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STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 9 – STOCKHOLDERS’ EQUITY

Preferred Stock

At December 31, 2020, we had 10,000,000 shares of preferred stock, par value $0.001 per share, or Preferred Stock, authorized for issuance, of which no shares of Preferred Stock were issued or outstanding.

Common Stock

At December 31, 2020, we had 600,000,000 shares of Common Stock authorized for issuance, of which 299,765,396 shares of Common Stock were issued and outstanding.

Issuances During 2020

During the year ended December 31, 2020, stock options to purchase an aggregate of 1,182,195 shares of Common Stock were exercised for $271,678 in cash.

On November 10, 2020, we entered into an underwriting agreement with Cantor Fitzgerald & Co., or Cantor Fitzgerald, as underwriter, relating to an underwritten public offering of 23,437,500 shares of Common Stock at a public offering price of $1.1856 per share. We granted to the underwriter an option, exercisable for a period of 30 days, to purchase up to 3,515,625 additional shares of Common Stock, which was exercised in full. The net proceeds the offering were approximately $31,703,000, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The offering of 23,437,500 shares closed on November 13, 2020 and the offering of 3,515,625 shares closed on November 20, 2020.

In November 2020, we entered into a Controlled Equity Offering^SM Sales Agreement, or sales agreement, with Cantor Fitzgerald relating to shares of our Common Stock. In accordance with the terms of the sales agreement, we were permitted to offer and sell shares of our Common Stock having an aggregate offering price of up to $50 million from time to time through or to Cantor Fitzgerald, acting as sales agent. Cantor Fitzgerald was entitled to compensation at a fixed commission rate of 3.0% of the aggregate gross sales price per share sold. No shares of Common Stock were sold under the sales agreement during the year ended December 31, 2020. As further described in Note 16 - Subsequent Events, on February 8, 2021, our “at the market” offering with Cantor Fitzgerald terminated following the sale of the maximum $50 million of shares of Common Stock in January 2021 and February 2021 pursuant to the sales agreement.

Issuances During 2019

On October 24, 2019, we entered into an underwriting agreement with J.P. Morgan Securities LLC, as representative of the underwriters, relating to an underwritten public offering of 26,000,000 shares of our Common Stock at a public offering price of $2.75 per share. We granted the underwriters an option, exercisable for a period of 30 days, to purchase up to 3,900,000 additional shares of Common Stock, which was exercised in full. The net proceeds to us from the offering were approximately $77,031,000, after deducting the underwriting discount and offering expenses payable by us. The offering closed on October 29, 2019.

During the year ended December 31, 2019, certain individuals exercised stock options to purchase an aggregate of 331,619 shares of Common Stock for $108,656 in cash. Also, during the year ended December 31, 2019, stock options to purchase an aggregate of 12,097 shares of Common Stock were exercised pursuant to the options’ cashless exercise provisions, which resulted in 11,834 shares of Common Stock being issued.

Issuances During 2018

On August 1, 2018, we entered into an underwriting agreement with Goldman Sachs & Co. LLC, as representative of the underwriters, relating to an underwritten public offering of 12,745,098 shares of our Common Stock at a price of $5.10 per share. We granted the underwriters an option, exercisable for a period of 30 days, to purchase up to 1,911,764 additional shares of Common Stock. On August 2, 2018, the underwriters exercised the option in full. The net proceeds to us from the offering, including the exercise of the option to purchase additional shares, were approximately $69,908,000, after deducting the underwriting discount and offering expenses payable by us. The offering closed on August 6, 2018. In connection with the Knight License Agreement, on August 6, 2018, Knight entered into a subscription agreement with us, pursuant to which Knight purchased 3,921,568 of shares of our Common Stock concurrently with the closing of the underwritten public offering of Common Stock at a price of $5.10, for proceeds to us of $20,000,000.

During the year ended December 31, 2018, certain individuals exercised stock options to purchase an aggregate of 5,444,526 shares of Common Stock for $1,666,208 in cash. Also, during the year ended December 31, 2018, stock options to purchase an aggregate of 10,000 shares of Common Stock were exercised pursuant to the options’ cashless exercise provisions, wherein 9,841 shares of Common Stock were issued.

Warrants to Purchase Common Stock

As of December 31, 2020, we had warrants outstanding to purchase an aggregate of 6,534,687 shares of Common Stock with a weighted-average contractual remaining life of approximately 7.25 years, and exercise prices ranging from $0.24 to $8.20 per share, resulting in a weighted average exercise price of $1.55 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.

In connection with Amendment No. 5 and in lieu of a cash amendment fee, we issued to the Administrative Agent and the lenders under the Financing Agreement the Lender Warrants. The fair value for the Lender Warrants was determined by using the Black-Scholes Model on the date of the grant using a term of ten years, volatility of 68.8%, risk-free interest rate of 0.34% and dividend yield of 0%. The grant date fair value of the warrants was $1.56 per share. The warrants vested upon issuance. We concluded that the modification accounting model is applicable to this warrant issuance and recognized the fair value of the warrants as a debt discount. As a result, the fair value of the Lender Warrants is being amortized to interest expense over the term of the Financing Agreement.

On November 8, 2020, in connection with entering into Amendment No. 6, we amended the Lender Warrants to provide for an adjustment to the exercise price if we conducted certain dilutive issuances prior to December 31, 2020, or if the volume-weighted average price of our Common Stock for the fifteen trading days ending December 31, 2020 was lower than the then-current exercise price. Pursuant to Amendment No. 6, the issuance of the shares of Common Stock in the November 2020 underwritten public offering triggered the automatic reduction in the exercise price of the Warrants from $1.58 to $1.1856. Based on Amendment No. 6 to the Financing Agreement, we recognized additional value to the debt discount of $239,983.

During the year ended December 31, 2019, we granted warrants to purchase an aggregate of 75,000 shares of Common Stock to outside consultants which vest ratably over a 12-month period and have an expiration date of February 13, 2024. During the year ended December 31, 2018, we granted warrants to purchase an aggregate of 175,000 shares of Common Stock to outside consultants which vest ratably over a 12-month period and have an expiration date of March 15, 2023.

We recorded share-based compensation expense related to warrants previously issued of $26,446, $254,970, and $494,136 for the years ended December 31, 2020, 2019 and 2018, respectively, in the accompanying consolidated financial statements. At December 31, 2020, there was no unrecognized compensation expense remaining related to unvested warrants.

Summary of our Warrant activity during the year ended December 31, 2020:

		Number of Shares Under Warrants				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life in Years				Aggregate Intrinsic Value
Balance at December 31, 2019			1,832,571			$	2.62				1.95			$	2,447,929
Granted			4,752,116			$	1.19
Exercised			—				—								—
Expired			—				—
Cancelled/Forfeited			(50,000	)		$	6.35
Balance at December 31, 2020			6,534,687			$	1.55				7.25			$	1,041,219
Vested and Exercisable at December 31, 2020			6,534,687			$	1.55				7.25			$	1,041,219
Unvested at December 31, 2020			—				—				—				—

The weighted average fair value per share of warrants issued and the assumptions used in the Black-Scholes Model during the years ended December 31, 2020, 2019, and 2018 are set forth in the table below.

		2020				2019				2018
Weighted average exercise price		$	1.19			$	5.63			$	5.16
Weighted average grant date fair value		$	1.56			$	3.00			$	2.79
Risk-free interest rate			0.34	%			2.52	%			2.36	%
Volatility			68.8	%			60.8	%			62.12	%
Term (in years)			10				5				5
Dividend yield			0.00	%			0.00	%			0.00	%

Warrant exercises

During the year ended December 31, 2020, no warrants were exercised.

During the year ended December 31, 2019, warrants to purchase an aggregate of 1,250,000 shares of Common Stock were exercised pursuant to the warrants’ cashless exercise provisions, which resulted in 471,184 shares of Common Stock being issued.

During the year ended December 31, 2018, no warrants were exercised.

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 December 31, 2020, there were non-qualified stock options to purchase an aggregate of 13,285,205 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 December 31, 2020, there were non-qualified stock options to purchase an aggregate of 6,305,974 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 December 31, 2020, there were 2,583,565 shares of Common Stock available for issuance under the 2019 Plan, consisting of (i) new shares, (ii) 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) 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 December 31, 2020, there were non-qualified stock options to purchase 4,190,751 shares of Common Stock outstanding under the 2019 Plan and an aggregate of 6,171,024 restricted stock units and 2,403,951 performance stock units 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 years ended December 31, 2020, 2019, and 2018 are set forth in the table below.

		2020				2019				2018
Weighted average exercise price		$	1.58			$	3.10			$	5.45
Weighted average grant date fair value		$	0.95			$	1.82			$	3.24
Risk-free interest rate			0.34-1.68%				1.64-2.54%				2.38-2.89%
Volatility			63.53-67.92%				61.25-64.49%				59.45-64.04%
Term (in years)			6-6.8				5.5-6.5				5.1-6.25
Dividend yield			0.00	%			0.00	%			0.00	%

A summary of activity under the 2009, 2012 and 2019 Plans and related information during the year ended December 31, 2020 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			736,500			$	1.58
Exercised			(1,182,195	)		$	0.23							$	1,738,740
Expired			(386,609	)		$	3.76
Cancelled/Forfeited			(416,000	)		$	3.80
Balance at December 31, 2020			23,781,930			$	4.80				5.20			$	152,253
Vested and Exercisable at December 31, 2020			19,862,681			$	5.06				4.59			$	117,443
Unvested at December 31, 2020			3,919,249			$	3.53				8.29			$	34,810

At December 31, 2020, our outstanding options had exercise prices ranging from $0.38 to $8.92 per share. Share-based compensation expense related to options recognized in our results of operations for the years ended December 31, 2020, 2019, and 2018 was approximately $5,235,585, $8,798,707, and $8,091,294, respectively, and it is based on awards vested. At December 31, 2020, total unrecognized estimated compensation expense related to unvested options was approximately $5,238,000, which may be adjusted for future changes in forfeitures. This cost is expected to be recognized over a weighted-average period of 1.9 years. No tax benefit was realized due to a continued pattern of operating losses.

Restricted Stock

Restricted stock units 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 units 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. We recognize performance-based restricted stock as compensation expense based on the most likely probability of attaining the prescribed performance and over the requisite service period beginning at its grant date and through the date the restricted stock vests. 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 years ended December 31, 2020, 2019 and 2018 we recorded $5,399,472, $1,628,407 and $73,132, respectively, in share-based compensation expense related to restricted stock units and performance stock units. As of December 31, 2020, we recognized performance-based compensation expense using our assessment of the most likely probability of attaining quarterly EBITDA break-even which would result in vesting 1.5 times the base number of performance stock units. At December 31, 2020, total unrecognized estimated compensation expense related to unvested restricted stock units and performance stock units was approximately $9,989,000, 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 1.6 years.

Schedule of restricted stock units and performance stock units

		Restricted Stock Units								Performance Stock Units
		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			6,152,818			$	1.39				2,585,745			$	1.08
Vested/Released			(301,500	)		$	1.78				(151,500	)		$	1.14
Forfeited			(30,294	)		$	1.07				(30,294	)		$	1.07
Balance at December 31, 2020			7,061,024			$	1.76				2,403,951	*		$	1.08

*

The number of performance stock units (PSUs) represents the base number of PSUs that may vest. The actual number of PSUs that will vest will be between zero and two times the base number of PSUs depending on the Company’s achievement of break-even quarterly EBITDA.

Employee Stock Purchase Plan

On June 18, 2020, our stockholders approved the TherapeuticsMD, Inc. 2020 Employee Stock Purchase Plan, or the ESPP, which reserved 5,400,000 shares of Common Stock for purchase. The ESPP permits eligible employee participants to purchase Common Stock at a price per share which is equal to 85% of the lesser of (a) the fair market value of the shares on the offering date of the offering period or (b) the fair market value of the shares on the purchase date. During the year ended December 31, 2020, no shares were issued under the ESPP. We recorded $17,489 of non-cash compensation expense related to the ESPP during the year ended December 31, 2020.