GoodRx : INDEX TO FINANCIAL STATEMENTS – Form 8-K/A

INDEX TO FINANCIAL STATEMENTS

Page

Report of Independent Certified Public Accountants

2

Balance Sheet

4

Statement of Operations

5

Statement of Stockholder’s (Deficit) Equity

6

Statement of Cash Flows

7

Notes to Financial Statements

8

1

Report of Independent Certified Public Accountants

Board of Directors and Stockholder

vitaCare Prescription Services, Inc.

Opinion

We have audited the monetary statements of vitaCare Prescription Services, Inc. (a Florida company) (the “Company”), which comprise the steadiness sheet as of December 31, 2021, and the associated statements of operations, adjustments in stockholder’s deficit, and money flows for the yr then ended, and the associated notes to the monetary statements.

In our opinion, the accompanying monetary statements current pretty, in all materials respects, the monetary place of the Company as of December 31, 2021, and the outcomes of itsoperations and itscash flows for the yr then led to accordance with accounting rules usually accepted within the United States of America.

Substantial doubt concerning the Company’s skill to proceed as a going concern

The accompanying monetary statements have been ready assuming that the Company will proceed as a going concern. As mentioned in Note 1 to the monetary statements, the Company has incurred web losses since inception and expects losses to proceed into the foreseeable future. The Company additionally has unfavorable working capital as of December 31, 2021 and has been funded since inception completely by its sole stockholder. Management has said that substantial doubt exists concerning the Company’s skill to proceed as a going concern, administration’s analysis of the occasions and circumstances and administration’s plans concerning these issues are additionally described in Note 1. The monetary statements don’t embody any changes which may outcome from the result of this uncertainty. Our opinion will not be modified with respect to this matter.

Basis for opinion

We carried out our audit of the monetary statements in accordance with auditing requirements usually accepted within the United States of America (US GAAS). Our tasks beneath these requirements are additional described within the Auditor’s Responsibilities for the Audit of the Financial Statements part of our report. We are required to be unbiased of the Company and to fulfill our different moral tasks in accordance with the related moral necessities regarding our audits. We imagine that the audit proof we’ve obtained is enough and acceptable to offer a foundation for our audit opinion.

Responsibilities of administration for the monetary statements

Management is accountable for the preparation and truthful presentation of the monetary statements in accordance with accounting rules usually accepted within the United States of America, and for the design, implementation, and upkeep of inside management related to the preparation and truthful presentation of economic statements which are free from materials misstatement, whether or not because of fraud or error.

In making ready the monetary statements, administration is required to judge whether or not there are circumstances or occasions, thought of within the combination, that increase substantial doubt concerning the Company’s skill to proceed as a going concern for one yr after the date the monetary statements are issued.

Auditor’s tasks for the audit of the monetary statements

Our goals are to acquire affordable assurance about whether or not thefinancial statements as a complete are free from materials misstatement, whether or not because of fraud or error, and to subject an auditor’s report that features our opinion. Reasonable assurance is a excessive stage of assurance however will not be absolute assurance and subsequently will not be a assure that an audit carried out in accordance with US GAAS will at all times detect a cloth misstatement when it exists. The threat of not detecting a cloth misstatement ensuing from fraud is larger than for one ensuing from error, as fraud might contain collusion, forgery, intentional omissions, misrepresentations, or the override of inside management. Misstatements are thought of materials if there’s a substantial chance that, individually or within the combination, they’d affect the judgment made by an affordable person primarily based on the monetary statements.

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In performing an audit in accordance with US GAAS, we:

Exercise skilled judgment and keep skilled skepticism all through the audit.

Identify and assess the dangers of fabric misstatement of thefinancial statements, whether or not because of fraud or error, and design and carry out audit procedures conscious of these dangers. Such procedures embody analyzing, on a check foundation, proof concerning the quantities and disclosures within the monetary statements.

Obtain an understanding of inside management related to the audit as a way to design audit procedures which are acceptable within the circumstances, however not for the aim of expressing an opinion on the effectiveness of the Company’s inside management. Accordingly, no such opinion is expressed.

Evaluate the appropriateness of accounting insurance policies used and the reasonableness of great accounting estimates made by administration, in addition to consider the general presentation of the monetary statements.

Conclude whether or not, in our judgment, there are circumstances or occasions, thought of within the combination, that increase substantial doubt concerning the Company’s skill to proceed as a going concern for an affordable time frame.

We are required to speak with these charged with governance concerning, amongst different issues, the deliberate scope and timing of the audit, important audit findings, and sure inside management-associated issues that we recognized through the audit.

/s/ GRANT THORNTON LLP

Miami, Florida

March 25, 2022

3

vitaCare Prescription Services, Inc.

Balance Sheet

As of

December 31, 2021

Assets:

Current belongings:

Accounts receivable

$

156,612

Prepaid license charges

15,867

Total present belongings

172,479

Fixed belongings, web

156,628

Intangible belongings, web

36,366

Total belongings

$

365,473

Liabilities and stockholder’s deficit:

Current liabilities:

Accounts payable

$

662,486

Accrued compensation prices

1,384,320

Other accrued bills

52,000

Total present liabilities and whole liabilities

2,098,806

Commitments and contingencies (Note 5)

Stockholder’s deficit:

Common inventory, par worth $0.01; 1,000 shares approved,

issued and excellent as of December 31, 2021 and 2020

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Additional paid-in-capital

50,187,968

Accumulated deficit

(51,921,311

)

Total stockholder’s deficit

(1,733,333

)

Total liabilities and stockholder’s deficit

$

365,473

See notes to the monetary statements

4

vitaCare Prescription Services, Inc.

Statement of Operations

Year ended

December 31, 2021

Service income, web

$

875,037

Operating bills:

Compensation and advantages

17,256,192

Contract labor

2,672,197

Software

949,516

Rent

575,576

Depreciation

115,473

Other direct bills

688,668

Corporate expense allocations from Seller

1,256,241

Total working bills

23,513,863

Loss from operations

(22,638,826

)

Interest expense allocation from Seller

(2,365,756

)

Loss earlier than revenue taxes

(25,004,582

)

Provision for revenue taxes

Net loss

$

(25,004,582

)

See notes to the monetary statements

5

vitaCare Prescription Services, Inc.

Statement of Stockholder’s (Deficit) Equity

Additional

Common Stock

Paid-In

Accumulated

Shares

Amount

Capital

Deficit

Total

Balance, January 1, 2021

1,000

$

10

$

26,934,364

$

(26,916,729

)

$

17,645

Share-based compensation prices from stockholder

1,420,103

1,420,103

Net funds supplied by stockholder

21,833,501

21,833,501

Net loss

(25,004,582

)

(25,004,582

)

Balance, December 31, 2021

1,000

$

10

$

50,187,968

$

(51,921,311

)

$

(1,733,333

)

See notes to the monetary statements

6

vitaCare Prescription Services, Inc.

Statement of Cash Flows

Year ended

December 31, 2021

Cash flows from working actions:

Net loss

$

(25,004,582

)

Adjustments to reconcile web loss to web money utilized in working actions:

Depreciation and amortization

115,473

Share-based fee compensation prices from stockholder

1,420,103

Changes in working belongings and liabilities:

Accounts receivable

78,264

Prepaid and different present belongings

(15,867

)

Accounts payable

648,810

Accrued bills

932,350

Total changes

3,179,133

Net money utilized in working actions

(21,825,449

)

Cash flows from investing actions:

Payment for patents and logos

(7,536

)

Purchase of mounted belongings

(516

)

Net money utilized in investing actions

(8,052

)

Cash flows from financing actions:

Net funds supplied by stockholder

21,833,501

Net money supplied by financing actions

21,833,501

Net change in money

Cash, starting of interval

Cash, finish of interval

$

See notes to the monetary statements

7

vitaCare Prescription Services, Inc.

Notes to Financial Statements

1. Business, foundation of presentation, new accounting requirements and abstract of great accounting insurance policies

General

vitaCare Prescriptions Services, Inc., (the “Company”, “VPS”, “we”, or “our”), a Florida company, is a know-how and repair platform that disrupts the present provide chain and branded prescription achievement course of, leveraging management to drive simplicity, transparency, and effectivity. VPS offers an entire suite of pharmaceutical commercialization help providers for pharmaceutical corporations associated to prescription achievement, market entry and affected person help by aiding sufferers in acquiring simple and handy entry to their prescriptions for merchandise at a pharmacy of their selection, together with by way of residence supply pharmacy choices.

VPS is an entirely owned subsidiary of TherapeuticsMD, Inc. (“TherapeuticsMD” or “Seller”), a Nevada company, with its principal govt workplaces at 951 Yamato Road, Suite 220, Boca Raton, Florida 33431. Seller’s shares are listed on the Nasdaq Global Select Market of the Nasdaq Stock Market LLC beneath the image “TXMD.”

COVID-19

VPS continues to be topic to dangers and uncertainties in reference to the COVID-19 pandemic. The extent of the longer term influence of the COVID-19 pandemic on our enterprise continues to be extremely unsure and troublesome to foretell. The final world restoration from the pandemic can be depending on, amongst different issues, actions taken by governments and companies to comprise and fight the virus, together with any variant strains, the velocity and effectiveness of vaccine manufacturing and world distribution, in addition to how shortly, and to what extent, regular financial and working circumstances can resume on a sustainable foundation globally.

Since the early part of the COVID-19 pandemic, we’ve been utilizing substantial digital choices to make sure enterprise continuity. The full influence of the COVID-19 pandemic continues to evolve. However, we stay dedicated to the execution of the Company’s company objectives, regardless of the continued COVID-19 pandemic. As of the date of issuance of those monetary statements, the longer term extent to which the COVID-19 pandemic might proceed to materially influence our monetary situation, liquidity, or outcomes of operations stays unsure. We are persevering with to evaluate the impact of the COVID-19 pandemic on our operations by monitoring the unfold of COVID-19 and the varied actions applied to fight the pandemic all through the world. Even after the COVID-19 pandemic has subsided, VPS might proceed to expertise opposed impacts to its enterprise on account of any financial recession or melancholy that has occurred or might happen sooner or later.

While administration presently believes that our COVID-19 contingency plan has the power to mitigate lots of the unfavorable results of the COVID-19 pandemic on our enterprise, the severity of the influence of the COVID-19 pandemic on our enterprise will rely upon quite a few elements, together with, however not restricted to, the length and severity of the pandemic, the length of “social distancing” orders, will increase in unemployment, which may cut back entry to industrial medical insurance for the sufferers of Seller and our third social gathering prospects, thus limiting payer protection for his or her merchandise, and the influence of the pandemic on the worldwide provide chain, all of which stay unsure. Our future outcomes of operations and liquidity could possibly be materially adversely affected by delays in funds of excellent receivable quantities past regular fee phrases, provide chain disruptions, unsure demand, and the influence of any initiatives or packages that we might undertake to deal with monetary and operations challenges that we might face.

Going Concern

VPS has skilled web losses and unfavorable money flows from operations since inception and expects these circumstances to proceed a minimum of by way of the foreseeable future. VPS had unfavorable working capital as of December 31, 2021, and VPS’s operations are funded completely by Seller, which can be its sole stockholder. In addition, as additional mentioned in Note 5, VPS is a guarantor to a Financing Agreement which has been entered into by the Seller. The Financing Agreement matures on June 1, 2022, and neither the Seller nor VPS presently have enough liquidity to pay the quantities due beneath the Financing Agreement at maturity.These elements increase substantial doubt about VPS’s skill to function as a going concern as a stand-alone enterprise.

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In March 2022, TherapeuticsMD entered right into a definitive settlement with GoodRx, Inc. (“GoodRx”) to promote VPS to GoodRx. See Note 8 for extra particulars on this transaction. Upon the closing of the anticipated transaction, the funding necessities of VPS will must be happy by GoodRx. Furthermore, there’s uncertainty as to if VPS will have the ability to function at a worthwhile stage sooner or later given the aggressive setting by which it operates. These elements may have a materially opposed impact on our Company. The accompanying monetary statements don’t embody any changes regarding the recoverability and classification of asset carrying quantities and the classification of liabilities that could be crucial from the result of this uncertainty.

A. Basis of presentation

These monetary statements have been ready in accordance with U.S. usually accepted accounting rules (“U.S. GAAP”). The monetary statements embody allocations for sure company bills incurred by Seller on behalf of the Company. For additional info, see Corporate expense allocations under. Management believes the assumptions underlying the monetary statements of VPS are affordable; nonetheless, the Company’s monetary place as of December 31, 2021, and its outcomes of operations and money flows for the yr ended December 31, 2021 might have been materially completely different if it was operated as a stand-alone entity. VPS relies upon Seller for all of its working capital and financing necessities. Our working capital and financing preparations with the Seller aren’t supported by written agreements, have by no means been money settled up to now, and are anticipated to be forgiven, accordingly, the transfers of economic assets between Seller and VPS are mirrored as further paid-in capital on the accompanying steadiness sheet in lieu of money and intercompany debt.

B. Estimates and assumptions

The preparation of economic statements in conformity to U.S. GAAP requires us to make sure estimates and assumptions that have an effect on the reported quantities of belongings and liabilities, disclosure of contingent belongings and liabilities on the date of the monetary statements and the reported quantities of income and bills through the reporting interval. We consider our estimated assumptions primarily based on historic expertise and on numerous different assumptions which are believed to be affordable, the outcomes of which type the premise for making judgments concerning the carrying values of belongings and liabilities that aren’t readily obvious from different sources. Actual outcomes might differ, at instances in materials quantities, from these estimates beneath completely different assumptions or circumstances

C. Accounts receivable, allowance for uncertain accounts and focus of great prospects

Accounts receivable are buyer obligations due beneath regular commerce phrases and are measured at amortized price. The Company extends credit score on an unsecured foundation to most of our prospects primarily based on an analysis of a buyer’s monetary situation, and collateral will not be required.

We assessment accounts receivable for uncollectible and delinquent accounts and bank card chargebacks, and we offer an allowance for uncertain accounts, which is predicated upon a assessment of excellent receivables, historic assortment info, affordable supportable forecasts, and current financial circumstances, and we file an allowance that presents the web quantity anticipated to be collected. We write off uncollectible and delinquent receivables in opposition to our allowance for uncertain accounts primarily based on particular person credit score evaluations, the outcomes of assortment efforts, and particular circumstances of consumers. We file recoveries of accounts beforehand written off when acquired as a rise within the allowance for uncertain accounts. To the extent information we use to calculate these estimates doesn’t precisely replicate unhealthy money owed, changes to those reserves could also be required. Our publicity to credit score losses might improve if our prospects are adversely affected by adjustments in healthcare legal guidelines, protection, and reimbursement, financial pressures or uncertainty related to native or world financial recessions, disruption related to the present COVID-19 pandemic, or different buyer-particular elements. Although we’ve traditionally not skilled important credit score losses, it’s potential that there could possibly be a cloth opposed influence from potential changes of the carrying quantity of commerce receivables sooner or later.

As of December 31, 2021, the Company’s accounts receivable focus of credit score threat is made up of two prospects who accounted for 55% and 25% of the overall accounts receivable. In the mixture, these two prospects accounted for 81% of whole accounts receivable as of December 31, 2021.

For 2021, we had 4 prospects who accounted for 12%, 16%, 28% and 32% of whole web income. In the mixture, these 4 prospects accounted for 89% of whole web income for 2021.

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D. Fair Value Measurements

Fair worth is the worth to promote an asset or switch a legal responsibility and subsequently represents an exit worth within the principal market (or within the absence of a principal market, probably the most advantageous market). It represents a market-primarily based measurement that contemplates a hypothetical transaction between market individuals on the measurement date.

The distinctive traits of an asset or legal responsibility and the provision of observable costs have an effect on the variety of valuation approaches and/or methods utilized in a good worth evaluation. We measure truthful worth utilizing observable and unobservable inputs. We give the very best precedence to quoted costs (unadjusted) in lively markets for similar belongings or liabilities (Level 1 inputs) and the bottom precedence to unobservable inputs (Level 3 inputs).

We apply the next truthful worth hierarchy:

Level 1 – Quoted costs (unadjusted) in lively markets for similar belongings and liabilities.

Level 2 – Quoted costs in non-lively markets or in lively markets for related belongings or liabilities, observable inputs aside from quoted costs; and inputs that aren’t immediately observable however are corroborated by observable market information.

Level 3 – Inputs which are unobservable.

The carrying quantity of accounts receivable, accounts payable and accrued bills approximate their truthful worth due to the quick-time period maturity of such devices, that are thought of Level 1 beneath the truthful worth hierarchy.

E. Fixed belongings

Fixed belongings are carried at price much less gathered depreciation and amortization. We cost upkeep prices, which don’t considerably lengthen the helpful lives of the respective belongings, and restore prices to working bills as incurred. We compute depreciation utilizing the straight-line methodology over the estimated helpful lives of the associated belongings, which vary from three to 5 years. Leasehold enhancements are depreciated over the shorter of their helpful life or the time period of the lease. Long-lived belongings held and utilized by us, together with mounted belongings, are assessed for impairment every time occasions or adjustments in circumstances point out that the carrying quantity of an asset is probably not recoverable.

F. Intangible belongings

We file intangible belongings at price, which incorporates exterior prices, consisting main of authorized prices, incurred in securing our patents and logos. Intangible belongings topic to amortization, corresponding to patents, can be amortized over the helpful lifetime of the patent utilizing the straight-line methodology, as soon as granted. If the patent will not be granted, we write-off any capitalized patent prices at the moment. Intangible belongings not topic to amortization, corresponding to logos, are perpetual and have indefinite lives.

We assessment intangible belongings topic to amortization on a periodic foundation to find out whether or not occasions and circumstances would point out impairment or warrant a revision to their remaining helpful lives. We assess intangible belongings not topic to amortization for potential impairment a minimum of yearly through the fourth quarter of every yr, or extra often if occasions happen or circumstances change that will extra seemingly than not cut back the truthful worth of the intangible belongings under their carrying worth.

G. Segment reporting

We handle and function as one enterprise, and our enterprise operations are managed by a single govt management group, which is led by our chief govt officer. We don’t function separate strains of enterprise with respect to any of our providers, and we don’t put together discrete monetary info with respect to separate providers. Additionally, all service income is derived throughout the United States. Accordingly, we view our enterprise as one reportable working section with one geographic location.

H. Revenue recognition

We decide the quantity of income to be acknowledged by way of software of the next steps:

Identification of the contract with a buyer;

Identification of the efficiency obligations within the contract;

Determination of the transaction worth;

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Allocation of the transaction worth to the efficiency obligations within the contract; and

Recognition of income when or as we fulfill the efficiency obligations.

Our income is primarily derived from prescription transaction charges generated when pharmacies fill prescriptions for merchandise bought by our prospects. We additionally generate different income from producer options. All of our income is generated by way of contracts with our third-social gathering prospects. A efficiency obligation is a promise in a contract to switch a service to a buyer. A service is taken into account to be transferred when the client receives the service. We usually acknowledged income because the promised providers beneath the phrases of a contract are carried out in an quantity that displays the consideration we count on to obtain in change for these providers. Typically, we’re entitled to a set price per prescription for every of our prospects’ sufferers assisted by us. The collectability of consideration on the contract is fairly assured earlier than income is acknowledged. To the extent that buyer fee has been acquired earlier than all recognition standards are met, these revenues are initially deferred in different accruals on the steadiness sheet and the income is acknowledged within the interval that every one recognition standards have been met.

Since inception, VPS has not acknowledged any service income associated to providers supplied to our stockholder since there was no current contract between VPS and our stockholder.

I. Corporate expense allocations

In addition to working VPS, Seller is a ladies’s healthcare firm with a mission of making and commercializing modern merchandise to help the lifespan of ladies from being pregnant prevention by way of menopause. TherapeuticsMD options vary from a affected person-managed, lengthy-lasting contraceptive to superior hormone remedy pharmaceutical merchandise, and Seller has a portfolio of branded and generic prescription prenatal nutritional vitamins.

Seller makes use of separate departments for VPS direct bills, which embody, however aren’t restricted to, compensation and associated advantages, contract labor, hire, depreciation. Seller’s company bills for shared providers associated to authorized, accounting and finance, and human assets in addition to insurance coverage and curiosity have been allotted to VPS. The prices related to these providers and help features have been allotted to VPS utilizing methodologies established by Seller’s administration and thought of to be an affordable reflection of the utilization of providers wanted to function VPS. Certain synergies can be misplaced if TherapeuticsMD and VPS have been separated.

While VPS’s operations are carried out in workplace suites that are segregated from the opposite operations of Seller, these workplaces are leased from third social gathering within the identify of Seller. See Note 5 for extra info.

The monetary info included herein might not replicate the monetary place, the outcomes of operations and money flows of VPS sooner or later or had VPS been a separate, stand-alone entity through the durations introduced.

J. Share-based fee awards

Seller accounts for share-primarily based fee awards on a good worth foundation of the fairness instrument issued. Under truthful worth accounting, the grant-date truthful worth of the share-primarily based fee award is amortized as compensation expense, on a straight-line foundation, over the service interval (usually, the vesting interval) for each graded and cliff vesting awards. Seller has elected to account for forfeitures as they happen. These monetary statements embody the share-primarily based fee compensation prices of Seller share-primarily based fee awards granted to VPS workers.

Okay. Income taxes

Income taxes are accounted for beneath the asset and legal responsibility methodology. Under this methodology, deferred tax belongings and liabilities are acknowledged for the longer term tax penalties attributable to variations between the monetary assertion carrying quantities of current belongings and liabilities and their respective tax bases, and working loss and revenue tax credit score carryforwards. Deferred tax belongings and liabilities are measured utilizing enacted revenue tax charges anticipated to use to taxable revenue within the years by which these non permanent variations are anticipated to be recovered or settled. The impact on deferred tax belongings and liabilities of a change in revenue tax charges is recorded as a part of the revenue tax provision within the interval that features the enactment date.

Regular assessments are made on the chance that our deferred tax belongings can be recovered from our future taxable revenue. Our analysis is predicated on estimates, assumptions, and contains an evaluation of obtainable optimistic and unfavorable proof, giving weight primarily based on the proof’s relative objectivity. Sources of optimistic proof embody estimates of future taxable revenue, future reversal of current taxable non permanent variations, taxable revenue in carryback years, and accessible tax planning

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methods. Sources of unfavorable proof embody present and cumulative losses lately, losses anticipated in early future years, any historical past of working losses or tax credit score carryforwards expiring unused, and unsettled circumstances that, if unfavorably resolved, would adversely have an effect on future revenue ranges.

The remaining carrying worth of our deferred tax belongings, after recording the valuation allowance on our deferred tax belongings, is predicated on our current perception that it’s extra seemingly than not that we can generate enough future taxable revenue to make the most of such deferred tax belongings. The quantity of the remaining deferred tax belongings thought of recoverable could possibly be adjusted if our estimates of future taxable revenue through the carryforward interval change favorably or unfavorably. To the extent we imagine that it’s extra seemingly than not that some or all the remaining deferred tax belongings is not going to be realized, we should set up a valuation allowance in opposition to these deferred tax belongings, leading to further revenue tax expense within the interval such dedication is made. To the extent a valuation allowance presently exists, we’ll proceed to observe all optimistic and unfavorable proof till we imagine it’s extra seemingly than not that it’s not crucial, leading to an revenue tax profit within the interval such dedication is made.

Our coverage is to acknowledge each curiosity and penalties associated to unsure tax positions as a part of the revenue tax provision. Significant judgment is required in evaluating our tax positions, and in figuring out our provisions for revenue taxes, our deferred tax belongings and liabilities and any valuation allowance recorded in opposition to our web deferred tax belongings. We set up reserves when, regardless of our perception that the revenue tax return positions are absolutely supportable, sure positions are more likely to be challenged and we might in the end not prevail in defending these positions.

2. Fixed belongings

The Company’s mounted belongings, web consisted of the next:

As of

December 31, 2021

Furniture and fixtures

$

156,445

Computer and workplace gear

269,963

Leasehold enhancements

30,900

Fixed belongings

457,308

Less: gathered depreciation and amortization

300,680

Fixed belongings, web

$

156,628

We recorded depreciation expense of $115,473 for 2021.

3. Intangible belongings

The following offers details about the Company’s intangible belongings:

As of December 31, 2021

Gross

Carrying

Accumulated

Amount

Amortization

Net

Intangible belongings topic to amortization:

Patents utilized and pending approval

$

23,831

$

$

23,831

Intangible belongings not topic to amortization:

Trademarks/commerce identify rights utilized and pending approval

12,535

12,535

Intangible belongings, web

$

36,366

$

$

36,366

4. Related social gathering transactions

Corporate expense allocations

VPS is an entirely owned subsidiary of Seller; subsequently company bills for shared providers associated to authorized, accounting and finance, and human assets in addition to insurance coverage and curiosity have been allotted to VPS as mentioned in Note 1 beneath company expense allocations.

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Cash Management and Treasury

As an entirely-owned subsidiary of Seller, VPS participates in Seller’s centralized money administration and treasury packages. Accordingly, Seller makes all money disbursements on behalf of VPS and receives all money from VPS’s prospects. These working capital and financing preparations with Seller aren’t supported by written agreements, have by no means been money settled up to now, and are anticipated to be forgiven. Accordingly, the transfers of economic assets between Seller and VPS are mirrored as further paid-in capital on the accompanying steadiness sheet in lieu of money and intercompany debt.

Prescription Services

VPS offers prescription achievement providers to the Seller. As mentioned in Note 1, VPS doesn’t acknowledge income associated to those providers.

5. Commitments and contingencies

Operating leases

VPS’s company workplaces in Boca Raton are working leases leased from a 3rd social gathering within the identify of Seller. Upon the closing of the anticipated transaction (see Note 8), topic to the working leases’ landlord approval, Seller will sublet the workplaces that VPS occupies to VPS. These leases expire in July 2030, and rental lease expense was $575,576 for 2021. As of December 31, 2021, remaining lease funds, excluding frequent space upkeep (CAM) prices, have been as follows:

Year ending December 31,

2022

$

315,712

2023

323,601

2024

331,707

2025

340,010

2026

348,493

Thereafter

1,321,842

Total

$

2,981,364

Employment agreements

Seller has entered into employment agreements with sure of our executives that present for compensation and sure different advantages. Under sure circumstances, together with a change in management, a few of these agreements present for severance or different funds, if these circumstances happen through the time period of the employment settlement. Upon the closing of the anticipated transaction (see Note 8), these employment agreements can be terminated by Seller.

Debt

VPS is a guarantor to a Financing Agreement by and amongst Seller because the borrower, Sixth Street Specialty Lending, Inc., as administrative agent (the “Administrative Agent”), numerous lenders from time-to-time social gathering thereto, and sure of Seller subsidiaries social gathering thereto every so often as guarantors. As of December 31, 2021, Seller’s excellent debt was $200,000,000. Borrowings beneath the Facility accrue curiosity at both (i) 3-month LIBOR plus 7.75%, topic to a LIBOR flooring of two.70% or (ii) the prime price plus 6.75%, topic to a main price flooring of 5.2% as chosen by us. As of December 31, 2021, Seller rate of interest was 10.45%. Interest on quantities borrowed beneath the Financing Agreement is due and payable quarterly in arrears. In addition, Seller is required to pay an annual administrative price, and different charges and expense. The Financing Agreement incorporates customary restrictions and covenants relevant to Seller which are customary for financings of this sort. The Seller was not in compliance with the covenant for the Seller to attain sure minimal quarterly web product income necessities for the quarterly interval ended December 31, 2021. In March 2022, the Seller, the Company, and different Seller subsidiaries which are additionally guarantors entered into Amendment No. 9 to the Financing Agreement pursuant to which, amongst different issues, (i) the lenders waived numerous Seller breaches of the Financing Agreement, together with breaches of the minimal money covenant through the first quarter of 2022 and the minimal web income covenants for the fourth quarter of 2021; (ii) the Seller, the Company, the opposite subsidiary guarantors, and the lenders agreed to lowered minimal money covenant and to the removing of the minimal web income covenant for the primary quarter of 2022; (iii) the lenders waived the present prepayment penalty beneath the Financing Agreement and the Seller, the Company, and the opposite subsidiary guarantors agreed to a paid in form modification price of $30,000,000, which price was added to the principal quantity of the loans beneath the Financing Agreement, $16,000,000 of which price is waivable in sure circumstances; and (iv) the maturity date of the Financing Agreement was amended to June 1, 2022.

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The Financing Agreement additionally contains different representations, warranties, indemnities, restrictions on the fee of dividends, and occasions of default which are customary for financings of this sort, together with an occasion of default regarding a change of management of Seller. Upon or after an occasion of default, the Administrative Agent and the lenders might declare all or a portion of the Seller’s obligations beneath the Financing Agreement to be instantly due and payable and train different rights and treatments supplied for beneath the Financing Agreement. The obligations of the Seller and its subsidiaries guarantors, together with the Company, beneath the Financing Agreement are secured, topic to customary permitted liens and different agreed upon exceptions, by a primary precedence perfected safety curiosity in all current and after acquired belongings of the Seller and its subsidiaries. The obligations beneath the Financing Agreement can be assured by every of the Seller’s future direct and oblique subsidiaries, topic to sure exceptions. No quantities have been recorded within the accompanying December 31, 2021 steadiness sheet of the Company relative to the Company’s assure of the Seller’s efficiency beneath the phrases of the Financing Agreement.

Legal Proceedings

From time to time, the Company is concerned in litigations and proceedings within the odd course of enterprise. The Company is presently not concerned in any litigations and proceedings that it believes would have a cloth impact on its monetary situation, outcomes of operations, or money flows.

6. Share-based fee awards and worker profit plan

Share-based fee awards

From time to time, Seller grants share-primarily based fee awards within the type of Seller’s shares to VPS workers as a way to appeal to key personnel to offer providers to VPS and Seller, in addition to to offer a way by which these key individuals can purchase and keep inventory possession in Seller, leading to a strengthening of their dedication to our welfare and the welfare of Seller and subsidiaries, and selling the mutuality of pursuits between individuals and Seller’s stockholders. Based on share-primarily based fee awards granted to VPS workers, VPS acknowledged share-primarily based fee compensation prices of $1,420,103 for 2021.

Employee profit plan

Seller maintains a voluntary outlined contribution 401(okay) plan protecting all eligible workers as outlined within the plan paperwork. The plan offers for discretionary matching contribution, which is the same as as much as 4 p.c of every eligible contributing participant’s elective deferral to not exceed two thousand per yr. Employees who elect to take part within the plan are usually absolutely vested in any current matching contribution after 5 years of service with the TherapeuticsMD and Subsidiaries. Contributions by Seller for the Company beneath the plan amounted to $119,761 for 2021.

7. Income taxes

As is an entirely owned subsidiary of TherapeuticsMD, the Company’s U.S. taxable revenue is included within the consolidated U.S. federal revenue tax return of TherapeuticsMD and Subsidiaries in addition to in returns filed by Seller consolidated group with sure state and native taxing jurisdictions. The revenue tax legal responsibility has been computed and introduced herein beneath the “separate return methodology,” as if the Company have been a separate tax paying entity, as modified by the advantages-for-loss strategy. As such, the working losses and different tax attributes are characterised as utilized when these attributes have been utilized by different members of Seller consolidated group. The advantages-for-loss strategy doesn’t have an effect on revenue tax expense. Additionally, a calculation has not been carried out with respect to the profit acquired for the usage of tax attributes by the rest of the members inside Seller consolidated group for the reason that above talked about methodology is used herein.

The Company’s loss earlier than revenue taxes is as follows:

Year ended

December 31, 2021

United States

$

(25,004,582

)

There was no present or deferred provision for revenue taxes for 2021.

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A reconciliation between taxes computed on the federal statutory price and the efficient tax price is as follows:

Year ended

December 31, 2021

Federal statutory tax price

21.0

%

State tax price, web of federal tax profit

4.5

%

Adjustment in valuation allowances

(25.5

%)

Provision (profit) for revenue taxes

0.0

%

The elements of the web deferred revenue tax asset as of December 31, 2021 are as follows:

As of

December 31, 2021

Deferred revenue tax belongings:

Net working losses

$

13,239,934

Valuation allowance

(13,239,934

)

Deferred revenue tax belongings

$

As of December 31, 2021, the Seller had a federal web working loss (“NOL”) carryforward of $885,071,027, which is out there to offset future taxable revenue. Of the overall NOL, $338,775,332 could be carried ahead for 20 years and can start to run out in 2031. The remaining $546,295,695 could be carried ahead indefinitely. In the occasion of future revenue, the NOL deduction arising from NOL generated in taxable years starting in 2021 can be restricted to 80% of the surplus taxable revenue. Seller believes that it’s extra seemingly than not that Seller consolidated group is not going to generate enough future taxable revenue to comprehend the tax advantages associated to the deferred tax belongings on Seller’s steadiness sheet and as such, a valuation allowance has been established in opposition to the deferred tax belongings as of December 31, 2021.

If the proposed transaction mentioned in Note 8 is consummated, it’s anticipated that all the federal and state web working loss carryforwards and all of the federal tax credit score carryforwards mentioned within the previous paragraph would stay for the advantage of TherapeuticsMD and Subsidiaries.

Since the Company’s Seller consolidated group’s first yr of operations in 2011, Seller consolidated group generated web working losses, and Seller’s consolidated group’s U.S. federal and state tax returns stay open to examination.

As of December 31, 2021, Seller consolidated group had no tax positions regarding open tax returns that have been thought of to be unsure.

As of December 31, 2021, Seller consolidated group had no unrecognized tax advantages.

8. Sale of the Company

On March 6, 2022, Seller entered right into a inventory buy settlement (the “Purchase Agreement”) with GoodRx, which offers for the sale of all the issued and excellent capital inventory of VPS to GoodRx (the “Divestiture”). Under the phrases of the Purchase Agreement, upon the closing of the Divestiture (the “Closing”), Seller will obtain a money fee of $150,000,000, topic to adjustment as supplied within the Purchase Agreement and customary holdbacks. In addition, Seller might obtain as much as an extra of $7,000,000 in earn-out consideration (the “Earnout”), contingent upon VPS’s monetary efficiency by way of 2023 as decided in accordance with the phrases of the Purchase Agreement. The Earnout can be earned in two equal tranches of $3,500,000 every, primarily based on VPS’s income for 2022 and 2023.

The Purchase Agreement incorporates customary representations and warranties, covenants and indemnities of the events thereto. In addition, the Purchase Agreement offers that on the Closing: (i) Seller will enter into a protracted-time period providers settlement with VPS to proceed utilization of the VPS platform with respect to Seller’s merchandise; (ii) Seller and VPS will enter right into a transition providers settlement for Seller to offer sure transition providers to VPS for as much as 12 months following the Closing; and (iii) sure workers of Seller and/or VPS will enter into employment agreements with GoodRx.

The Divestiture is predicted to shut within the second quarter of 2022, topic to the satisfaction or waiver of sure customary circumstances, together with the receipt of sure regulatory approvals.

15

9. Subsequent Events

The Company evaluated its December 31, 2021 monetary statements for subsequent occasions by way of March 25, 2022, the date the monetary statements have been accessible to be issued. No subsequent occasions requiring accrual or disclosure have been famous, aside from as disclosed herein.

16

https://www.marketscreener.com/quote/inventory/GOODRX-HOLDINGS-INC-112833794/information/GoodRx-INDEX-TO-FINANCIAL-STATEMENTS-Form-8-Okay-A-40847087/

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