What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-12 compared with 2024-05-10 · 271 added, 198 removed, 230 unchanged (67% of the section changed)

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Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2023

10-K Report under the heading “Risk Factors.” We assume no obligation to revise or update any forward-looking statements for

any reason, except as required by law.

10-K Report under the heading “Risk Factors.” We assume no obligation to revise or update any forward-looking statements

for any reason, except as required by law.

Certain amounts in the following discussion may not add due to rounding,

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For example, statements regarding our operations, financial position, debt position, liquidity, business strategy, and other plans and

objectives for future operations, and assumptions and predictions about future cost reduction strategies, expenses and royalties are all

forward-looking statements.

objectives for future operations, and assumptions and predictions about future cost reduction strategies, expenses and royalties are

all forward-looking statements.

These statements are generally accompanied by words such as “intend,” “anticipate,”

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and are subject to risks and uncertainties, many of which are outside of our control.

Factors that could cause or contribute to such differences

include, but are not limited to, our liquidity requirements, supply chain issues, management transitions, risks related to our licensing

agreements, market and general economic factors, and the other risks discussed in Part I, Item 1A of our 2023 10-K Report, as updated

and supplemented by Part II, Item 1A of this 10-Q Report.

Factors that could cause or contribute to such

differences include, but are not limited to, our liquidity requirements, supply chain issues, management transitions, risks related to

our licensing agreements, market and general economic factors, and the other risks discussed in Part I, Item 1A of our 2023 10-K Report,

as updated and supplemented by Part II, Item 1A of this 10-Q Report.

TherapeuticsMD was previously a women’s healthcare company with

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certain further adjustments, including as described below (the “Minimum Annual Royalty”).

Upon the expiry of the 20-year royalty

term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for

the Licensed Products.

Upon the expiry of the 20-year

royalty term, the licenses granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license

for the Licensed Products.

Pursuant to a Transaction Agreement, dated December 4, 2022, between

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ANNOVERA (the “Transferred Assets”).

total consideration from Mayne Pharma to us for the purchase of the Transferred Assets and the grant of the licenses under the Mayne

License Agreement was (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 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

(as defined below) and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.

acquisition of net working capital was determined in accordance with the Transaction Agreement and included significant estimates which

could change materially for a period of up to two years following the Closing Date.

the Closing Date, TherapeuticsMD and Mayne Pharma entered into Amendment No.

1 to the Mayne License Agreement (the “Mayne License

Agreement Amendment”).

Pursuant to the Mayne License Agreement Amendment, Mayne Pharma agreed to pay us approximately $1.0 million

in prepaid royalties on the Closing Date.

The prepaid royalties reduced the first four quarterly payments that would have otherwise been

payable pursuant to the Mayne License Agreement by an amount equal to $257 thousand per quarterly royalty payment plus interest calculated

at 19% per annum accruing from the Closing Date until the date such quarterly royalty payment was paid to us.

We and Mayne Pharma settled

the $1.5 million of consideration due to Mayne for the assumed obligations under a long-term services agreement, including our minimum

payment obligations thereunder.

As the parties agreed, during the second quarter of 2023, Mayne Parma held back our royalty payment of

$0.6 million and we funded an additional $0.9 million in August 2023 to settle the original $1.5 million payable.

The total consideration from Mayne Pharma to us for the purchase of

the Transferred Assets and the grant of the licenses under the Mayne License Agreement was (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 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 (as defined below) and (iv) the right to receive the contingent

consideration set forth in the Mayne License Agreement, as amended.

The acquisition of net working capital was determined in accordance

with the Transaction Agreement and included significant estimates which could change materially for a period of up to two years following

the Closing Date.

On the Closing Date, TherapeuticsMD and Mayne Pharma entered into

Amendment No.

1 to the Mayne License Agreement (the “Mayne License Agreement Amendment”).

Pursuant to the Mayne License Agreement

Amendment, Mayne Pharma agreed to pay us approximately $1.0 million in prepaid royalties on the Closing Date.

The prepaid royalties reduced

the first four quarterly payments that would have otherwise been payable pursuant to the Mayne License Agreement by an amount equal to

$257 thousand per quarterly royalty payment plus interest calculated at 19% per annum accruing from the Closing Date until the date such

quarterly royalty payment was paid to us.

We and Mayne Pharma settled the $1.5 million of consideration due to Mayne for the assumed

obligations under a long-term services agreement, including our minimum payment obligations thereunder.

As the parties agreed, during

the second quarter of 2023, Mayne Parma held back our royalty payment of $0.6 million and we funded an additional $0.9 million in August

2023 to settle the original $1.5 million payable.

This action represented a shift in our business and therefore, the

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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.

See Note 2 – Discontinued Operations to the condensed consolidated financial statements

included in this Quarterly Report on Form 10-Q for further details.

We also have license agreements with strategic partners to commercialize

IMVEXXY and BIJUVA outside of the U.S.

● In July 2018, we entered into

a license and supply agreement (the “Knight License Agreement”) with Knight Therapeutics Inc.

(“Knight”) pursuant

to which we granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel.

Knight obtained regulatory approval for IMVEXXY and BIJUVA and began commercialization

efforts in 2024.

● In September 2019, we entered

into an exclusive license and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”)

to commercialize IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel.

In 2021, Theramex secured regulatory approval for

BIJUVA in certain European countries and began commercialization efforts in those countries.

In July 2018, we entered into a license and supply

agreement (the “Knight License Agreement”) with Knight Therapeutics Inc.

(“Knight”) pursuant to which we

granted Knight an exclusive license to commercialize IMVEXXY and BIJUVA in Canada and Israel.

Knight obtained regulatory approval

for IMVEXXY and BIJUVA and began commercialization efforts in 2024.

In September 2019, we entered into an exclusive license

and supply agreement (the “Theramex License Agreement”) with Theramex HQ UK Limited (“Theramex”) to commercialize

IMVEXXY and BIJUVA outside of the U.S., excluding Canada and Israel.

In 2021, Theramex secured regulatory approval for BIJUVA in

certain European countries and began commercialization efforts in those countries.

In connection with our transformation into a pharmaceutical royalty

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accordance with their employment agreements and separation agreements as previously disclosed.

As of December 31, 2023 and March

As of December 31, 2023 and June 30, 2024,

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.

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.

Going concern

Following the transaction with

Mayne Pharma, our primary source of revenue is from royalties on products licensed to pharmaceutical organizations that possess commercial

capabilities in the relevant territories.

We may need to raise additional capital to provide additional liquidity to fund our operations

until we become cash flow positive.

To address our capital needs, we may pursue various equity and debt financing and other alternatives.

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

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.

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.

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

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 our election.

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.

On November 15, 2023 Rubric

drew down an additional 877,192 shares of Common Stock at a price per share equal to $2.2761.

We received gross proceeds of $2.0 million

from the drawdown, before expenses.

Following the transaction with Mayne Pharma, our primary source of

revenue is from royalties on products licensed to pharmaceutical organizations that possess commercial capabilities in the relevant territories.

We may need to raise additional capital to provide additional liquidity to fund our operations until we become cash flow positive.

address our capital needs, we may pursue various equity and debt financing and other alternatives.

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 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.

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.

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 our election.

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.

On November 15, 2023, Rubric drew down an additional 877,192 shares of Common Stock

at a price per share equal to $2.2761.

We received gross proceeds of $2.0 million from the drawdown, before expenses.

Mayne Pharma paid us approximately $12.1 million at closing on

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under the Transaction Agreement.

In September 2023, we revised certain accrual estimates including increasing

our working capital adjustment accrual from $3.5 million to $5.5 million for amounts anticipated to be owed under the Transaction

In December 2023, we made a $5.5 million payment to Mayne Pharma to settle certain working capital amounts that were required

to be trued-up shortly after the Closing Date, excluding the allowance for returns, allowance for payer rebates, and allowance for wholesale

distributor fees.

In September 2023, we revised certain accrual estimates including

increasing our working capital adjustment accrual from $3.5 million to $5.5 million for amounts anticipated to be owed under

the Transaction Agreement.

In December 2023, we made a $5.5 million payment to Mayne Pharma to settle certain working capital amounts

that were required to be trued-up shortly after the Closing Date, excluding the allowance for returns, allowance for payer rebates, and

allowance for wholesale distributor fees.

The Company’s estimate of the allowance for payer rebates and

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associated with Mayne Pharma’s allowance calculation for payer rebates and wholesale distributor fees.

As of March 31, 2024, the Company believes

no additional accrual is required for amounts that may be owed for the allowance for returns under the Transaction Agreement.

has not recorded any contingent gains or receivables for any such allowances.

Management continues to monitor the unresolved and pending

net working capital items as changes to estimated amounts owed or amounts due from Mayne Pharma may be material.

As of June 30, 2024, the Company believes no additional accrual is

required for amounts that may be owed for the allowance for returns under the Transaction Agreement.

The Company has not recorded any

contingent gains or receivables for any such allowances.

Management continues to monitor the unresolved and pending net working capital

items as changes to estimated amounts owed or amounts due from Mayne Pharma may be material.

If Mayne Pharma’s sales of Licensed

Products grow more slowly than expected or decline, if the net working capital settlement with Mayne Pharma under the Transaction Agreement

is greater than our current estimates, if we are unsuccessful with future financings or the supply chains related to the third-party contract

manufacturers are worse than we anticipate, our existing cash reserves may be insufficient to satisfy our liquidity requirements.

potential impact of these factors in conjunction with the uncertainty of the capital markets raises substantial doubt about our ability

is greater than our current estimates, if we are unsuccessful with future financings or the supply chains related to the third-party

contract manufacturers are 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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human use outside of the U.S., except for Canada and Israel.

As of March 31, 2024 , no IMVEXXY

sales had been made through the Theramex licensing agreement.

As of June 30, 2024, no IMVEXXY sales had been made through the Theramex

licensing agreement.

BIJUVA (estradiol and progesterone) capsules, 1 mg/100 mg

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ANNOVERA to Mayne Pharma.

This pharmaceutical product is a one-year ring-shaped contraceptive vaginal system (“CVS”) and the

first and only patient-controlled, procedure-free, reversible prescription contraceptive that can prevent pregnancy for up to a total

This pharmaceutical product is a one-year ring-shaped contraceptive vaginal system (“CVS”) and

the first and only patient-controlled, procedure-free, reversible prescription contraceptive that can prevent pregnancy for up to a total

of 13 cycles (one year).

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Results of operations

Three months ended March 31, 2024 compared with three months ended

March 31, 2023

As part of the transformation that included the Mayne License Agreement,

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are based on, and relate to, our continuing operations.

The following table sets forth the results of our operations (in thousands):

Three months ended June 30, 2024 compared with three months ended

June 30, 2023

The following table sets forth the results of our operations

(in thousands):

Three Months Ended

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Selling, general and administrative

Impairment of long-lived assets (Note 4)

Depreciation and amortization

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Interest expense and other financing costs

Miscellaneous income (expense)

Miscellaneous income

Total other income, net

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Net loss from continuing operations

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

Loss from discontinued operations, net of income taxes

As part of our transformation and the Mayne License

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statements for all periods presented.

We recorded $313 thousand in license revenue for the first quarter

of 2024, primarily from the Mayne License Agreement, compared to $416 thousand in license revenue

from the Mayne License Agreement for the first quarter of 2023.

The decrease is primarily attributable to changes in sales of licensed

Total operating expenses for the first quarter of 2024 were $1,455 thousand, a decrease of $1,628 thousand, or 52.8%, compared

to the first quarter of 2023.

This decrease was due to the down-sizing of our business following our transition to a royalty-based business.

We recorded $234 thousand in license revenue for the second quarter

of 2024, primarily from the Mayne License Agreement, a decrease of $203 thousand, or 46.5%, compared to $437 thousand in license

revenue for the second quarter of 2023.

The decrease is primarily attributable to changes in sales of licensed products.

Operating expenses .

Total operating expenses for the second

quarter of 2024 were $2,674 thousand, a decrease of $235 thousand, or 8.1%, compared to the second quarter of 2023.

This decrease was

due to the further optimization of our business through the reduction of costs following our transition to a royalty-based business, and

is partially off-set by the patent impairment recognized in the second quarter of 2024.

Selling, general and administrative.

Selling, general and administrative expenses were $1,322 thousand for

the first quarter of 2024, a decrease of $1,734 thousand, or 56.7%, compared to the first quarter of 2023.

This decrease was due to the

increased efficiencies realized following our transition to a royalty-based business.

Selling, general and administrative

expenses were $1,233 thousand for the second quarter of 2024, a decrease of $1,548 thousand, or 55.7%, compared to the second quarter

This decrease was due to the increased efficiencies realized following our transition to a royalty-based business.

Depreciation & amortization.

Depreciation and amortization expense was $133 thousand for the first

quarter of 2024, an increase of $106 thousand, or 392.6%, compared to the first quarter of 2023.

In 2024, this balance is entirely comprised

of amortization of license rights and intangible assets.

Depreciation and amortization

expense was $180 thousand for the second quarter of 2024, an increase of $52 thousand, or 40.6%, compared to the second quarter of 2023.

In the 2024 period, this balance is entirely comprised of amortization of license rights and intangible assets.

Loss from operations.

In the first quarter of 2024, we had a loss from operations of $1,142

thousand, as compared to a loss from operations of $2,667 thousand for the first quarter of 2023.

This change reflects the streamlining

of our business and increased efficiencies realized as a royalty-based business.

In the second quarter of 2024, we had

a loss from operations of $2,440 thousand, as compared to a loss from operations of $2,472 thousand for the second quarter of 2023.

change reflects the streamlining of our business and increased efficiencies realized as a royalty-based business.

Other income (expense), net .

During the first quarter of 2024,

we had other income of $333 thousand compared to other income of $357 thousand in the first quarter of 2023.

This change reflects our

transition to a royalty-based business.

During the second quarter of 2024,

we had other income of $1,390 thousand compared to other income of $58 thousand in the second quarter of 2023.

The difference is mainly

due to a $1,250 thousand one-time consideration the Company received from its sublessee on its early termination on the sublease, which

was recognized in the second quarter of 2024.

Royalties reported as other income for intellectual property licensed by us totaled approximately

$295 thousand in the first quarter of 2024.

$108 thousand in the second quarter of 2024.

Provision for income taxes .

During the first quarter of 2024

During the second quarter of 2024

and 2023, we recorded no provision for income taxes for continuing operations.

Net loss from continuing operations .

For the first quarter of

2024, we had a net loss of $809 thousand, or $0.07 per basic and diluted common share, compared to a net loss of $2,310 thousand, or $0.24

per basic and diluted common share, for the first quarter of 2023.

For the second quarter

of 2024, we had a net loss of $1,050 thousand, or $0.09 per basic and diluted common share, compared to a net loss of $2,414 thousand,

or $0.24 per basic and diluted common share, for the second quarter of 2023.

Discontinued Operations – Net loss from discontinued operations

was $40 thousand for the second quarter of 2024, compared to a net loss from discontinued operations of $0 thousand for the second quarter

Six months ended June 30, 2024 compared with six months ended June

The following table sets forth the results of our operations (in thousands):

Six Months Ended

License and service revenue

Operating expenses:

Selling, general and administrative

Impairment of long-lived assets (Note 4)

Depreciation and amortization

Total operating expenses

Loss from operations

Other income (expense):

Interest expense and other financing costs

Miscellaneous income

Total other income, 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

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.

We recorded $547 thousand in license revenue for the first six months

of 2024, primarily from the Mayne License Agreement, a decrease of $306 thousand, or 35.9%, compared to $853 thousand in license

revenue for the first six months of 2023.

The decrease is primarily attributable to changes in sales of licensed products.

Operating expenses .

Total operating expenses for the first

six months of 2024 were $4,129 thousand, a decrease of $1,863 thousand, or 31.1%, compared to the first six months of 2023.

This decrease

was due to the further optimization of our business through the reduction of costs following our transition to a royalty-based business

, and is partially off-set by the patent impairment recognized in the second quarter of 2024.

Selling, general and administrative.

Selling, general and administrative

expenses were $2,555 thousand for the first six months of 2024, a decrease of $3,282 thousand, or 56.2%, compared to the first six months

This decrease was due to the increased efficiencies realized following our transition to a royalty-based business.

Depreciation & amortization.

Depreciation and amortization

expense was $313 thousand for the first six months of 2024, an increase of $158 thousand, or 101.9%, compared to the first six months

In the 2024 period, this balance is entirely comprised of amortization of license rights and intangible assets.

Loss from operations.

In the first six months of 2024, we had

a loss from operations of $3,582 thousand, as compared to a loss from operations of $5,139 thousand for the first six months of 2023.

This change reflects the streamlining of our business and increased efficiencies realized as a royalty-based business.

Other income, net .

During the first six months of 2024, we had

other income of $1,723 thousand compared to other income of $415 thousand in the first six months of 2023.

The difference is mainly due

to a $1,250 thousand one-time consideration the Company received from its sublessee on its early termination on the sublease, which was

recognized in the second quarter of 2024.

Royalties reported as other income for intellectual property licensed by us totaled approximately

$404 thousand in the first six months of 2024.

Provision for income taxes .

During the first six months of

2024 and 2023, we recorded no provision for income taxes for continuing operations.

Net loss from continuing operations .

For the first six months

of 2024, we had a net loss of $1,859 thousand, or $0.16 per basic and diluted common share, compared to a net loss of $4,724 thousand,

or $0.47 per basic and diluted common share, for the first six months of 2023.

Discontinued Operations - Net income from discontinued operations

was $75 thousand for the first quarter of 2024, compared to a net loss from discontinued operations of $1,293 thousand for the first

quarter of 2023.

was $35 thousand for the first six months of 2024, compared to a net loss from discontinued operations of $1,293 thousand for the first

six months of 2023.

This change reflects the continued wind-down of our legacy business.

For additional information, see Note 2 - Discontinued Operations, in

the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

For additional information, see Note 2 - Discontinued Operations,

in the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

Liquidity and capital resources

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divestiture of our former subsidiary vitaCare, and the transactions with Mayne Pharma.

31, 2024 , we had cash and cash equivalents totaling $4,338 thousand.

We maintain cash at financial institutions that at times may

exceed the Federal Deposit Insurance Corporation insured limits of $250 thousand per bank.

We have never experienced any losses related

to these funds.

As of June 30, 2024, we had cash and cash equivalents

totaling $5,232 thousand.

We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation

insured limits of $250 thousand per bank.

We have never experienced any losses related to these funds.

Mayne Pharma License Agreement

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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.

Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the first $80 million

in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period of 20 years following

the Closing Date.

The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur of (i) the expiration

or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United States.

will pay us minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual rate of 3%, subject to

certain further adjustments, including as described below.

Upon the expiry of the 20-year royalty term, the licenses granted to Mayne

Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products.

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

Further, Mayne Pharma will pay us royalties on net sales of all Products in the United States at a royalty rate of 8.0% on the

first $80 million in annual net sales and 7.5% on annual net sales above $80.0 million, subject to certain adjustments, for a period

of 20 years following the Closing Date.

The royalty rate will decrease to 2.0% on a Product-by-Product basis upon the earlier to occur

of (i) the expiration or revocation of the last patent covering a Product and (ii) a generic version of a Product launching in the United

Mayne Pharma will pay us minimal annual royalties of $3.0 million per year for 12 years, adjusted for inflation at an annual

rate of 3%, subject to certain further adjustments, including as described below.

Upon the expiry of the 20-year royalty term, the licenses

granted to Mayne Pharma under the Mayne License Agreement will become a fully paid-up and royalty free license for the Licensed Products.

Subscription Agreement with Rubric Capital Management LP

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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

from time to time during the term of the Subscription Agreement in separate drawdowns 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”).

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.

On November 15, 2023 Rubric drew down an additional 877,192

shares of Common Stock at a price per share equal to $2.2761.

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.

On November 15, 2023 Rubric drew down an additional 877,192 shares of Common Stock at a price per share equal to $2.2761.

We received gross proceeds of $2.0 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.

As a result, there is substantial doubt about our ability to continue as a going

concern for the next twelve months from the issuance of these financial statements.

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.

As a result, there is substantial doubt about our ability to continue as a going concern for

the next twelve months from the issuance of these financial statements.

The following table reflects the major categories of cash flows for

each of the periods (in thousands).

Three Months Ended

Net cash used in operating activities

Net cash provided by (used in) discontinued operations

Six Months Ended

Net cash provided by (used in) continuing operating activities

Net cash provided by financing activities

Net cash used in discontinued operations

Net increase (decrease) in cash

1 unchanged sentence

For the first

three months of 2024, net cash used in operating activities was $229 thousand, compared to net cash used in operating activities of $8,701

thousand for the first three months of 2023.

This decrease of $8,472 thousand or 97.4%, was primarily due to a $1,501 thousand decrease

six months of 2024, net cash provided by operating activities was $1,224 thousand, compared to net cash used in operating activities of

$12,093 thousand for the first six months of 2023.

This change of $13,317 thousand or 110.1%, was primarily due to a $2,865 thousand decrease

in our net loss from continuing operations following our transition from a manufacturing and commercialization business to a royalty-based

business combined with the pay-down of current liabilities in the prior-year period.

Net cash provided by (used in) discontinued operations.

cash provided by operating activities from discontinued operations for the first three months of 2024 was $240 thousand as compared to

net cash used in operating activities of $23,368 thousand for the first three months of 2023.

This change 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.

For additional details, see the condensed consolidated statements of

cash flows in Item 1, Financial Statements, appearing elsewhere in this 10-Q Report.

Financing Activities from continuing operations.

first six months of 2024, there was no cash received from financing activities, compared to net cash received from financing activities

of $1,150 thousand for the first six months of 2023, reflecting the sale of common stock during the first six months of 2023.

Net cash used in discontinued operations.

Net cash used in

operating activities from discontinued operations for the first six months of 2024 was $319 thousand as compared to net cash used in

operating activities of $24,645 thousand for the first six months of 2023.

This change relates primarily to a decrease in expenses incurred

and the payment of current liabilities associated with our transition from a manufacturing and commercialization business to a royalty-based

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

2 unchanged sentences

our accounts receivable balance of approximately $29.3 million which is subject to certain working capital adjustments.

31, 2024 , we had a royalty receivable of $3,113 thousand relating to the short-term portion of receivable from Mayne Pharma and

$17,855 thousand 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 consolidated financial statements included in our 2023 10-K Report .

On December 30, 2022, Mayne Pharma acquired our inventory

balance of approximately $6.6 million, which is subject to certain net working capital adjustments.

As of June 30,

2024, we had a royalty receivable of $2,778 thousand relating to the short-term portion of receivable from Mayne Pharma and $17,224 thousand

relating to the long-term portion of royalty receivable which includes royalties recognized from the Minimum Annual Royalty.

1 Business, basis of presentation, new accounting standards and summary of significant accounting policies (Revenue Recognition) to the

consolidated financial statements included in our 2023 10-K Report.

On December 30, 2022, Mayne Pharma acquired our

inventory balance of approximately $6.6 million, which is subject to certain net working capital adjustments.

Contractual obligations, off-balance sheet arrangements and purchase

6 unchanged sentences

parties that include indemnification provisions, which, in our judgment, are normal and customary for companies in our industry sector.

Pursuant to these agreements, we generally agree to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or

omitted by us.

The maximum potential amount of future payments we could be required to make under these indemnification provisions is

sometimes unlimited.

Pursuant to these agreements, we agree to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or omitted by

The maximum potential amount of future payments we could be required to make under these indemnification provisions is sometimes unlimited.

We have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

As a result, the estimated fair value of liabilities relating to these provisions is minimal.

Accordingly, we had no liabilities recorded

for these provisions as of March 31, 2024 and December 31, 2023 .

As a result, the

estimated fair value of liabilities relating to these provisions is minimal.

Accordingly, we had no liabilities recorded for these provisions

as of June 30, 2024 and December 31, 2023.

In the normal course of business, we may be confronted with issues

or events that may result in contingent liability.

These generally relate to lawsuits, claims, environmental actions, or the actions of

various regulatory agencies.

These generally relate to lawsuits, claims, environmental actions, or the actions

of various regulatory agencies.

We consult with counsel and other appropriate experts to assess the claim.

If, in our opinion, we have incurred

a probable loss as set forth by U.S.

GAAP, an estimate is made of the loss and the appropriate accounting entries are reflected in our

condensed consolidated financial statements.

If, in our opinion, we have

incurred a probable loss as set forth by U.S.

GAAP, an estimate is made of the loss and the appropriate accounting entries are reflected

in our condensed consolidated financial statements.

Critical accounting policies and estimates

2 unchanged sentences

has been prepared in accordance with U.S.

We make estimates and assumptions that affect the reported amounts on our condensed consolidated

financial statements and accompanying notes as of the date of the condensed consolidated financial statements.

The critical accounting

policies and estimates used are disclosed in Item 7 – Management’s discussion and analysis of financial condition and results

of operations – Critical accounting policies and estimates in our 2023 10-K Report.

GAAP and SEC rules and regulations related to interim financial reporting.

We make estimates

and assumptions that affect the reported amounts on our condensed consolidated financial statements and accompanying notes as of the date

of the condensed consolidated financial statements.

The critical accounting policies and estimates used are disclosed in Item 7 –

Management’s discussion and analysis of financial condition and results of operations – Critical accounting policies and estimates

in our 2023 10-K Report.

Quantitative and qualitative disclosures about market

As a “smaller reporting company,” as defined by Rule 12b-2

of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation

S-K, we are not required to provide this information.

of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of

Regulation S-K, we are not required to provide this information.

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