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Mandatory Redeemable Preferred Stock and Stockholders' Deficit | 9 Months Ended
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Sep. 30, 2022
Equity [Abstract] |
Mandatory Redeemable Preferred Stock and Stockholders' Deficit |
1 0. | Mandatory Redeemable Preferred Stock and Stockholders’ Deficit
Rubric Capital Management LP Subscription Agreements (Sale of Mandatory Redeemable Preferred Stock and Common Stock) On July 29, 2022, we entered into a Subscription Agreement with the Preferred Stock Investor, pursuant to which we issued and sold, in a private placement offering, (i) 15,000 shares of the Company’s newly issued Preferred Stock, for a purchase price per share of Preferred Stock equal to $822.21 and an aggregate purchase price of $12.3 million, and (ii) 565,000 shares of the Company’s Common Stock, for a purchase price per share of Common Stock equal to $4.72 and an aggregate purchase price of $2.7 million. This offering closed on July 29, 2022, and we received aggregate gross proceeds of $15.0 million, before expenses. On September 30, 2022, we entered into a Subscription Agreement with the Preferred Stock Investor, pursuant to which we issued and sold, in a private placement offering, 7,000 shares of the Company’s Preferred Stock for an aggregate offering price of $7.0 million. In addition, in lieu of issuing, selling and delivering 263,666 shares of the Company’s Common Stock to the Preferred Stock Investor, we agreed to pay the Preferred Stock Investor, on the later of (i) the Preferred Stock Maturity Date or (ii) the date our obligations under the Financing Agreement are paid in full, a make-whole payment equal to 263,666 multiplied by the closing price of our Common Stock on the principal securities exchange or securities market on which the Common Stock is then traded, on the day prior to the date of payment of the make-whole payment. This offering closed on September 30, 2022, and we received gross proceeds of $7.0 million, before expenses. Based on the structure of the make-whole payment, it is recorded as make-whole payment derivative liability in the consolidated balance sheets and the carrying amounts are marked to market based on our Common Stock’s closing price at measurement date, which is considered Level 1 under the fair value hierarchy. As of September 30, 2022, we had 30,000 and 22,000 shares of Series A Preferred Stock authorized and outstanding, respectively, at the liquidation preference of $1,333 per share. The Preferred Stock is not convertible into Common Stock and ranks senior to Common Stock, with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Preferred Stock has a liquidation preference equal to $1,333 per share. The Preferred Stock will not have any voting rights other than as required by applicable law. The holders of Preferred Stock are entitled to dividends equal to 25% of cash dividends actually paid, if any, on shares of Common Stock, paid pro rata on the outstanding shares of Preferred Stock. If the Company undergoes certain change of control transactions, the holders of Preferred Stock may require the Company to redeem their shares of Preferred Stock at a redemption price per share of Preferred Stock, payable in cash, equal to the liquidation preference of $1,333 per share of Preferred Stock. We also have the option to redeem the shares of Preferred Stock on such terms if the Company undergoes certain change of control transactions. Each holder of the Preferred Stock has the right to cause the Company to redeem all, but not less than all, of their shares of the Preferred Stock upon the occurrence of certain events, including, without limitation, the Company’s failure to comply with any covenants under the Certificate of Designation, Preferences and Rights of Series A Preferred Stock (the “Certificate of Designation”) filed with the Secretary of State of the State of Nevada or if the Company commences a bankruptcy proceeding, subject to certain conditions. Under such circumstances, the Company is required to redeem all, but not less than all, of the holder’s outstanding shares of Preferred Stock at a redemption price per share of Preferred Stock, payable in cash, equal to the liquidation preference of $1,333 per share. The Preferred Stock matures on December 31, 2022, subject to certain extension terms, as set forth in the Certificate of Designation, and the Company is required to redeem the shares on such date at a redemption price per share of Preferred Stock, payable in cash, equal to the liquidation preference of $1,333 per share. Since the Preferred Stock is mandatorily redeemable on December 31, 2022, the Company has classified the Preferred Stock as a current liability in the consolidated balance sheets. In addition, the Company is accreting the Preferred Stock from its fair value on the date of issuance to its redemption value using the effective interest rate method. Warrants As of September 30, 2022, the following table summarizes the status of our outstanding and exercisable warrants and related transactions (each adjusted to account for the 50-for-1 reverse stock split) since December 31, 2021 (in thousands, except weighted average exercise price and weighted average remaining contractual life data):
|  | Outstanding |  |  | Exercisable |
|  | Warrants |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Weighted Average Remaining Contractual Life (in Years) |  |  | Warrants |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Weighted Average Remaining Contractual Life (in Years) |
As of January 1, 2022 |  |  | 103 |  |  | $ | 76.19 |  |  | $ | — |  |  |  | 8.3 |  |  |  | 103 |  |  | $ | 76.19 |  |  | $ | — |  |  |  | 8.3 |
Granted |  |  | 311 |  |  |  | 0.20 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expired |  |  | (3 | ) |  |  | 341.50 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of September 30, 2022 |  |  | 411 |  |  | $ | 17.08 |  |  | $ | 2,055 |  |  |  | 9.3 |  |  |  | 286 |  |  | $ | 24.54 |  |  | $ | 2,055 |  |  |  | 9.1 |
The above table includes an aggregate of Lenders Warrants to purchase 310,000 shares of our Common Stock with an exercise price of $0.01 per warrant that are classified as Lender Warrants derivative liability. See Note 8, Debt, for additional information. Share-based compensation payment plans As of September 30, 2022, 598,223 shares of common stock were subject to outstanding awards under our share-based payment award plans and inducement grants (calculated using the base number of PSUs that may vest). If we assume the maximum achievement of performance goals for PSUs, then 663,731 shares of common stock will be subject to outstanding awards under our share-based payment award plans and inducement grants. As of September 30, 2022, 242,015 shares of common stock were available for future grants of share-based payment awards under the TherapeuticsMD, Inc. 2019 Stock Incentive Plan. The following table summarizes the status of our outstanding and exercisable options and related transactions (each adjusted to account for the 50-for-1 reverse stock split) since December 31, 2021 (in thousands, except weighted average exercise price and weighted average remaining contractual life data):
|  | Outstanding |  |  | Exercisable |
|  | Options Awards |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Weighted Average Remaining Contractual Life (in Years) |  |  | Options Awards |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Weighted Average Remaining Contractual Life (in Years) |
As of January 1, 2022 |  |  | 353 |  |  | $ | 225.98 |  |  | $ | - |  |  |  | 3.8 |  |  |  | 336 |  |  | $ | 230.93 |  |  | $ | - |  |  |  | 3.6 |
Cancelled/Forfeited |  |  | (1 | ) |  |  | 1,885.39 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expired |  |  | (155 | ) |  |  | 238.45 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of September 30, 2022 |  |  | 197 |  |  | $ | 216.65 |  |  | $ | - |  |  |  | 3.5 |  |  |  | 192 |  |  | $ | 219.65 |  |  | $ | - |  |  |  | 3.4 |
The following table summarizes the status of our RSUs and related transactions (each adjusted to account for the 50-for-1 reverse stock split) since December 31, 2021 (in thousands, except weighted average grant date fair value):
|  | Outstanding |  |  | Vested and not settled |
|  | RSUs |  |  | Weighted Average Grant Date Fair Value |  |  | Aggregate Intrinsic Value |  |  | RSUs |  |  | Weighted Average Grant Date Fair Value |  |  | Aggregate Intrinsic Value |
As of January 1, 2022 |  |  | 272 |  |  | $ | 58.93 |  |  | $ | 4,891 |  |  |  | 31 |  |  | $ | 105.28 |  |  | $ | 566 |
Granted |  |  | 170 |  |  |  | 16.05 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Vested and settled |  |  | (106 | ) |  |  | 69.42 |  |  |  | 1,180 |  |  |  |  |  |  |  |  |  |  |  |  |
Cancelled/Forfeited |  |  | (35 | ) |  |  | 54.91 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of September 30, 2022 |  |  | 301 |  |  | $ | 31.50 |  |  | $ | 1,998 |  |  |  | 104 |  |  | $ | 38.58 |  |  | $ | 692 |
The following table summarizes the status of our PSUs and related transactions (each adjusted to account for the 50-for-1 reverse stock split) since December 31, 2021 (in thousands, except weighted average grant date fair value):
|  | Outstanding |  |  | Vested and not settled |
|  | PSUs |  |  | Weighted Average Grant Date Fair Value |  |  | Aggregate Intrinsic Value |  |  | PSUs |  |  | Weighted Average Grant Date Fair Value |  |  | Aggregate Intrinsic Value |
As of January 1, 2022 |  |  | 164 |  |  | $ | 51.50 |  |  | $ | 2,953 |  |  |  | 39 |  |  | $ | 58.81 |  |  | $ | 709 |
Granted |  |  | 63 |  |  |  | 34.50 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Vested and settled |  |  | (52 | ) |  |  | 58.26 |  |  |  | 695 |  |  |  |  |  |  |  |  |  |  |  |  |
Cancelled/Forfeited |  |  | (75 | ) |  |  | 44.82 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of September 30, 2022 |  |  | 100 |  | (1) | $ | 42.32 |  |  | $ | 664 |  |  |  | 43 |  |  | $ | — |  |  | $ | 282 |
(1) | The number of PSUs represents the base number of PSUs that may vest. The actual number of PSUs that will vest will be between zero and 165,548 depending on the Company’s achievement of certain performance goals.
Share-based payment compensation cost Share-based payment compensation cost for PSUs is based on our current assessment of the most likely probability of the Company’s achievement of certain performance goals. In connection with previously granted options, RSUs and PSUs, and shares of common stock issuable under the TherapeuticsMD, Inc. 2020 Employee Stock Purchase Plan (“ESPP”), we recorded share-based payment compensation costs of $4.3 million and $7.3 million for the three months ended September 30, 2022 and 2021, respectively, and $8.6 million and $12.8 million for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, we had $6.1 million of unrecognized share-based payment award compensation cost related to unvested options, RSUs and PSUs as well as shares issuable under the ESPP, which may be adjusted if certain performance targets are achieved and for future changes in forfeitures and is included as additional paid-in capital in the accompanying consolidated balance sheets. No tax benefit was realized due to a continued pattern of net losses. The unrecognized compensation cost as of September 30, 2022 is expected to be recognized as share-based payment award compensation over a weighted average period of 1.8 years as follows (in thousands):
Year Ending December 31, |  |  |  |
2022 (3 months) |  | $ | 1,098 |
2023 |  |  | 3,255 |
2024 |  |  | 1,556 |
2025 |  |  | 157 |
|  | $ | 6,066 |

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