patients, thus limiting payer coverage for our products, and the impact of the pandemic on our global supply chain, all of which remain uncertain. Our future results of operations and liquidity could be materially adversely affected by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions, uncertain demand, and the impact of any initiatives or programs that we may undertake to address financial and operations challenges that we may face.
Going concern
We incurred a loss from operations of $65.8 million and interest expense and other financing costs of $30.9 million during the nine months ended September 30, 2022, and as of that date, our current liabilities exceeded our current assets by $86.6 million and our total liabilities exceeded our total assets by $48.3 million. We will need to raise additional capital to repay the entire principal balance of the Financing Agreement, dated as of April 24, 2019, as amended (the “Financing Agreement”), with Sixth Street Specialty Lending, Inc., as administrative agent (the “Administrative Agent” or “Sixth Street”), various lenders from time to time party thereto (the “Lenders”), and certain of our subsidiaries party thereto from time to time as guarantors, and to provide additional liquidity to fund our losses until our operations become cash flow positive.
On July 29, 2022, we closed on a private placement offering with Rubric Capital Management LP (the “Preferred Stock Investor”), pursuant to which we issued and sold (i) 15,000 shares of the Company’s newly-designated Series A Preferred Stock, par value $0.001 per share (“Preferred Stock”) and (ii) 565,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), and we received aggregate gross proceeds of $15.0 million, before expenses.
On July 29, 2022, we entered into Amendment No. 16 to the Financing Agreement pursuant to which the maturity date of the Financing Agreement was extended to September 30, 2022, with the Company having the option to further extend the maturity date to October 31, 2022, and November 30, 2022, in each case if the Company receives not less than $7.0 million in cash proceeds from an equity issuance,
21
which, if preferred equity, is on substantially the same terms as the Preferred Stock. In connection with the closing of a private placement offering with the Preferred Stock Investor on September 30, 2022, and in accordance with Amendment No. 16 to the Financing Agreement, on September 30, 2022, the maturity date of the Financing Agreement was extended to October 31, 2022. In connection with the closing of a private placement offering with the Preferred Stock Investor on October 28, 2022, and in accordance with Amendment No. 16 to the Financing Agreement, on October 28, 2022 the maturity date of the Financing Agreement was extended to November 30, 2022.
On September 30, 2022, we closed on an additional private placement offering with the Preferred Stock Investor, pursuant to which we issued and sold 7,000 shares of the Company’s Preferred Stock for an aggregate offering price of $7.0 million. In addition, in lieu of issuing, selling and delivering 263,666 shares of Common Stock to the Preferred Stock Investor, we agreed to pay the Preferred Stock Investor, on the later of (i) the maturity date of the Preferred Stock of December 31, 2022, which shall be automatically extended, on a day-for-day basis, to the extent the maturity date under the Financing Agreement is extended, but by no more than a total of 60 days without the consent of the holders representing at least 66 2/3% of the outstanding shares of Preferred Stock (the “Preferred Stock Maturity Date”) or (ii) the date our obligations under the Financing Agreement are paid in full, a make-whole payment equal to 263,666 multiplied by the closing price of our Common Stock on the principal securities exchange or securities market on which the Common Stock is then traded, on the day prior to the date of payment of the make-whole payment. See Note 10, Mandatory Redeemable Preferred Stock and Stockholders’ Deficit for additional information regarding the equity financing with the Preferred Stock Investor.
In connection with the closing of the private placement offering with the Preferred Stock Investor on September 30, 2022, and in accordance with Amendment No. 16 to the Financing Agreement, on September 30, 2022, we issued warrants (“Lender Warrants”) to the Lenders to purchase an aggregate of 125,000 shares of Common Stock and the maturity date of the Financing Agreement was extended to October 31, 2022. The Lender Warrants have an exercise price of $0.01 per share of Common Stock, subject to certain adjustment as provided therein, and an expiration date of September 30, 2032. The Lender Warrants may also be exercised via cashless exercise pursuant to the terms thereof.
On October 28, 2022, we closed on an additional private placement offering with the Preferred Stock Investor, pursuant to which we issued and sold 7,000 shares of the Company’s Preferred Stock for an aggregate offering price of $7.0 million. In addition, in lieu of issuing, selling and delivering 263,666 shares of Common Stock to the Preferred Stock Investor, we agreed to pay the Preferred Stock Investor, on the later of (i) the Preferred Stock Maturity Date or (ii) the date our obligations under the Financing Agreement are paid in full, a make-whole payment equal to 263,666 multiplied by the closing price of our Common Stock on the principal securities exchange or securities market on which the Common Stock is then traded, on the day prior to the date of payment of the make-whole payment.
In connection with the closing of the private placement offering with the Preferred Stock Investor on October 28, 2022, and in accordance with Amendment No. 16 to the Financing Agreement, on October 28, 2022, we issued Lender Warrants to purchase an aggregate of 125,000 shares of Common Stock, pursuant to a subscription agreement and the maturity date of the Financing Agreement was extended to November 30, 2022. See Note 16, Subsequent Events for additional information regarding amendments to the Financing Agreement.
To address our capital needs, we are pursuing various equity and debt refinancing and other strategic alternatives, including the possibility that we will file for Chapter 11 protection if our equity and debt refinancing or other strategic alternatives fail prior to the maturity date of our Financing Agreement. 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. Along with considering additional financings and other strategic alternatives, we have reviewed numerous potential scenarios in connection with steps that we may take to reduce our operating expenses.
If we are unsuccessful with future financings, if the successful commercialization of ANNOVERA, IMVEXXY, or BIJUVA is delayed, or if the continued impact of the COVID-19 pandemic or issues in our supply chains related to our third-party contract manufacturers on our business is worse than we anticipate, our existing cash reserves would be insufficient to repay the entire principal balance of the Financing Agreement or satisfy our liquidity needs. The presence of these projected factors in conjunction with the uncertainty of the capital markets raises substantial doubt about the Company's ability to continue as a going concern for the next twelve months from the issuance of these financial statements.
22
The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Product portfolio
Our portfolio of products focused on women’s health allows us to efficiently leverage our sales and marketing plans to grow our pharmaceutical products. We are focused on activities necessary for the continued commercialization of IMVEXXY, commercially launched in the third quarter of 2018; BIJUVA, commercially launched in the third quarter of 2019; and ANNOVERA, which we started selling in the third quarter of 2019 and commercially launched in March 2020, which was subsequently paused as a result of the COVID-19 pandemic and relaunched in July 2020. We continue to manufacture and distribute our prescription prenatal vitamin product lines, consisting of branded prenatal vitamins under vitaMedMD and authorized generic formulations of some of our prescription prenatal vitamin products under BocaGreenMD.
ANNOVERA (segesterone acetate (“SA”) and ethinyl estradiol (“EE”) vaginal system)
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 by us in the U.S. pursuant to the terms of the Population Council 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 have 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. Given the observational nature of the study, we do not believe that the costs of the study will be material on an annual basis.
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. With the FDA approval of the supplemental NDA, we expect our third-party contract manufacturer will be able to supply us with sufficient ANNOVERA to better meet customer demand.
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. As part of the FDA’s approval of IMVEXXY, we have 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. The FDA has also asked two sponsors of other vaginal estrogen products to participate in an observational study. In connection with the observational study, we are required to provide various reports to the FDA per a requested timeline. We do not believe that the costs will be significant on an annual basis.
We market and sell IMVEXXY in the U.S. and have entered into licensing agreements with third parties to market and sell IMVEXXY outside of the U.S. We have 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 in Canada and Israel. We have entered into a licensing and supply agreement (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 September 30, 2022, no IMVEXXY sales have been made through these licensing agreements.
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. We market and sell BIJUVA in the U.S. and have entered into licensing agreements with third parties to market and sell BIJUVA outside of the U.S. We 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. We recorded BIJUVA sales through the Theramex License Agreement of $0.4 million and $1.4 million for the three and nine months ended September 30, 2022, respectively, and $0.7 million for the three and nine months ended September 30, 2021. For the three and nine months ended September 30, 2022 and 2021, no BIJUVA sales were made through the Knight License Agreement.
23
Prenatal vitamin products
We manufacture and distribute 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 Prena1 name. We will continue to support the vitaMedMD and BocaGreenMD products as they are important products to our core customers and help provide us with continued access to sell our women’s health portfolio.
Results of operations
Three months ended September 30, 2022 compared with three months ended September 30, 2021
Revenue. Our total revenue for the third quarter of 2022 was $20.9 million, a decrease of $4.5 million, or 17.7%, compared to the third quarter of 2021.
The following table sets forth our revenue during these periods (in thousands):
|
|
|
Three Months Ended September 30, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Product revenue: |
|
|
|
|
|
|
|
|
|
ANNOVERA |
|
$ |
10,415 |
|
|
$ |
11,807 |
|
|
IMVEXXY |
|
|
6,947 |
|
|
|
8,016 |
|
|
BIJUVA |
|
|
2,663 |
|
|
|
3,298 |
|
|
Prescription vitamin |
|
|
892 |
|
|
|
1,335 |
|
|
Product revenue, net |
|
|
20,917 |
|
|
|
24,456 |
|
|
License and service |
|
|
— |
|
|
|
950 |
|
|
Total revenue, net |
|
$ |
20,917 |
|
|
$ |
25,406 |
|
Our sales of ANNOVERA were $10.4 million for the third quarter of 2022, a decrease of $1.4 million, or 11.8%, compared to the third quarter of 2021. This decrease was primarily due to a 13.4% decrease in the average sale price due to fluctuations in constrains of variable consideration (product returns, chargebacks, rebates, coupons, discounts and wholesaler fees) on revenue, partially offset by a 1.9% increase in sales volume.
Our sales of IMVEXXY were $6.9 million for the third quarter of 2022, a decrease of $1.1 million, or 13.3%, compared to the third quarter of 2021. This decrease was primarily due to a 24.0% decrease in the average sale price due to fluctuations in revenue constraints, partially offset by a 14.0% increase in sales volume.
Our sales of BIJUVA were $2.7 million for the third quarter of 2022, a decrease of $0.6 million, or 19.3%, compared to the third quarter of 2021. Included in our BIJUVA sales for the third quarter of 2022 was $0.4 million of sales made through the Theramex License Agreement. Without the sales made through the Theramex License Agreement, our sales of BIJUVA were $2.3 million for the third quarter of 2022, a decrease of $0.3 million, or 11.2%, compared to the third quarter of 2021. This decrease was primarily attributable to a 16.6% decrease in the average sale price due to fluctuations in revenue constraints, partially offset by a 6.5% increase in sales volume.
Our prescription vitamin sales were $0.9 million for the third quarter of 2022, a decrease of $0.4 million, or 33.2%, compared to the third quarter of 2021. This decrease was primarily due to a 30.8% decrease in sales volume and 3.4% decrease in the average sale price due to fluctuations in revenue constraints.
On a consolidated basis, our total product sales were $20.9 million for the third quarter of 2022, a decrease of $3.5 million, or 14.5%, compared to the third quarter of 2021.
We recorded less than $0.1 million of service revenue related to pharmacy services provided by our vitaCare business to pharmaceutical companies for the third quarter of 2021 and no service revenue related to pharmacy services for the third quarter of 2022 due to our divesture of our vitaCare business earlier in 2022. We recorded no license revenue for the third quarter of 2022, and $0.9 million for the third quarter of 2021. This change in license revenue was entirely due to the timing of achieving previously established milestone payment targets.
24
Gross profit. Our gross profit for the third quarter of 2022 was $17.1 million, a decrease of $3.0 million, or 14.9%, compared to the third quarter of 2021. The following table sets forth our gross profit during these periods (in thousands):
|
|
|
Three Months Ended September 30, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Product |
|
$ |
17,129 |
|
|
$ |
19,174 |
|
|
License and service |
|
|
- |
|
|
|
950 |
|
|
Total gross profit |
|
$ |
17,129 |
|
|
$ |
20,124 |
|
The decrease in our gross profit was a result a decrease of 14.5% in product revenue for the third quarter of 2022, partially offset by an increase in our product gross margin of 3.5% to 81.9% for the third quarter of 2022. The increase in product gross margins was mainly due to changes in product sales mix during the third quarter of 2022.
Operating expenses. Total operating expenses for the third quarter of 2022 were $37.9 million, a decrease of $22.2 million, or 36.9%, compared to the third quarter of 2021. The decrease in operating expenses reflects our efforts to reduce operating expenses, including the reduction of vitaCare operating expenses in connection with its divestiture in April 2022.
The following table sets forth our operating expense categories (in thousands):
|
|
|
Three Months Ended September 30, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Selling and marketing |
|
$ |
19,129 |
|
|
$ |
30,005 |
|
|
General and administrative |
|
|
17,635 |
|
|
|
28,435 |
|
|
Research and development |
|
|
1,112 |
|
|
|
1,605 |
|
|
Total operating expenses |
|
$ |
37,876 |
|
|
$ |
60,045 |
|
Our selling and marketing costs were $19.1 million for the third quarter of 2022, a decrease of $10.9 million, or 36.2%, compared to the third quarter of 2021. This decrease was primarily due to $11.3 million in lower advertising and marketing expenses, $1.9 million in lower compensation and employee benefit costs, and $0.2 million in lower sales conference and travel expenses. These decreases were partially offset by $1.9 million in vitaCare service fee for the third quarter of 2022, $0.5 million in higher samples expense and $0.2 million in higher software development expenses.
Our general and administrative costs were $17.6 million for the third quarter of 2022, which included cash and accelerated equity severances amounting to $4.8 million for our former chief executive officer. Our general and administrative costs decreased $10.8 million, or 38.0%, compared to the third quarter of 2021, which included cash and accelerated equity severances amounting to $7.3 million for certain of our former senior executives. The overall decrease in general and administrative costs was primarily related to $9.2 million in lower compensation and employee benefit costs, $0.8 million in lower information technology expenditures, and $0.5 in lower corporate rent.
Our R&D costs were $1.1 million for the third quarter of 2022, a decrease of $0.5 million, or 30.7%, compared to the third quarter of 2021. This decrease was primarily attributable to $0.3 million in lower compensation and employee benefit costs and $0.2 million in lower lab research and sample testing costs. As we refocus our resources towards the continued commercialization of our pharmaceutical products, our R&D expenditures have declined over the last few years. We continue to deploy limited resources in the development of new products, to perform stability testing and validation on our pharmaceutical products, to develop and validate secondary manufacturers, to prepare regulatory submissions, and work with regulatory authorities on existing submissions.
Loss from operations. For the third quarter of 2022, we had a loss from operations of $20.7 million, a decrease of $19.2 million, or 48.0%, compared to the third quarter of 2021. This decrease was attributable to $22.2 million in lower operating expenses, partially offset by a $3.0 million in lower gross profit. We anticipate that we will continue to have operating losses for the near future until we are able to successfully commercialize ANNOVERA, IMVEXXY and BIJUVA, although there is no assurance that our efforts will be successful.
Other income/expense, net. For the third quarter of 2022, we had non-operating expense of $8.5 million, an increase of $1.0 million, or 13.1%, compared to the third quarter of 2021. This increase was primarily attributable to $3.5 million of expense for accretion of Series A Preferred Stock recorded for the third quarter of 2022 and $1.1 million in higher amortization of deferred financing costs compared to the third quarter of 2021. These increases were partially offset by $3.1 million in lower interest expense related to lower average debt balance and $0.7 million in lower interest prepayment fee due to elimination of prepayment fees with Amendment No. 9 to the Financing Agreement.
25
Provision for income taxes. For the third quarter of 2022, we recorded a reduction to provision for income taxes of $0.3 million compared to no provision for income taxes for the third quarter of 2022.
Net loss. For the third quarter of 2022, we had net loss of $29.0 million, or $3.13 per basic and diluted common share, compared to $47.4 million, or $5.62 per basic and diluted common share for the third quarter of 2021. The historical per share data have been adjusted to give effect of the May 2022 reverse stock split.
Nine months ended September 30, 2022 compared with nine months ended September 30, 2021
Revenue. Our total revenue for the first nine months of 2022 was $68.8 million, an increase of $0.5 million, or 0.8%, compared to the first nine months of 2021.
The following table sets forth our revenue during these periods (in thousands):
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Product revenue: |
|
|
|
|
|
|
|
|
|
ANNOVERA |
|
$ |
37,196 |
|
|
$ |
30,112 |
|
|
IMVEXXY |
|
|
20,583 |
|
|
|
24,866 |
|
|
BIJUVA |
|
|
7,877 |
|
|
|
7,899 |
|
|
Prescription vitamin |
|
|
2,671 |
|
|
|
4,162 |
|
|
Product revenue, net |
|
|
68,327 |
|
|
|
67,039 |
|
|
License and service |
|
|
484 |
|
|
|
1,234 |
|
|
Total revenue, net |
|
$ |
68,811 |
|
|
$ |
68,273 |
|
Our sales of ANNOVERA were $37.2 million for the first nine months of 2022, an increase of $7.1 million, or 23.5%, compared to the first nine months of 2021. This increase was primarily due to a 32.1% increase in sales volume, partially offset by a 6.5% decrease in the average sale price due to fluctuations in revenue constraints.
Our sales of IMVEXXY were $20.6 million for the first nine months of 2022, a decrease of $4.3 million, or 17.2%, compared to the first nine months of 2021. This decrease was primarily attributable to a 17.0% decrease in the average sales price due to fluctuations in revenue constraints and a 0.2% decrease in sales volume.
Our sales of BIJUVA were $7.9 million for the first nine months of 2022, which was flat when compared to the first nine months of 2021. Included in our BIJUVA sales for the first nine months of 2022 and 2021 was $1.4 million and $0.7 million, respectively, of sales made through the Theramex License Agreement. Without the sales made through the Theramex License Agreement, our sales of BIJUVA were $6.5 million for the first nine months of 2022, a decrease of $0.7 million, or 10.0%, compared to the first nine months of 2021. This decrease was primarily attributable to a 9.3% decrease in the average sale price due to fluctuations in revenue constraints and a 0.8% decrease in sales volume.
Our prescription vitamin sales were $2.7 million for the first nine months of 2022, a decrease of $1.5 million, or 35.8%, compared to the first nine months of 2021. This decrease was primarily due to a 28.1% decrease in sales volume and a 10.8% decrease in the average sale price due to fluctuations in revenue constraints.
On a consolidated basis, our total product sales were $68.3 million for the first nine months of 2022, an increase of $1.3 million, or 1.9%, compared to the first nine months of 2021.
We recorded service revenue related to pharmacy services provided by our vitaCare business to pharmaceutical companies of $0.5 million for the first nine months of 2022, an increase of $0.4 million, compared to the first nine months of 2021. We recorded no license revenue for the first nine months of 2022 and our license revenue was $1.2 million for the first nine months of 2021. This change in license revenue was entirely due to the timing of achieving previously established milestone payment targets.
Gross profit. Our gross profit for the first nine months of 2022 was $55.4 million, an increase of $1.3 million, or 2.3%, compared to the first nine months of 2021. The following table sets forth our gross profit during these periods (in thousands):
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Product |
|
$ |
54,939 |
|
|
$ |
52,938 |
|
|
License and service |
|
|
484 |
|
|
|
1,234 |
|
|
Total gross profit |
|
$ |
55,423 |
|
|
$ |
54,172 |
|
26
The increase in our gross profit was a result an increase of 1.4% in our product gross margin to 80.4% and an increase of 1.9% in product revenue for the first nine months of 2022. The increase in product gross margins was mainly due to changes in product sales mix during the first nine months of 2022.
Operating expenses. Total operating expenses for the first nine months of 2022 were $121.2 million, a decrease of $37.3 million, or 23.5%, compared to the first nine months of 2021. The decrease in operating expenses reflects our efforts to reduce operating expenses, including the reduction of vitaCare operating expenses in connection with its divestiture in April 2022. The following table sets forth our operating expense categories (in thousands):
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Selling and marketing |
|
$ |
61,703 |
|
|
$ |
86,193 |
|
|
General and administrative |
|
|
55,445 |
|
|
|
66,691 |
|
|
Research and development |
|
|
4,092 |
|
|
|
5,666 |
|
|
Total operating expenses |
|
$ |
121,240 |
|
|
$ |
158,550 |
|
Our selling and marketing costs were $61.7 million for the first nine months of 2022, a decrease of $24.5 million, or 28.4%, compared to the first nine months of 2021. This decrease was primarily due to $27.3 million in lower advertising and marketing expenses and $2.4 million in lower compensation and employee benefit costs and consulting expenses. These decreases were partially offset by $3.5 million in vitaCare service fee recorded for the first nine months of 2022, $1.2 million in higher sales conference and travel expenses, and $0.7 million in higher software development expenses.
Our general and administrative costs were $55.4 million for the first nine months of 2022, a decrease of $11.2 million, or 16.9%, compared to the first nine months of 2021. This decrease was primarily related to $12.1 million in lower compensation and employee benefit costs, $2.7 million in lower information technology expenditures, $1.0 in lower corporate rent, and $0.4 million in lower investor relations expenses. These decreases were partially offset by $4.8 million in higher expenditures attributable to various professional fees, such as legal, consulting, etc.
Our R&D costs were $4.1 million for the first nine months of 2022, a decrease of $1.6 million, or 27.8%, compared to the first nine months of 2021. This decrease was primarily attributable to $1.3 million in lower compensation and employee benefit costs, partially offset by $0.2 million in higher lab research costs. As we refocus our resources towards the continued commercialization of our pharmaceutical products, our R&D expenditures have declined over the last few years. We continue to deploy limited resources in the development of new products, to perform stability testing and validation on our pharmaceutical products, to develop and validate secondary manufacturers, to prepare regulatory submissions, and work with regulatory authorities on existing submissions.
Loss from operations. For the first nine months of 2022, we had a loss from operations of $65.8 million, a decrease of $38.6 million, or 36.9%, compared to the first nine months of 2021. This decrease was attributable to $37.3 million in lower operating expenses and $1.3 million in higher gross profit. We anticipate that we will continue to have operating losses for the near future until we are able to successfully commercialize ANNOVERA, IMVEXXY and BIJUVA, although there is no assurance that our efforts will be successful.
Other income/expense, net. For the first nine months of 2022, we had non-operating income of $100.4 million compared to non-operating expense of $25.1 million for the first nine months of 2021. This $125.5 million positive change was primarily attributable to the $143.4 million gain on the sale of the vitaCare business, net of transaction costs, $6.3 million in lower interest expense related to lower debt balance, and $4.0 million in lower interest prepayment fee due to the elimination of prepayment fees with Amendment No. 9 to the Financing Agreement. These positive changes were partially offset by $15.9 million in higher amortization of deferred financing costs, and $8.4 million in loss on extinguishment of debt in connection with Amendment No. 9 to the Financing Agreement, which is recorded as an extinguishment of debt for accounting purposes, compared to the first nine months of 2021.
Provision for income taxes. For the first nine months of 2022, we recorded a provision for income taxes of $0.3 million compared to no provision for income taxes for the first nine months of 2021.
Net loss/income. For the first nine months of 2022, we had net income of $34.3 million, or $3.86 per basic common share and $3.73 per diluted common share. Our results for the first nine months of 2022 included a non-recurring gain on sale of business related to the vitaCare Divestiture of $143.0 million, net of taxes, or $16.12 per basic common share and $15.55 per diluted common share. Without the non-recurring gain, we would have had a net loss of $108.8 million, or $12.26 per basic and diluted common share, for the first nine months of 2022 compared to a net loss of $129.5 million, or $16.68 per basic and diluted common share, for the first nine months of 2021. The historical per share data have been adjusted to give effect to the May 2022 reverse stock split.
27
Liquidity and capital resources
Our primary use of cash is to fund the continued commercialization of our hormone therapy and contraceptive products. We have funded our operations primarily through public offerings of our common stock and private placements of equity and debt securities. As of September 30, 2022, we had cash totaling $27.1 million. We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation insured limits of $0.25 million per bank. We have never experienced any losses related to these funds.
On April 14, 2022, we completed the vitaCare Divestiture and included $11.3 million of customary holdbacks, as provided in the Purchase Agreement, which is recorded as restricted cash in the consolidated balance sheets. The restricted cash is held by an escrow agent and will be released to us in April 2023 upon a joint written direction from the buyer and us being delivered to the escrow agent to disburse to us an amount equal to the amount of escrow funds less any amounts subject to a claim notice in accordance with the terms set forth in the Purchase Agreement. Any amounts subject to a claim notice in accordance with the terms set forth in the Purchase Agreement shall be retained by the escrow agent until each such claim subject thereto is resolved. 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. We utilized $120.0 million of net proceeds from the vitaCare Divestiture to make a prepayment of the loans under the Financing Agreement under the terms of Amendment No. 9 of the Financing Agreement.
See “Going Concern” above for further discussion related to our ability to generate and obtain adequate amounts of cash to meet our liquidity needs and our plans for to satisfy our such needs in the short-term and in the long-term.
Cash flows
The following table reflects the major categories of cash flows for each of the periods (in thousands).
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Nine Months Ended September 30, |
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|||||
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2022 |
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2021 |
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Net cash used in operating activities |
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$ |
(63,850 |
) |
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$ |
(103,135 |
) |
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Net cash provided by (used in) investing activities |
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142,316 |
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(709 |
) |
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Net cash (used in) provided by financing activities |
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(105,258 |
) |
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128,199 |
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Net (decrease) increase in cash and restricted cash |
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$ |
(26,792 |
) |
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$ |
24,355 |
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Operating Activities. The principal use of cash in operating activities was to fund our current expenditures in support of our continued commercialization activities for ANNOVERA, IMVEXXY, and BIJUVA, sales, marketing, scale-up and manufacturing activities, adjusted for non-cash items. For the first nine months of 2022, net cash used in operating activities was $63.9 million, compared to net cash used in operating activities of $103.1 million for the first nine months of 2021. This decrease of $39.3 million, or 38.1%, was primarily due to a $124.5 million decrease in adjustments to reconcile net income (loss) to net cash used in operating activities, partially offset by a $163.8 million increase in our net income.
Investing Activities. For the first nine months of 2022, net cash provided by investing activities was $142.3 million, compared to net cash used in investing activities of $0.7 million for the first nine months of 2021. This increase of $143.0 million was primarily due to $142.6 million in proceeds from the 2022 sale of the vitaCare business, net of transaction costs, partially offset by lower patent related costs of $0.4 million, and lower fixed asset purchases.
Financing Activities. Financing activities have historically represented the principal source of our cash flow. For the first nine months of 2022, net cash used in financing activities was $105.3 million, compared to net cash provided by financing activities of $128.2 million for the first nine months of 2021. This negative change of $233.5 million was primarily related to $180.4 million in lower net proceeds from sales of our common stock and $75.0 million in higher repayment of debt. These negative changes were partially offset by $4.4 million in payments of debt financing fees in 2021, and $18.0 million in net proceeds from the sale of Series A Preferred Stock.
For additional details, see the consolidated statements of cash flows and Note 16, Subsequent events, in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report.
Other liquidity measures
Receivable. Our net days sales outstanding (“DSO”) is calculated by dividing average gross accounts receivable less the reserve for doubtful accounts, chargebacks, and payment discounts by the average daily net product revenue during the last four quarters for each respective quarterly period. Our net DSO was 145 days as of September 30, 2022, compared to 146 days as of December 31, 2021 and 125 days as of September 30, 2021. Our gross DSO is calculated by dividing average gross accounts receivable by the average daily gross product revenue to distributors during the last four quarters for each respective quarterly period. Our gross DSO was 65 days as of September 30, 2022, compared to 72 days as of December 31, 2021 and 61 days as of September 30, 2021. Our DSOs have fluctuated and will continue to fluctuate in the future due to variety of factors, including longer payment terms associated with the continued commercialization of ANNOVERA, IMVEXXY, and BIJUVA and changes in the healthcare industry. Our exposure to credit losses
28
may increase if our customers are adversely affected by changes in healthcare laws, coverage, and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the COVID-19 pandemic, or other customer-specific factors. Although we have historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables in the future.
Inventory. We rely on third parties to manufacture our finished products, and we have entered into long-term supply agreements for the manufacture of ANNOVERA, IMVEXXY, and BIJUVA. We do not have a long-term supply agreement for the manufacture of our prescription vitamins. Additionally, we do not have long-term contracts for the supply of all the active pharmaceutical ingredients used in ANNOVERA and BIJUVA. For additional information, see Note 3, Inventory in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report.
Debt. We had $94.4 million and $200.0 million in term loans outstanding under our Financing Agreement as of September 30, 2022 and December 31, 2021, respectively. For additional information, see Note 8, Debt and Note 16, Subsequent events, in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report.
Contractual obligations, off-balance sheet arrangements and purchase commitments and employment agreements
Except for entering into Amendment No. 9 to the Financing Agreement in March 2022, Amendments 10 and 11 to the Financing Agreement in May 2022, Amendments 12 through 16 to the Financing Agreement in July 2022, make whole payments we owe to the Preferred Stock Investor under the Subscription Agreements we entered into in July, September and October 2022, and the long-term services agreement with vitaCare, which we are required to pay a minimum service fee for each respective annual contract year, there were no other material changes from December 31, 2021 to September 30, 2022. Our estimated minimum service fee commitments for vitaCare are as follows: $2.0 million for the period from October 1, 2022 to December 31, 2022, $10.7 million for 2023, $13.4 million for 2024, $15.4 million for 2025, $16.2 million for 2026, and $5.5 million for the period from January 1, 2027 to April 14, 2027. See Note 10 – Mandatory Redeemable Preferred Stock and Stockholders’ Deficit for additional information regarding the equity financing with the Preferred Stock Investor. For discussion on amendments to the Financing Agreement, see Note 8, Debt and Note 16, Subsequent events, in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report. For a discussion of matters in this section, refer to Item 7 - Contractual obligations, off-balance sheet arrangements and purchase commitments and employment agreements of our 2021 10-K Report.
Critical accounting policies and estimates
Management's discussion and analysis of our financial condition and results of operations are based upon our 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 consolidated financial statements and accompanying notes as of the date of the consolidated financial statements. The critical accounting policies and estimates used are disclosed in Item 7 - Critical accounting policies and estimates in our 2021 10-K Report.
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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.
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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 management, with the participation of our Chief Executive Officers and Interim Chief Financial 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 Officers and Interim Chief Financial 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 Officers and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
29
Our management, including our Chief Executive Officers and Interim Chief Financial 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 financing reporting
There were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the three months ended September 30, 2022.
Part II – Other Information
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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 9, 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.
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Item 1A. |
Risk factors |
The business, financial condition and operating results of the Company 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 2021 10-K Report under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause the Company’s 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 the Company’s business, financial condition, operating results and stock price. Except as set forth below, there have been no material changes to the Company’s risk factors since the 2021 10-K Report.
Our level of indebtedness and other liabilities, and the terms of the Financing Agreement, which matures in November 2022, raise substantial doubt about our ability to continue as a going concern.
Our substantial amount of indebtedness and other liabilities could adversely affect our business. As of September 30, 2022, we had $94.4 million of debt outstanding under the Financing Agreement. In addition, in the third quarter of 2022, we issued 22 thousand shares of our newly-designated Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) and we issued an additional seven thousand shares of Series A Preferred Stock in October 2022. The Series A Preferred Stock has a liquidation preference equal to $1,333 per share of Series A Preferred Stock and matures on December 31, 2022, subject to certain extension terms, as set forth in the Certificate of Designation, Preferences and Rights of Series A Preferred Stock (the “Certificate of Designation”), and the Company is required to redeem the shares on such date at a redemption price per share of Series A Preferred Stock, payable in cash, equal to the liquidation preference. In addition, we have incurred make-whole payments we owe to Rubric Capital Management LP under the Subscription Agreements pursuant to which the Series A Preferred Stock was issued.
Our high level of indebtedness and other liabilities could affect our business in the following ways, among other things: make it more difficult for us to satisfy our contractual and commercial commitments; require us to use a substantial portion of our cash flow from operations to pay interest and principal, which would reduce funds available for working capital, capital expenditures and other general corporate purposes; limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other investments or general corporate purposes; heighten our vulnerability to downturns in our business, our industry or in the general economy; place us at a disadvantage compared to those of our competitors that may have proportionately less debt and other liabilities; limit management’s discretion in operating our business; and limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate or the general economy.
The Financing Agreement contains a minimum unrestricted cash balance requirement and several other restrictive covenants. The Financing Agreement requires that we and our subsidiaries party to the Financing Agreement must maintain a minimum unrestricted cash balance of $10.0 million. The Financing Agreement also contains covenants that limit, among other things, the ability of us and our subsidiaries party to the Financing Agreement to (i) incur indebtedness, (ii) incur liens on our property, (iii) pay dividends or make other distributions, (iv) sell our assets, (v) make certain loans or investments, (vi) merge or consolidate, and (vii) enter into transactions with affiliates, in each case subject to certain exceptions. These and other terms in the Financing Agreement have to be monitored closely for compliance and could restrict our ability to grow our business or enter into transactions that we believe would be beneficial to our business. To maintain compliance with the minimum unrestricted cash balance requirement of the Financing Agreement, we anticipate that we may need to raise additional capital. We cannot guarantee that future financing sufficient to maintain or exceed the
30
minimum unrestricted cash balance will be available in sufficient amounts, in a timely fashion, or on terms acceptable to us, if at all. If we are unable to maintain the minimum unrestricted cash balance or otherwise comply with any other covenant of the Financing Agreement, all or a portion of our obligations under the Financing Agreement may be declared immediately due and payable, which would have an adverse effect on our business, results of operations and financial condition.
In addition, our Financing Agreement matures on November 30, 2022, and the entire principal balance under the Financing Agreement is due and payable as of such date. Our current cash on hand is not sufficient to pay the amounts due under the Financing Agreement. This raises substantial doubt about our ability to continue as a going concern. We will need to raise additional capital to repay the entire principal balance of the Financing Agreement upon maturity. The report of our independent registered public accounting firm on our audited financial statements contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our audited financial statements as of and for the year ended December 31, 2021 and our unaudited financial statements as of and for the three and nine months ended September 30, 2022 do not include any adjustments that might result from the outcome of the uncertainty regarding our ability to continue as a going concern. This going concern opinion could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise. Further, we currently have approximately 1.1 million shares of Common Stock available to be issued under our current authorization, which limits our ability to raise capital through equity financing. In addition, the Certificate of Designation establishing the powers, designations, preferences and privileges and the qualifications, limitations or restrictions of our Series A Preferred Stock contains restrictions that could limit our ability to raise more capital, including a prohibition on incurring certain indebtedness or liens. If we cannot continue as a going concern, our investors may lose their entire investment in our securities. Until we can generate significant cash flows, we expect to satisfy our future cash needs through debt or equity financing; however, there can be no assurance that such capital will be available, or if available, that it will be on terms acceptable to us.
If we are unable raise additional capital or to generate cash flow through operations, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, including under the Financing Agreement.
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Item 2. |
Unregistered sales of equity securities and use of proceeds |
None.
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Item 3. |
Defaults upon senior securities |
None.
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Item 4. |
Mine safety disclosures |
None.
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Item 5. |
Other information |
None.
31
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Item 6. |
Exhibits |
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Exhibit No. |
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Description |
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3.1 |
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Certificate of Designation, Preferences and Rights of Series A Preferred Stock(1) |
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3.2 |
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Third Amendment to Bylaws of the Company, dated July 29, 2022(1) |
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10.1† |
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10.2† |
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10.3† |
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10.4† |
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10.5 |
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10.6 |
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10.7 |
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10.8 |
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10.9 |
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31.1† |
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) |
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31.2† |
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) |
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31.3† |
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Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) |
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32.1†† |
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32.2†† |
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32.3†† |
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101† |
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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 |
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104† |
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Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set |
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† |
Filed herewith. |
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†† |
Furnished |
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(1) |
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 1, 2022 and incorporated herein by reference (SEC File No. 001-00100). |
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(2) |
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on October 3, 2022 and incorporated herein by reference (SEC File No. 001-00100). |
32
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.
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Date: November 14, 2022 |
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TherapeuticsMD, Inc. |
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/s/ Brian Bernick |
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Brian Bernick |
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Interim Co-Chief Executive Officer (Co-Principal Executive Officer) |
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/s/ Mark Glickman |
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Mark Glickman |
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Interim Co-Chief Executive Officer (Co-Principal Executive Officer) |
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/s/ Michael C. Donegan |
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Michael C. Donegan |
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Interim Chief Financial Officer, Chief Accounting Officer and Vice President Finance (Principal Financial and Accounting Officer) |
33
Exhibit 10.1
AMENDMENT NO. 12
TO FINANCING AGREEMENT
AMENDMENT NO. 12 TO FINANCING AGREEMENT, dated as of July 13, 2022 (this “Amendment”), to the Financing Agreement, dated as of April 24, 2019 (as amended, restated, supplemented or otherwise modified from time to time through the date hereof, the “Financing Agreement”), by and among THERAPEUTICSMD, INC., a Nevada corporation (“Company” or “Borrower”), certain Subsidiaries of Borrower, as Guarantors, the Lenders from time to time party thereto, and SIXTH STREET SPECIALTY LENDING, INC., a Delaware corporation (“Sixth Street”), as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”).
WHEREAS, the Loan Parties, the Administrative Agent and the Lenders have entered into that certain Amendment No. 11 to Financing Agreement, dated as of May 27, 2022 (such amendment, the “Amendment No. 11”), which was only to become effective upon satisfaction in full of the conditions precedent set forth therein on or before July 13, 2022, which did not occur;
WHEREAS, the Loan Parties have requested that the Administrative Agent and the Lenders amend certain terms and conditions of the Financing Agreement; and
WHEREAS, the Administrative Agent and the Lenders are willing to amend such terms and conditions of the Financing Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
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1. |
Definitions. All terms used herein that are defined in the Financing Agreement and not otherwise defined herein shall have the meanings assigned to them in the Financing Agreement. |
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2. |
Amendments. |
(a)New Definitions. Section 1.01 of the Financing Agreement is hereby amended by adding the following definitions, in appropriate alphabetical order:
(i)““Amendment No. 12” means Amendment No. 12 to Financing Agreement, dated as of July 13, 2022, by and among the Loan Parties, the Administrative Agent and the Lenders.”
(ii)““Amendment No. 12 Effective Date” means the “Amendment Effective Date” as set forth in Amendment No. 12.”
(iii)““Amendment No. 12 PIK Fee” means $1,200,000, which will be paid in kind by being added to the principal balance of the Term Loans on the Amendment No. 12 Effective Date.”
(iv)““Milestone” has the meaning set forth in Section 5.15.”
(v)““Stalking Horse APA” means an asset purchase agreement, on terms (including the payment in full in cash of all Obligations) acceptable to the Administrative Agent in its sole discretion, for the purchase of all or substantially all of Company’s assets to be consummated in context of a chapter 11 case pursuant to Section 363 of the Bankruptcy Code.”
(b)Existing Definitions. Section 1.01 of the Financing Agreement is hereby amended as follows:
(i)The definition of “Obligations” is hereby amended andrestated to read as follows:
““Obligations” means all obligations of every nature of each Loan Party and its Subsidiaries from time to time owed to the Administrative Agent (including former Administrative Agents), the Lenders or any of them, under any Loan Document, whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Loan Party, would have accrued on any Obligation, whether or not a claim is allowed against such Loan Party for such interest in the related bankruptcy proceeding), fees (including, (i) the Amendment No. 9 PIK Fee but excluding the Waivable Portion of Amendment No. 9 PIK Fee, (ii) the Amendment No. 10 PIK Fee and (iii) the Amendment No. 12 PIK Fee), expenses, indemnification or otherwise and whether primary, secondary, direct, indirect, contingent, fixed or otherwise (including obligations of performance).”
(ii)The definition of “Term Loan Maturity Date” is hereby amended and restated to read as follows:
““Term Loan Maturity Date” means the earliest of (a) July 24, 2022, (b) the date on which the Loan Parties have failed to satisfy the Milestone and (c) the date that the Term Loan shall become due and payable in full hereunder, whether by acceleration or otherwise.”
(c)Section 2.4 (Interest). Section 2.4 of the Financing Agreement is hereby amended as follows:
(i)By adding the following new paragraph (h) to read as follows:
“(g) From and after the Amendment No. 12 Effective Date interest will accrue and be payable on the Amendment No. 12 PIK Fee.”
(d)Section 5.15 (Milestone). Article V of the Financing Agreement is hereby amended by inserting the following new Section 5.15 as follows:
“Section 5.15. Milestone. The Loan Parties shall satisfy the following milestone (the “Milestone”):
(i)By no later than July 24, 2022, the Company shall have executed and delivered to the Administrative Agent, an executed and binding Stalking Horse APA.”
3.Amendment No. 11. The parties hereto acknowledge and agree that the conditions to the effectiveness of Amendment No. 11 were not satisfied and Amendment No. 11 has terminated and is no longer in effect.
4.Conditions to Effectiveness. This Amendment shall become effective only upon satisfaction in full, in a manner satisfactory to the Administrative Agent, of the following conditions precedent on or before July 13, 2022 (the first date on or before July 13, 2022 upon which all such conditions shall have been satisfied being hereinafter referred to as the “Amendment Effective Date”):
(a)Payment of Fees, Etc. The Borrowers shall have paid on or before the Amendment Effective Date (i) the Amendment No. 12 PIK Fee, which fee shall be fully earned, due and payable to Administrative Agent on the Amendment Effective Date and added to the principal amount of the Term Loan, and (ii) all fees, costs, expenses and taxes then payable, if any, pursuant to Section 2.7 or 10.2 of the Financing Agreement.
(b)Representations and Warranties. The representations and warranties contained in this Amendment and in Article IV of the Financing Agreement and in each other Loan Document (with the exception of the representations and warranties made in Sections 4.5, 4.9, 4.19 and 4.23(d) of the Financing Agreement) shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as the Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.
(c)No Default; Event of Default. No Default or Event of Default shall have occurred and be continuing on the Amendment Effective Date or result from this Amendment becoming effective in accordance with its terms.
(d)Delivery of Documents. The Administrative Agent shall have received on or before the Amendment Effective Date this Amendment, duly executed by the Loan Parties, the Administrative Agent and the Lenders.
(e)Liens; Priority. The Administrative Agent shall be satisfied that the Administrative Agent has been granted, and holds, for the benefit of the Administrative Agent and the Lenders, a perfected, first priority Lien on and security interest in all of the Collateral, subject only to Permitted Liens, to the extent such Liens and security interests are required pursuant to the Loan Documents to be granted or perfected on or before the Amendment Effective Date.
(f)Approvals. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with any Loan Document or the transactions contemplated thereby or the conduct of the Loan Parties’ business shall have been obtained or made and shall be in full force and effect. There shall exist no claim, action, suit, investigation, litigation or proceeding (including, without limitation, shareholder or derivative litigation) pending or, to the knowledge of any Loan Party, threatened in any court or before any arbitrator or Governmental Authority which (i) relates to the Loan Documents or the transactions contemplated thereby or (ii) could reasonably be expected to have a Material Adverse Effect.
5.Continued Effectiveness of the Financing Agreement and Other Loan Documents. Each Loan Party hereby (a) acknowledges and consents to this Amendment,(b) confirms and agrees that the Financing Agreement and each other Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Amendment Effective Date, all references in any such Loan Document to “the Financing Agreement”, the “Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Financing Agreement shall mean the Financing Agreement as amended by this Amendment, and(c) confirms and agrees that, to the extent that any such Loan Document purports to assign or pledge to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, or to grant to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, a security interest in or Lien on any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Financing Agreement (as amended hereby) and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects. This Amendment does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties’ obligations to repay the Loans in accordance with the terms of Financing Agreement or the obligations of the Loan Parties under any Loan Document to which they are a party, all of which obligations shall remain in full force and effect. Except as expressly
provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Administrative Agent or any Lender under the Financing Agreement or any other Loan Document nor constitute a waiver of any provision of the Financing Agreement or any other Loan Document.
6.No Novation. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby.
7.No Representations by Administrative Agent or Lenders. Each Loan Party hereby acknowledges that it has not relied on any representation, written or oral, express or implied, by Administrative Agent or any Lender, other than those expressly contained herein, in entering into this Amendment.
8.Release. Each Loan Party hereby acknowledges and agrees that: (a) neither it nor any of its Subsidiaries has any claim or cause of action against Administrative Agent or any Lender (or any of the directors, officers, employees, agents, attorneys or consultants of any of the foregoing) and (b) the Administrative Agent and the Lenders have heretofore properly performed and satisfied in a timely manner all of their obligations to the Loan Parties, and all of their Subsidiaries and Affiliates. Notwithstanding the foregoing, the Administrative Agent and the Lenders wish (and the Loan Parties agree) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of their rights, interests, security and/or remedies. Accordingly, for and in consideration of the agreements contained in this Amendment and other good and valuable consideration, each Loan Party (for itself and its Subsidiaries and Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally and irrevocably release, waive and forever discharge the Administrative Agent and the Lenders, together with their respective Affiliates and Related Funds, and each of the directors, officers, employees, agents, attorneys and consultants of each of the foregoing (collectively, the “Released Parties”), from any and all debts, claims, allegations, obligations, damages, costs, attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done, in each case, on or prior to the Amendment Effective Date directly arising out of, connected with or related to this Amendment, the Financing Agreement or any other Loan Document, or any act, event or transaction related or attendant thereto, or the agreements of Administrative Agent or any Lender contained therein, or the possession, use, operation or control of any of the assets of any Loan Party, or the making of any Loans or other advances, or the management of such Loans or other advances or the Collateral. Each Loan Party represents and warrants that it has no knowledge of any claim by any Releasor against any Released Party or of any facts or acts or omissions of any Released Party which on the date hereof would be the basis of a claim by any Releasor against any Released Party which would not be released hereby.
9.Estoppel; Term Loan. To induce the Administrative Agent and the Lenders to enter into this Amendment, each Loan Party hereby acknowledges and agrees that there exists no Default or Event of Default as of the Amendment Effective Date. Each Loan Party hereby acknowledges and agrees that as of the Amendment Effective Date (after giving effect to the effectiveness of this Amendment No. 12 and the payment in kind of the Amendment No. 12 PIK Fee), the outstanding principal amount of the Term Loan is $91,980,000 and no right of offset, defense, counterclaim or objection exists in favor of any Loan Party as against Administrative Agent or any Lender with respect to the Obligations.
10.Further Assurances. The Loan Parties shall execute any and all further documents, agreements and instruments, and take all further actions, as may be required under applicable law or as Administrative Agent may reasonably request, in order to effect the purposes of this Amendment.
11.Expenses. Notwithstanding anything to the contrary contained herein or in the Financing Agreement (including, for the avoidance of doubt, Section 10.2 thereof, Amendment No. 10 and Amendment No. 11), any limitation in Amendment No. 10 and Amendment No. 11 on the amount of out-of-pocket fees, costs, expenses and disbursements of counsel required to be paid or reimbursed by the Loan Parties in connection with (a) the preparation for any bankruptcy, liquidation or similar reorganization and/or (b) any discussions with the Administrative Agent and the Lenders (or their respective representatives) with respect to any such bankruptcy, liquidation or similar reorganization is hereby, deleted terminated and no longer in effect.
12.Miscellaneous.
(a)This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
(b)Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
(c)This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
(d)Each Loan Party hereby acknowledges and agrees that this Amendment constitutes a “Loan Document” under the Financing Agreement. Accordingly, it shall be an immediate Event of Default under the Financing Agreement if (i) any representation or warranty made by any Loan Party under or in connection with this Amendment shall have been incorrect in any respect when made or deemed made, or (ii) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in this Amendment.
(e)Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date set forth on the first page hereof.
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BORROWER:
THERAPEUTICSMD, INC. |
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By: |
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/s/ Michael Donegan |
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Name: |
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Michael Donegan |
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Title: |
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Interim Chief Financial Officer, Chief Accounting Officer and Vice President Finance |
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GUARANTORS:
VITAMEDMD, LLC |
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By: |
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/s/ Hugh O’Dowd |
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Name: |
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Hugh O’Dowd |
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Title: |
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Manager |
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BOCAGREENMD, INC. |
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By: |
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/s/ Hugh O’Dowd |
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Name: |
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Hugh O'Dowd |
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Title: |
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Chief Executive Officer |
[Amendment No. 12]
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SIXTH STREET SPECIALTY LENDING, INC., as Administrative Agent and Lender |
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By: |
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/s/ Robert (Bo) Stanley |
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Name: Robert (Bo) Stanley |
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Title: President |
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TOP IV TALENTS, LLC, as Lender |
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By: |
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/s/ Steven Pluss |
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Name: Steven Pluss |
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Title: Vice President |
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TAO TALENTS, LLC, as Lender |
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By: |
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/s/ Steven Pluss |
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Name: Steven Pluss |
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Title: Vice President |
[Amendment No. 12]
Exhibit 10.2
AMENDMENT NO. 13
TO FINANCING AGREEMENT
AMENDMENT NO. 13 TO FINANCING AGREEMENT, dated as of July 24, 2022 (this “Amendment”), to the Financing Agreement, dated as of April 24, 2019 (as amended, restated, supplemented or otherwise modified from time to time through the date hereof, the “Financing Agreement”), by and among THERAPEUTICSMD, INC., a Nevada corporation (“Company” or “Borrower”), certain Subsidiaries of Borrower, as Guarantors, the Lenders from time to time party thereto, and SIXTH STREET SPECIALTY LENDING, INC., a Delaware corporation (“Sixth Street”), as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”).
WHEREAS, the Loan Parties have requested that the Administrative Agent and the Lenders amend certain terms and conditions of the Financing Agreement; and
WHEREAS, the Administrative Agent and the Lenders are willing to amend such terms and conditions of the Financing Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.Definitions. All terms used herein that are defined in the Financing Agreement and not otherwise defined herein shall have the meanings assigned to them in the Financing Agreement.
2.Amendments.
(a)New Definitions. Section 1.01 of the Financing Agreement is hereby amended by adding the following definitions, in appropriate alphabetical order:
(i)““Amendment No. 13” means Amendment No. 13 to Financing Agreement, dated as of July 24, 2022, by and among the Loan Parties, the Administrative Agent and the Lenders.”
(ii)““Amendment No. 13 Effective Date” means the “Amendment Effective Date” as set forth in Amendment No. 13.”
(iii)““June 2022 Interest Payment Amount” means the amount of interest accrued on the Obligations for the period commencing on March 31, 2022 through and including June 30, 2022, in the amount of $2,856,194.00.”
(b)Existing Definitions. Section 1.01 of the Financing Agreement is hereby amended as follows:
(i)The definition of “Term Loan Maturity Date” is hereby amended and restated to read as follows:
““Term Loan Maturity Date” means the earlier of (a) July 27, 2022 and (b) the date that the Term Loan shall become due and payable in full hereunder, whether by acceleration or otherwise; provided, that, (x) the Term Loan Maturity Date shall automatically be extended to August 19, 2022 if the Company shall have received not less than $15 million of cash Net Proceeds from a preferred Equity Issuance on terms acceptable to the Administrative Agent, such acceptance to be evidenced by a written acknowledgement from the Administrative Agent, and (y) the Term Loan Maturity Date shall automatically be further extended to September 21, 2022 if a public tender offer is commenced for all of the Borrower’s outstanding common stock.”
(c)Section 5.15 (Payments). Section 5.15 of the Financing Agreement is hereby amended and restated as follows:
“Section 5.15 (Payments). On or before July 25, 2022, the Loan Parties shall have paid (i) a portion of the legal fees of Proskauer Rose, LLP in the amount of $350,000 and (ii) the June 2002 Interest Payment Amount to the Administrative Agent.”
(d)Section 5.16 (Chief Restructuring Officer). Article V of the Financing Agreement is hereby amended by inserting the following new Section 5.16 as follows:
“Section 5.16. Chief Restructuring Officer. The Loan Parties shall retain no later than July 25, 2022 and maintain Jeffrey Varsalone from G2 Capital Advisors, LLC as the Company’s chief restructuring officer on terms reasonably satisfactory to the Administrative Agent (the “CRO”). The Loan Parties hereby (i) authorize the Administrative Agent (or their respective agents or advisors) to communicate directly with the CRO regarding any and all matters related to the Loan Parties, including, without limitation, all financial reports and projections developed, reviewed or verified by the CRO and all additional information, reports and statements reasonably requested by the Administrative Agent and (ii) authorize and direct the CRO to provide the Administrative Agent (or their respective agents or advisors) with copies of reports and other information or materials prepared or reviewed by such CRO as the Administrative Agent may reasonably request.”
(e)Section 8.1 (Events of Default). Section 8.1(c) (Breach of Covenants) is hereby amended and restated to read as follows:
“(c) Breach of Covenants. Failure of any Loan Party to perform or comply with any term or condition contained in (i) Section 2.2, Section 5.1(a)-(m), Section 5.1(o)-(t), Section 5.2, Section 5.3, Section 5.5, Section 5.7(c), Section 5.8, Section 5.9, Section 5.12, Section 5.13, Section 5.15, Section 5.16 or Article VI or (ii) Section 5.4, Section 5.6, Section 5.7(a)-(b), Section 5.10 or Section 5.11, and, solely in the case of this clause (ii), such failure shall continue unremedied for 10 Business Days following notice of such failure; or”
3.Conditions to Effectiveness. This Amendment shall become effective only upon satisfaction in full, in a manner satisfactory to the Administrative Agent, of the following conditions precedent (the first date upon which all such conditions shall have been satisfied being hereinafter referred to as the “Amendment Effective Date”):
(a)Payment of Fees, Etc. The Borrowers shall have paid on or before the Amendment Effective Date, all fees, costs, expenses and taxes then payable, if any, pursuant to Section 2.7 or 10.2 of the Financing Agreement.
(b)Representations and Warranties. The representations and warranties contained in this Amendment and in Article IV of the Financing Agreement and in each other Loan Document (with the exception of the representations and warranties made in Sections 4.5, 4.9, 4.19 and 4.23(d) of the Financing Agreement) shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as the Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.
(c)No Default; Event of Default. No Default or Event of Default shall have occurred and be continuing on the Amendment Effective Date or result from this Amendment becoming effective in accordance with its terms.
(d)Delivery of Documents. The Administrative Agent shall have received on or before the Amendment Effective Date:
(i)this Amendment, duly executed by the Loan Parties, the Administrative Agent and the Lenders; and
(ii)the retention agreement for the CRO, in form and substance acceptable to the Administrative Agent, duly executed by the Loan Parties and G2 Capital Advisors, LLC.
(e)Liens; Priority. The Administrative Agent shall be satisfied that the Administrative Agent has been granted, and holds, for the benefit of the Administrative Agent and the Lenders, a perfected, first priority Lien on and security interest in all of the Collateral, subject only to Permitted Liens, to the extent such Liens and security interests are required pursuant to the Loan Documents to be granted or perfected on or before the Amendment Effective Date.
(f)Approvals. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with any Loan Document or the transactions contemplated thereby or the conduct of the Loan Parties’ business shall have been obtained or made and shall be in full force and effect. There shall exist no claim, action, suit, investigation, litigation or proceeding (including, without limitation, shareholder or derivative litigation) pending or, to the knowledge of any Loan Party, threatened in any court or before any arbitrator or Governmental Authority which (i) relates to the Loan Documents or the transactions contemplated thereby or (ii) could reasonably be expected to have a Material Adverse Effect.
4.Continued Effectiveness of the Financing Agreement and Other Loan Documents. Each Loan Party hereby (a) acknowledges and consents to this Amendment, (b) confirms and agrees that the Financing Agreement and each other Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Amendment Effective Date, all references in any such Loan Document to “the Financing Agreement”, the “Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Financing Agreement shall mean the Financing Agreement as amended by this Amendment, and (c) confirms and agrees that, to the extent that any such Loan Document purports to assign or pledge to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, or to grant to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, a security interest in or Lien on any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Financing Agreement (as amended hereby) and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects. This Amendment does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties’ obligations to repay the Loans in accordance with the terms of Financing Agreement or the obligations of the Loan Parties under any Loan Document to which they are a party, all of which obligations shall remain in full force and effect. Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Administrative Agent or any Lender under the Financing Agreement or any other Loan Document nor constitute a waiver of any provision of the Financing Agreement or any other Loan Document.
5.No Novation. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby.
6.No Representations by Administrative Agent or Lenders. Each Loan Party hereby acknowledges that it has not relied on any representation, written or oral, express or implied, by Administrative Agent or any Lender, other than those expressly contained herein, in entering into this Amendment.
7.Release. Each Loan Party hereby acknowledges and agrees that: (a) neither it nor any of its Subsidiaries has any claim or cause of action against Administrative Agent or any Lender (or any of the directors, officers, employees, agents, attorneys or consultants of any of the foregoing) and (b) the Administrative Agent and the Lenders have heretofore properly performed and satisfied in a timely manner all of their obligations to the Loan Parties, and all of their Subsidiaries and Affiliates. Notwithstanding the foregoing, the Administrative Agent and the Lenders wish (and the Loan Parties agree) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of their rights, interests, security and/or remedies. Accordingly, for and in consideration of the agreements contained in this Amendment and other good and valuable consideration, each Loan Party (for itself and its Subsidiaries and Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally and irrevocably release, waive and forever discharge the Administrative Agent and the Lenders, together with their respective Affiliates and Related Funds, and each of the directors, officers, employees, agents, attorneys and consultants of each of the foregoing (collectively, the “Released Parties”), from any and all debts, claims, allegations, obligations, damages, costs, attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done, in each case, on or prior to the Amendment Effective Date directly arising out of, connected with or related to this Amendment, the Financing Agreement or any other Loan Document, or any act, event or transaction related or attendant thereto, or the agreements of Administrative Agent or any Lender contained therein, or the possession, use, operation or control of any of the assets of any Loan Party, or the making of any Loans or other advances, or the management of such Loans or other advances or the Collateral. Each Loan Party represents and warrants that it has no knowledge of any claim by any Releasor against any Released Party or of any facts or acts or omissions of any Released Party which on the date hereof would be the basis of a claim by any Releasor against any Released Party which would not be released hereby.
8.Estoppel; Term Loan. To induce the Administrative Agent and the Lenders to enter into this Amendment, each Loan Party hereby acknowledges and agrees that there exists no Default or Event of Default as of the Amendment Effective Date. Each Loan Party hereby acknowledges and agrees that as of the Amendment Effective Date (after giving effect to the effectiveness of this Amendment No. 13), the outstanding principal amount of the Term Loan is $91,980,000 and no right of offset, defense, counterclaim or objection exists in favor of any Loan Party as against Administrative Agent or any Lender with respect to the Obligations.
9.Further Assurances. The Loan Parties shall execute any and all further documents, agreements and instruments, and take all further actions, as may be required under applicable law or as Administrative Agent may reasonably request, in order to effect the purposes of this Amendment.
10.Miscellaneous.
(a)This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
(b)Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
(c)This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
(d)Each Loan Party hereby acknowledges and agrees that this Amendment constitutes a “Loan Document” under the Financing Agreement. Accordingly, it shall be an immediate Event of Default under the Financing Agreement if (i) any representation or warranty made by any Loan Party under or in connection with this Amendment shall have been incorrect in any respect when made or deemed made, or (ii) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in this Amendment.
(e)Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date set forth on the first page hereof.
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BORROWER: |
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THERAPEUTICSMD, INC. |
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By: |
/s/ Marlan Walker |
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Name: |
Marlan Walker |
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Title: |
General Counsel and Secretary |
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GUARANTORS: |
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VITAMEDMD, LLC |
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By: |
/s/ Hugh O’Dowd |
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Name: |
Hugh O’Dowd |
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Title: |
Manager |
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BOCAGREENMD, INC. |
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By: |
/s/ Hugh O’Dowd |
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Name: |
Hugh O’Dowd |
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Title: |
Chief Executive Officer |
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[Amendment No. 13]
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SIXTH STREET SPECIALTY LENDING, INC., as |
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Administrative Agent and Lender |
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By: |
/s/ Joshua Easterly |
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Name: Joshua Easterly |
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Title: Chief Executive Officer |
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TOP IV TALENTS, LLC, as Lender |
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By: |
/s/ Steven Pluss |
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Name: Steven Pluss |
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Title: Vice President |
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TAO TALENTS, LLC, as Lender |
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By: |
/s/ Steven Pluss |
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Name: Steven Pluss |
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Title: Vice President |
[Amendment No. 13]
Exhibit 10.3
AMENDMENT NO. 14
TO FINANCING AGREEMENT
AMENDMENT NO. 14 TO FINANCING AGREEMENT, dated as of July 27, 2022 (this “Amendment”), to the Financing Agreement, dated as of April 24, 2019 (as amended, restated, supplemented or otherwise modified from time to time through the date hereof, the “Financing Agreement”), by and among THERAPEUTICSMD, INC., a Nevada corporation (“Company” or “Borrower”), certain Subsidiaries of Borrower, as Guarantors, the Lenders from time to time party thereto, and SIXTH STREET SPECIALTY LENDING, INC., a Delaware corporation (“Sixth Street”), as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”).
WHEREAS, the Loan Parties have requested that the Administrative Agent and the Lenders amend certain terms and conditions of the Financing Agreement; and
WHEREAS, the Administrative Agent and the Lenders are willing to amend such terms and conditions of the Financing Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.Definitions. All terms used herein that are defined in the Financing Agreement and not otherwise defined herein shall have the meanings assigned to them in the Financing Agreement.
2.Amendments.
(a)New Definitions. Section 1.01 of the Financing Agreement is hereby amended by adding the following definitions, in appropriate alphabetical order:
(i)““Amendment No. 14” means Amendment No. 14 to Financing Agreement, dated as of July 27, 2022, by and among the Loan Parties, the Administrative Agent and the Lenders.”
(ii)““Amendment No. 14 Effective Date” means the “Amendment Effective Date” as set forth in Amendment No. 14.”
(b)Existing Definitions. Section 1.01 of the Financing Agreement is hereby amended as follows:
(i)The definition of “Term Loan Maturity Date” is hereby amended and restated to read as follows:
““Term Loan Maturity Date” means the earlier of (a) July 28, 2022 and (b) the date that the Term Loan shall become due and payable in full hereunder, whether by acceleration or otherwise.”
3.Conditions to Effectiveness. This Amendment shall become effective only upon satisfaction in full, in a manner satisfactory to the Administrative Agent, of the following conditions precedent (the first date upon which all such conditions shall have been satisfied being hereinafter referred to as the “Amendment Effective Date”):
(a)Payment of Fees, Etc. The Borrowers shall have paid on or before the Amendment Effective Date, all fees, costs, expenses and taxes then payable, if any, pursuant to Section 2.7 or 10.2 of the Financing Agreement.
(b)Representations and Warranties. The representations and warranties contained in this Amendment and in Article IV of the Financing Agreement and in each other Loan Document (with the exception of the representations and warranties made in Sections 4.5, 4.9, 4.19 and 4.23(d) of the Financing Agreement) shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as the Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.
(c)No Default; Event of Default. No Default or Event of Default shall have occurred and be continuing on the Amendment Effective Date or result from this Amendment becoming effective in accordance with its terms.
(d)Delivery of Documents. The Administrative Agent shall have received on or before the Amendment Effective Date:
(i)this Amendment, duly executed by the Loan Parties, the Administrative Agent and the Lenders.
(e)Liens; Priority. The Administrative Agent shall be satisfied that the Administrative Agent has been granted, and holds, for the benefit of the Administrative Agent and the Lenders, a perfected, first priority Lien on and security interest in all of the Collateral, subject only to Permitted Liens, to the extent such Liens and security interests are required pursuant to the Loan Documents to be granted or perfected on or before the Amendment Effective Date.
(f)Approvals. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with any Loan Document or the transactions contemplated thereby or the conduct of the Loan Parties’ business shall have been obtained or made and shall be in full force and effect. There shall exist no claim, action, suit, investigation, litigation or proceeding (including, without limitation, shareholder or derivative litigation) pending or, to the knowledge of any Loan Party, threatened in any court or before any arbitrator or Governmental Authority which (i) relates to the Loan Documents or the transactions contemplated thereby or (ii) could reasonably be expected to have a Material Adverse Effect.
4.Continued Effectiveness of the Financing Agreement and Other Loan Documents. Each Loan Party hereby (a) acknowledges and consents to this Amendment, (b) confirms and agrees that the Financing Agreement and each other Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Amendment Effective Date, all references in any such Loan Document to “the Financing Agreement”, the “Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Financing Agreement shall mean the Financing Agreement as amended by this Amendment, and (c) confirms and agrees that, to the extent that any such Loan Document purports to assign or pledge to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, or to grant to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, a security interest in or Lien on any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Financing Agreement (as amended hereby) and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects. This Amendment does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties’ obligations to repay
the Loans in accordance with the terms of Financing Agreement or the obligations of the Loan Parties under any Loan Document to which they are a party, all of which obligations shall remain in full force and effect. Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Administrative Agent or any Lender under the Financing Agreement or any other Loan Document nor constitute a waiver of any provision of the Financing Agreement or any other Loan Document.
5.No Novation. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby.
6.No Representations by Administrative Agent or Lenders. Each Loan Party hereby acknowledges that it has not relied on any representation, written or oral, express or implied, by Administrative Agent or any Lender, other than those expressly contained herein, in entering into this Amendment.
7.Release. Each Loan Party hereby acknowledges and agrees that: (a) neither it nor any of its Subsidiaries has any claim or cause of action against Administrative Agent or any Lender (or any of the directors, officers, employees, agents, attorneys or consultants of any of the foregoing) and (b) the Administrative Agent and the Lenders have heretofore properly performed and satisfied in a timely manner all of their obligations to the Loan Parties, and all of their Subsidiaries and Affiliates. Notwithstanding the foregoing, the Administrative Agent and the Lenders wish (and the Loan Parties agree) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of their rights, interests, security and/or remedies. Accordingly, for and in consideration of the agreements contained in this Amendment and other good and valuable consideration, each Loan Party (for itself and its Subsidiaries and Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally and irrevocably release, waive and forever discharge the Administrative Agent and the Lenders, together with their respective Affiliates and Related Funds, and each of the directors, officers, employees, agents, attorneys and consultants of each of the foregoing (collectively, the “Released Parties”), from any and all debts, claims, allegations, obligations, damages, costs, attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done, in each case, on or prior to the Amendment Effective Date directly arising out of, connected with or related to this Amendment, the Financing Agreement or any other Loan Document, or any act, event or transaction related or attendant thereto, or the agreements of Administrative Agent or any Lender contained therein, or the possession, use, operation or control of any of the assets of any Loan Party, or the making of any Loans or other advances, or the management of such Loans or other advances or the Collateral. Each Loan Party represents and warrants that it has no knowledge of any claim by any Releasor against any Released Party or of any facts or acts or omissions of any Released Party which on the date hereof would be the basis of a claim by any Releasor against any Released Party which would not be released hereby.
8.Estoppel; Term Loan. To induce the Administrative Agent and the Lenders to enter into this Amendment, each Loan Party hereby acknowledges and agrees that there exists no Default or Event of Default as of the Amendment Effective Date. Each Loan Party hereby acknowledges and agrees that as of the Amendment Effective Date (after giving effect to the effectiveness of this Amendment No. 14), the outstanding principal amount of the Term Loan is $91,980,000 and no right of offset, defense, counterclaim or objection exists in favor of any Loan Party as against Administrative Agent or any Lender with respect to the Obligations.
9.Further Assurances. The Loan Parties shall execute any and all further documents, agreements and instruments, and take all further actions, as may be required under applicable law or as Administrative Agent may reasonably request, in order to effect the purposes of this Amendment.
10.Miscellaneous.
(a)This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
(b)Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
(c)This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
(d)Each Loan Party hereby acknowledges and agrees that this Amendment constitutes a “Loan Document” under the Financing Agreement. Accordingly, it shall be an immediate Event of Default under the Financing Agreement if (i) any representation or warranty made by any Loan Party under or in connection with this Amendment shall have been incorrect in any respect when made or deemed made, or (ii) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in this Amendment.
(e)Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date set forth on the first page hereof.
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BORROWER: |
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THERAPEUTICSMD, INC. |
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By: |
/s/ Michael Donegan |
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Name: |
Michael Donegan |
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Title: |
Interim Chief Financial Officer, Chief Accounting Officer and Vice President Finance |
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GUARANTORS: |
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VITAMEDMD, LLC |
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By: |
/s/ Hugh O’Dowd |
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Name: |
Hugh O'Dowd |
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Title: |
Manager |
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BOCAGREENMD, INC. |
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By: |
/s/ Hugh O’Dowd |
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Name: |
Hugh O'Dowd |
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Title: |
Chief Executive Officer |
[Amendment No. 14]
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SIXTH STREET SPECIALTY LENDING, INC., as |
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Administrative Agent and Lender |
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By: |
/s/ Joshua Easterly |
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Name: Joshua Easterly |
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Title: Chief Executive Officer |
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TOP IV TALENTS, LLC, as Lender |
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By: |
/s/ Joshua Easterly |
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Name: Joshua Easterly |
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Title: Co-President |
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TAO TALENTS, LLC, as Lender |
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By: |
/s/ Joshua Easterly |
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Name: Joshua Easterly |
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Title: Co-President |
[Amendment No. 14]
Exhibit 10.4
AMENDMENT NO. 15
TO FINANCING AGREEMENT
AMENDMENT NO. 15 TO FINANCING AGREEMENT, dated as of July 28, 2022 (this “Amendment”), to the Financing Agreement, dated as of April 24, 2019 (as amended, restated, supplemented or otherwise modified from time to time through the date hereof, the “Financing Agreement”), by and among THERAPEUTICSMD, INC., a Nevada corporation (“Company” or “Borrower”), certain Subsidiaries of Borrower, as Guarantors, the Lenders from time to time party thereto, and SIXTH STREET SPECIALTY LENDING, INC., a Delaware corporation (“Sixth Street”), as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”).
WHEREAS, the Loan Parties have requested that the Administrative Agent and the Lenders amend certain terms and conditions of the Financing Agreement; and
WHEREAS, the Administrative Agent and the Lenders are willing to amend such terms and conditions of the Financing Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein that are defined in the Financing Agreement and not otherwise defined herein shall have the meanings assigned to them in the Financing Agreement.
2. Amendments.
(a) New Definitions. Section 1.01 of the Financing Agreement is hereby amended by adding the following definitions, in appropriate alphabetical order:
(i)““Amendment No. 15” means Amendment No. 15 to Financing Agreement, dated as of July 28, 2022, by and among the Loan Parties, the Administrative Agent and the Lenders.”
(ii)““Amendment No. 15 Effective Date” means the “Amendment Effective Date” as set forth in Amendment No. 15.”
(b) Existing Definitions. Section 1.01 of the Financing Agreement is hereby amended as follows:
(i)The definition of “Term Loan Maturity Date” is hereby amended and restated to read as follows:
““Term Loan Maturity Date” means the earlier of (a) July 29, 2022 and (b) the date that the Term Loan shall become due and payable in full hereunder, whether by acceleration or otherwise.”
3. Conditions to Effectiveness. This Amendment shall become effective only upon satisfaction in full, in a manner satisfactory to the Administrative Agent, of the following conditions precedent (the first date upon which all such conditions shall have been satisfied being hereinafter referred to as the “Amendment Effective Date”):
(a)Payment of Fees, Etc. The Borrowers shall have paid on or before the Amendment Effective Date, all fees, costs, expenses and taxes then payable, if any, pursuant to Section 2.7 or 10.2 of the Financing Agreement.
(b)Representations and Warranties. The representations and warranties contained in this Amendment and in Article IV of the Financing Agreement and in each other Loan Document (with the exception of the representations and warranties made in Sections 4.5, 4.9, 4.19 and 4.23(d) of the Financing Agreement) shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as the Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.
(c)No Default; Event of Default. No Default or Event of Default shall have occurred and be continuing on the Amendment Effective Date or result from this Amendment becoming effective in accordance with its terms.
(d)Delivery of Documents. The Administrative Agent shall have received on or before the Amendment Effective Date:
(i)this Amendment, duly executed by the Loan Parties, the Administrative Agent and the Lenders.
(e)Liens; Priority. The Administrative Agent shall be satisfied that the Administrative Agent has been granted, and holds, for the benefit of the Administrative Agent and the Lenders, a perfected, first priority Lien on and security interest in all of the Collateral, subject only to Permitted Liens, to the extent such Liens and security interests are required pursuant to the Loan Documents to be granted or perfected on or before the Amendment Effective Date.
(f)Approvals. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with any Loan Document or the transactions contemplated thereby or the conduct of the Loan Parties’ business shall have been obtained or made and shall be in full force and effect. There shall exist no claim, action, suit, investigation, litigation or proceeding (including, without limitation, shareholder or derivative litigation) pending or, to the knowledge of any Loan Party, threatened in any court or before any arbitrator or Governmental Authority which (i) relates to the Loan Documents or the transactions contemplated thereby or (ii) could reasonably be expected to have a Material Adverse Effect.
4.Continued Effectiveness of the Financing Agreement and Other Loan Documents. Each Loan Party hereby (a) acknowledges and consents to this Amendment, (b) confirms and agrees that the Financing Agreement and each other Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Amendment
Effective Date, all references in any such Loan Document to “the Financing Agreement”, the “Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Financing Agreement shall mean the Financing Agreement as amended by this Amendment, and (c) confirms and agrees that, to the extent that any such Loan Document purports to assign or pledge to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, or to grant to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, a security interest in or Lien on any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Financing Agreement (as amended hereby) and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects. This Amendment does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties’ obligations to repay the Loans in accordance with the terms of Financing Agreement or the obligations of the Loan Parties under any Loan Document to which they are a party, all of which obligations shall remain in full force and effect. Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Administrative Agent or any Lender under the Financing Agreement or any other Loan Document nor constitute a waiver of any provision of the Financing Agreement or any other Loan Document.
5.No Novation. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby.
6.No Representations by Administrative Agent or Lenders. Each Loan Party hereby acknowledges that it has not relied on any representation, written or oral, express or implied, by Administrative Agent or any Lender, other than those expressly contained herein, in entering into this Amendment.
7.Release. Each Loan Party hereby acknowledges and agrees that: (a) neither it nor any of its Subsidiaries has any claim or cause of action against Administrative Agent or any Lender (or any of the directors, officers, employees, agents, attorneys or consultants of any of the foregoing) and (b) the Administrative Agent and the Lenders have heretofore properly performed and satisfied in a timely manner all of their obligations to the Loan Parties, and all of their Subsidiaries and Affiliates. Notwithstanding the foregoing, the Administrative Agent and the Lenders wish (and the Loan Parties agree) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of their rights, interests, security and/or remedies. Accordingly, for and in consideration of the agreements contained in this Amendment and other good and valuable consideration, each Loan Party (for itself and its Subsidiaries and Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally and irrevocably release, waive and forever discharge the Administrative Agent and the Lenders, together with their respective Affiliates and Related Funds, and each of the directors, officers, employees, agents, attorneys and consultants of each of the foregoing (collectively, the “Released Parties”), from any and all debts, claims, allegations, obligations, damages, costs, attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done, in each case, on or prior to the Amendment Effective Date directly arising out of, connected with or related to this Amendment, the Financing Agreement or any other Loan Document, or any act, event or transaction related or attendant thereto, or the agreements of Administrative Agent or any Lender contained therein, or the possession, use, operation or control of any of the assets of any Loan Party, or the making of any Loans or other advances, or the management of such Loans or other advances or the Collateral. Each Loan Party represents and warrants that it has no knowledge of any claim by any Releasor against any Released Party or of any facts or acts or omissions of any Released Party which on the
date hereof would be the basis of a claim by any Releasor against any Released Party which would not be released hereby.
8.Estoppel; Term Loan. To induce the Administrative Agent and the Lenders to enter into this Amendment, each Loan Party hereby acknowledges and agrees that there exists no Default or Event of Default as of the Amendment Effective Date. Each Loan Party hereby acknowledges and agrees that as of the Amendment Effective Date (after giving effect to the effectiveness of this Amendment No. 15), the outstanding principal amount of the Term Loan is $91,980,000 and no right of offset, defense, counterclaim or objection exists in favor of any Loan Party as against Administrative Agent or any Lender with respect to the Obligations.
9.Further Assurances. The Loan Parties shall execute any and all further documents, agreements and instruments, and take all further actions, as may be required under applicable law or as Administrative Agent may reasonably request, in order to effect the purposes of this Amendment.
10.Miscellaneous.
(a) This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
(b)Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
(c)This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
(d)Each Loan Party hereby acknowledges and agrees that this Amendment constitutes a “Loan Document” under the Financing Agreement. Accordingly, it shall be an immediate Event of Default under the Financing Agreement if (i) any representation or warranty made by any Loan Party under or in connection with this Amendment shall have been incorrect in any respect when made or deemed made, or (ii) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in this Amendment.
(e)Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date set forth on the first page hereof.
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BORROWER:
THERAPEUTICSMD, INC. |
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By: |
/s/ Marlan Walker |
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Name: |
Marlan Walker |
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Title: |
General Counsel and Secretary |
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GUARANTORS:
VITAMEDMD, LLC |
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By: |
/s/ Hugh O’Dowd |
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Name: |
Hugh O’Dowd |
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Title: |
Manager |
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BOCAGREENMD, INC. |
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By: |
/s/ Hugh O’Dowd |
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Name: |
Hugh O’Dowd |
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Title: |
Chief Executive Officer |
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[Amendment No. 15]
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SIXTH STREET SPECIALTY LENDING, INC., as |
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Administrative Agent and Lender |
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By: |
/s/ Joshua Easterly |
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Name: Joshua Easterly |
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Title: Chief Executive Officer |
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TOP IV TALENTS, LLC, as Lender |
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By: |
/s/ Joshua Easterly |
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Name: Joshua Easterly |
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Title: Co-President |
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TAO TALENTS, LLC, as Lender |
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By: |
/s/ Joshua Easterly |
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Name: Joshua Easterly |
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Title: Co-President |
[Amendment No. 15]
Exhibit 31.1
Certification of Chief Executive Officer
I, Brian Bernick, certify that:
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I have reviewed this quarterly report on Form 10-Q of TherapeuticsMD, Inc.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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(3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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(4) |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2022
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/s/ Brian Bernick |
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Brian Bernick |
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Interim Co-Chief Executive Officer (Co-Principal Executive Officer) |
Exhibit 31.2
Certification of Chief Executive Officer
I, Mark Glickman, certify that:
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I have reviewed this quarterly report on Form 10-Q of TherapeuticsMD, Inc.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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(3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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(4) |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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(5) |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2022
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/s/ Mark Glickman |
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Mark Glickman |
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Interim Co-Chief Executive Officer (Co-Principal Executive Officer) |
Exhibit 31.3
Certification of Chief Financial Officer
I, Michael C. Donegan, certify that:
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(1) |
I have reviewed this quarterly report on Form 10-Q of TherapeuticsMD, Inc.; |
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(2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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(3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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(4) |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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(5) |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2022
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/s/ Michael C. Donegan |
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Michael C. Donegan |
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Interim Chief Financial Officer, Chief Accounting Officer and Vice President Finance (Principal Financial and Accounting Officer) |
Exhibit 32.1
Section 1350 Certification of Chief Executive Officer
In connection with the quarterly report of TherapeuticsMD, Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brian Bernick, Interim Co-Chief Executive Officer of the Company, certify, to my best knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
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(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: November 14, 2022
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/s/ Brian Bernick |
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Brian Bernick |
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Interim Co-Chief Executive Officer (Co-Principal Executive Officer) |
The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing).
Exhibit 32.2
Section 1350 Certification of Chief Executive Officer
In connection with the quarterly report of TherapeuticsMD, Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark Glickman, Interim Co-Chief Executive Officer of the Company, certify, to my best knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
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(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: November 14, 2022
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/s/ Mark Glickman |
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Mark Glickman |
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Interim Co-Chief Executive Officer (Co-Principal Executive Officer) |
The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing).
Exhibit 32.3
Section 1350 Certification of Chief Financial Officer
In connection with the quarterly report of TherapeuticsMD, Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael C. Donegan, Interim Chief Financial Officer of the Company, certify to my best knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
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(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: November 14, 2022
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/s/ Michael C. Donegan |
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Interim Chief Financial Officer, Chief Accounting Officer and Vice President Finance (Principal Financial and Accounting Officer) |
The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing).