What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-15 · 110 added, 59 removed, 180 unchanged (48% of the section changed)

Management’s discussion and analysis of financial condition and results of operations

The following discussion should be read in conjunction with our 2022 Annual Report on Form 10-K (“2022 10-K Report”), and the condensed consolidated financial statements and related notes in Item 1, Financial Statements, appearing elsewhere in this this Quarterly Report on Form 10-Q (“10-Q Report”).

The following discussion may contain forward-looking statements, and our actual results may differ materially from the results suggested by these forward-looking statements.

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We have based these forward-looking statements on our current expectations and projections about future events.

We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date of this 10-Q Report, and but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning.

We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date of this 10-Q Report, and we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning.

These forward-looking statements are inherently subject to known and unknown risks and uncertainties.

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We are no longer engaged in research and development or commercial operations.

On December 30, 2022 (the “Closing Date”), we 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 we (i) granted Mayne Pharma an exclusive license to commercialize 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 our 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.

On December 30, 2022 (the “Closing Date”), we 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 we (i) granted Mayne Pharma an exclusive license to commercialize 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 our 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 TherapeuticsMD and Mayne Pharma (the “Mayne License Agreement”), we 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.

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In addition, the parties agreed that 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 a long-term services agreement, including our minimum payment obligations thereunder.

and the results of operations have been presented as discontinued operations within our condensed consolidated statements of operations and comprehensive income (loss) for all periods presented.

This action represented a shift in our business and therefore, the related assets and liabilities associated with commercial operations are classified as discontinued operations on our condensed consolidated balance sheets and the results of operations have been presented as discontinued operations within our condensed consolidated statements of operations for all periods presented.

See Note 2 – Discontinued Operations to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

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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 and March 31, 2023, we employed one full-time employee primarily engaged in an executive position.

As of December 31, 2022 and June 30, 2023, 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.

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Included in the net proceeds amount was $11.3 million of customary holdbacks as provided in the stock purchase agreement between us and GoodRx, Inc.

(the “Purchase Agreement”), which was recorded as restricted cash in the condensed consolidated balance sheets.

(the “Purchase Agreement”), which was recorded as restricted cash in the condensed consolidated balance sheets until the cash was released to us.

The restricted cash was held by an escrow agent and was released to us in March 2023.

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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 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.

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 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.

with future financings or if the continued impact of the COVID-19 pandemic on us or the third parties we rely on is worse than we anticipate, our existing cash reserves may be insufficient to satisfy our liquidity requirements.

On May 1, 2023, we entered into a Subscription Agreement (the “Subscription Agreement”) with Rubric Capital Management LP (“Rubric”), pursuant to which we agreed to sell to Rubric, or one or more of its affiliates, up to an aggregate of 5,000,000 shares of our common stock, par value $0.001 per share (our “Common Stock”), from time to time during the term of the Subscription Agreement in separate draw-downs at the election of the Company.

On June 29, 2023, we issued and sold 312,525 shares of Common Stock at a price per share equal to $3.6797 pursuant to the Subscription Agreement.

We received gross proceeds of $1.15 million from the draw down, before expenses.

The Common Stock issued pursuant to the Subscription Agreement was sold and issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 5-06 of Regulation D promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

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, if we are unsuccessful with future financings or if the continued impact of the COVID-19 pandemic on us or the third parties we rely on is worse than we anticipate, our existing cash reserves may be insufficient to satisfy our liquidity requirements.

The potential impact of these factors in conjunction with the uncertainty of the capital markets raises substantial doubt about our ability to continue as a going concern for the next twelve months from the issuance of these financial statements.

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On December 30, 2022, we granted an exclusive license to commercialize IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands and assigning our exclusive license to commercialize ANNOVERA to Mayne Pharma.

IMVEXXY (estradiol vaginal inserts), 4- m g and 10- m g

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.

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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 March 31, 2023, no IMVEXXY sales had been made through the Theramex and Knight licensing agreements.

As of June 30, 2023, no IMVEXXY sales had been made through the Theramex and Knight licensing agreements.

The FDA has also asked the sponsors of other vaginal estrogen products to participate in the observational study.

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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

Three months ended March 31, 2023 compared with three months ended March 31, 2022

Three months ended June 30, 2023 compared with three months ended June 30, 2022

In December 2022, we granted an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products and assigned our 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.

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

Three months ended March 31,

Three months ended June 30,

License and service revenue

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Total operating expenses

Income (loss) from operations

Loss from operations

Other (expense) income:

Interest expense and other financing costs

Miscellaneous income

Miscellaneous income (expense)

Total other income, net

Income (loss) from continuing operations before income taxes

Loss from continuing operations before income taxes

Provision for income taxes

Net income (loss) from continuing operations

Income (loss) from discontinued operations, net of income taxes

Net loss from continuing operations

Income from discontinued operations, net of income taxes

Net income (loss)

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License and service revenue.

We recorded $0.4 million in license revenue during the first three months of 2023, primarily from the Mayne License Agreement, and $0.7 million in sales to another licensee during the first quarter of 2022.

This decrease was due to a decrease in sales to licensees as a result of our transformation and transition from a manufacturing and commercialization business to a royalty-based business, partially offset by the license revenue recognized during the first quarter from the Mayne License Agreement.

We recorded $0.4 million in license revenue for the second quarter of 2023, primarily from the Mayne License Agreement, compared to $0.3 million in sales to another licensee for the second quarter of 2022.

This increase was a result of our transformation and transition from a manufacturing and commercialization business to a royalty-based business with revenue from the Mayne License Agreement.

Operating expenses.

Total operating expenses for the first three months of 2023 were $3.1 million, a decrease of $14.8 million, or 82.8%, compared to the first three months of 2022.

Total operating expenses for the second quarter of 2023 were $2.9 million, a decrease of $11.9 million, or 80.4%, compared to the second quarter of 2022.

This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business with limited infrastructure.

Selling, general and administrative.

Selling, general and administrative expenses were $3.1 million for the first three months of 2023, a decrease of $14.5 million, or 82.6%, compared to the first three months of 2022.

Selling, general and administrative expenses were $2.8 million for the second quarter of 2023, a decrease of $11.8 million, or 80.9%, compared to the second quarter of 2022.

This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business.

Depreciation & amortization – Depreciation and amortization expenses were $0.0 million for the first three months of 2023, a decrease of $0.3 million, or 91.8%, compared to the first three months of 2022.

Depreciation & amortization.

Depreciation and amortization expense was $0.1 million for the second quarter of 2023, a decrease of $0.2 million, or 54.6%, compared to the second quarter of 2022.

This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business.

Income (loss) from operations.

For the first three months of 2023, we had a loss from operations of $2.7 million, as compared to a loss from operations of $17.9 million for the first three months of 2022.

Loss from operations.

In the second quarter of 2023, we had a loss from operations of $2.4 million, as compared to a loss from operations of $14.9 million for the second quarter of 2022.

This change was primarily due to the transition of our business from a manufacturing and commercialization business to a royalty-based business and the associated decrease in expenses.

Other income (expense), net.

During the first three months of 2023, we had other income of $0.4 million compared to other income of $0.0 million in the first three months of 2022.

During the second quarter of 2023, we had other income of $0.1 million compared to other expense of $0.0 million in the second quarter of 2022.

This change was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business.

Other income of $0.1 million represents interest income for the present value of the minimum royalty receivables recorded compared to actual minimum royalties received.

Provision for income taxes .

During the first three months of 2023 and 2022, we recorded no provision for income taxes for continuing operations.

Net income (loss) from continuing operations .

For the first three months of 2023, we had a net loss of $2.3 million, or $0.24 per basic and diluted common share, compared to a loss of $17.9 million, or $2.08 per basic and diluted common share, for the first three months of 2022.

Discontinued Operations – Revenues from discontinued operations were $0.0 million for the first three months of 2023, a decrease of $18.6 million as compared to the first three months of 2022.

During the second quarter of 2023 and 2022, we recorded no provision for income taxes for continuing operations.

Net loss from continuing operations .

For the second quarter of 2023, we had a net loss of $2.4 million, or $0.24 per basic and diluted common share, compared to a loss of $14.9 million, or $1.70 per basic and diluted common share, for the second quarter of 2022.

Discontinued Operations – Revenues from discontinued operations were $0.0 million for the second quarter of 2023, a decrease of $28.2 million as compared to the second quarter of 2022.

Operating expenses from discontinued operations were $0.0 million in the second quarter of 2023, a decrease of $27.8 million, as compared to the second quarter of 2022.

Net income (loss) from discontinued operations for the second quarter of 2023 was $0.0 million, a decrease of $127.2 million as compared to the second quarter of 2022.

For additional information, see Note 2 – Discontinued Operations, in the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

Results of operations

Six months ended June 30, 2023 compared with six months ended June 30, 2022

As part of the transformation that included the Mayne License Agreement, historical results of commercial operations have been reflected as discontinued operations in our condensed 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 our condensed consolidated balance sheets.

Additional disclosures regarding discontinued operations are provided in Note 2 to the financial statements included in this Quarterly Report.

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

Six months ended June 30,

License and service revenue

Cost of revenue

Operating expenses:

Selling, general and administrative

Depreciation and amortization

Total operating expenses

Loss from operations

Other (expense) income:

Interest expense and other financing costs

Miscellaneous income (expense)

Total other income (expense), net

Loss from continuing operations before income taxes

Provision for income taxes

Net loss from continuing operations

Income (loss) from discontinued operations, net of income taxes

Net income (loss)

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

License and service revenue.

We recorded $0.9 million in license revenue for the first six months of 2023, primarily from the Mayne License Agreement, and $1.0 million in sales to another licensee during the first six months of 2022.

Operating expenses.

Total operating expenses for the first six months of 2023 were $6.0 million, a decrease of $26.7 million, or 81.7%, compared to the first six months of 2022.

This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business with limited infrastructure.

Selling, general and administrative.

Selling, general and administrative expenses were $5.8 million for the first six months of 2023, a decrease of $26.3 million, or 81.8%, compared to the first six months of 2022.

This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business.

Operating expenses were $0.3 million for the first three months of 2023, a decrease of $22.8 million, as compared to the first three months of 2022.

Depreciation & amortization.

Depreciation and amortization expenses were $0.2 million for the first six months of 2023, a decrease of $0.4 million, or 74.6%, compared to the first six months of 2022.

This decrease was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business.

Operating loss from discontinued operations was $0.3 million, a decrease of $8.0 million as compared to the first three months of 2022.

Loss from operations.

For the first six months of 2023, we had a loss from operations of $5.1 million, as compared to a loss from operations of $32.7 million for the first six months of 2022.

This change was primarily due to the transition of our business from a manufacturing and commercialization business to a royalty-based business and the associated decrease in expenses.

Other income (expense), net.

During the first six months of 2023, we had other income of $0.4 million compared to other expense of $0.0 million in the first six months of 2022.

This change was due to the transition of our business from a manufacturing and commercialization business to a royalty-based business.

Other income of $0.1 million represents interest income for the present value of the minimum royalty receivables recorded compared to actual minimum royalties received and $0.3 million of a net working capital adjustment from the vitaCare Divestiture.

Provision for income taxes .

During the first six months of 2023 and 2022, we recorded no provision for income taxes for continuing operations.

Net loss from continuing operations .

For the first six months of 2023, we had a net loss of $4.7 million, or $0.47 per basic and diluted common share, compared to a loss of $32.7 million, or $3.77 per basic and diluted common share, for the first six months of 2022.

Discontinued Operations – Revenues from discontinued operations were $0.0 million for the first six months of 2023, a decrease of $46.9 million as compared to the first six months of 2022.

Operating expenses from discontinued operations were $0.3 million for the first six months of 2023, a decrease of $50.3 million, as compared to the first six months of 2022.

Net loss from discontinued operations for the first six months of 2023 was $1.3 million, a decrease of $97.3 million as compared to the first six months of 2022.

For additional information, see Note 2 – Discontinued Operations, in the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

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We have funded our operations primarily through public offerings of our common stock and private placements of equity and debt securities, the divestiture of our former subsidiary vitaCare, and the transactions with Mayne Pharma.

As of March 31, 2023, we had cash totaling $17.2 million.

As of June 30, 2023, we had cash totaling $13.7 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.

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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.

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.

The total consideration from Mayne Pharma to us under the Mayne License Agreement consisted of (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 Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.

Pursuant to the Mayne License Agreement, Mayne Pharma will pay us one-time, milestone payments 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.

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Subscription Agreement with Rubric Capital Management LP

On May 1, 2023, we entered into a Subscription Agreement (the “Subscription Agreement”) with Rubric Capital Management LP (the “Investor”), pursuant to which we agreed to sell to the Investor, or one or more of its affiliates, up to an aggregate of 5,000,000 shares of our common stock (the “Shares”), from time to time during the term of the Subscription Agreement in separate draw downs at our election, at a purchase price of the five-day volume-weighted average price of our common stock at the time of the sale of such Shares, at an aggregate purchase price of up to $5,000,000 (collectively, the “Private Placement”).

The initial draw down will occur on the third trading day following receipt of stockholder approval of the Private Placement, and the parties have agreed the initial draw down will consist of a sale of 312,525 Shares at a price per share equal to $3.6797.

At our election, we may issue additional shares from time to time to the Investor, up to an aggregate cap of the lesser of 5,000,000 Shares or $5,000,000.

The effectiveness of the Subscription Agreement and each draw down is subject to the satisfaction or waiver of certain conditions, including that our stockholders vote to approve the Private Placement at our upcoming annual meeting of stockholders.

On May 1, 2023, we entered into the Subscription Agreement with Rubric, pursuant to which we agreed to sell to Rubric, or one or more of its affiliates, up to an aggregate of 5,000,000 shares of Common Stock, from time to time during the term of the Subscription Agreement in separate draw downs at our election, at a purchase price of the five-day volume-weighted average price of our common stock at the time of the sale of such shares, at an aggregate purchase price of up to $5,000,000 (collectively, the “Private Placement”).

The initial draw down occurred on June 29, 2023 consisting of a sale of 312,525 shares of Common Stock at a price per share equal to $3.6797.

We received gross proceeds of $1.15 million from the drawdown, before expenses.

See “Going Concern” above 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.

The following table reflects the major categories of cash flows for each of the periods (in thousands).

Three Months Ended March 31,

Six Months Ended June 30,

Net cash (used in) operating activities

Net cash (used in) investing activities

Net cash (used in) financing activities

Net cash (used in) discontinued operations

Net cash provided by (used in) financing activities

Net cash provided by (used in) discontinued operations

Net (decrease) in cash

Operating Activities from continuing operations.

For the first three months of 2023, net cash used in operating activities was $8.7 million, compared to net cash used in operating activities of $17.9 million for the first

three months of 2022.

This decrease of $9.2 million or 51%, was primarily due to a $15.6 million decrease in our net loss from continuing operations following our transition from a manufacturing and commercialization business to a royalty-based business, combined with a $4.5 million increase in cash usage related to changes in operating assets and liabilities in 2023, partially offset by a $1.6 million decrease in share-based compensation as compared to 2022.

For the first six months of 2023, net cash used in operating activities was $12.1 million, compared to net cash used in operating activities of $38.6 million for the first six months of 2022.

This decrease of $26.5 million or 68.7%, was primarily due to a $28.0 million decrease in our net loss from continuing operations following our transition from a manufacturing and commercialization business to a royalty-based business, combined with a $2.3 million decrease in cash usage related to changes in operating assets and liabilities in 2023, partially offset by a $3.4 million decrease in share-based compensation as compared to 2022.

Investing Activities from continuing operations.

Net cash used in investing activities for the first three months of 2023 was $0.0 million, compared to net cash used in investing activities of $0.2 million for the first three months of 2022.

Net cash used in investing activities for the first six months of 2023 was $0.0 million, compared to net cash used in investing activities of $0.3 million for the first six months of 2022.

This change was due our transition from a manufacturing and commercialization business to a royalty-based business.

Financing Activities from continuing operations.

For the first three months of 2023, net cash used in financing activities was $0.0 million, compared to net cash used by financing activities of $5.0 million for the first three months of 2022, reflecting payments of outstanding long-term debt.

For the first six months of 2023, net cash received from financing activities was $1.2 million, compared to net cash used by financing activities of $125.0 million for the first six months of 2022, reflecting the sale of common stock during the first six months of 2023 and the payments of outstanding long-term debt during the first six months of 2022.

Net cash used in discontinued operations.

Net cash used in operating activities from discontinued operations for the first three months of 2023 was $23.4 million as compared to net cash used in operating activities of $11.7 million for first three months of 2022.

Net cash used in operating activities from discontinued operations for the first six months of 2023 was $25.8 million as compared to net cash provided by operating activities of $124.9 million for first six months of 2022.

This increase relates primarily to expenses incurred and the payment of current liabilities associated with our transition from a manufacturing and commercialization business to a royalty-based business.

Net cash provided by financing activities of discontinued operations for the first three months of 2023 was $1.1 million, compared to net cash used by financing activities of discontinued operations of $0.0 million for the first three months of 2022, which were caused by increases in our long-term liabilities.

Net cash provided by investing activities from discontinued operations was $0.0 million for the first six months of 2023, compared to net cash provided of $0.2 million for the first six months of 2022.

This decrease was due to our transition from a manufacturing and commercialization business to a royalty-based business.

Net cash provided by financing activities from discontinued operations was $1.1 million for the first six months of 2023, compared to net cash provided of $0.0 million for the first six months of 2022.

For additional details, see the condensed consolidated statements of cash flows in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report.

Other liquidity measures

Receivable from Mayne.

On December 30, 2022, Mayne Pharma acquired our accounts receivable balance of approximately $29.3 million which is subject to certain working capital adjustments.

As of March 31, 2023, we had a royalty receivable of $2.0 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.

As of June 30, 2023, we had a royalty receivable of $0.8 million relating to the short-term portion of receivable from Mayne Pharma and $19.8 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 (Revenue Recognition) to the condensed consolidated financial statements included in this Quarterly Report.

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Commitments and Contingencies” to the condensed consolidated financial statements included in this 10-Q Report.

Contractual obligations

A summary of contractual obligations is as follows:

Operating lease obligations

Total contractual obligations

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.

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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 March 31, 2023 and December 31, 2022.

Accordingly, we had no liabilities recorded for these provisions as of June 30, 2023 and December 31, 2022.

In the normal course of business, we may be confronted with issues or events that may result in contingent liability.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis