TXMD

Business Context and Reporting Period

This Form 8-K Current Report was filed by TherapeuticsMD, Inc. on October 28, 2022, with the report date finalized on October 31, 2022. The filing discloses the entry into material definitive agreements regarding a private placement offering and an extension of an existing financing agreement.

Key Financial Metrics and Capital Structure

• Capital Raised: The Company received gross proceeds of $7 million from the sale of 7,000 shares of Series A Preferred Stock to Rubric Capital Management LP.
• Use of Proceeds: Net proceeds are designated for working capital and general corporate purposes.
• Debt Extension: The maturity date of the Financing Agreement with Sixth Street Specialty Lending, Inc. and related lenders was extended to November 30, 2022.
• Equity Issuance: In connection with the debt extension, the Company issued warrants to lenders to purchase an aggregate of 125,000 shares of Common Stock.
• Warrant Terms: The Lender Warrants have an exercise price of $0.01 per share and an expiration date of October 28, 2032.

Material Changes and Agreements

The filing details two primary material changes:

1. Series A Preferred Stock Offering: The Company entered into a Subscription Agreement with Rubric Capital Management LP. Instead of issuing 263,666 shares of Common Stock, the Company agreed to a "make-whole" payment. This payment is calculated as 263,666 multiplied by the closing price of the Common Stock on the day prior to payment, due on the later of the Maturity Date of the Preferred Stock or the date the Financing Agreement obligations are paid in full.
2. Financing Agreement Amendment: Pursuant to Amendment No. 16 to the Financing Agreement, the maturity was extended by approximately one month (to November 30, 2022), contingent upon the issuance of the Lender Warrants described above.

Outlook, Risks, and Contingencies

• Liquidity Strategy: The immediate issuance of preferred stock and the extension of the credit facility indicate a focus on securing short-term liquidity and working capital.
• Future Obligations: The "make-whole" payment obligation creates a contingent liability tied to the future market price of the Company's Common Stock.
• Investor Rights: The Investor in the Series A Preferred Stock was granted rights of first refusal on subsequent equity offerings while the stock remains outstanding.
• Regulatory Status: Both the Preferred Stock and Lender Warrants were issued without registration under the Securities Act of 1933, relying on Section 4(a)(2) and Rule 506 of Regulation D exemptions.

Investor Verification Checklist

• Verify the exact terms of the "make-whole" payment calculation and the specific Maturity Date defined in the Certificate of Designation for the Series A Preferred Stock.
• Confirm the current status of the Financing Agreement with Sixth Street Specialty Lending, Inc., specifically whether the extension to November 30, 2022, has been successfully maintained or if further amendments are required.
• Review the Company's cash burn rate to assess if the $7 million in gross proceeds is sufficient to cover operations until the next financing event or revenue milestone.
• Check for any subsequent filings regarding the exercise of the 125,000 Lender Warrants or the issuance of additional equity that might trigger the rights of first refusal granted to Rubric Capital Management LP.