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- designated Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) for a purchase price per share of Series A 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 Series A 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 Maturity Date (as defined in the Certificate of Designation, Preferences and Rights of Series A Preferred Stock, establishing the powers, designations, preferences and privileges and the

qualifications, limitations or restrictions of the Series A Preferred Stock (the “Certificate of Designation”)) or (ii) the date our obligations under the Financing Agreement were 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.

On October 28, 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 Series A 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) Maturity Date or (ii) the date our obligations under the Financing Agreement were 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 October 28, 2022, and we received gross proceeds of $7.0 million, before expenses. The Company received gross proceeds of $7 million from the Offering, before expenses.

The Series A Preferred Stock was not convertible into Common Stock and ranked 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 Series A Preferred Stock had a liquidation preference equal to $1,333 per share. The Series A Preferred Stock did not have any voting rights other than as required by applicable law. The holders of Series A Preferred Stock were 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 Series A Preferred Stock. Upon the occurrence of change of control, the holders of Series A Preferred Stock could have required the Company to redeem all or part of such holder’s Series A Preferred Stock at a redemption price per share of Series A Preferred Stock, payable in cash, equal to the liquidation preference of $1,333 per share of Series A Preferred Stock.

We also had the option to redeem all the outstanding shares of Series A Preferred Stock on such terms if we consummated a change of control transaction. Each holder of Series A Preferred Stock also had the right to cause the Company to redeem all, but not less than all, of their shares of the Series A 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 or if the Company commenced a bankruptcy proceeding, subject to certain conditions. Under such circumstances, the Company was required to redeem all, but not less than all, of the holder’s outstanding shares of Series A Preferred Stock at a redemption price per share of Series A Preferred Stock, payable in cash, equal to the liquidation preference of $1,333 per share.

We were required to redeem from each holder of Series A Preferred Stock all outstanding shares of Series A Preferred Stock held by such holder, at a redemption price per share of Series A Preferred Stock, payable in cash, equal to the liquidation preference of $1,333 per share of Series A Preferred Stock, upon the earlier to occur of (i) the Maturity Date and (ii) the incurrence of Permitted Refinancing Indebtedness (as defined in the Certificate of Designation). The Company accreted the Series A Preferred Stock from its fair value on the date of issuance to its redemption value using the effective interest rate method.

On December 30, 2022, and in accordance with the terms of the Certificate of Designation, the Company mandatorily redeemed all 29,000 outstanding shares of Series A Preferred Stock at a purchase price of $1,333 per share. The Company also paid certain affiliates of the Preferred Stock Investor approximately $3.0 million as a make-whole payment pursuant to the subscription agreements previously entered into between the Company and the Preferred Stock Investor.

In March 2021, we entered into an at-the-market equity offering program (the “2021 ATM Program”) relating to shares of our common stock. The 2021 ATM Program permitted us to offer and sell shares of our common stock having an aggregate offering price of up to $100.0 million from time to time through or to the sales agent under the 2021 ATM Program. Sales of our common stock could be made from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act, including by means of ordinary broker’s transactions on The Nasdaq Stock Market LLC (“Nasdaq”) or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices, or as otherwise agreed to with the sales agent. The sales agent was entitled to compensation at a fixed commission rate of 3.0% of the aggregate gross sales price per share sold. The sales agent was not required to sell any specific number or dollar amounts of securities but acted as sales agent and used commercially reasonable efforts to sell on our behalf all the shares of common stock requested to be sold by us, consistent with its normal trading and sales practices, on mutually agreed terms between us and the sales agent. Through December 31, 2021, we sold a total of 674,106 shares of our common stock under the 2021 ATM Program at an average sale price of $60.5 per share and we received estimated net proceeds of $39.4 million, after deducting discounts and commissions to the sales agent and estimated offering expenses. Subsequently, through the date of this 2022 10-K Report, we have not sold any additional shares of our common stock under the 2021 ATM Program. The Company does not currently have an effective shelf registration statement in place and therefore, the 2021 ATM program has been suspended. Future sales, if any, under the 2021 ATM Program will depend on a variety of factors, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding, and potential uses of funding available to us.

In February 2021, we closed on an underwritten public offering of our common stock, pursuant to which we issued 1,189,189 shares of our common stock at an offering price of $92.5 per share, and we received net proceeds of $96.6 million, after deducting the underwriting discounts and commissions and estimated offering expenses.

As disclosed in Note 7. Debt, in 2022 we issued to the Administrative Agent and the lenders under the Financing Agreement Lender Warrants to purchase an aggregate of 435,000 shares of common stock in relation to Amendment No.16 to the Financing Agreement. In 2020, we issued to the Administrative Agent and the lenders under the Financing Agreement warrants to purchase an aggregate of 95,042 shares of our common stock.

The following table summarizes the status of our outstanding and exercisable warrants and related for each of the following years (in thousands, except weighed average exercise price and weighted average remaining contractual life data):

	Warrants outstanding and exercisable
	Warrants			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (in Years)
Balance, December 31, 2020		131		$	77.50	$	1,041		7.3
Exercised		(23	)	$	15.50	$	1,146
Expired		(5	)	$	395.00
Balance, December 31, 2021		103		$	76.19	$	-		8.3
Granted		436		$	0.14
Expired		(3	)	$	341.50
Balance, December 31, 2022		536		$	13.10	$	2,427		9.3

We used the Black Scholes option pricing model to estimate the fair value of warrants issued. The weighted average fair value of the warrants issued in 2022 was $0.13 per warrant and the assumptions used to determine such fair value were as follows: expected term of 10 years, volatility of 69.4%, dividend yields of 0% and risk-free interest rates of 2.9%. The fair value of the Lender Warrants was based on the date of grant using our Common Stock’s closing price at measurement date and was recorded to “Additional paid-in-capital” in the consolidated balance sheets. There were no warrant grants in 2021.

In June 2019, our stockholders approved the TherapeuticsMD, Inc. 2019 Stock Incentive Plan, as amended (the “2019 Plan”), which replaced our previously adopted 2012 Stock Incentive Plan, as amended, and the 2009 Long-Term Incentive Compensation Plan (referred to collectively as the “Prior Plans”). Outstanding awards granted under the Prior Plans will remain subject to the terms and conditions in the Prior Plans.

The 2019 Plan is administered by the Compensation Committee of the Board. The purpose of the 2019 Plan is to provide a means for us and our subsidiaries and other designated affiliates (the “Related Entities”) to attract key personnel to provide services to us and the Related Entities, as well as to provide a means by which those key persons can acquire and maintain stock ownership, resulting in a strengthening of their commitment to our welfare and the welfare of the Related Entities and promoting the mutuality of interests between participants and our stockholders. A further purpose of the 2019 Stock Incentive Plan is to provide participants with additional incentive and reward opportunities designed to enhance our profitable growth and the profitable growth of the Related Entities, and provide participants with annual and long-term performance incentives to expend their maximum efforts in the creation of stockholder value. The persons eligible to receive awards under the 2019 Plan are our employees, officers, members of the Board, and consultants who provide services to us or any subsidiary.

The provisions of the 2019 Plan authorize the grant of (i) stock options, which can be “qualified” or “nonqualified” under the Internal Revenue Code of 1986, as amended, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units (“RSUs”), (v) performance shares and performance units, such as performance stock units (“PSUs”), and (vi) other share-based awards. The 2019 Plan will terminate at the earliest of (i) such time as no shares remain available for issuance under the 2019 Stock Plan, (ii) termination of the 2019 by the Board, or (iii) the tenth anniversary of the effective date of the 2019 Stock Incentive Plan. Awards outstanding upon termination of the 2019 Plan will remain in effect until they have been exercised or terminated, or have expired. The term and vesting period of awards granted under the 2019 Plan are established on a per grant basis, and option expiration date is generally ten years from the date of grant.

Under the 2019 Plan, 749,500 shares of common stock are authorized for issuance, which includes 449,500 shares from the First Amendment to the 2019 Plan, which was approved by our stockholders in May 2021 plus any unallocated shares previously available for issuance under the Prior Plans that were not then subject to outstanding awards. Any shares subject to outstanding share-based payment awards under the 2019 Plan and Prior Plans 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.

In August 2021, the Company hired a new President, who became our CEO in December 2021, and granted an “inducement grant” under Listing Rule 5635(c)(4) of Nasdaq of 55,000 RSUs (designated as “Time-Based Units”) and 55,000 PSUs (designated as “Performance Units”). In October 2021, the Company appointed a new Chief Business Officer and granted an “inducement grant” under Listing Rule 5635(c)(4) of Nasdaq of 13,200 RSUs (designated as “Time-Based Units”) and 5,200 PSUs (designated as “Performance Units”). The Time-Based Units and Performance Units were granted pursuant to certain Inducement Grant Restricted Stock Unit Agreement; accordingly, these equity awards were not counted against the shares of common stock available for issuance under the 2019 Plan. As part of the termination agreement with our CEO, 55,000 Performance Units were cancelled and 55,000 RSUs vested in 2022. As part of the termination agreements with our Chief Business Officer, 3,900 Performance Units and 11,466 RSUs vested in 2022.

As of December 31, 2022, 518,074 shares of common stock were subject to outstanding awards under our share-based payment award plans and inducement grants including outstanding PSUs that were vested at 100% as a result of termination of employees.

The following table summarizes the outstanding awards issued pursuant to our share-based payment award plans and inducement grants as of December 31, 2022 and the remaining shares of common stock available for future issuance (in thousands):

Plan Name	Options		RSUs		PSUs ⁽¹⁾		Remaining shares of common stock available for future issuance ⁽²⁾
2019 Plan⁽³⁾		47		198		96		352
2012 Plan ⁽⁴⁾		11		—		—		—
2009 Plan⁽⁵⁾		114		—		—		—
2021 Inducement Grants		—		48		4		—

In May 2021, our stockholders approved an Offer to Exchange Eligible Options for Restricted Stock Units (the “Exchange Offer”). The Exchange Offer allowed certain employee option holders, excluding the Company’s named executive officers, advisers, consultants, contractors, or present or past non-employee directors, to exchange some or all of their outstanding options to purchase shares of common stock that were granted before August 26, 2019, and had a per share exercise price equal to or greater than $250.5 (“Eligible Options”), for an award of RSUs of the Company (“New RSUs”), subject to specified conditions. In September 2021, following the expiration of the Exchange Offer, 69 eligible employees elected to exchange Eligible Options, and the Company accepted for cancellation Eligible Options to purchase an aggregate of 89,860 shares of common stock, representing approximately 91.5% of the total shares of common stock underlying the Eligible Options. Also, in September 2021, promptly following the expiration of the Exchange Offer, the Company granted 14,005 New RSUs in exchange for the cancellation of the tendered Eligible Options. The New RSUs vest in three equal annual installments beginning in September 2022, subject to the terms and conditions of the 2019 Plan.

The following table summarizes the status of our outstanding and exercisable options and related transactions, including the Exchange Offer, for each for the following years (in thousands, except weighed average exercise price and weighted average remaining contractual life data):

	Options awards outstanding									Options awards 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)
Balance, December 31, 2020		476		$	240.00	$	152	5.2			397	$	253.00	$	117		4.6
Granted		1		$	60.50
Exercised		(2	)	$	1.50	$	61
Cancelled/Forfeited		(101	)	$	300.50
Expired		(21	)	$	201.00
Balance, December 31, 2021		353		$	225.98	$	-		3.8	336		$	230.93	$	-		3.6
Granted		-		$	-
Exercised		-		$	-	$	-
Cancelled/Forfeited		(4	)	$	94.99
Expired		(177	)	$	226.56
Balance, December 31, 2022		172		$	228.28	$	-		3.6		170	$	229.43	$	-		3.6

We used the Black Scholes option pricing model to estimate the fair value of options granted. There were no option grants in 2022. The weighted average fair value of the options granted in 2021 was $0.77 per option, and the assumptions used to determine such fair value were as follows: expected term of 6.9 years, volatility of 67.6%, dividend yields of 0% and risk-free interest rates of 1.1%.

The following table summarizes the status of our RSUs and related transactions, including the Exchange Offer, for each for the following years (in thousands, except weighed average grant date fair value):

	RSUs awards outstanding							RSUs awards vested and not settled
	RSUs			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value		RSUs		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance, December 31, 2020		141		$	88.00	$	8,544		—	$	-	$	-
Granted		260		$	52.50
Vested and settled		(103	)	$	78.50	$	4,021
Cancelled/Forfeited		(27	)	$	73.50
Balance, December 31, 2021		272		$	58.00	$	4,890		31	$	105.00	$	566
Granted		170		$	16.05
Vested and settled		(138	)	$	67.50	$	1,343
Cancelled/Forfeited		(58	)	$	37.49
Balance, December 31, 2022		246		$	29.64	$	1,376		189	$	26.28	$	1,059

The following table summarizes the status of our PSUs and related transactions for each for the following years (in thousands, except weighed average grant date fair value):

	PSUs awards outstanding								PSUs awards vested and not settled
	PSUs				Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value		PSUs		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance, January 1, 2020		48			$	54.00	$	2,909		—	$	—	$	—
Granted		152			$	52.00
Vested and settled		(34	)		$	58.00	$	1,057
Cancelled/Forfeited		(2	)		$	53.50
Balance, December 31, 2021		164			$	51.50	$	2,953		39	$	59.00	$	709
Granted		63			$	34.50
Vested and settled		(52	)		$	58.26	$	108
Cancelled/Forfeited		(75	)		$	44.85
Balance, December 31, 2022		100		⁽¹⁾	$	42.30	$	558		81	$	39.95	$	450

In June 2020, our stockholders approved the TherapeuticsMD, Inc. 2020 Employee Stock Purchase Plan (“ESPP”), which reserved 108,000 shares of our common stock for purchase by eligible employees. The ESPP permits eligible employees to purchase our common stock at a price per share which is equal to 85% of the lesser of (i) the fair market value of the shares on the offering date of the offering period or (ii) the fair market value of the shares on the purchase date. In 2022, 5,229 shares were sold under the ESPP at the average price of $2.6 per share and we received proceeds of approximately $14,000. In 2021, 6,721 shares were sold under the ESPP at an average sale price of $34.5 per share and we received proceeds of $0.2 million. In the second quarter of 2022, the ESPP Plan was suspended.

Share-based payment compensation expense for PSUs is based on 100% vesting which was a part of termination of benefits for all employees who were terminated in 2022. We recorded share-based payment award compensation costs related to previously issued options, RSU and PSUs, as well as shares of common stock issued under the ESPP totaling $11.6 million for 2022 and $18.1 million for 2021.

As of December 31, 2022, we had $0.7 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 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 December 31, 2022, is expected to be recognized as share-based payment award compensation over a weighted average period of 1.4 years.