Item 7.Management’s discussion and analysis of financial condition and results of operations

You should read the following discussion and analysis in conjunction with the information set forth under our consolidated financial statements and the notes to those financial statements included elsewhere in this 2022 10-K Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. See “Statement Regarding Forward-Looking Information.” Our actual results may differ materially from those contained in or implied by any forward-looking statements as a result of various factors, including, but not limited to, the risks and uncertainties described under “Risk Factors” elsewhere in this 2022 10-K Report.

Certain amounts in the Management’s discussion and analysis of financial condition and results of operations may not add due to rounding, and all percentages have been calculated using unrounded amounts.

Business overview

In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. On December 30, 2022, the Company completed the Mayne Transaction pursuant to which the Company and its subsidiaries (i) granted Mayne Pharma an exclusive license to commercialize the Company’s IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD® and vitaMedMD® brands in the United States and its possessions and territories, (ii) assigned to Mayne Pharma the Company’s exclusive license to commercialize ANNOVERA in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.

Pursuant to a License Agreement, dated December 4, 2022, the Company granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.

The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur of (i) the expiration or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States. Mayne Pharma will pay to the Company minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain further adjustments, including as described below. Upon the expiry of the 20-year royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products.

Pursuant to a Transaction Agreement, dated December 4, 2022, between the Company and Mayne Pharma, the Company sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including the Company’s exclusive license from the Population Council to commercialize ANNOVERA.

The total consideration from Mayne Pharma to the Company for the purchase of the Transferred Assets and the grant of the licenses under the Mayne License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.

On the Closing Date, the Company and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement. Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay the Company approximately $1.0 million in prepaid royalties on the Closing Date. The prepaid royalties will reduce the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257,250 per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment is paid to the Company. In addition, the parties agreed that Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to the Company by $1.5 million in consideration of Mayne Pharma assuming the Company’s obligations under a long-term services agreement, including the Company’s minimum payment obligations thereunder.

As part of the transformation that included the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods prior to the Closing Date. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in the Company’s consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2 Discontinued Operations to the consolidated financial statements included in this Annual Report.

The Company also has license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S.

In connection with the Company’s transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022. Severance obligations for all employees other than executive officers were paid in full in the first quarter of 2023 and severance obligations for terminated executive officers will be paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 2022, we employed one full-time employee primarily engaged in an executive position. We have engaged external consultants, including certain former members of our management team, who support our relationship with current partners and assist with certain financial, legal and regulatory matters and the continued wind-down of our historical business operations.

vitaCare divestiture

On April 14, 2022, we completed the divestiture of vitaCare with the sale of all vitaCare’s issued and outstanding capital stock (the “vitaCare Divestiture”). We received net proceeds of $142.6 million, net of transaction costs of $7.2 million, and we recognized a gain on sale of business of $143.4 million. Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the Purchase Agreement, which is recorded as restricted cash in the consolidated balance sheets. The restricted cash was held by an escrow agent and was released to us in March 2023. Additionally, we may receive up to an additional $7.0 million in earn-out consideration,

contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement. We will record the contingent consideration at the settlement amount when the consideration is realized or realizable.

The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. The commitments under a long-term services agreement related to vitaCare was transferred to Mayne Pharma as part of the Mayne Transaction. In addition, under the Mayne License Agreement Amendment, Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to us by $1.5 million in consideration of Mayne Pharma assuming our obligations under the long-term services agreement related to vitaCare.

The operations of vitaCare were classified as discontinued operations in December 2022, when the Company completed the change in its business by becoming a royalty company.

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.

As of the date of the filing of this Annual Report, the future extent to which the COVID-19 pandemic may continue to materially impact our financial condition, liquidity, or results of operations remains uncertain and difficult to predict. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

Portfolio of our licensed products

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 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.

On December 30, 2022, we granted an exclusive license to commercialize the Company’s IMVEXXY in the United States and its possessions and territories to Mayne Pharma. We also have entered into licensing agreements with third parties to market and sell IMVEXXY outside of the U.S. We entered into the Knight License Agreement, with Knight pursuant to which, we granted Knight an exclusive license to commercialize IMVEXXY in Canada and Israel. We entered into the Theramex License Agreement with Theramex HQ UK Limited (“Theramex”) pursuant to which we granted Theramex an exclusive license to commercialize IMVEXXY for human use outside of the U.S., except for Canada and Israel. As of December 31, 2022, no IMVEXXY sales had been made through these licensing agreements.

The FDA has also asked the sponsors of other vaginal estrogen products to participate in the observational study. In connection with the observational study, we would have been required to provide progress reports to the FDA on an annual basis. The obligation to conduct this study was transferred to Mayne Pharma as part of the License Agreement.

BIJUVA (estradiol and progesterone) capsules, 1 mg/100 mg

This pharmaceutical product is the first and only FDA approved bioidentical hormone therapy combination of estradiol and progesterone in a single, oral capsule for the treatment of moderate-to-severe vasomotor symptoms (commonly known as hot flashes or flushes) due to menopause in women with a uterus.

On December 30, 2022, we granted an exclusive license commercialize the Company’s BIJUVA in the United States and its possessions and territories to Mayne Pharma. We also have entered into the Knight License Agreement with Knight pursuant to which we granted Knight an exclusive license to commercialize BIJUVA in Canada and Israel. We have entered into the Theramex License Agreement with Theramex pursuant to which we granted Theramex an exclusive license to commercialize BIJUVA for human use outside of the

U.S., except for Canada and Israel. During 2022 and 2021, we had BIJUVA sales of $1.4 million made through the Theramex License Agreement, and such sales were included as license revenue in the statements of operations. In addition, in 2021, we received milestone payments comprised of an aggregate of EUR 1.0million, or $1.2 million, in regulatory milestone payments based on regulatory approvals for BIJUVA in certain specified markets.

ANNOVERA (segesterone acetate (“SA”) and ethinyl estradiol (“EE”) vaginal system)

On December 30, 2022, we assigned the Company’s exclusive license to commercialize ANNOVERA to Mayne Pharma. This pharmaceutical product is a one-year ring-shaped contraceptive vaginal system (“CVS”) and the first and only patient-controlled, procedure-free, reversible prescription contraceptive that can prevent pregnancy for up to a total of 13 cycles (one year). ANNOVERA is commercially sold in the U.S. pursuant to the terms of the Population Council License Agreement. As part of the approval of ANNOVERA, the FDA has required a post-approval observational study be performed to measure the risk of venous thromboembolism. We agreed to perform and pay the costs and expenses associated with this post-approval study, provided that if the costs and expenses associated with such post-approval study exceed $20.0 million, half of such excess will offset against royalties or other payments owed by us under the Population Council License Agreement. In August 2021, we filed a supplemental New Drug Application (“NDA”) with the FDA to modify the testing specifications for ANNOVERA to allow increased consistency of supply of ANNOVERA. In May 2022, the FDA approved the supplemental NDA for ANNOVERA.

Prenatal vitamin products

On December 30, 2022, we granted an exclusive license to commercialize, in the United States and its possessions and territories, our prescription prenatal vitamin product lines under our vitaMedMD brand name and authorized generic formulations of some of our prescription prenatal vitamin products under our BocaGreenMD Prena1 name to Mayne Pharma.

Results of operations

In December 2022, we granted an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products and assigning the Company’s exclusive license to commercialize ANNOVERA to Mayne Pharma, which resulted in a business shift that had a major effect on our operations and financial results.

As part of the transformation that included the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods prior to the Closing Date. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in the Company’s consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2 to the financial statements included in this Annual Report.

The discussion below, and the revenues and expenses discussed below, are based on and relate to the continuing operations of the company.

2022 compared to 2021

Year ended December 31,

Revenue:

Product revenue, net $ — $ —

Operating expenses:

Selling and marketing — —

Research and development — —

Restructuring expense 9,472 —

Other (expense) income:

Other (expense) income, net (117 ) 272

Total other (expense) income, net (117 ) 272

Income (loss) from continuing operations before income taxes 1,074 (79,305 )

Provision for income taxes — —

Net income (loss) from continuing operations 1,074 (79,305 )

Revenue. As part of the transformation of our Company and the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods presented.

Revenue from continuing operations is related to our license agreements. We recorded $70.0 million in license revenue related to the allocation of the initial upfront payment and guaranteed minimum royalties from the Mayne License Agreement during the year ended December 31, 2022, and $2.6 million in license revenue related to achieving previously established milestone payment targets and sales from other licensee during the year ended December 31, 2021.

Gross profit. Our gross profit for 2022 was $68.6 million, an increase of $67.4 million, compared to 2021. The increase in our gross profit was primarily a result of an increase in license revenue related to the initial upfront payment and guaranteed minimums from the Mayne Transaction.

Operating expenses. Total operating expenses for 2022 were $67.4 million, a decrease of $13.4 million, or 16.6%, compared to 2021. Total operating expenses decreased primarily due to lower general and administrative expenses described below during 2022, partially offset by $9.5 million of restructuring expenses including severance, employee termination costs contract termination costs and write off of fixed assets related to restructuring activities following the Mayne Transaction.

Our general and administrative costs were $57.9 million for 2022, a decrease of $22.8 million, or 28.3%, compared to 2021. This decrease was primarily related to $12.7 million in lower compensation and employee benefit costs, $6.7 million in lower stock-based compensation expenses, and $3.6 million in lower information technology expenses. These decreases were partially offset by $3.2 million in higher expenditures attributable to various professional fees, such as legal, consulting, etc.

Income (loss) from operations. For 2022, we had an income from operations of $1.2 million, as compared to a loss from operations of $79.6 million for 2021. This change was attributable to $13.4 million in lower operating expenses and $67.4 million in higher gross profit.

Other income (expense), net. In 2022, we had non-operating expense of $0.1 million compared to non-operating income of $0.2 million in 2021.

Provision for income taxes. In 2022 or 2021, we recorded no provision for income taxes for continuing operations.

Net income (loss) from continuing operations. For 2022, we had a net income of $1.1 million, or $0.12 per basic and $0.11 per diluted common share, compared to a loss of $79.3 million, or $9.96 per basic and diluted common share, for 2021.

Discontinued Operations—Revenues were $80.7 million for 2022, a decrease of $3.6 million, or 4.3%, as compared to the prior year. The decrease was driven by a decrease in IMVEXXY revenue of $4.7 million, lower BIJUVA revenue of $0.5 million and lower prenatal vitamins revenue of $2.2 million, partially offset by higher revenue of ANNOVERA of $3.8 million. Operating expenses were $97.6 million for 2022, a decrease of $35.7 million, as compared to the prior year. Operating expenses decreased due to lower selling and marketing expenses of $33.0 million and lower research and development expenses of $2.1 million as compared to the prior year, partially offset by restructuring charges of $6.2 million recorded in 2022, which were recorded due to our business shift after granting an exclusive license to commercialize the Company’s IMVEXXY, BIJUVA, and prescription prenatal vitamin products and assigning the Company’s exclusive license to commercialize ANNOVERA to Mayne Pharma. The decrease in operating expenses also reflected the reduction of vitaCare operating expenses in connection with its divestiture in April 2022 and the termination of employees on December 31, 2022 following the Mayne Transaction. Operating loss from discontinued operations was $32.5 million, a decrease of $27.7 million as compared to the prior year.

We reclassified certain expenses that were associated with debt that was required to be repaid as a result of transaction with Mayne Pharma and the vitaCare divestiture to discontinued operations, which included interest, amortization of deferred financing costs as well as expense for accretion of the Company’s newly-designated Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) and loss on extinguishment of debt.Discontinued operations other income (expense) reflects a $143.4 million gain on the sale of the vitaCare business and a $62.0 million gain on sale of ANNOVERA, net of transaction costs partially offset by $17.0 million in expense for accretion of Series A Preferred Stock in 2022, $8.4 million in loss on extinguishment of debt in connection with amendments to the Financing Agreement (as defined below) during 2022 and $3.1 million in higher interest expense and amortization of deferred financing costs as compared to 2021. For additional information, see Note 2 - Discontinued Operations, in the notes to the consolidated financial statements appearing elsewhere in this Annual Report.

Liquidity and capital resources

Our primary use of cash is to fund the continued operations of our company. We have funded our operations primarily through public offerings of our common stock and private placements of equity and debt securities. As of December 31, 2022, we had cash totaling $38.1 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 was held by an escrow agent and was be released to us in March 2023. Additionally, we may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement. 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.

On December 30, 2022, we granted Mayne Pharma (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories. The total consideration from Mayne Pharma to us under the License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the transaction agreement dated December 4, 2022, and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the License Agreement, as amended.

Pursuant to the Mayne License Agreement, Mayne Pharma will make one-time, milestone payments to the Company of each of (i) $5.0 million if aggregate net sales of all Products in the United States during a calendar year reach $100.0 million, (ii) $10.0 million if aggregate net sales of all Products in the United States during a calendar year reach $200.0 million and (iii) $15.0 million if aggregate net sales of all Products in the United States during a calendar year reach $300.0 million. Further, Mayne Pharma will pay to the Company royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following the Closing Date. The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur of (i) the expiration or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States. Mayne Pharma will pay to the Company minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to certain

further adjustments, including as described below. Upon the expiry of the 20-year royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products.

See “Going Concern” below 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 from continuing operations for each of the periods (in thousands).

Cash flow from continuing operations 2022 2021

Net cash provided by (used in) operating activities $ 9,359 $ (55,133 )

Net cash used in investing activities (355 ) (2,223 )

Net cash (used in) provided by financing activities (235,206 ) 129,552

2022 compared to 2021

Operating Activities from continuing operations. Net cash provided by operating activities in 2022 was $9.4 million, compared to net cash used in operating activities of $55.1 million for 2021. This decrease of $64.5 million or 117%, was primarily due to a $80.4 million decrease in our net loss from continuing operations resulting from allocated to day one license revenue from the Mayne Transaction, a $8.7 million decrease in cash usage related to changes in operating assets and liabilities, and a $7.2 million increase in non-cash expenditure adjustments as compared to 2021.

Investing Activities from continuing operations. Net cash used in investing activities for 2022 was $0.4 million, compared to net cash used in investing activities of $2.2 million for 2021. This change was due to lower fixed asset and patent related costs as compared to 2021.

Financing Activities from continuing operations. Net cash used in financing activities for 2022 was $235.2 million, compared to net cash provided by financing activities of $129.6 million for 2021. This change of $364.8 million, or 281.6%, was primarily related to higher repayment of debt of $169.4 million as compared to 2021, the redemption of our Series A Preferred Stock of $38.7 million at liquidation preference, and the repayment of make-whole derivative of $3.0 million as compared to 2021. This was partially offset by proceeds from Series A Preferred Stock of $21.7 million, proceeds from make-whole payment of $3.3 million, lower proceeds from sale of common stock of $181.7 million, lower payment for financing fees of $3.5 million and lower proceeds from sale of stock related to employee stock purchase plan of $0.2 million as compared to 2021.

Operating Activities from discontinued operations. Net cash used in operating activities in 2022 was $13.4 million as compared to net cash used in operating activities of $87.6 million for 2021. This decrease relates to a decrease in net loss of $204.0 million reflecting four months of vitaCare activities in 2022 as compared to a full year in 2021 and reductions in marketing expenses for the commercial business as well as lower research and development expenses to preserve cash in 2022, as well as increase in non-cash expenditure adjustments which included debt financing fees, non-cash interest expense, accretion of Series A Preferred Stock and make-whole payment accretion and the loss of extinguishment of debt as compared to 2021.

Investing Activities from discontinued operations. Net cash provided by investing activities for 2022 was $223.8 million which included proceeds from divesture of vitaCare of $142.6 million and proceeds from the sale of ANNOVERA of $81.2 million in 2022.

For additional details, see the consolidated statements of cash flows included in this 2022 10-K Report.

Other liquidity measures

Receivable. On December 30, Mayne Pharma acquired our account receivable balance of approximately $29.3 million which is subject to certain working capital adjustments. As of December 31, 2022, we had a royalty receivable of $1.5 million relating to the short-term portion of receivable from Mayne Pharma and $20.3 million relating to the long term portion of royalty receivable which includes royalties recognized from the Minimum Annual Royalty. See Note 1 Business, basis of presentation, new accounting standards and summary of significant accounting policies (L Revenue Recognition) to the consolidated financial statements included in this Annual Report.

Inventory. On December 30, Mayne Pharma acquired our inventory balance of approximately $8.4 million, which is subject to certain net working capital adjustments.

Debt. On December 30, 2022, we repaid all obligations under the Financing Agreement and the Financing Agreement was terminated. See Note 7. Debt to the consolidated financial statements included in this Annual Report.

Going concern

On December 4, 2022, we entered into agreements with Mayne Pharma pursuant to which we (i) granted Mayne Pharma an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products (in the United States and its possessions and territories), (ii) assigned to Mayne Pharma the Company’s exclusive license to commercialize ANNOVERA in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma.

The total consideration from Mayne Pharma to the Company for the purchase of the Transferred Assets and the grant of the licenses under the License Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the License Agreement, as amended.

On the Closing Date, we repaid all obligations under the Financing Agreement, dated as of April 24, 2019, as amended, with Sixth Street Specialty Lending, Inc., as administrative agent, the various lenders from time-to-time party thereto, and certain of the Company’s subsidiaries party thereto from time to time as guarantors (the “Financing Agreement”) and the Financing Agreement was terminated.

Following the transaction with Mayne Pharma, we changed our business to become a royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. We may need to raise additional capital to provide additional liquidity to fund our operations until we become cash flow positive. To address our capital needs, we are pursuing various equity and debt financing and other alternatives. The equity financing alternatives may include the private placement of equity, equity-linked, or other similar instruments or obligations with one or more investors, lenders, or other institutional counterparties or an underwritten public equity or equity-linked securities offering. Our ability to sell equity securities may be limited by market conditions, including the market price of our common stock, and our available authorized shares. To the extent that we raise additional capital through the sale of such securities, the ownership interests of our existing stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. If we are not successful in obtaining additional financing, we could be forced to discontinue or curtail our business operations, sell assets at unfavorable prices, or merge, consolidate, or combine with a company with greater financial resources in a transaction that might be unfavorable to us. Along with considering additional financing and other strategic alternatives, we have reviewed numerous potential scenarios in connection with steps that we may take to reduce our operating expenses.

Our ability to sell equity securities may be limited by market conditions, including the market price of our common stock and the potential delisting of our common stock from the Nasdaq Global Select Market, 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.

If Mayne Pharma’s sales of IMVEXXY, BIJUVA, or ANNOVERA are delayed, if the net working capital settlement with Mayne Pharma under the Transaction Agreement is greater than estimated, or if we are unsuccessful with future financings and or the continued impact of the COVID-19 pandemic or the supply chains related to the third-party contract manufacturers is worse than we anticipate, our existing cash reserves would be insufficient to satisfy our liquidity. 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.

Contractual obligations, off-balance sheet arrangements, purchase commitments and employment agreements

Our contractual obligations and off-balance sheet arrangements are set forth below. For additional information on any of the following and other obligations and arrangements, see "Note 7. Debt" and "Note 8. Commitments and Contingencies" to the consolidated financial statements included in this 2022 10-K Report.

Contractual obligations

A summary of contractual obligations is as follows:

Total Year 1 Years 2-3 Years 4-5 > 5 years

In the ordinary course of business, we enter into agreements with third parties that include indemnification provisions, which, in our judgment, are normal and customary for companies in our industry sector. Pursuant to these agreements, we generally agree to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or omitted by us. The maximum potential amount of future payments we could be required to make under these indemnification provisions is sometimes unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of liabilities relating to these provisions is minimal. Accordingly, we have no liabilities recorded for these provisions as of December 31, 2022 and 2021.

In the normal course of business, we may be confronted with issues or events that may result in contingent liability. These generally relate to lawsuits, claims, environmental actions, or the actions of various regulatory agencies. We consult with counsel and other appropriate experts to assess the claim. If, in our opinion, we have incurred a probable loss as set forth by U.S. GAAP, an estimate is made of the loss and the appropriate accounting entries are reflected in our financial statements.

Purchase commitments

Information regarding purchase commitments is in "Note 8. Commitments and contingencies" to the consolidated financial statements included in this 2022 10-K Report.

Employment agreements

Information regarding employment agreements is in "Note 8. Commitments and contingencies" to the consolidated financial statements included in this 2022 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 2022 10-K Report, which has been prepared in accordance with U.S. GAAP (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to unbilled revenue, identifiable intangible assets, certain accrued liabilities, and income taxes. We base our estimates on historical experience and on other assumptions that are believed to be reasonable under the circumstances, 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 from these estimates under different assumptions or conditions.

We have identified the areas described below as critical to our business operations and the understanding of our results of operations given the uncertainties associated with the assumptions underlying each estimate. For a detailed discussion on the application of these and other significant accounting policies, see “Note 1. Basis of presentation, new accounting standards and summary of significant accounting policies” to the consolidated financial statements included in this 2022 10-K Report.

Discontinued Operations

Segment reporting

We manage and operate as one business, which prior to December 2022 was focused on creating and commercializing products targeted exclusively for women and after we signed License Agreement with Mayne Pharma, it is focused on collecting royalties from licensing our products. Our business is led by our chief executive officer. We do not operate separate lines of business with respect to any of our products, and we do not prepare discrete financial information with respect to separate products. Accordingly, we view our business as one reportable operating segment.

License revenue

License arrangements may consist of non-refundable upfront license fees, exclusive licensed rights to patented or patent pending technology, and various performance or sales milestones and future product royalty payments. Some of these arrangements may include multiple performance obligations. Non-refundable up-front fees that are not contingent on any future performance by us, and do not require continuing involvement on our part, are recognized as revenue when the right to use functional intellectual property is transferred to the customer.

On December 30, 2022, we closed a License Agreement with Mayne Pharma pursuant to which we sold to Mayne Pharma the exclusive license rights in our product ANNOVERA and granted an exclusive license in other products, including IMVEXXY and BIJUVA. Under the terms of the License Agreement, we received $140 million at closing and we are eligible to receive additional payments in the aggregate of up to an additional $30 million based on the achievement of sales milestones (collectively, the “Milestone Amounts”). The proceeds at closing were allocated between consideration for the sale of ANNOVERA and the initial license fee for the Licensed Products, as the sale of ANNOVERA was accounted for under ASC 610-20, Gains and Losses from Derecognition of Nonfinancial Assets in arriving at the gain on disposal (see Note 2 to the financial statements included in this Annual Report), while the license grant of the other products were recognized under the provisions of ASC 606, Revenue from Contracts with Customers, as a license of functional intellectual asset. The proceeds were allocated among the Licensed Products on the relative net present value of forecasted future product sales from those products. The Milestone Amounts will be recognized, as applicable, in subsequent periods based on actual product sales that exceed the respective net sales milestones as such variable consideration is constrained by the occurrence of the subsequent sales.

Our royalty revenue recognized in 2022 primarily related to royalties provided for under the Mayne License Agreement based on Mayne Pharma’s sales of the Licensed Products subject to that agreement. Under the agreement, the Mayne License Agreement, the Company is entitled to earn royalties on net sales of all of the Licensed Products at a royalty rate of (i) 8% on the first $80 million of net sales of the Licensed Products and (ii) 7.5% on net sales of all of the Licensed Products after the first $80 million of net sales. The royalty rate is subject to a 2% reduction upon the earlier to occur of (i) the expiration or revocation of the last valid claim covering a Licensed Product, and (ii) a generic product launch (a “LOE”). We are entitled to minimum annual royalties beginning with the year ending December 31, 2023 ($3 million annual minimum) and continuing with 3% annual increases through the year ending December 31, 2034 (the “Minimum Annual Royalty”). The Minimum Annual Royalty totaled $42.6 million, and this total amount was allocated among the Licensed Products on the relative net present value of forecasted future product sales from those products. The portion allocated to consideration for the sale of ANNOVERA was attributed towards the gain on disposal of that asset. For the remaining portion allocated to the license grants for the other products, we determined that the minimum guarantee underlying the Minimum Annual Royalty should be treated as fixed consideration and recognized under ASC 606 at the point in time when the license was transferred. Since the Minimum Annual Royalty will be received in annual installments through 2034, we determined the transaction price allocated under ASC 606 contained a significant financing component, and we therefore determined the initial royalty revenue and corresponding receivable based on the present value of the allocated Minimum Annual Royalty. The present value was calculated using a discount rate of 10.45%, based on the credit characteristics of Mayne Pharma and the timing of future payments, and the value will be accreted to full value through the earlier of January 1, 2034 or a LOE. This royalty receivable is a contract asset as of December 31, 2022, and is further subject to offset by Mayne Pharma.

Royalty revenue earned in excess of the Minimum Annual Royalty will be recognized under ASC 606, which provides revenue recognition constraints by requiring the recognition of revenue at the later of the following: 1) when the subsequent sale occurs or 2) when the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied (or partially satisfied). We applied the royalty recognition constraint required under the guidance for sales-based royalties, which requires a sales-based royalty to be recorded no sooner than the underlying sale. Therefore, royalties on sales of products commercialized by Mayne Pharma will be recognized in the subsequent periods that the Licensed Products are sold.

For additional discussion on revenue, see “L. Revenue recognition” in Note 1. Basis of presentation, new accounting standards and summary of significant accounting policies to the consolidated financial statements included in this 2022 10-K Report.

During 2022 and 2021, we had BIJUVA sales of $1.4 million made through the Theramex License Agreement, and such sales were included as license revenue in the statements of operations. In addition, in 2021, we received milestone payments comprised of an aggregate of EUR 1.0million, or $1.2 million, in regulatory milestone payments based on regulatory approvals for BIJUVA in certain specified markets. We previously granted licenses to commercialize the Company’s BIJUVA product outside of the United States to Theramex and Knight.

Share-based payment awards

We account for share-based payment awards on a fair value basis of the equity instrument issued. Under fair value accounting, the grant-date fair value of the share-based payment award is amortized as compensation expense, on a straight-line basis, over the service period (generally, the vesting period) for both graded and cliff vesting awards. We have elected to account for forfeitures as they occur.

Income taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and income tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rates is recorded as a component of the income tax provision in the period that includes the enactment date.

Regular assessments are made on the likelihood that our deferred tax assets will be recovered from our future taxable income. Our evaluation is based on estimates, assumptions, and includes an analysis of available positive and negative evidence, giving weight based on the evidence’s relative objectivity. Sources of positive evidence include estimates of future taxable income, future reversal of existing taxable temporary differences, taxable income in carryback years, and available tax planning strategies. Sources of negative evidence include current and cumulative losses in recent years, losses expected in early future years, any history of operating losses or tax credit carryforwards expiring unused, and unsettled circumstances that, if unfavorably resolved, would adversely affect future profit levels.

The remaining carrying value of our deferred tax assets, after recording the valuation allowance on our deferred tax assets, is based on our present belief that it is more likely than not that we will be able to generate sufficient future taxable income to utilize such deferred tax assets. The amount of the remaining deferred tax assets considered recoverable could be adjusted if our estimates of future taxable income during the carryforward period change favorably or unfavorably. To the extent we believe that it is more likely than not that some or all the remaining deferred tax assets will not be realized, we must establish a valuation allowance against those deferred tax assets, resulting in additional income tax expense in the period such determination is made. To the extent a valuation allowance currently exists, we will continue to monitor all positive and negative evidence until we believe it is more likely than not that it is no longer necessary, resulting in an income tax benefit in the period such determination is made.

Our policy is to recognize both interest and penalties related to uncertain tax positions as part of the income tax provision. Significant judgment is required in evaluating our tax positions, and in determining our provisions for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We establish reserves when, despite our belief that the income tax return positions are fully supportable, certain positions are likely to be challenged and we may ultimately not prevail in defending those positions.

Restructuring Costs.

Our restructuring costs consist primarily of severance, employee termination costs contract termination costs and write off of fixed assets related to restructuring activities.

Recent accounting pronouncements

Information regarding accounting standards adopted during 2022 is included in "Note 1. Basis of Presentation, New Accounting Standards and Significant Accounting Policies" to the consolidated financial statements.

Item 7A. Quantitative and qualitative disclosures about market risk

As a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation S-K, we are not required to provide this information.

Item 8.Financial statements and supplementary data

Reference is made to the financial statements, the notes thereto, and the report thereon, commencing on page F-1 of this 2022 10-K Report, which financial statements, notes, and reports are incorporated herein by reference.

Item 9. Change in and disagreements with accountants on accounting and financial disclosure

None.

Item 9A. Controls and procedures

Evaluation of disclosure controls and procedures

Our management evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this 2022 10-K Report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of December 31, 2022, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There was no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent limitations on effectiveness of controls

Our management 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 benefit 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 because of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

Management’s report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that:

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control— Integrated Framework (2013). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Based on management’s assessment, we believe that our internal controls over financial reporting were effective as of December 31, 2022.

This 2022 10-K Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in this 2022 10-K Report.

Item 9B. Other information

None.

Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections

None.

PART III

Item 10. Directors, executive officers, and corporate governance

The information required by this Item relating to our directors and corporate governance is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2023 Annual Meeting of Stockholders.

Item 11. Executive compensation

The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2023 Annual Meeting of Stockholders.

Item 12. Security ownership of certain beneficial owners and management and related stockholder matters

Item 13. Certain relationships and related transactions, and director independence

The information required by this Item is incorporated herein by reference to the definitive Proxy Statements to be filed pursuant to Regulation 14A of the Exchange Act for our 2023 Annual Meeting of Stockholders.

Item 14. Principal accountant fees and services

PART IV

Item 15. Exhibits and financial statement schedules

(a) Financial statements and financial statements schedules

(b) Exhibits

Exhibit No. Description

3.4 Bylaws of the AMHN, Inc.(7)

3.5 First Amendment to Bylaws of the Company, dated December 17, 2015(8)

3.6 Second Amendment to Bylaws of the Company, adopted May 27, 2022(36)

3.7 Third Amendment to Bylaws of the Company, dated July 29, 2022(37)

3.8 Certificate of Change to Articles of Incorporation of the Company(38)

4.1 Form of Certificate of Common Stock(9)

4.2† Description of Securities of the Company

10.1 Form of Common Stock Purchase Warrant(11)

10.2* Form of Non-Qualified Stock Option Agreement(11)

10.3* TherapeuticsMD, Inc. 2019 Stock Incentive Plan(12)

10.4* First Amendment to the TherapeuticsMD, Inc. 2019 Stock Incentive Plan(27)

10.5* Amended and Restated 2012 Stock Incentive Plan(13)

10.6* 2009 Long Term Incentive Compensation Plan, as amended(14)

10.7* TherapeuticsMD, Inc. 2020 Employee Stock Purchase Plan(15)

10.8 Form of Common Stock Purchase Warrant, dated February 24, 2012(17)

10.10 Form of Warrant to Purchase Common Stock, dated August 5, 2020(6)

10.13 Warrant issued by the Company to Robert Finizio(20)

10.14 Amendment to Warrant issued by the Company to Robert Finizio(20)

10.15* Warrant issued by the Company to John C.K. Milligan, IV(20)

10.16* Amendment to Warrant issued by the Company to John C.K. Milligan, IV(20)

10.36* 2022 Executive Retention and Performance Bonus Plan. (ERB-Plan)(34)

21.1† Subsidiaries of the Company

23.1† Consent of Grant Thornton LLP

32.1†† Section 1350 Certification of Chief Executive Officer

32.2†† Section 1350 Certification of Chief Financial Officer

* Indicates a contract with management or compensatory plan or arrangement.

† Filed herewith.

†† Furnished herewith.

Item 16.Form 10-K summary

None.

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this 2022 10-K Report to be signed on its behalf by the undersigned, thereunto duly authorized, on April 7, 2023

THERAPEUTICSMD, INC.

/s/ Marlan D. Walker

Marlan D. Walker

Chief Executive Officer

/s/ Michael C. Donegan

Michael C. Donegan

Principal Financial and Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this 2022 10-K Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated on April 7, 2023.

Signature Title

/s/ Marlan D. Walker Chief Executive Officer

Marlan D. Walker (Principal Executive Officer)

/s/ Michael C. Donegan Principal Financial and Accounting Officer

Michael C. Donegan

/s/ Tommy G. Thompson Chairman

Tommy G. Thompson

/s/ Cooper C. Collins Director

Cooper C. Collins

/s/ Gail K. Naughton, Ph.D. Director

Gail K. Naughton, Ph.D.

/s/ Justin Roberts Director

Justin Roberts

INDEX TO FINANCIAL STATEMENTS

Page

Consolidated Balance Sheets F-3

Consolidated Statements of Operations F-4

Consolidated Statements of Stockholders’ Equity (Deficit) F-5

Consolidated Statements of Cash Flows F-6

Notes to Consolidated Financial Statements F-7

F-1

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

TherapeuticsMD, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of TherapeuticsMD, Inc. (a Nevada corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2022, and the related notes collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Going concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has recently changed its business strategy to become a royalty company. The Company has limited experience operating as a royalty company and may need to raise additional capital to fund its operations until the Company becomes cash flow positive. These conditions, along with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2015.

Miami, Florida

April 7, 2023

F-2

TherapeuticsMD, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except per share amounts)

As of December 31,

Assets:

Current assets:

Prepaid and other current assets 6,034 5,859

Current assets of discontinued operations — 48,702

License rights and other intangible assets, net 6,943 7,144

Royalty receivable, long term 20,253 —

Other non-current assets 253 253

Non-current assets of discontinued operations — 33,550

Liabilities and stockholders' equity (deficit):

Current liabilities:

Current maturities of long-term debt $ — $ 188,269

Accrued expenses and other current liabilities 18,846 13,338

Current liabilities of discontinued operations 25,831 47,911

Operating lease liabilities, non-current 7,369 8,063

Other non-current liabilities 1,107 2,139

Commitments and contingencies (Note 8)

Stockholders' equity (deficit):

Preferred stock, par value $0.001; 10,000 shares authorized — —

Total stockholders' equity (deficit) 35,143 (93,621 )

Total liabilities and stockholders' equity (deficit) $ 90,458 $ 169,472

The accompanying notes are an integral part of these consolidated financial statements.

F-3

TherapeuticsMD, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

Year ended December 31,

Revenue:

Product revenue, net $ — $ —

Operating expenses:

Selling and marketing — —

Research and development — —

Restructuring expense 9,472 —

Other (expense) income:

Other (expense) income, net (117 ) 272

Total other (expense) income, net (117 ) 272

Income (loss) from continuing operations before income taxes 1,074 (79,305 )

Provision for income taxes — —

Net income (loss) from continuing operations 1,074 (79,305 )

Income (loss) per common share, basic:

Continuing operations $ 0.12 $ (9.96 )

Discontinued operations, net 12.29 (11.70 )

Income (loss) per common share, diluted:

Continuing operations $ 0.11 $ (9.96 )

Discontinued operations, net 11.84 (11.70 )

Weighted average common shares, basic 9,028 7,960

Weighted average common shares, diluted 9,366 7,960

Comprehensive income (loss):

Other comprehensive income — —

The accompanying notes are an integral part of these consolidated financial statements.

F-4

TherapeuticsMD, Inc. and Subsidiaries

Consolidated Statements of Stockholders' (Deficit) Equity

(In thousands)

Common Stock Additional Paid in Accumulated

Shares Amount Capital Deficit Total

Shares issued for exercise of warrants, net of cashless exercises 22 — 278 — 278

Shares issued for exercise of options 2 — 44 — 44

Shares issued for vested restricted and performance stock units 136 — — — -

Share-based payment award compensation costs — — 18,125 — 18,125

Shares issued for sale of common stock, net of cost 565 — 2,454 — 2,454

Shares issued for vested restricted and performance stock units 189 — — — —

Share-based payment award compensation costs — — 11,572 — 11,572

The accompanying notes are an integral part of these consolidated financial statements.

F-5

TherapeuticsMD, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

Year ended December 31,

Cash flows from operating activities:

Less: Loss from discontinued operations, net of tax 110,923 (93,110 )

Net income (loss) from continuing operations 1,074 (79,305 )

Depreciation and amortization 1,193 736

Share-based payment compensation costs 11,572 18,125

Make-whole payment accretion (354 ) —

Changes in operating assets and liabilities:

Prepaid and other current assets 620 (1,125 )

Other assets (7,636 ) —

Accrued expenses and other current liabilities 4,262 4,639

Other non-current liabilities (121 ) 2,139

Net cash used in continuing operating activities 9,359 (55,133 )

Cash flows from continuing investing activities:

Payment for patent related costs (355 ) (2,189 )

Purchase of fixed assets — (34 )

Net cash provided by (used in) continuing investing activities (355 ) (2,223 )

Cash flows from continuing financing activities:

Proceeds from sale of common stock, net of costs 2,454 184,115

Proceeds from exercise of options and warrants — 322

Proceeds from Series A Preferred Stock, net of transaction costs 21,684 —

Repurchase of Preferred Stock at liquidation preference (38,657 ) —

Proceeds from make-whole derivative 3,322 —

Repayment of make-whole derivative (2,969 ) —

Payment of debt financing fees (1,622 ) (5,118 )

Discontinued operations:

Net cash used in operating activities (13,437 ) (87,560 )

Net cash provided by investing activities 223,834 —

Net cash provided by financing activities — —

Net cash provided by (used in) discontinued operations 210,397 (87,560 )

Total cash and restricted cash, end of period $ 49,317 $ 65,122

Supplemental disclosure of cash flow information:

Supplemental disclosure of noncash financing activities:

Warrants issued in relation to debt financing agreement $ 2,727 $ -

The accompanying notes are an integral part of these consolidated financial statements.

F-6

TherapeuticsMD, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

General

TherapeuticsMD, Inc. (the “Company”), a Nevada corporation, and its consolidated subsidiaries are referred to collectively in this Annual Report on Form 10-K (“2022 10-K Report”) as “TherapeuticsMD,” “we,” “our” and “us.” This 2022 10-K Report includes our trademarks, trade names and service marks, such as TherapeuticsMD®, vitaMedMD®, BocaGreenMD®, vitaCareTM, 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 2022 10-K 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.

TherapeuticsMD was previously a women’s healthcare company with a mission of creating and commercializing innovative products to support the lifespan of women from pregnancy prevention through menopause. In December 2022, we changed our business to become a pharmaceutical royalty company, currently receiving royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. On December 30, 2022 (the “Closing Date”), the Company completed a transaction (the “Mayne Transaction”) with Mayne Pharma LLC, a Delaware limited liability company (“Mayne Pharma”) and subsidiary of Mayne Pharma Group Limited, an Australian public company, pursuant to which the Company and its subsidiaries (i) granted Mayne Pharma an exclusive license to commercialize the Company’s IMVEXXY, BIJUVA and prescription prenatal vitamin products sold under the BocaGreenMD® and vitaMedMD® brands (collectively, the “Licensed Products”) in the United States and its possessions and territories, (ii) assigned to Mayne Pharma the Company’s exclusive license to commercialize ANNOVERA (together with the Licensed Products, collectively, the “Products”) in the United States and its possessions and territories, and (iii) sold certain other assets to Mayne Pharma in connection therewith.

Pursuant to a License Agreement, dated December 4, 2022, between the Company and Mayne Pharma (the “Mayne License Agreement”), the Company granted Mayne Pharma, on the Closing Date, (i) an exclusive, sublicensable, perpetual, irrevocable license to research, develop, register, manufacture, have manufactured, market, sell, use, and commercialize the Licensed Products in the United States and its possessions and territories and (ii) an exclusive, sublicensable, perpetual, irrevocable license to manufacture, have manufactured, import and have imported the Licensed Products outside the United States for commercialization in the United States and its possessions and territories.

Pursuant to a Transaction Agreement, dated December 4, 2022, between the Company and Mayne Pharma (the “Transaction Agreement”), the Company sold to Mayne Pharma, at closing, certain assets for Mayne Pharma to commercialize the Products in the United States, including, with the Populations Council’s consent, the Company’s exclusive license from the Population Council to commercialize ANNOVERA (the “Transferred Assets”).

The total consideration from Mayne Pharma to the Company for the purchase of the Transferred Assets and the grant of the licenses under the Mayne Transaction Agreement was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of approximately $12.1 million at closing for the acquisition of net working capital as determined in accordance with the Transaction Agreement and subject to certain adjustments, (iii) a cash payment of approximately $1.0 million at closing for prepaid royalties in connection with the Mayne License Agreement Amendment (as defined below) and (iv) the right to receive the contingent consideration set forth in the

F-7

Mayne License Agreement, as amended. The acquisition of net working capital was determined in accordance with the Transaction Agreement and included significant estimates which could change materially for a period of up to two years following the Closing Date.

On the Closing Date, the Company and Mayne Pharma entered into Amendment No. 1 to the Mayne License Agreement (the “Mayne License Agreement Amendment”). Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay the Company approximately $1.0 million in prepaid royalties on the Closing Date. The prepaid royalties will reduce the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to $257,250 per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment is paid to the Company. In addition, the parties agreed that Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to the Company by $1.5 million in consideration of Mayne Pharma assuming the Company’s obligations under a long-term services agreement (see vitaCare divestiture below), including the Company’s minimum payment obligations thereunder.

As part of the transformation that included Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods prior to the Closing Date. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in the Company’s consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2.

The Company also has license agreements with strategic partners to commercialize IMVEXXY and BIJUVA outside of the U.S.

In connection with the Company’s transformation into a pharmaceutical royalty company, the termination of our executive management team (except for Mr. Marlan Walker, our former General Counsel and current Chief Executive Officer) and all other employees was completed by December 31, 2022. Severance obligations for all employees other than executive officers were paid in full in January 2023 and severance obligations for terminated executive officers will be paid in accordance with their employment agreements and separation agreements as previously disclosed. As of December 31, 2022, we employed 1 full-time employee primarily engaged in an executive position. We have also entered into consulting agreements with certain former members of our management team who support our relationship with current partners and assist with certain financial, legal and regulatory matters and the continued wind-down of our historical business operations.

vitaCare 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 was held by an escrow agent and was be released to us in March 2023. Additionally, we may receive up to an additional $7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through 2023 as determined in accordance with the terms of the Purchase Agreement. We will record the contingent consideration at the settlement amount when the consideration is realized or realizable.

The Purchase Agreement contains customary representations and warranties, covenants, and indemnities of the parties thereto. The commitments under a long-term services agreement related to vitaCare were transferred to Mayne Pharma as part of the Mayne Transaction. In addition, under the Mayne License Agreement Amendment, Mayne Pharma will reduce one quarterly royalty payment (other than the first quarterly royalty payment) otherwise payable to us by $1.5 million in consideration of Mayne Pharma assuming our obligations under the long-term services agreement related to vitaCare.

The divestiture of vitaCare was determined to be a component of discontinued operations in December 2022, when the Company changed its business by becoming a royalty company and as a result vitaCare activities were reclassified to discontinued operations for 2022 and 2021.

F-8

COVID-19

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 and difficult to predict. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

Going Concern

On December 4, 2022, we entered into agreements with Mayne Pharma pursuant to which we granted Mayne Pharma an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products (in the United States and its possessions and territories), (ii) assign to Mayne Pharma the Company’s exclusive license to commercialize ANNOVERA in the United States and its possessions and territories, and (iii) sell certain other assets to Mayne Pharma.

Following the transaction with Mayne Pharma, our primary source of revenue will be from royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories. We may need to raise additional capital to provide additional liquidity to fund our operations until we become cash flow positive. To address our capital needs, we may pursue various equity and debt financing and other alternatives. The equity financing alternatives may include the private placement of equity, equity-linked, or other similar instruments or obligations with one or more investors, lenders, or other institutional counterparties or an underwritten public equity or equity-linked securities offering. Our ability to sell equity securities may be limited by market conditions, including the market price of our common stock, and our available authorized shares.

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.

If Mayne Pharma’s sales of IMVEXXY, BIJUVA, or ANNOVERA are delayed, if the net working capital settlement with Mayne Pharma under the Transaction Agreement, or if we are unsuccessful with future financings and or the continued impact of the COVID-19 pandemic or the supply chains related to the third-party contract manufacturers is worse than we anticipate, our existing cash reserves would be insufficient to satisfy our liquidity. 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.

A. Basis of presentation

The consolidated financial statements and related notes include our parent company and all wholly-owned subsidiaries. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

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GAAP”). Our fiscal year-end is as of and for the year ended December 31st for each year presented. All intercompany transactions among our businesses have been eliminated.

As part of the transformation as a result of Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods prior to the Closing Date. Assets and liabilities associated with the commercial business are classified as assets and liabilities of discontinued operations in the Company’s consolidated balance sheets. Additional disclosures regarding discontinued operations are provided in Note 2.

Certain amounts in the notes to the consolidated financial statements 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.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. We paid off our debt as of December 30, 2022, and as a result the adoption of this guidance will not have an impact on our financial statements and, to the extent we enter into new debt agreements, we will apply such guidance to those contracts.

Other recently issued accounting standards not yet adopted by us are not expected, upon adoption, to have a material impact on the Company’s consolidated financial statements or processes.

C. Discontinued Operations

Discontinued operations comprise activities that were disposed of at the end of the period, represent a separate major line of business that can be clearly distinguished for operational and financial reporting purposes and represent a business shift having a major effect on the Company’s operations and financial results according to Accounting Standard Codification (“ASC”) Topic 205, Presentation of Financial Statements. An adjustment has been made to the consolidated statements of operations for the twelve months ended December 31, 2022 and 2021 to reclassify commercial activities and vitaCare activities to discontinued operations as both components, in the aggregate, represented a business shift that will have a major effect on the Company’s operations and financial results.No amounts for shared general and administrative operating support expense were allocated to discontinued operations. As required by the terms of our Financing Agreement, the proceeds from both transactions were used to fully repay our outstanding debt borrowings. As a result, interest expense and amortization of deferred financing costs as well as expense for accretion of Series A Preferred Stock and loss on extinguishment of debt are included within income (loss) from discontinued operations, net of tax. Additionally, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in the Company’s consolidated balance sheet as of December 31, 2022 and 2021. For additional information, see Note 2 - Discontinued Operations.

D. Estimates and assumptions

The preparation of consolidated financial statements in conformity to U.S. GAAP requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimated assumptions based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ, at times in material amounts, from these estimates under different assumptions or conditions.

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E. Cash and Restricted Cash

We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limits of $0.25 million per bank. We have never experienced any losses related to these funds.

Restricted cash is comprised of escrowed funds deposited with a bank relating to the vitaCare Divestiture. All restrictions were lifted in March 2023 and it is no longer restricted, see Note 15.

F. Accounts receivable and allowance for doubtful accounts

Accounts receivable are customer obligations due under normal trade terms and are measured at amortized cost. We historically extended credit on an unsecured basis to most of our customers based on an evaluation of a customer’s financial condition, and collateral was not required. Our accounts receivable concentration of credit risk is primarily limited to customers who are drug wholesalers and retail pharmacy distributors.

We review accounts receivable for uncollectible and delinquent accounts and credit card chargebacks, and we provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, reasonable supportable forecasts, and existing economic conditions, and we record an allowance that presents the net amount expected to be collected. We write off uncollectible and delinquent receivables against our allowance for doubtful accounts based on individual credit evaluations, the results of collection efforts, and specific circumstances of customers. We record recoveries of accounts previously written off when received as an increase in the allowance for doubtful accounts. To the extent data we use to calculate these estimates does not accurately reflect bad debts, adjustments to these reserves may be required. Our exposure to credit losses 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 current 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. On December 30, 2022, Mayne Pharma acquired our accounts receivable balance of approximately $29.3 million which is subject to certain working capital adjustments.

G. Inventories

Inventories are valued at the lower of cost or net realizable value. Our pharmaceutical products are valued using first in first out method and our vitamins are valued using the average-cost method. We review inventories for excess and obsolescence, and we write-down obsolete or otherwise unmarketable inventory to its estimated net realizable value. Obsolescence may occur due to product expiring, product improvements rendering previous versions obsolete, or decreases in demand for our products. On December 30, 2022, Mayne Pharma acquired our inventory balance of approximately $8.4 million, which is subject to certain net working capital adjustments.

H. Fair Value Measurements

Fair value is the price to sell an asset or transfer a liability and therefore represents an exit price in the principal market (or in the absence of a principal market, the most advantageous market). It represents a market-based measurement that contemplates a hypothetical transaction between market participants at the measurement date.

The unique characteristics of an asset or liability and the availability of observable prices affect the number of valuation approaches and/or techniques used in a fair value analysis. We measure fair value using observable and unobservable inputs. We give the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

We apply the following fair value hierarchy:

• Level 3 - Inputs that are unobservable.

The carrying amount of our cash, restricted cash, accounts receivable, accounts payable and accrued expenses approximate their fair value because of the short-term maturity of such instruments, which are considered Level 1 under the fair value hierarchy.

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I. Fixed assets

Fixed assets are carried at cost less accumulated depreciation and amortization. We charge maintenance costs, which do not significantly extend the useful lives of the respective assets, and repair costs to operating expenses as incurred. We compute depreciation using the straight-line method over the estimated useful lives of the related assets, which range from three to seven years. Leasehold improvements are depreciated over the shorter of their useful life or the term of the lease. Long-lived assets held and used by us, including fixed assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

We capitalize software and software development costs incurred to create and acquire computer software for internal use, principally related to software coding and application development. We begin to capitalize software development costs when both the preliminary project stage is completed, and it is probable that the software will be used as intended. Capitalized software costs include only external direct costs and services utilized in developing or obtaining computer software. Capitalized software costs are amortized on a straight-line basis when placed into service over the estimated useful life, generally five to seven years.

J. License rights and other intangibles assets

We record license rights and other intangible assets at cost, which includes external costs, consisting primary of legal costs, incurred in securing our patents and trademarks.

License rights cost related to ANNOVERA were amortized until December 30, 2022 over the useful life over which the license rights would contribute directly or indirectly to our cash flows. The cost was amortized using the straight-line method as the pattern of economic benefit could not be reliably determined.On December 30, 2022, we assigned our ANNOVERA license to Mayne Pharma and included the remaining ANNOVERA license cost of $30.2 million in our calculation of the gain on sale of assets. In addition, amortization of license rights of $3.0 million for years 2022 and 2021 was reclassified to discontinued operations.

Intangible assets subject to amortization, such as patents, are amortized over the useful life of the patent using the straight-line method. If the patent is not granted, we write off any capitalized patent costs at that time. Intangible assets not subject to amortization, such as trademarks, are perpetual and have indefinite lives.

We review license rights and other intangible assets subject to amortization on a periodic basis to determine whether events and circumstances would indicate impairment or warrant a revision to their remaining useful lives. We assess other intangible assets not subject to amortization for potential impairment at least annually during the fourth quarter of each year, or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of the intangible assets below their carrying value.

K. Segment reporting

We manage and operate as one business, which prior to December 2022 was focused on creating and commercializing products targeted exclusively for women and after we signed Mayne License Agreement, is focused on collecting royalties from licensing our products. Our business is led by our chief executive officer. We do not operate separate lines of business with respect to any of our products, and we do not prepare discrete financial information with respect to separate products. Accordingly, we view our business as one reportable operating segment.

L. Revenue recognition

We determine the amount of revenue to be recognized through application of the following steps:

• Identification of the contract with a customer;

• Identification of the performance obligations in the contract;

• Determination of the transaction price;

• Recognition of revenue when or as we satisfy the performance obligations.

Essentially all of our revenue is generated through contracts with our customers. A performance obligation is a promise in a contract to transfer a product or service to a customer. A good or service is considered to be transferred when the customer receives the goods or service or obtains control, and we treat shipping as a fulfillment activity rather than as a separate obligation. We generally recognize revenue at a point in time when all of our performance obligations under the terms of a contract are satisfied. Revenue is recognized upon transfer of control of promised products or services in an amount that reflects the consideration we expect to receive in exchange

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for those products or services. The collectability of consideration on the contract is reasonably assured before revenue is recognized. To the extent that customer payment has been received before all recognition criteria are met, these revenues are initially deferred in other accruals on the balance sheet and the revenue is recognized in the period that all recognition criteria have been met.

Prescription products

On December 30, 2022, we granted an exclusive license to commercialize our prescription products and assigning the Company’s exclusive license to commercialize ANNOVERA to Mayne Pharma, which resulted in a business shift that had a major effect on our operations and financial results. As part of the transformation that included the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in the Company’s consolidated financial statements for all periods prior to the Closing Date. As of December 31, 2022, we are no longer directly engaged in the sale of prescription products.

Prior to the business shift in December 2022, prescription products were sold at fixed wholesale acquisition cost, or WAC, determined based on our list price. However, the total transaction price was variable as it was calculated net of estimated product returns, chargebacks, rebates, coupons, discounts and wholesaler fees. These estimates were based on the amounts earned or to be claimed on the related sales and were classified as reductions of accounts receivable (if the amount was payable to the customer) or a current liability (if the amount was payable to a party other than a customer). To determine the transaction price, we estimated the amount of variable consideration at the outset of the contract either utilizing the expected value or most likely amount method, depending on the facts and circumstances relative to the contract or each variable consideration. The estimated amount of variable consideration was included in the transaction price only to the extent that it was probable that a significant reversal in the amount of cumulative product revenue recognized would not occur when the uncertainty associated with the variable consideration was subsequently resolved. In determining amounts of variable consideration to include in a contract’s transaction price, we relied on our historical experience and other evidence that supported our qualitative assessment of whether product revenue would be subject to a significant reversal. We considered all the facts and circumstances associated with both the risk of a product revenue reversal arising from an uncertain future event and the magnitude of the reversal if that uncertain event were to occur. Actual amounts of consideration ultimately received could differ from our estimates. If actual results in the future varied from our original estimates, we would adjust these estimates, which would affect net product revenue and earnings in the period such changes in estimates become known.

We accepted returns of unsalable prescription products sold through wholesale distributors within a return period of six months prior to and up to 12 months following product expiration. ANNOVERA can not be returned before the expiration date and expired ANNOVERA can be returned up to 12 months past the expiration date. Our prescription vitamins, IMVEXXY and BIJUVA have a shelf life of 24 months from the date of manufacture and ANNOVERA currently has a shelf life of 18 months from the date of manufacture. We did not allow product returns for prescription products that have been dispensed to a patient. We estimated the amount of our product sales that could be returned by our customers and recorded this estimate as a reduction of product revenue in the period the related product revenue was recognized. Where historical rates of return existed, we used history as a basis to establish a returns reserve for products shipped to wholesalers. For newly launched products, for which the right of return existed but for which we did not have history of product returns, we estimated returns based on available industry data, our own sales information and our visibility into the inventory remaining in the distribution channel. At the end of each reporting period, sometimes we constrained product revenue, if necessary, for product returns based on information from various sources, including channel inventory levels and dating and sell-through data, the expiration dates of products being shipped, price changes of competitive products and any introductions of generic products. We recognized the amount of expected returns as a refund liability, representing the obligation to return the customer’s consideration. Since our returns primarily consisted of expired and short dated products that would not be resold, we did not record a return asset for the right to recover the goods returned by the customer at the time of the initial sale (when recognition of product revenue is deferred due to the anticipated return).

We offered various rebate and discount programs in an effort to maintain a competitive position in the marketplace and to promote sales and customer loyalty. We estimated the allowance for consumer rebates and coupons that we have offered based on our experience and industry averages, which was reviewed and adjusted, if necessary, on a quarterly basis. We recorded distributor fees based on amounts stated in contracts. We estimated chargebacks based on number of units sold during the period taking into account prices stated in contracts and our historical experience. We provided discounts to our customers for prompt payment. Consumer rebates and coupons costs, distribution fees, chargebacks and discounts were deducted from gross product revenue at the time the product revenue was recognized.

For our prescription products, we offered a co-pay assistance program for eligible enrolled patients whose out of pocket costs were reduced to a more affordable price. This allowed patients to access the product at a reasonable cost and was in line with our responsible pricing approach. We reimbursed pharmacies for this discount through third-party vendors. The variable consideration was estimated based on contract prices, the estimated percentage of patients that would utilize the copay assistance, the average assistance paid, the estimated levels of inventory in the distribution channel and the current level of prescriptions covered by patients’ insurance. Payers could change coverage levels for our prescription products positively or negatively, at any time up to the time that we have formally

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contracted coverage with the payer. As such, the net transaction price of our prescription products was susceptible to such changes in coverage levels, which was outside the influence of the Company. As a result, we constrained variable consideration for our prescription products to an amount that would not result in a significant product revenue reversal in future periods. Our ability to estimate the net transaction price for our prescription products was constrained by our estimates of the amount to be paid for the co-pay assistance program which was directly related to the level of prescriptions paid for by insurance. As such, we recorded an accrual to reduce gross sales for the estimated co-pay and other patient assistance based on currently available third-party data and our internal analyses. We re-evaluated variable consideration each reporting period.

License revenue

On December 30, 2022, we and closed the Mayne Transaction pursuant to which we sold to Mayne Pharma the exclusive license rights in our product ANNOVERA and granted an exclusive license in other products, including IMVEXXY and BIJUVA (together, the three products being the “Licensed Products” - see Note 1). Under the terms of the Mayne License Agreement, we received $140 million at closing and we are eligible to receive additional payments in the aggregate of up to an additional $30 million, based on the achievement of sales milestones (collectively, the “Milestone Amounts”). The proceeds at closing were allocated between consideration for the sale of ANNOVERA and the initial license fee for the Licensed Products, as the sale of ANNOVERA was accounted for under ASC 610-20, Gains and Losses from Derecognition of Nonfinancial Assets in arriving at the gain on disposal (see Note 2), while the license grant of the other products were recognized under the provisions of ASC 606, Revenue from Contracts with Customers, as a license of functional intellectual property. The proceeds were allocated among the Licensed Products on the relative net present value of forecasted future product sales from those products. The Milestone Amounts will be recognized, as applicable, in subsequent periods based on actual product sales that exceed the respective net sales milestones as such variable consideration is constrained by the occurrence of the subsequent sales.

Our royalty revenue in 2022 related to royalties provided for under the Mayne License Agreement based on Mayne Pharma’s sales of the licensed products subject to that agreement. Under the Mayne License Agreement, the Company is entitled to earn royalties on net sales of all of the Licensed Products at a royalty rate of (i) 8% on the first $80 million of net sales of the Licensed Products and (ii) 7.5% on net sales of all of the Licensed Products after the first $80 million of net sales. The royalty rate is subject to a 2% reduction upon the earlier to occur of (i) the expiration or revocation of the last valid claim covering a Licensed Product, and (ii) a generic product launch (a “LOE”). We are entitled to minimum annual royalties beginning with the year ending December 31, 2023 ($3 million annual minimum) and continuing with 3% annual increases through the year ending December 31, 2034 (the “Minimum Annual Royalty”). The total Minimum Annual Royalty we are entitled to is $42.6 million, and this total amount was allocated among the Licensed Products on the relative net present value of forecasted future product sales from those products. The portion allocated to consideration for the sale of ANNOVERA was attributed towards the gain on disposal of that asset. For the remaining portion allocated to the license grants for the other products, we determined that the minimum guarantee underlying the Minimum Annual Royalty should be treated as fixed consideration and recognized under ASC 606 at the point in time when the license was transferred. Since the Minimum Annual Royalty will be received in annual installments through 2034, we determined the transaction price allocated under ASC 606 contained a significant financing component, and we therefore determined the initial royalty revenue and corresponding receivable based on the present value of the allocated Minimum Annual Royalty. The present value was calculated using a discount rate of 10.45%, based on the credit characteristics of Mayne Pharma and the timing of future payments, and the value will be accreted to full value through the earlier of January 1, 2034 or a LOE. This royalty receivable is a contract asset as of December 31, 2022, and is further subject to offset by Mayne Pharma (see N. Contract Assets and Liabilities below).

In 2021, we received milestone payments comprised of an aggregate of EUR 1.0million, or $1.2 million, in regulatory milestone payments based on regulatory approvals for BIJUVA in certain specified markets. In 2022 and 2021, we recorded BIJUVA sales of $1.4 million made through the Theramex License Agreement which was recorded as license revenue.

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M. Cost of revenue

Cost of revenue includes the cost of inventory, manufacturing, manufacturing overhead and supply chain costs and product shipping and handling costs. Costs related to the Population Council License Agreement, which were based on our net sales of ANNOVERA, and amortization of license rights were reclassified to discontinued operations for 2022 and 2021 as a result of the transaction with Mayne Pharma.

N. Contract Assets and Liabilities

Contract assets as of December 31, 2022, include royalties recognized from the Minimum Annual Royalty (see L. Revenue Recognition above). Pursuant to the Mayne License Agreement, this asset was reduced in December 2022 by $1.5 million in consideration for Mayne Pharma assuming an obligation payable to vitaCare, and will be further reduced, other than from future payments on receivables from Mayne Pharma, for $1.0 million in prepaid royalties that we received from Mayne Pharma on the closing date. The prepaid royalties will reduce the first four quarterly payments that would have otherwise been payable to us under the Minimum Annual Royalty by an amount equal to $257,250 per quarter plus interest calculated at 19% per annum.

O. Research and development

Research and development expenses included internal R&D activities, costs of services of third-party contract research organizations (“CROs”) and usage of their clinical research sites, manufacturing, scale-up and validation costs, and other activities. Internal R&D activity expenses included laboratory supplies, salaries, benefits, and share-based payment award compensation costs. CRO activity expenses included preclinical laboratory experiments and clinical trial studies. Other activity expenses included regulatory consulting and other costs. These consulting expenses were direct costs associated with preparing, reviewing, and undertaking work for our clinical trials and investigative drugs which were reclassified to discontinued operations for 2022 and 2021 as a result of the transaction with Mayne Pharma. As of December 31, 2022, we do not have any ongoing research and development activities.

P. Share-based payment awards

Q. Common stock reverse stock split

On May 6, 2022, we completed a reverse stock split of our Common Stock. As a result, outstanding shares of our Common Stock were split at a ratio of 50- for-1 (the “Reverse Stock Split”) with any fractional shares resulting from the Reserve Stock Split rounded up to the next whole share of Common Stock. The number of authorized shares of Common Stock was also correspondingly reduced from 600.0 million shares to 12.0 million shares to give effect to the Reverse Stock Split. Additionally, all rights to receive shares of Common Stock under outstanding warrants, options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) were adjusted to give effect of the Reverse Stock Split. Furthermore, remaining shares of Common Stock available for future issuance under share-based payment award plans and our employee stock purchase plan were adjusted to give effect of the Reverse Stock Split. Pursuant to Section 78.209 of the Nevada Revised Statutes, the approval of our stockholders was not required for our Board of Directors (the “Board”) to effectuate the Reverse Stock Split.

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.

R. Income taxes

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taxable temporary differences, taxable income in carryback years, and available tax planning strategies. Sources of negative evidence include current and cumulative losses in recent years, losses expected in early future years, any history of operating losses or tax credit carryforwards expiring unused, and unsettled circumstances that, if unfavorably resolved, would adversely affect future profit levels.

S. Earnings per common share

Basic earnings or loss per common share is computed by dividing net income or loss available to common stockholders by the sum of the weighted average number of shares of common stock. Diluted earnings per common share is computed by dividing net income available to common stockholders by the sum of the weighted average number of shares of common stock and the number of additional shares of common stock that would have been outstanding if our outstanding potentially dilutive securities had been issued. Potentially dilutive securities include awards of non-vested or vested and not settled restricted stock units, performance stock units where the performance requirements have been met and not settled, warrants and options. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method, except if its impact is anti-dilutive. Under the treasury stock method, an increase in the fair market value of our common stock can result in a greater dilutive effect from potentially dilutive securities.

T. Leases

We determine if an arrangement is a lease at inception. Determining whether a contract contains a lease includes judgment regarding whether the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration.

We account for our lease-related assets and liabilities based on their classification as operating leases or finance leases, following the relevant accounting guidance. For all the lessee arrangements, we have elected an accounting policy to combine non-lease components with the related-lease components and treat the combined items as a lease for accounting purposes. We measure lease related assets and liabilities based on the present value of lease payments, including in-substance fixed payments, variable payments that depend on an index or rate measured at the commencement date, and the amount we believe is probable we will pay the lessor under residual value guarantees when applicable. We discount lease payments based on our estimated incremental borrowing rate at lease commencement (or modification), which is primarily based on our estimated credit rating, the lease term at commencement, and the contract currency of the lease arrangement. We have elected to exclude short-term leases (leases with an original lease term less than one year) from the measurement of lease-related assets and liabilities.

We test right-of-use asset in an operating or finance lease at the asset group level (because these assets are long-lived nonfinancial assets and should be accounted for the same way as other long-lived nonfinancial assets) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

U. Loss Contingencies

In determining whether an accrual for a loss contingency is required, we first assess the likelihood of occurrence of the future event or events that will confirm the loss. When a loss is probable (the future event or events are likely to occur) and the amount of the loss can be reasonably estimated, the estimated loss is accrued. If the reasonable estimate of the loss is a range and an amount within the range appears to be a better estimate than any other amount within the range, that amount should be accrued. However, if no amount within the range is a better estimate, the minimum amount in the range should be accrued.

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When a loss is reasonably possible (the chance of the future event or events occurring is more than remote but less than likely), no accrual is recognized.

V. Restructuring charges

During the year ended December 31, 2022, the Company initiated and completed a restructuring plan that resulted in a reduction of its workforce to one employee. One-time termination benefits include severance, continuation of health insurance coverage, and other benefits for a specified period of time, as well as contract terminations and fixed assets write-downs, which resulted in $15.7 million of restructuring costs for the year ended December 31, 2022. These costs have been recognized in the accompanying consolidated statement of operations as follows (in thousands):

Year ended December 31,

Executive termination benefits $ 3,897

Consulting and legal expenses 3,060

Other contract termination costs 2,515

Total restructuring expenses - general and administrative expenses $ 9,472

Employee termination benefits $ 4,813

Other contract termination costs 1,367

Total restructuring expenses - discontinued operations $ 6,180

At December 31, 2022, $9.3 million related to restructuring costs was included in accrued expenses and other current liabilities and $6.2 million was included in current liabilities of discontinued operations in the accompanying consolidated balance sheets.

W. Reclassification of prior year presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. An adjustment has been made to the consolidated statements of operations for 2022 and 2021 to reclassify commercial operations and vitaCare operations to discontinued operations as both components, in the aggregate, represented a business shift that will have a major effect on the Company’s operations and financial results.

2. Discontinued Operations

We changed our business in 2022, by out-licensing our products to receive royalties and future sales related milestone payments, after granting an exclusive license to commercialize the Company’s IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands in the United States and assigning the Company’s exclusive license to commercialize ANNOVERA to Mayne Pharma.

This plan represented a strategic shift having a major effect on the Company's operations and financial results. Upon the completion of the Company’s restructuring and ultimate conversion from a commercial pharmaceutical company to a licensing only company with the consummation of the Mayne Transaction, the Company classified all direct revenues, costs and expenses related to commercial operations, within income (loss) from discontinued operations, net of tax, in the consolidated statements of operations for all periods presented. No amounts for shared general and administrative operating support expense were allocated to discontinued operations. As required by the terms of our Financing Agreement, the proceeds from both transactions were used to fully repay our outstanding debt borrowings, and as a result interest expense and amortization of deferred financing costs as well as expense for accretion of Series A Preferred Stock and loss on extinguishment of debt are included within income (loss) from discontinued operations, net of tax (as disclosed below).

Additionally, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in the Company’s consolidated balance sheet as of December 31, 2022 and 2021.

The total consideration from Mayne Pharma was (i) a cash payment of $140.0 million at closing, (ii) a cash payment of $12.1 million for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million for prepaid royalties in connection with the License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the License Agreement, as amended.

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The Company’s estimate of net working capital at closing was determined in accordance with the Transaction Agreement which establishes the process for the determination of final net working capital. The determination of net working capital includes significant estimates which could change materially for a period of up to two years following the Closing Date. On March 29, 2023, the Company received Mayne Pharma’s closing net working capital calculation which differed significantly from the Company’s estimate of closing net working capital. The Company believes that its estimate of net working capital is reasonable and intends to resolve this matter through the process outlined in the Transaction Agreement. Given the recent receipt of Mayne Pharma’s calculation and the nature of the estimates involved, the outcome of this matter is uncertain at this point. As a result, the Company cannot reasonably estimate a range of loss, and accordingly, the Company has not accrued any additional liability associated with Mayne Pharma’s calculation.

The proceeds at closing were allocated separately to the sale of ANNOVERA and the license grant related to the other products, as the sale of ANNOVERA was accounted for under ASC 610-20, Gains and Losses from Derecognition of Nonfinancial Assets in arriving at the gain on disposal. We recognized $70.0 million in revenue from transaction with Mayne Pharma, which represented license to commercialize the Company’s IMVEXXY, BIJUVA, and prescription prenatal vitamin products as well as present value of future minimum royalty payments (as discussed in Note 1).

The Company classified the $143.4 million gain on the sale of the vitaCare business and $62.0 gain on sale of ANNOVERA, net of transaction costs in discontinued operations.

The Company recorded a restructuring expense of $15.7 million, for the year ended December 31, 2022 for contract terminations, severance, and fixed asset write-downs, of which $6.2 million was recorded in discontinued operations.

The following table presents results of discontinued operations (in thousands):

Year ended December 31,

Operating expenses:

Restructuring charges 6,180 —

Loss from discontinued operations (32,522 ) (60,193 )

Other (expense) income:

Gain on sale of vitaCare 143,384 —

Gain on ANNOVERA sale 62,031 —

Loss on the extinguishment of debt (8,380 ) —

Interest expense and other financing costs (36,065 ) (32,917 )

Expense for accretion of Series A Preferred Stock (16,973 ) —

Other income, net — —

Provision for income taxes (552 ) —

Net income (loss) from discontinued operations $ 110,923 $ (93,110 )

F-18

The following table presents the carrying amounts of the classes of assets and liabilities of discontinued operations as of December 31, 2022 and December 31, 2021 (in thousands):

As of December 31,

Assets:

Current assets:

Accounts receivable — 36,176

Prepaid and other current assets — 4,689

Total current assets — 48,702

Fixed assets, net — 376

License rights and other intangible assets, net — 33,174

Liabilities:

Current liabilities:

Accrued expenses and other current liabilities 13,588 30,966

3. Prepaid and other current assets

Our prepaid and other current assets consisted of the following (in thousands):

As of December 31,

Paragraph IV legal proceeding costs 2,334 2,304

Prepaid and other current assets $ 6,034 $ 5,859

4. Fixed assets

Our fixed assets, net consisted of the following (in thousands):

As of December 31,

Furniture and fixtures $ 931 $ 891

Computer and office equipment 1,168 1,448

Leasehold improvements 49 80

Less: accumulated depreciation and amortization 2,445 1,971

Fixed assets, net $ 78 $ 823

We recorded depreciation expense of $0.6 million for 2022 and $0.4 million for 2021.

F-19

5. Licensed rights and other intangible assets

The following provides information about our license rights and other intangible assets, net (in thousands):

Gross Gross

Carrying Accumulated Carrying Accumulated

Amount Amortization Net Amount Amortization Net

Intangible assets subject to amortization:

Intangible assets not subject to amortization:

We recorded, in continuing operations, amortization expense related to patents of $0.6 million for 2022 and $0.3 million for 2021.We recorded amortization expense related to the exclusive license rights agreement with Population Council of $3.0 million for 2022 and 2021, which was reclassified to discontinued operations after we completed transaction with Mayne Pharma in December 2022, which are excluded from the table above.

Our intangible assets subject to amortization are expected to be amortized as follows (in thousands):

Year ending December 31,

We use a combination of qualitative and quantitative factors to assess licensed rights and intangible assets for impairment. As a result of performing these assessments, we determined that no impairment existed as of December 31, 2022 or 2021, therefore, no write downs were recorded to our licensed rights and other intangible assets.

6. Accrued expenses and other current liabilities

Other accrued expenses and other current liabilities consisted of the following (in thousands):

As of December 31,

Payroll and related costs $ 8,748 $ 6,549

Accrued contract termination costs 4,700 -

Research and development expenses 978 -

Prepaid royalty 1,011 -

Accrued expenses and other current liabilities $ 18,846 $ 13,338

We expense advertising costs when incurred, which amounted to $13.2 million and $39.7 million for 2022 and 2021, respectively, which was reclassified to discontinued operations as a result of business shift following transaction with Mayne Pharma.

F-20

7. Debt

Our debt consisted of the following (in thousands):

As of December 31,

Financing Agreement $ - $ 200,000

Less: deferred financing fees - 11,731

Current maturities of long-term debt - 188,269

Long-term debt $ - $ -

Financing agreement

We were party to a Financing Agreement with Sixth Street Specialty Lending, Inc., as administrative agent (the “Administrative Agent”), various lenders from time-to-time party thereto, and certain of our subsidiaries party thereto from time to time as guarantors. On December 30, 2022, we repaid all obligations under the Financing Agreement and the Financing Agreement was terminated.

The Financing Agreement was entered into in April 2019, and it provided us with up to a $300.0 million first lien secured term loan credit facility. The credit facility provided for availability to us in three tranches: (i) $200.0 million was drawn upon entering into the Financing Agreement; (ii) $50.0 million was drawn in February 2020 and (iii) $50.0 million was previously available to us in the Administrative Agent’s sole and absolute discretion either contemporaneously with the delivery of our financial statements for the quarterly period ended June 30, 2020 or at such earlier date as the Administrative Agent may have consented to. In the third quarter of 2020, the Administrative Agent terminated the undrawn $50.0 million tranche under the Financing Agreement, therefore, such amount was no longer available to us to borrow.

TXMD US Equity

TXMD · 10-K · period ended 2022-12-31

Item 7.Management’s discussion and analysis of financial condition and results of operations

Item 7A. Quantitative and qualitative disclosures about market risk

Item 8.Financial statements and supplementary data

Item 9. Change in and disagreements with accountants on accounting and financial disclosure

Item 9A. Controls and procedures

Item 9B. Other information

Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections

Item 10. Directors, executive officers, and corporate governance

Item 11. Executive compensation

Item 12. Security ownership of certain beneficial owners and management and related stockholder matters

Item 13. Certain relationships and related transactions, and director independence

Item 14. Principal accountant fees and services

Item 15. Exhibits and financial statement schedules

Item 16.Form 10-K summary

TXMD US Equity☆

TXMD · 10-K · period ended 2022-12-31

Item 7.Management’s discussion and analysis of financial condition and results of operations

Item 7A. Quantitative and qualitative disclosures about market risk

Item 8.Financial statements and supplementary data

Item 9. Change in and disagreements with accountants on accounting and financial disclosure

Item 9A. Controls and procedures

Item 9B. Other information

Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections

Item 10. Directors, executive officers, and corporate governance

Item 11. Executive compensation

Item 12. Security ownership of certain beneficial owners and management and related stockholder matters

Item 13. Certain relationships and related transactions, and director independence

Item 14. Principal accountant fees and services

Item 15. Exhibits and financial statement schedules

Item 16.Form 10-K summary

TXMD US Equity