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NOTE 11 – STOCKHOLDERS’ EQUITY | 3 Months Ended
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Mar. 31, 2020
Equity [Abstract] |
NOTE 11 – STOCKHOLDERS’ EQUITY | NOTE 11 – STOCKHOLDERS’ EQUITY Preferred Stock At March 31, 2020, we had 10,000,000 shares of Preferred Stock, par value $0.001, authorized for issuance, of which no shares of Preferred Stock were issued or outstanding. Common Stock At March 31, 2020, we had 350,000,000 shares of Common Stock authorized for issuance, of which 271,677,742 shares of Common Stock were issued and outstanding. Issuances During the Three Months ended March 31, 2020 During the three months ended March 31, 2020, certain individuals exercised stock options to purchase an aggregate of 350,666 shares of Common Stock for $72,109 in cash. Issuances During the Three Months ended March 31, 2019 During the three months ended March 31, 2019, certain individuals exercised stock options to purchase an aggregate of 276,383 shares of Common Stock for $100,107 in cash. Also, during the same period, stock options to purchase an aggregate of 12,097 shares of Common Stock were exercised pursuant to the options’ cashless exercise provisions, wherein an aggregate of 11,834 shares of Common Stock were issued. Warrants to Purchase Common Stock As of March 31, 2020, we had warrants outstanding to purchase an aggregate of 1,832,571 shares of Common Stock with a weighted-average contractual remaining life of approximately 1.70 years, and exercise prices ranging from $0.24 to $8.20 per share, resulting in a weighted average exercise price of $2.62 per share. The valuation methodology used to determine the fair value of our warrants is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions, including volatility of the stock price, the risk-free interest rate, dividend yield and the term of the warrant. During the three months ended March 31, 2020, no warrants were granted. During the three months ended March 31, 2019, we granted warrants to purchase an aggregate of 75,000 shares of Common Stock to outside consultants at an exercise price of $5.63. The fair value for these warrants was determined by using the Black-Scholes Model on the date of the grant using a term of five years; volatility of 60.8%; risk free rate of 2.52%; and dividend yield of 0%. The grant date fair value of the warrants was $3.00 per share. The warrants vested ratably over a 12-month period and have an expiration date of February 12, 2024. During the three months ended March 31, 2020, no warrants were exercised. During the three months ended March 31, 2019, warrants to purchase an aggregate of 1,250,000 shares of Common Stock were exercised pursuant to the warrants’ cashless exercise provisions, wherein an aggregate of 471,184 shares of Common Stock were issued. We recorded share-based compensation expense related to warrants previously issued of $26,446 and $85,716 for the three months ended March 31, 2020 and 2019, respectively, in the accompanying consolidated financial statements. At March 31, 2020, there was no unrecognized estimated compensation expense related to unvested warrants. Options to Purchase Common Stock of the Company In 2009, we adopted the 2009 Long Term Incentive Compensation Plan, or the 2009 Plan, to provide financial incentives to employees, directors, advisers, and consultants of our company who are able to contribute towards the creation of or who have created stockholder value by providing them stock options and other stock and cash incentives, or the Awards. As of March 31, 2020, there were non-qualified stock options to purchase an aggregate of 14,546,246 shares of Common Stock outstanding under the 2009 Plan. Effective upon our adoption of the TherapeuticsMD, Inc. 2019 Stock Incentive Plan, or the 2019 Plan, on June 20, 2019, no future awards may be made under the 2009 Plan. In 2012, we adopted the 2012 Stock Incentive Plan, or the 2012 Plan, a non-qualified plan that was amended in August 2013. The 2012 Plan was designed to serve as an incentive for retaining qualified and competent key employees, officers, directors, and certain consultants and advisors of our company. As of March 31, 2020, there were non-qualified stock options to purchase an aggregate of 6,316,474 shares of Common Stock outstanding and an aggregate of 890,000 restricted stock awards under the 2012 Plan. Effective upon our adoption of the 2019 Plan, no future awards may be made under the 2012 Plan. On June 20, 2019, we adopted the 2019 Plan to serve as an incentive for retaining qualified and competent key employees, officers, directors, and certain consultants and advisors of our company. The Awards available under the 2019 Plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock or cash awards as described in the 2019 Plan. Generally, the options vest annually over four years or as determined by our board of directors, upon each option grant. Options may be exercised by paying the price for shares or on a cashless exercise basis after they have vested and prior to the specified expiration date provided and applicable exercise conditions are met, if any. The expiration date is generally ten years from the date the option is issued. As of March 31, 2020, there were 4,970,994 shares of Common Stock available for issuance under the 2019 Plan, consisting of (i) 2,354,764 new shares, (ii) 2,395,333 unallocated shares previously available for issuance under the 2012 Plan that were not then subject to outstanding “Awards” (as defined in the 2012 Plan), and (iii) 220,897 unallocated shares previously available for issuance under the 2009 Plan that were not then subject to outstanding “Awards” (as defined in the 2009 Plan). Any shares subject to outstanding options or other equity “Awards” under the 2019 Plan, the 2012 Plan and the 2009 Plan that are forfeited, expire or otherwise terminate without issuance of the underlying shares, or if any such Award is settled for cash or otherwise does not result in the issuance of all or a portion of the shares subject to such Award (other than shares tendered or withheld in connection with the exercise of an Award or the satisfaction of withholding tax liabilities), the shares to which those Awards were subject, shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available for delivery with respect to Awards under the 2019 Plan. As of March 31, 2020, there were non-qualified stock options to purchase 4,292,501 shares of Common Stock outstanding under the 2019 Plan, 3,584,245 restricted stock awards and 2,384,245 performance stock awards outstanding under the 2019 Plan. The valuation methodology used to determine the fair value of stock options is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the risk-free interest rate, and the expected life of the stock options. The ranges of assumptions used in the Black-Scholes Model during the three months ended March 31, 2020 and 2019 are set forth in the table below.
|  | March 31, 2020 |  | March 31, 2019
Weighted average grant date fair value |  | $ | 0.98 |  |  | $ | 3.35 |
Risk-free interest rate |  |  | 1.32-1.68 | % |  |  | 2.54 | %
Volatility |  |  | 63.53-65.72 | % |  |  | 61.85 | %
Term (in years) |  |  | 6-6.7 |  |  |  | 6.25 |
Dividend yield |  |  | 0.00 | % |  |  | 0.00 | %
A summary of activity under the 2009, 2012 and 2019 Plans and related information during the three months ended March 31, 2019 is as follows:
|  | Number of Shares Under Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life in Years |  | Aggregate Intrinsic Value
Balance at December 31, 2019 |  |  | 25,030,234 |  |  | $ | 4.65 |  |  |  | 5.84 |  |  | $ | 3,668,171 |
Granted |  |  | 636,500 |  |  | $ | 1.64 |  |  |  |  |  |  |  |  |
Exercised |  |  | (350,666 | ) |  | $ | 0.21 |  |  |  |  |  |  | $ | 725,199 |
Expired |  |  | (50,472 | ) |  | $ | 0.41 |  |  |  |  |  |  |  |  |
Cancelled/Forfeited |  |  | (110,375 | ) |  | $ | 4.48 |  |  |  |  |  |  |  |  |
Balance at March 31, 2020 |  |  | 25,155,221 |  |  | $ | 4.65 |  |  |  | 5.77 |  |  | $ | 787,178 |
Vested and Exercisable at March 31, 2020 |  |  | 19,258,556 |  |  | $ | 5.02 |  |  |  | 4.77 |  |  | $ | 787,178 |
Unvested at March 31, 2020 |  |  | 5,896,665 |  |  | $ | 3.42 |  |  |  | 9.05 |  |  | $ | — |
At March 31, 2020, our outstanding options had exercise prices ranging from $0.19 to $8.92 per share. Share-based compensation expense related to options recognized in our results of operations for the three months ended March 31, 2020 and 2019 was approximately $1,836,630 and $2,143,239, respectively, and it is based on awards vested. At March 31, 2020, total unrecognized estimated compensation expense related to unvested options was approximately $9,800,000, which may be adjusted for future changes in forfeitures. This cost is expected to be recognized over a weighted-average period of 2.3 years. No tax benefit was realized due to a continued pattern of operating losses. Restricted Stock Restricted stock awards granted under our 2009, 2012 and 2019 Plans entitle the holder to receive, at the end of vesting period, a specified number of shares of our Common Stock. Share-based compensation expense is measured by the market value of our Common Stock on the day of the grant. The shares vest ratably over the period specified in the grant. There is no partial vesting and any unvested portion is forfeited. Performance stock awards will vest if certain performance targets are achieved. If minimum performance thresholds are achieved, each award will convert into common stock at a defined ratio depending on the degree of achievement of the performance target designated by each individual award. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, stock-based compensation is recognized on a straight-line basis over the awards’ requisite service periods. The expected levels of achievement are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted and recorded on the consolidated statements of income and the remaining unrecognized stock-based compensation is recognized over the remaining requisite service period. During the three months ended March 31, 2020 and 2019, we recorded $503,377 and $346,414, respectively, in share-based compensation expense related to restricted stock units and performance stock awards. At March 31, 2020, total unrecognized estimated compensation expense related to unvested restricted stock units and performance stock awards was approximately $9,830,000, which may be adjusted if certain performance targets are achieved or for future changes in forfeitures. This cost is expected to be recognized over a weighted-average period of 2.6 years.
|  |  | Restricted Stock Awards |  |  |  | Performance Stock Awards |
|  |  | Number of Shares |  |  |  | Weighted Average Grant Date Fair Value |  |  |  | Number of Shares |  |  |  | Weighted Average Grant Date Fair Value |
Balance at December 31, 2019 |  |  | 1,240,000 |  |  | $ | 3.56 |  |  |  | — |  |  |  | — |
Granted |  |  | 3,384,245 |  |  | $ | 1.50 |  |  |  | 2,384,245 |  |  | $ | 1.07 |
Vested/Released |  |  | (150,000 | ) |  | $ | 2.42 |  |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Balance at March 31, 2020 |  |  | 4,474,245 |  |  | $ | 2.04 |  |  |  | 2,384,245 |  |  | $ | 1.07 |

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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