The accompanying footnotes are an integral part of these consolidated financial statements.

~~The accompanying footnotes are an integral part of these consolidated financial statements.~~

TherapeuticsMD, Inc., a Nevada corporation, or TherapeuticsMD or the Company, has three wholly owned subsidiaries, vitaMedMD, LLC, a Delaware limited liability company, or VitaMed; BocaGreenMD, Inc., a Nevada corporation, or BocaGreen; and VitaCare Prescription Services, Inc., a Florida corporation, or VitaCare. Unless the context otherwise requires, TherapeuticsMD, VitaMed, BocaGreen, and VitaCare collectively are sometimes referred to as “our company,” “we,” “our,” or “us.”

We are a women’s health care product company focused on ~~creating~~developing and commercializing products targeted exclusively for women. As of the date of these unaudited consolidated financial statements, we are focused on conducting the clinical trials and pursuing the regulatory approvals and pre-commercialization activities necessary for ~~regulatory approval and~~ commercialization of our advanced hormone therapy pharmaceutical products. The drug candidates used in our clinical trials are designed to alleviate the symptoms of and reduce the health risks resulting from menopause-related hormone deficiencies, including hot flashes, osteoporosis, and vaginal discomfort. We are developing these hormone therapy drug candidates, which contain estradiol and progesterone alone or in combination, with the aim of demonstrating equivalent clinical efficacy at lower doses, thereby enabling an enhanced side effect profile compared with competing products. Our drug candidates are ~~created from~~developed using our SYMBODA technology to enable delivery of bio-identical hormones through a ~~platform~~variety of ~~hormone technology that enables the~~dosage forms and administration ~~of hormones with high bioavailability alone or in combination.~~routes. In addition, we manufacture and distribute branded and generic prescription prenatal vitamins, as well as over-the-counter, or OTC, vitamins.

NOTE 2 – BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The accompanying unaudited interim consolidated financial statements of TherapeuticsMD, Inc., which include our wholly owned subsidiaries, should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission, or the SEC, from which we derived the accompanying consolidated balance sheet as of December 31, 2015. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying unaudited interim consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year or any other interim period in the future.

In ~~March~~August 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 is intended to reduce the diversity in practice regarding how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted with retrospective application. We are currently evaluating the impact of this guidance on our consolidated financial statements and disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This guidance simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted in any annual or interim period for which financial statements have not been issued or made available for issuance, but all of the guidance must be adopted in the same period. If an entity early adopts the guidance in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. We are currently evaluating the impact of this guidance on our consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard is effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. We are currently evaluating the impact of this guidance on our consolidated financial statements and disclosures.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), simplifying the Measurement of Inventory. This guidance requires entities to measure inventory at the lower of cost or net realizable value rather than at the lower of cost or market (LOCOM). The guidance applies only to inventories for which cost is determined by methods other than last-in first-out (LIFO) or the retail inventory method (RIM). Entities that use LIFO or RIM will continue to use existing impairment models. The new guidance does not change the calculation of net realizable value that entities are required to calculate when applying existing LOCOM guidance. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Under the new guidance, however, entities will no longer need to calculate other measures of “market.” The guidance is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this guidance, if any, on our consolidated financial statements and disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable) and, if so, disclose that fact. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. We do not expect the adoption of ASU 2014-15 to have a material effect on our consolidated financial statements and disclosures.

In May 2014, the FASB and the International Accounting Standards Board (IASB) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under previous guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligations. In July 2015, the FASB approved the proposal to defer the effective date of ASU 2014-09 standard by one year. Early adoption is permitted after December 15, 2016, and the standard is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations (ASU 2016-08) as well as accounting for licenses of intellectual property and identifying performance obligations (ASU 2016-10) and narrow-scope improvements and practical expedients (ASU 2016-12) in its new revenue standard. We are currently evaluating the impact of this guidance on our consolidated financial statements and disclosures.

We do not believe there would have been a material effect on the accompanying consolidated financial statements had any other recently issued, but not yet effective, accounting standards been adopted in the current period.

Our financial instruments consist primarily of accounts receivable, accounts payable and accrued expenses. The carrying amount of accounts receivable, accounts payable and accrued expenses approximates their fair value because of the short-term maturity of such instruments, which are considered Level 1 assets under the fair value hierarchy.

We categorize our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy as defined by Accounting Standards Codification, or ASC, 820, Fair Value Measurements. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). Assets and liabilities recorded in the consolidated balance sheet at fair value are categorized based on a hierarchy of inputs, as follows:

At ~~June~~September 30, 2016 and December 31, 2015, we had no assets or liabilities that were valued at fair value on a recurring basis. The fair value of indefinite-lived assets or long-lived assets is measured on a non-recurring basis using significant unobservable inputs (Level 3) in connection with our impairment test. There was no impairment of intangible assets or long-lived assets during the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015.

We recognize revenue on arrangements in accordance with ASC 605, Revenue Recognition. We recognize revenue only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability is reasonably assured.

Our OTC and prescription prenatal vitamin products are generally variations of the same product with slight modifications in formulation and marketing. The primary difference between our OTC and prescription prenatal vitamin products is the source of payment. Purchasers of our OTC prenatal vitamin products pay for the product directly while purchasers of our prescription prenatal vitamin products pay for the product primarily via third-party payers. Both OTC and prescription prenatal vitamin products share the same marketing support team utilizing similar marketing techniques. The revenue that is generated by us from major customers is all generated from sales of our prescription prenatal vitamin products which is disclosed in Note 14. There are no major customers for our OTC prenatal vitamin or other products.

We generate OTC revenue from product sales primarily to retail consumers. We recognize revenue from product sales upon shipment, when the rights of ownership and risk of loss have passed to the consumer. We include outbound shipping and handling fees in revenues, net, and bill them upon shipment. We include shipping expenses in cost of goods sold. A majority of our OTC customers pay for our products with credit cards, and we usually receive the cash settlement in two to three banking days. Credit card sales minimize accounts receivable balances relative to OTC sales. We provide an unconditional 30-day money-back return policy under which we accept product returns from our retail and eCommerce OTC customers. We recognize revenue from OTC sales, net of estimated returns, sales discounts, and eCommerce fees.

We sell our name brand and generic prescription products primarily through drug wholesalers and retail pharmacies. We recognize revenue from prescription product sales, net of sales discounts, chargebacks, and customer rebates. We accept returns of unsalable prescription products from customers within a return period of six months prior to and up to 12 months following product expiration. Our prescription products currently have a shelf life of 24 months from the date of manufacture. We estimate returns based on historical return rates and recorded actual product returns against this reserve as received. We offer various rebate programs in an effort to maintain a competitive position in the marketplace and to promote sales and customer loyalty. The consumer rebate program is designed to enable the end user to submit a coupon to us. If the coupon qualifies, we send a rebate check to the end user. We estimate the allowance for consumer rebates that we have offered based on our experience and industry averages, which is reviewed, and adjusted if necessary, on a quarterly basis.

We measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include options, restricted stock, restricted stock units, performance-based awards, share appreciation rights, and employee share purchase plans. As such, compensation cost is measured on the date of grant at fair value. We amortize such compensation amounts, if any, over the requisite service periods of the award. We use the Black-Scholes-Merton option pricing model, or the Black-Scholes Model, an acceptable model in accordance with ASC 718, Compensation—Stock Compensation, to value options. Calculating share-based compensation expense requires the input of highly subjective judgment and assumptions, including forfeiture rates, estimates of expected life of the share-based award, stock price volatility and risk-free interest rates. The assumptions used in calculating the fair value of share-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future.

Equity instruments issued to non-employees are recorded on the basis of the fair value of the instruments, as required by ASC 505, Equity - Based Payments to Non-Employees, or ASC 505. ASC 505 defines the measurement date and recognition period for such instruments. In general, the measurement date is when either (a) a performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The estimated expense is recognized each period based on the current fair value of the award. As a result, the amount of expense related to awards to non-employees can fluctuate significantly during the period from the date of the grant through the final measurement date. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

We generally recognize the compensation expense on a straight-line basis over the employee’s requisite service period. We estimate the forfeiture rate based on our historical experience of forfeitures. If our actual forfeiture rate is materially different from our estimate, share-based compensation expense could be significantly different from what we have recorded in the current period.

Research and development, or R&D, expenses include internal R&D activities, services of external contract research organizations, or CROs, costs of their clinical research sites, manufacturing, scale-up and validation costs, and other activities. Internal R&D activity expenses include laboratory supplies, salaries, benefits, and non-cash share-based compensation expenses. Advance payments to be expensed in future research and development activities are capitalized, and were ~~$364,959~~$244,335 at ~~June~~September 30, 2016, all of which was included in other current assets on the accompanying consolidated balance sheets. Advance payments to be expensed in future research and development activities were $1,138,073 at December 31, 2015, of which $1,009,175 was included in other current assets and $128,898 was included in long term prepaid expense on the accompanying consolidated balance sheets. CRO activity expenses include preclinical laboratory experiments and clinical trial studies. Other activity expenses include regulatory consulting and legal fees and costs. The activities undertaken by our regulatory consultants that were classified as R&D expenses include assisting, consulting with, and advising our in-house staff with respect to various FDA submission processes, clinical trial processes, and scientific writing matters, including preparing protocols and FDA submissions. Legal activities that were classified as R&D expenses related to designing experiments to generate data for patents and to further the formulation development process for our pipeline technologies. Outside legal counsel also provided professional research and advice regarding R&D, patents and regulatory matters. These consulting and legal expenses were direct costs associated with preparing, reviewing, and undertaking work for our clinical trials and investigative drugs. We charge internal R&D activities and other activity expenses to operations as incurred. We make payments to CROs based on agreed-upon terms, which may include payments in advance of a study starting date. We expense nonrefundable advance payments for goods and services that will be used in future R&D activities when the activity has been performed or when the goods have been received rather than when the payment is made. We review and accrue CRO expenses and clinical trial study expenses based on services performed and rely on estimates of those costs applicable to the completion stage of a study as provided by CROs. Estimated accrued CRO costs are subject to revisions as such studies progress to completion. We charge revisions expense in the period in which the facts that give rise to the revision become known.

We are managed and operated as one business, which is focused on creating and commercializing products targeted exclusively for women. Our business operations are managed by a single management team that reports to the President of our Company. We do not operate separate lines of business with respect to any of our products and we do not prepare discrete financial information with respect to separate products. All product sales are derived from sales in the United States. Accordingly, we view our business as one reportable operating segment.

Depreciation expense for the three months ended ~~June~~September 30, 2016 and 2015 was ~~$10,853~~$26,543 and ~~$7,367,~~$7,856, respectively, and ~~$19,216~~$45,759 and ~~$14,248~~$22,104 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, ~~respectively.~~respectively, which was included in operating expenses in the accompanying consolidated financial statements.

The following table sets forth the gross carrying amount and accumulated amortization of our intangible assets as of ~~June~~September 30, 2016 and December 31, 2015:

We capitalize external costs, consisting primarily of legal costs, related to securing our patents and trademarks. Once a patent is granted, we amortize the approved hormone therapy drug candidate patents using the straight-line method over the estimated useful life of approximately 20 years, which is the life of intellectual property patents. If the patent is not granted, we write-off any capitalized patent costs at that time. Trademarks are perpetual and are not amortized. As of ~~June~~September 30, 2016, the remaining life related to OPERA^® patent was approximately 13 years and the remaining life related to the approved hormone therapy drug candidate patents was approximately ~~16.5~~16 years.

In addition to numerous pending patent applications, as of ~~June~~September 30, 2016, we had 17 issued patents, including:

13 utility patents that relate to our combination progesterone and estradiol product candidates, which are owned by us and are U.S. jurisdiction patents with expiration dates in 2032. We have pending patent applications with respect to certain of these patents in Argentina, Australia, Brazil, Canada, Europe, Israel, Japan, Mexico, Russia, South Africa, and South Korea;

two utility patents that relate to TX-004HR, our applicator-free vaginal estradiol softgel product candidate, which establish an important intellectual property foundation for TX-004HR, which are owned by us and are U.S. jurisdiction patents with expiration dates in 2033 and 2032. We have pending patent applications with respect to certain of these patents in Argentina, Australia, Brazil, Canada, Europe, Israel, Japan, Mexico, Russia, South Africa, and South Korea;

one utility patent that relates to a pipeline transdermal patch technology, which is owned by us and is a U.S. jurisdiction patent with an expiration date in 2032. We have pending patent applications with respect to this technology in Australia, Brazil, Canada, Europe, Mexico, Japan, and South Africa; and

Amortization expense was ~~$13,409~~$13,917 and ~~$6,913~~$8,692 for the three months ended ~~June~~September 30, 2016 and 2015, respectively and ~~$24,643~~$38,560 and ~~$13,604~~$22,296 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. Estimated amortization expense for the next five years is as follows:

We calculate basic and diluted net loss per share allocable to common stockholders using the weighted-average number of shares of common stock, par value $0.001 per share, or Common Stock outstanding during the period, less any shares subject to repurchase or forfeiture. There were no shares of our Common Stock outstanding subject to repurchase or forfeiture for the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015.

Since we are in a net loss position, we have excluded outstanding stock options, all of which are subject to forfeiture, as well as warrants for the purchase of our Common Stock from our calculation of diluted net loss per share. The table below presents potentially dilutive securities that could affect our calculation of diluted net loss per share allocable to common stockholders for the periods presented.

At ~~June~~September 30, 2016, we had 10,000,000 shares of Preferred Stock, par value $0.001, authorized for issuance, of which no shares of Preferred Stock were issued or outstanding.

At ~~June~~September 30, 2016, we had 350,000,000 shares of Common Stock authorized, of which ~~196,492,195~~196,580,212 shares of Common Stock were issued and outstanding.

On January 6, 2016, we entered into an underwriting agreement with Goldman Sachs & Co. and Cowen and Company, LLC, as the representatives of the several underwriters, or the Underwriters, relating to an underwritten public offering of 15,151,515 shares of our Common Stock at a public offering price of $8.25 per share. Under the terms of the underwriting agreement, we granted the Underwriters a 30-day option to purchase up to an aggregate of 2,272,727 additional shares of Common Stock, which option was exercised in full. The net proceeds to us from the offering were approximately $134.9 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. The offering closed on January 12, 2016 and we issued 17,424,242 shares of our Common Stock.

On July 9, 2015, we entered into an underwriting agreement with Stifel, Nicolaus & Company, Incorporated and Guggenheim Securities, LLC, as the representatives of the several underwriters, or the Stifel Underwriters, relating to an underwritten public offering of 3,846,154 shares of Common Stock at a public offering price of $7.80 per share. Under the terms of the underwriting agreement, we granted the Stifel Underwriters a 30-day option to purchase up to an aggregate of 576,923 additional shares of Common Stock, which option was exercised in full. The net proceeds to us from the offering were approximately $32.2 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. The offering closed on July 15, 2015 and we issued 4,423,077 shares of our Common Stock.

On February 10, 2015, we entered into an underwriting agreement, or the Cowen Agreement, with Cowen and Company, LLC, as the representative of the several underwriters, or the Cowen Underwriters, relating to an underwritten public offering of 13,580,246 shares of Common Stock, at a public offering price of $4.05 per share. Under the terms of the Cowen Agreement, we granted the Cowen Underwriters a 30-day option to purchase up to an aggregate of 2,037,036 additional shares of Common Stock, which option was exercised in full. The net proceeds to us from the offering were approximately $59.1 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. The offering closed on February 17, 2015 and we issued 15,617,282 shares of our Common Stock.

During the three months ended ~~June~~September 30, 2016, certain individuals exercised stock options to purchase ~~77,123~~127,109 shares of Common Stock. Stock options to purchase shares of Common Stock were exercised as follows: (i) 10,000 options for ~~$191,592~~$1,018 in ~~cash.~~cash and (ii) 117,109 options, pursuant to the stock options’ cashless provision, wherein 78,017 shares of Common Stock were issued. During the ~~six~~nine months ended ~~June~~September 30, 2016, certain individuals exercised stock options to purchase ~~417,168~~544,277 shares of Common Stock. Stock options to purchase shares of Common Stock were exercised as follows: (i) 427,168 options for ~~$978,042~~$979,060 in ~~cash.~~cash and (ii) 117,109 options, pursuant to the stock options’ cashless provision, wherein 78,017 shares of Common Stock were issued.

During the three months ended ~~June~~September 30, 2015, certain individuals exercised stock options to purchase ~~366,617~~95,000 shares of Common Stock for ~~$484,143~~$98,478 in cash. During the ~~six~~nine months ended ~~June~~September 30, 2015, certain individuals exercised stock options to purchase ~~377,867~~472,867 shares of Common Stock for ~~$491,351~~$589,829 in cash.

As of ~~June~~September 30, 2016, we had warrants outstanding to purchase an aggregate of 12,060,571 shares of Common Stock with a weighted-average contractual remaining life of ~~1.5~~1.3 years, and exercise prices ranging from $0.24 to $8.20 per share, resulting in a weighted average exercise price of $2.08 per share.

The valuation methodology used to determine the fair value of our warrants is the Black-Scholes-Merton valuation model, or the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions, including volatility of the stock price, the risk-free interest rate and the term of the warrant. During the three months ended June 30, 2016, we granted warrants to purchase 125,000 shares of Common Stock to outside consultants at an exercise price of $8.20 per share. The fair value for these warrants was determined by using the Black-Scholes Model on the date of the grant using a term of five years; volatility of 74.10%; risk free rate of 1.04%; and dividend yield of 0%. The grant date fair value of the warrants was approximately $4.95 per share.

These warrants have an expiration date of April 21, 2021 and vest as follows: warrants to purchase 75,000 shares of Common Stock vested on April 21, 2016 and warrants to purchase 50,000 shares of Common Stock vest ratably over a 24-month period.

During the ~~six~~three months ended ~~June~~September 30, 2016 and 2015, we did not issue any warrants. During the nine months ended September 30, 2016, we granted warrants to purchase 245,000 shares of Common Stock to outside consultants at a weighted average exercise price of $7.90 per share. The weighted average grant date fair value of these warrants was $4.78 per share. The fair value for these warrants was determined by using the Black-Scholes Model on the date of the grant using a term of five years; volatility of 74.10%-74.15%; risk free rate of 1.04%-1.28%; and dividend yield of 0%. These warrants vest and have expiration dates as follows: warrants to purchase 75,000 shares of Common Stock vested on April 21, 2016 and have an expiration date of April 21, 2021, warrants to purchase 50,000 shares of Common Stock vest ratably over a 24-month period and have an expiration date of April 21, 2021, and warrants to purchase 120,000 shares of Common Stock vest ratable over a 12-month period and have an expiration date of January 21, 2021. During the ~~three and six~~nine months ended ~~June~~September 30, 2015, we granted warrants to purchase 50,000 shares of Common Stock to an outside consultant at an exercise price of $6.35 ~~to an outside consultant.~~and the expiration date of April 6, 2020. We recorded share-based compensation expense related to these warrants totaling ~~$556,125~~$137,161 and ~~$43,741~~$42,266 for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and ~~$683,590~~$820,751 and ~~$43,741~~$86,008 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively, in the accompanying consolidated financial statements.

In May 2013, we entered into a consulting agreement to develop drug platforms to be used in our hormone replacement drug candidates. As consideration under the agreement, we agreed to issue the consultant a warrant to purchase 850,000 shares of our Common Stock at $2.01 per share that has vested or will vest as follows:

In addition, during both the three months ended ~~June~~September 30, 2016 and 2015, we recorded share-based compensation expense of $64,449 and during both the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, we recorded share-based compensation expense of ~~$128,898~~$193,347 related to warrants issued in 2012 for services in support of our drug development efforts. As of ~~June~~September 30, 2016, unamortized costs associated with warrants issued to the same holder in 2012 and 2013 totaled approximately ~~$258,000.~~$193,347 and will be recognized over a period of nine months.

During the three months ended ~~June~~September 30, 2016, ~~certain individuals~~no warrants were exercised ~~warrants to purchase 161,372 shares of our Common Stock for $63,000 in cash~~ and during the three months ended ~~June~~September 30, 2015, certain individuals and an entity exercised warrants to purchase ~~20,000~~310,000 shares of ~~our~~ Common Stock ~~for $7,600 in cash.~~pursuant to the warrants’ cashless exercise provisions, wherein 232,197 shares of Common Stock were issued. During the ~~six~~nine months ended ~~June~~September 30, 2016, certain individuals exercised warrants to purchase 722,744 shares of our Common Stock for $1,373,000 in cash and during the ~~six~~nine months ended ~~June~~September 30, 2015, certain individuals and an entity exercised warrants to purchase 1,255,485 shares of Common Stock as follows: (i) 945,485 shares of ~~our~~ Common Stock were issued for $366,000 in ~~cash.~~cash and (ii) warrants to purchase 310,000 shares of Common Stock were exercised pursuant to the warrants’ cashless exercise provisions, wherein 232,197 shares of Common Stock were issued.

In 2009, we adopted the 2009 Long Term Incentive Compensation Plan, or the 2009 Plan, to provide financial incentives to employees, directors, advisers, and consultants of our company who are able to contribute towards the creation of or who have created stockholder value by providing them stock options and other stock and cash incentives, or the Awards. The Awards available under the 2009 Plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock or cash awards as described in the 2009 Plan. There are 25,000,000 shares authorized for issuance thereunder. During the ~~six~~nine months ended ~~June~~September 30, 2016, we granted ~~373,000~~557,500 non-qualified stock options under the 2009 Plan. As of ~~June~~September 30, 2016, there were non-qualified stock options to purchase ~~17,800,183~~17,837,449 shares of Common Stock outstanding and stock options to purchase ~~3,247,352~~3,122,069 shares of Common Stock available to be issued under 2009 Plan.

In 2012, we adopted the 2012 Stock Incentive Plan, or the 2012 Plan, a non-qualified plan that was amended in August 2013. The 2012 Plan was designed to serve as an incentive for retaining qualified and competent key employees, officers, directors, and certain consultants and advisors of our company. There are 10,000,000 shares of Common Stock authorized for issuance thereunder. As of ~~June~~September 30, 2016, there were non-qualified stock options to purchase 2,868,474 shares of Common Stock outstanding and stock options to purchase 7,050,000 shares of Common Stock available to be issued under 2012 Plan.

The valuation methodology used to determine the fair value of stock options is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the risk-free interest rate, and the expected life of the stock options. The assumptions used in the Black-Scholes Model for options granted during the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015 are set forth in the table below.

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the expected term. Estimated volatility is a measure of the amount by which the price of our Common Stock is expected to fluctuate each year during the term of an award. Our estimated volatility is an average of the historical volatility of the stock prices of our peer entities whose stock prices were publicly available. Our calculation of estimated volatility is based on historical stock prices over a period equal to the term of the awards. We used the historical volatility of our peer entities due to the lack of sufficient historical data on our stock price. The expected term is based on the contractual terms of the stock option using the simplified method.

A summary of activity under the 2009 and 2012 Plans and related information follows:

At ~~June~~September 30, 2016, our outstanding stock options had exercise prices ranging from $0.10 to $8.92 per share. The weighted average grant date fair value per share of options granted was ~~$5.08~~$4.70 and $3.49 during the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. Share-based compensation expense for options recognized in our results of operations is based on vested awards. Share-based compensation expense related to options for the three months ended ~~June~~September 30, 2016 and 2015 was ~~$4,160,071~~$3,982,759 and ~~$1,973,675,~~$1,626,862, respectively, and ~~$8,311,330~~$12,294,089 and ~~$2,702,102,~~$4,328,964, for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. We estimate forfeitures at the time of grant and revise the forfeiture rate in subsequent periods if actual forfeitures differ from the estimates. At ~~June~~September 30, 2016, total unrecognized estimated compensation expense related to unvested options granted prior to that date was approximately ~~$13,321,000~~$10,225,000 which may be adjusted for future changes in forfeitures. This cost is expected to be recognized over a weighted-average period of ~~1.9~~2.11 years. No tax benefit was realized due to a continued pattern of operating losses.

Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We do not expect to pay any significant federal or state income tax for ~~2015~~2016 as a result of (i) the losses recorded during the ~~six~~nine months ended ~~June~~September 30, 2016, (ii) additional losses expected for the remainder of ~~2015,~~2016, and/or (iii) net operating loss carry forwards from prior years. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. As of ~~June~~September 30, 2016, we maintain a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income taxes has been recorded. There were no recorded unrecognized tax benefits at the end of the reporting period.

In July 2015, J. Martin Carroll, a director of our Company, was appointed to the board of directors of Catalent, Inc. From time to time, we have entered into agreements with Catalent, Inc. and its affiliates, (“Catalent”), in the normal course of business. Agreements with Catalent ~~Inc.~~ have been reviewed by independent directors of our Company or a committee consisting of independent directors of our Company since July 2015. During the three and ~~six~~nine months ended ~~June~~September 30, 2016, the amounts billed by Catalent ~~Inc.~~ were ~~$613,919~~$828,062 and ~~$2,078,776,~~$2,906,838, respectively for manufacturing activities related to our clinical trials. As of ~~June~~September 30, 2016, there were amounts due to Catalent ~~Inc.~~ of ~~$493,721.~~$208,233.

We purchase our products from several suppliers with approximately ~~96%~~97% and ~~98%~~54% of our purchases supplied from one vendor for ~~both~~ the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively.

We sell our prescription prenatal vitamin products to wholesale distributors, specialty pharmacies, specialty distributors, and chain drug stores that generally sell products to retail pharmacies, hospitals, and other institutional customers. Revenue generated from major customers accounted for approximately 60% of our recognized revenue for the ~~six~~nine months ended ~~June~~September 30, 2016 and revenue generated from major customers accounted for approximately ~~91%~~90% of our recognized revenue for the ~~six~~nine months ended ~~June~~September 30, 2015. Customers that generated more than 10% of our sales are designated as customers “A”, “B”, “C” and ~~“C”~~“D”. During the ~~six~~nine months ended ~~June~~September 30, 2016, ~~three~~four customers each generated more than 10% of our total revenues and during the ~~six~~nine months ended ~~June~~September 30, 2015, two customers each generated more than 10% of our total revenues. During the ~~six~~nine months ended ~~June~~September 30, 2016, customers A, B, C and CD generated approximately ~~$2,237,000, $1,863,000~~$2,247,000, $1,890,000, $2,683,000 and ~~$1,540,000,~~$2,113,000, in revenues, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2015, customers A and B generated approximately ~~$4,474,000~~$6,930,000 and ~~$1,832,000,~~$3,005,000, in revenues, respectively. During the three months ended September 30, 2016, we centralized our distribution channel for both our retail pharmacies and wholesale partners. We also wrote off accounts receivable balances of approximately $2,200,000 related to two former customers mentioned above due to our inability to collect the outstanding balances.

We lease administrative office space in Boca Raton, Florida pursuant to a non-cancelable operating lease that commenced on July 1, 2013 and originally provided for a 63-month term. On February 18, 2015, we entered into an agreement with the same lessors to lease additional administrative office space in the same location, pursuant to an addendum to such lease. In addition, on April 26, 2016, we entered into agreement with the same lessors to lease additional administrative office space in the same location. This agreement was effective beginning May 1, 2016 and extended the original expiration of the lease term to October 31, 2021.

The rental expense related to our lease during the three months ended ~~June~~September 30, 2016 and 2015 was approximately $182,000 and $119,000, respectively. The rental expense related to our lease during the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015 was approximately ~~$300,000~~$482,000 and ~~$209,000,~~$328,000, respectively.

As of ~~June~~September 30, 2016, future minimum rental payments are as follows:

~~We submitted the New Drug Application, or NDA, for TX-004HR with the U.S. Food and Drug Administration, or FDA, on July 7,~~On October 4, 2016, we entered into an agreement to lease additional administrative office space in Boca Raton, Florida, pursuant to an addendum to our existing non-cancelable operating lease. This addendum is effective beginning November 1, 2016. The NDA submission was supported by the complete TX-004HR clinical program, including positive results of the recently completed phase 3 REJOICE Trial. The NDA submission included all three doses of TX-004HR (4 mcg, 10 mcg and 25 mcg) that were evaluated in the REJOICE Trial. Once submitted, the FDA has a 60-day filing review period to determine whether the NDA is sufficiently complete to permit the FDA to accept the NDA for filing.

Item 2. Management’s Discussion and ~~Analysis~~Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information that we believe to be relevant to an assessment and understanding of our results of operations and financial condition for the periods described. This discussion should be read together with our consolidated financial statements and the notes to the financial statements, which are included in this Quarterly Report on Form 10-Q. This information should also be read in conjunction with the information contained in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission, or the Commission or the SEC, on February 26, 2016, or the Annual Report, including the audited financial statements and notes included therein. The reported results will not necessarily reflect future results of operations or financial condition.

In addition, this Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies as well as statements, other than historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. These statements are often characterized by terminology such as “believes,” “hopes,” “may,” “anticipates,” “should,” “intends,” “plans,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy” and similar expressions and are based on assumptions and assessments made in light of management’s experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and we undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the sections titled “Risk Factors” in our Annual Report, and include the following: our ability to maintain or increase sales of our products; our ability to develop and commercialize our hormone therapy drug candidates and obtain additional financing necessary therefor; whether the U.S. Food and Drug Administration, or FDA, will approve our new drug application for our TX-004HR product candidate and whether any such approval will occur by the Prescription Drug User Fee Act, or PDUFA, date; the length, cost and uncertain results of our clinical trials; the potential of adverse side effects or other safety risks that could preclude the approval of our hormone therapy drug candidates; our reliance on third parties to conduct our clinical trials, research and development and manufacturing; the availability of reimbursement from government authorities and health insurance companies for our products; the impact of product liability lawsuits; and the influence of extensive and costly government regulation.

Throughout this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “TherapeuticsMD,” or “our company” refer to TherapeuticsMD, Inc., a Nevada corporation, and unless specified otherwise, include our wholly owned subsidiaries, vitaMedMD, LLC, a Delaware limited liability company, or VitaMed; BocaGreenMD, Inc., a Nevada corporation, or BocaGreen; and VitaCare Prescription Services, Inc., a Florida corporation, or VitaCare.

We are a women’s health care company focused on ~~creating~~developing and commercializing products targeted exclusively for women. Currently, we are focused on conducting the clinical trials and pursuing the regulatory approvals and pre-commercialization activities necessary for ~~regulatory approval and~~ commercialization of advanced hormone therapy pharmaceutical products. The current drug candidates used in our clinical trials are designed to alleviate the symptoms of and reduce the health risks resulting from menopause-related hormone deficiencies, including hot flashes, osteoporosis and vaginal discomfort. We are developing these hormone therapy drug candidates, which contain estradiol and progesterone alone or in combination, with the aim of demonstrating clinical efficacy at lower doses, thereby enabling an enhanced side effect profile compared with competing products. Our drug candidates are ~~created~~developed using our SYMBODA^TM ~~hormone~~ technology ~~which enables the~~to enable delivery of bio-identical hormones through a variety of dosage forms and administration ~~of hormones with high bioavailability alone or in combination.~~routes. In addition, we manufacture and distribute branded and generic prescription prenatal vitamins, as well as over-the-counter, or OTC, vitamins.

Our common stock, par value $0.001 per share, or Common Stock, is traded on the NYSE MKT under the symbol “TXMD”. We maintain websites at www.therapeuticsmd.com, www.vitamedmd.com, www.vitamedmdrx.com, and www.bocagreenmd.com. The information contained on our websites or that can be accessed through our websites does not constitute part of this Quarterly Report on Form 10-Q.

We have obtained the ~~U.S. Food and Drug Administration, or~~ FDA acceptance of our Investigational New Drug, or IND, applications to conduct clinical trials for four of our hormone therapy drug candidates: TX-001HR, our oral combination of progesterone and estradiol; TX-002HR, our oral progesterone alone; TX-003HR, our oral estradiol alone; and TX-004HR, our applicator-free vaginal estradiol softgel with estradiol alone.

In December 2015, we completed a phase 3 clinical trial of TX-004HR and we are currently conducting a phase 3 clinical trial for TX-001HR. In July 2014, we suspended enrollment in the phase 3 clinical trial for TX-002HR and, in October 2014, we stopped the trial and are considering whether to update the phase 3 protocol based on discussions with the FDA. We have no current plans to conduct clinical trials for TX-003HR.

TX-001HR, our combination estradiol and progesterone drug candidate, is undergoing clinical trials for the treatment of moderate to severe vasomotor symptoms due to menopause, including hot flashes, night sweats, sleep disturbances, and vaginal discomfort for post-menopausal women with an intact uterus. The hormone therapy drug candidate is chemically identical to the hormones that naturally occur in a woman’s body, namely estradiol and progesterone, and is being studied as a continuous combined regimen, in which the combination of estrogen and progesterone are taken together in one product daily. If approved by the FDA, we believe this would represent the first time a combination product of estradiol and progesterone bioidentical to – or having the same chemical and molecular structure as – the estradiol and progesterone produced by the ovaries would be approved for use in a single combined product.

On September 5, 2013, we began enrollment in the REPLENISH Trial, a multicenter, double-blind, placebo-controlled, phase 3 study of TX-001HR in postmenopausal women with an intact uterus. The study is designed to evaluate the efficacy of TX-001HR for the treatment of moderate to severe vasomotor symptoms due to menopause and the endometrial safety of TX-001HR. Patients are assigned to one of five arms, four active and one placebo, and receive study medication for 12 months. The primary endpoint for the reduction of endometrial hyperplasia is an incidence of endometrial hyperplasia of less than 1% at 12 months, as determined by endometrial biopsy. The primary endpoint for the treatment of moderate to severe vasomotor symptoms is the mean change of frequency and severity of moderate to severe vasomotor symptoms at weeks four and 12 compared to placebo, as measured by the number and severity of hot flushes. Only subjects experiencing a minimum daily frequency of seven moderate to severe hot flushes at screening are included in the vasomotor symptoms analysis, while all subjects are included in the endometrial hyperplasia analysis. The secondary endpoints include reduction in sleep disturbances and improvement in quality of life measures, night sweats and vaginal dryness, measured at 12 weeks, six months and 12 months. The trial is designed to enroll approximately 1,750 patients at approximately 100 sites. We completed enrollment in thethe REPLENISH Trial in October 2015 and we currently anticipate that results of the trial will be reported late in the fourth quarter of 2016. Based on such timeline and assuming a successful trial, we would anticipate a New Drug Application, or NDA, for TX-001HR to be submitted ~~and potentially accepted~~ as soon as the first half of 2017 and potentially accepted 60 days thereafter, and assuming an FDA review period of ten months from the receipt date to the ~~Prescription Drug User Fee Act, or~~ PDUFA date for a non-new molecular entity, the NDA for TX-001HR could be approved by the FDA as soon as the first ~~quarter~~half of 2018. As of ~~August 2,~~November 3, 2016, ~~approximately 1,642~~virtually all patients have exited the REPLENISH Trial and the incidence of consensus endometrial hyperplasia among the three pathologists for these patients is less than 1%.

TX-002HR is a natural progesterone formulation for the treatment of secondary amenorrhea without the potentially allergenic component of peanut oil. The hormone therapy drug candidate is bioidentical to – or having the same chemical and molecular structure as – the hormones that naturally occur in a woman’s body. We believe it will be similarly effective to traditional treatments, but may demonstrate efficacy at lower dosages. In January 2014, we began recruitment of patients in the SPRY Trial, a phase 3 clinical trial designed to measure the safety and effectiveness of TX-002HR in the treatment of secondary amenorrhea. During the first two quarters of 2014, the SPRY Trial encountered enrollment challenges because of Institutional Review Board approved clinical trial protocols and FDA inclusion and exclusion criteria. In July 2014, we suspended enrollment and in October 2014 we stopped the SPRY Trial in order to update the phase 3 protocol based on discussions with the FDA. We are considering updating the phase 3 protocol to, among other things, target only those women with secondary amenorrhea due to polycystic ovarian syndrome and to amend the primary endpoint of the trial. We believe that the updated phase 3 protocol, if proposed by us and approved by the FDA, would allow us to mitigate the enrollment challenges in, and shorten the duration of, the SPRY Trial. However, there can be no assurance that the FDA will approve the updated phase 3 protocol if we propose it.

TX-004HR is a vaginal estradiol softgel drug candidate for the treatment of vulvar and vaginal atrophy, or VVA, in post-menopausal women with vaginal linings that do not receive enough estrogen. We believe that our drug candidate will be at least as effective as the traditional treatments for VVA because of an early onset of action with less systemic exposure, inferring a greater probability of dose administration to the target tissue, and it will have an added advantage of being a simple, easier to use dosage form versus traditional VVA treatments. TX-004HR features our SYMBODA^TM technology. This allows for the production of cohesive, stable formulations and provides content uniformity and accuracy of dosing strengths for TX-004HR. We initiated the REJOICE Trial, a randomized, multicenter, double-blind, placebo-controlled phase 3 clinical trial during the third quarter of 2014 to assess the safety and efficacy of three doses – 25 mcg, 10 mcg and 4 mcg (compared to placebo) – of TX-004HR for the treatment of moderate to severe dyspareunia, or painful intercourse, as a symptom of VVA due to menopause.

On December 7, 2015, we announced positive top-line results from the REJOICE Trial. The pre-specified four co-primary efficacy endpoints were the changes from baseline to week 12 versus placebo in the percentage of vaginal superficial cells, percentage of vaginal parabasal cells, vaginal pH and severity of participants’ self-reported moderate to severe dyspareunia as the most bothersome symptom of VVA. The trial enrolled 764 postmenopausal women (40 to 75 years old) experiencing moderate to severe dyspareunia at approximately 89 sites across the United States and Canada. Trial participants were randomized to receive either TX-004HR at 25 mcg (n=190), 10 mcg (n=191), or 4 mcg (n=191) doses or placebo (n=192) for a total of 12 weeks, all administered once daily for two weeks and then twice weekly (approximately three to four days apart) for ten weeks. The 25 mcg dose of TX-004HR demonstrated highly statistically significant results at the p < 0.0001 level compared to placebo across all four co-primary endpoints. The 10 mcg dose of TX-004HR demonstrated highly statistically significant results at the p < 0.0001 level compared to placebo across all four co-primary endpoints. The 4 mcg dose of TX-004HR also demonstrated highly statistically significant results at the p < 0.0001 level compared to placebo for the endpoints of vaginal superficial cells, vaginal parabasal cells, and vaginal pH; the change from baseline compared to placebo in the severity of dyspareunia was statistically significant at the p = 0.0149 level. The FDA has previously indicated to us that in order to approve the drug based on a single trial, the trial would need to show statistical significance at the 0.01 level or lower for each endpoint, and that a trial that is merely statistically significant at a higher level may not provide sufficient evidence to support an NDA filing or approval of a drug candidate where the NDA relies on a single clinical trial. Statistical improvement over placebo was also observed for all three doses at the first assessment at week two and sustained through week 12. Vaginal dryness was a pre-specified key secondary endpoint. The 25 mcg and 10 mcg doses of TX-004HR demonstrated highly statistically significant results at the p < 0.0001 level compared to placebo for the endpoint of vaginal dryness. The 4 mcg dose of TX-004HR demonstrated statistically significant results at the p = 0.0014 level compared to placebo. The pharmacokinetic data for all three doses demonstrated negligible to very low systemic absorption of 17 beta estradiol, estrone and estrone conjugated, supporting the previous phase 1 trial data. TX-004HR was well tolerated, and there were no clinically significant differences compared to placebo-treated participants with respect to adverse events. There were no drug-related serious adverse events reported. ~~We recently received conditional approval for the brand name Yuvvexy related to TX-004HR.~~

We submitted the NDA for TX-004HR with the FDA on July 7, 2016. The FDA determined that the NDA is sufficiently complete to permit a substantive review and accepted the NDA for filing. The PDUFA target action date for the completion of the FDA’s review is May 7, 2017. The NDA submission was supported by the complete TX-004HR clinical program, including positive results of the recently completed phase 3 ~~Rejoice~~REJOICE Trial. The NDA submission included all three doses of TX-004HR (4 mcg, 10 mcg and 25 mcg) that were evaluated in the REJOICE Trial. Once submitted, the FDA has a 60-day filing review period to determine whether the NDA is sufficiently complete to permit the FDA to accept the NDA for filing. If accepted, the NDA could be approved by the FDA as soon as the first half of 2017, assuming an FDA review period of ten months from the receipt date to the PDUFA date for a non-new molecular entity. If approved, the 4 mcg formulation would represent a lower effective dose than the currently available VVA therapies approved by the FDA.

As of ~~June~~September 30, 2016, we had 17 issued patents, which included 13 utility patents that relate to our combination progesterone and estradiol formulations, two utility patents that relate to TX-004HR, which establish an important intellectual property foundation for TX-004HR, one utility patent that relates to a pipeline transdermal patch technology, and one utility patent that relates to our OPERA^® information technology platform.

A significant portion of our operating expenses to date have been incurred in research and development activities. Research and development expenses relate primarily to the discovery and development of our drug ~~products.~~candidates. Our business model is dependent upon our company continuing to conduct a significant amount of research and development. Our research and development expenses consist primarily of expenses incurred under agreements with contract research organizations, or CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of our preclinical studies; employee-related expenses, which include salaries and benefits, and non-cash share-based compensation; the cost of developing our chemistry, manufacturing and controls capabilities, and acquiring clinical trial materials; and costs associated with other research activities and regulatory approvals. Other research and development costs listed below consist of costs incurred with respect to drug ~~products~~candidates that have not received IND approval from the FDA.

We make payments to the CROs based on agreed upon terms that may include payments in advance of a study starting date. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Advance payments to be expensed in future research and development activities are capitalized, and were ~~$364,959~~$244,335 at ~~June~~September 30, 2016, all of which was included in other current assets on the accompanying consolidated balance sheets. Advance payments to be expensed in future research and development activities were $1,138,073 at December 31, 2015, of which $1,009,175 was included in other current assets and $128,898 was included in long term prepaid expense on the accompanying consolidated balance sheets.

The following table indicates our research and development expense by project/category for the periods indicated (in 000s):

Research and development expenditures will continue to be significant as we continue development of our drug candidates and advance the development of our proprietary pipeline of novel drug candidates. We expect to incur significant research and development costs as we develop our drug pipeline, complete the ongoing clinical trials of our drug candidates, conduct our planned phase 3 clinical trials, subject to receiving input from regulatory authorities, and prepare regulatory submissions.

The costs of clinical trials may vary significantly over the life of a project owing to factors that include but are not limited to the following: per patient trial costs, the number of patients that participate in the trials; the number of sites included in the trials; the length of time each patient is enrolled in the trial; the number of doses that patients receive; the drop-out or discontinuation rates of patients; the amount of time required to recruit patients for the trial, the duration of patient follow-up; and the efficacy and safety profile of the drug candidate. We base our estimated expenses related to clinical trials on estimates that are based on our experience and estimates from CROs and other third parties.

Three months ended ~~June~~September 30, 2016 compared with three months ended ~~June~~September 30, 2015

Revenues for the three months ended ~~June~~September 30, 2016 ~~decreased~~increased approximately ~~$445,000,~~$346,000, or 9%7%, to approximately ~~$4,403,000,~~$5,536,000, compared with approximately ~~$4,848,000~~$5,190,000 for the three months ended ~~June~~September 30, 2015. This ~~decrease~~increase was primarily attributable to an increase in the number of units sold partially offset by a decrease in the average net sales price of our ~~products partially offset by a small increase in the number of units sold.~~products. Cost of goods sold increased approximately ~~$97,000~~$43,000 or 9%4%, to approximately ~~$1,130,000~~$1,237,000 for the three months ended ~~June~~September 30, 2016, compared with approximately ~~$1,033,000~~$1,194,000 for the three months ended ~~June~~September 30, 2015. Our gross margins ~~decreased~~increased to ~~74%~~78% for the three months ended ~~June~~September 30, 2016 compared to ~~79%~~77% for the three months ended ~~March 31,~~September 30, 2015. The gross margin change was primarily attributable to a ~~decrease~~shift in ~~average net sale price of our products.~~product mix from the prior period.

Our principal operating costs include the following items as a percentage of total operating expenses.

Operating expenses ~~decreased~~increased by approximately ~~$6,586,000,~~$5,928,000, or ~~21%~~25%, to approximately ~~$24,484,000~~$29,427,000 for the three months ended ~~June~~September 30, 2016, from approximately ~~$31,070,000~~$23,499,000 for the three months ended ~~June~~September 30, 2015 as a result of the following items:

Research and development costs for the three months ended ~~June~~September 30, 2016 decreased by approximately ~~$10,349,000,~~$1,758,000, or ~~43%~~11%, to approximately ~~$13,841,000,~~$14,664,000, compared with approximately ~~$24,190,000~~$16,422,000 for the three months ended ~~June~~September 30, 2015. Research and development costs include costs related to clinical trials as well as salaries, wages, non-cash compensation and benefits of personnel involved in research and development activities. Research and development costs decreased as a result of the completion of patient enrollment in the REPLENISH Trial for TX-001HR, our combination estradiol and progesterone drug candidate, which were partially offset by an increase in scale up and pre-production manufacturing activities to support ~~future commercialization.~~clinical trials and NDA approval. Research and developments costs during the three months ended ~~June~~September 30, 2016 included the following research and development projects.

During the three months ending ~~June~~September 30, 2016 and the period from February 2013 (project inception) through ~~June~~September 30, 2016, we have incurred approximately ~~$8,324,000~~$7,751,000 and ~~$81,509,000,~~$89,260,000, respectively, in research and development costs with respect to TX-001HR, our combination estradiol and progesterone drug candidate.

During the three months ended ~~June~~September 30, 2016 and the period from April 2013 (project inception) through ~~June~~September 30, 2016, we have incurred $0 and approximately $2,525,000, respectively, in research and development costs with respect to TX-002HR, our progesterone only drug candidate.

During the three months ended ~~June~~September 30, 2016 and the period from August 2014 (project inception) through ~~June~~September 30, 2016, we have incurred approximately ~~$2,676,000~~$2,611,000 and ~~$28,671,000, respectively, in research and development costs with respect to TX-004HR, our applicator-free vaginal estradiol softgel drug candidate.~~

For a discussion of the nature of efforts and steps necessary to complete these projects, see “Item 1. Business — Research and Development” in our Annual Report and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Research and Development” above. For a discussion of the risks and uncertainties associated with completing development of our products, see “Item 1A. Risk Factors — Risks Related to Our Business” in our Annual Report. For a discussion of the extent and nature of additional resources that we may need to obtain if our current liquidity is not expected to be sufficient to complete these projects, see “Liquidity and Capital Resources” below. For a discussion as to whether a future milestone such as completion of a development phase, date of filing an NDA with a regulatory agency or approval from a regulatory agency can be reliably determined, see “Item 1. Business — Our Hormone Therapy Drug Candidates,” “Item 1. Business — Products in Development” and “Item 1. Business — Pharmaceutical Regulation” in our Annual Report. Future milestones, including NDA submission dates, are not easily determinable as such milestones are dependent on various factors related to our clinical trials, including the timing of ongoing patient recruitment efforts to find eligible subjects for the applicable trials.

Human resource costs, including salaries, benefits and taxes, for the three months ended June 30, 2016 increased by approximately $2,717,000, or 81%, to approximately $6,074,000, compared with approximately $3,357,000 for the three months ended June 30, 2015, primarily as a result of an increase of approximately $1,731,000 in non-cash compensation related to stock awards and approximately $986,000 in personnel costs.

Other operating expense for the three months ended June 30, 2016 increased by approximately $724,000, or 72%, to approximately $1,729,000, compared with approximately $1,005,000 for the three months ended June 30, 2015, primarily as a result of software, data services and computer expenses as well as increased reserve for bad debt expense, and higher insurance and investor relations expenses.

Sales and marketing costs for the three months ended June 30, 2016 increased by approximately $475,000, or 32%, to approximately $1,975,000, compared with approximately $1,500,000 for the three months ended June 30, 2015, primarily as a result of increased expenses associated with sales and marketing efforts to support future commercialization, partially offset by a slight decrease in commission expense.

Professional fees for the three months ended June 30, 2016 decreased by approximately $153,000, or 15%, to approximately $864,000, compared with approximately $1,017,000 for the three months ended June 30, 2015, primarily as a result of decreased legal fees, partially offset by increased consulting expenses.

As a result of the foregoing, our operating loss decreased approximately $6,044,000, or 22%, to approximately $21,211,000 for the three months ended June 30, 2016, compared with approximately $27,255,000 for the three months ended June 30, 2015, primarily as a result decreased research and development expenses and professional fees, partially offset by increased stock-based compensation expenses, personnel costs, marketing expenses and other operating expenses and a decrease in our revenue. As a result of the continued development of our hormone therapy drug candidates, we anticipate that we will continue to have operating losses for the near future until our hormone therapy drug candidates are approved by the FDA and brought to market, although there is no assurance that we will attain such approvals or that any marketing of our hormone therapy drug candidates, if approved, will be successful.

Other non-operating income increased by approximately $89,000 or 318%, to approximately $117,000 for the three months ended June 30, 2016 compared with approximately $28,000 for the comparable period in 2015, primarily as a result of increased interest income.

As a result of the net effects of the foregoing, net loss decreased approximately $6,133,000, or 23%, to approximately $21,094,000 for the three months ended June 30, 2016, compared with approximately $27,227,000 for the three months ended June 30, 2015. Net loss per share of Common Stock, basic and diluted, was ($0.11) for the three months ended June 30, 2016, compared with ($0.16) per share of Common Stock for the three months ended June 30, 2015.

~~Six months ended June 30, 2016 compared with six months ended June 30, 2015~~

Revenues for the six months ended June 30, 2016 increased approximately $10,000, or 0.1%, to approximately $9,333,000, compared with approximately $9,323,000 for the six months ended June 30, 2015. This increase was attributable to an increase in the number of units sold partially offset by a decrease in the average net sales price of our products. Cost of goods sold increased approximately $162,000, or 8%, to approximately $2,239,000 for the six months ended June 30, 2016, compared with approximately $2,077,000 for the six months ended June 30, 2015. Our gross margins decreased to 76% for the six months ended June 30, 2016 compared to 78% for the six months ended March 31, 2015. The gross margin change was primarily attributable to a decrease in average net sale price of our products.

~~Our principal operating costs include the following items as a percentage of total operating expenses.~~

Operating expenses decreased by approximately $6,145,000, or 11%, to approximately $49,279,000 for the six months ended June 30, 2016, from approximately $55,424,000 for the six months ended June 30, 2015 as a result of the following items:

Research and development costs for the six months ended June 30, 2016 decreased by approximately $13,429,000, or 32%, to approximately $28,938,000, compared with approximately $42,367,000 for the six months ended June 30, 2015. Research and development costs include costs related to clinical trials as well as salaries, wages, non-cash compensation and benefits of personnel involved in research and development activities. Research and development costs decreased as a result of the completion of patient enrollment in the REPLENISH Trial for TX-001HR, our combination estradiol and progesterone drug candidate, which were partially offset by an increase in scale up and manufacturing activities to support future commercialization. Research and developments costs during the six months ended June 30, 2016 included the following research and development projects.

During the six months ending June 30, 2016 and the period from February 2013 (project inception) through June 30, 2016, we have incurred approximately $17,350,000 and $81,509,000, respectively, in research and development costs with respect to TX-001HR, our combination estradiol and progesterone drug candidate.

During the six months ended June 30, 2016 and the period April 2013 (project inception) through June 30, 2016, we have incurred $0 and approximately $2,525,000, respectively, in research and development costs with respect to TX-002HR, our progesterone only drug candidate.

~~During the six months ended June 30, 2016 and the period from August 2014 (project inception) through June 30, 2016, we have incurred approximately $5,113,000 and $28,671,000,~~$31,282,000, respectively, in research and development costs with respect to TX-004HR, our applicator-free vaginal estradiol softgel drug candidate.

Human resource costs, including salaries, benefits and taxes, for the ~~six~~three months ended ~~June~~September 30, 2016 increased by approximately ~~$5,165,000,~~$2,500,000, or ~~84%~~72%, to approximately ~~$11,344,000,~~$5,965,000, compared with approximately ~~$6,179,000~~$3,465,000 for the ~~six~~three months ended ~~June~~September 30, 2015, primarily as a result of an increase of approximately ~~$3,919,000~~$1,156,000 in personnel costs in the sales, marketing and regulatory areas to support commercialization of our hormone therapy drug candidates and an increase of approximately $1,344,000 in non-cash compensation related to stock ~~awards and approximately $1,246,000 in personnel costs.~~

Other operating expense for the ~~six~~three months ended ~~June~~September 30, 2016 increased by approximately ~~$1,237,000,~~$2,112,000, or ~~62%~~204%, to approximately ~~$3,237,000,~~$3,146,000, compared with approximately ~~$2,000,000~~$1,034,000 for the ~~six~~three months ended ~~June~~September 30, 2015, primarily as a result of a write-off of accounts receivable balances of approximately $2,200,000 related to former customers due to our inability to collect the outstanding balances, and increased data, computer and insurance expenses, partially offset by lower investor relations and other miscellaneous expenses.

Sales and marketing costs for the three months ended September 30, 2016 increased by approximately $2,753,000, or 190%, to approximately $4,201,000, compared with approximately $1,448,000 for the three months ended September 30, 2015, primarily as a result of increased ~~reserved~~expenses associated with sales and marketing efforts to support commercialization of our hormone therapy drug candidates coupled with an increase in commission expense.

Professional fees for ~~bad debt,~~the three months ended September 30, 2016 increased by approximately $321,000, or 28%, to approximately $1,450,000, compared with approximately $1,129,000 for the three months ended September 30, 2015, primarily as a result of increased legal expense.

As a result of the foregoing, our operating loss increased approximately $5,625,000, or 29%, to approximately $25,128,000 for the three months ended September 30, 2016, compared with approximately $19,503,000 for the three months ended September 30, 2015, primarily as a result of increased personnel, sales and marketing expenses to support commercialization of our hormone therapy drug candidates, higher stock-based compensation expenses, coupled with a write-off of accounts receivable balances mentioned above and an increase in professional fees and other operating expenses. This was partially offset by a decrease in research and development expenses and an increase in our revenue. As a result of the continued development of our hormone therapy drug candidates, we anticipate that we will continue to have operating losses for the near future until our hormone therapy drug candidates are approved by the FDA and brought to market, although there is no assurance that we will attain such approvals or that any marketing of our hormone therapy drug candidates, if approved, will be successful.

Other non-operating income increased by approximately $82,000, or 265%, to approximately $113,000 for the three months ended September 30, 2016 compared with approximately $31,000 for the comparable period in 2015, primarily as a result of increased interest income.

As a result of the net effects of the foregoing, net loss increased approximately $5,543,000, or 28%, to approximately $25,015,000 for the three months ended September 30, 2016, compared with approximately $19,472,000 for the three months ended September 30, 2015. Net loss per share of Common Stock, basic and diluted, was ($0.13) for the three months ended September 30, 2016, compared with ($0.11) per share of Common Stock for the three months ended September 30, 2015.

Nine months ended September 30, 2016 compared with nine months ended September 30, 2015

Revenues for the nine months ended September 30, 2016 increased approximately $356,000, or 2%, to approximately $14,869,000, compared with approximately $14,513,000 for the nine months ended September 30, 2015. This increase was primarily attributable to an increase in the number of units sold partially offset by a decrease in the average net sales price of our products. Cost of goods sold increased approximately $205,000, or 6%, to approximately $3,476,000 for the nine months ended September 30, 2016, compared with approximately $3,271,000 for the nine months ended September 30, 2015. Our gross margins of 77% for the nine months ended September 30, 2016 remained unchanged from the nine months ended September 30, 2015.

Our principal operating costs include the following items as a percentage of total operating expenses.

Operating expenses decreased by approximately $217,000, or 0.3%, to approximately $78,706,000 for the nine months ended September 30, 2016, from approximately $78,923,000 for the nine months ended September 30, 2015 as a result of the following items:

Research and development costs for the nine months ended September 30, 2016 decreased by approximately $15,187,000, or 26%, to approximately $43,602,000, compared with approximately $58,789,000 for the nine months ended September 30, 2015. Research and development costs include costs related to clinical trials as well as salaries, wages, non-cash compensation and benefits of personnel involved in research and development activities. Research and development costs decreased as a result of the completion of patient enrollment in the REPLENISH Trial for TX-001HR, our combination estradiol and progesterone drug candidate, which were partially offset by an increase in scale up and pre-production manufacturing activities to support clinical trials and NDA approval. Research and developments costs during the nine months ended September 30, 2016 included the following research and development projects.

During the nine months ending September 30, 2016 and the period from February 2013 (project inception) through September 30, 2016, we have incurred approximately $25,101,000 and $89,260,000, respectively, in research and development costs with respect to TX-001HR, our combination estradiol and progesterone drug candidate.

During the nine months ended September 30, 2016 and the period from April 2013 (project inception) through September 30, 2016, we have incurred $0 and approximately $2,525,000, respectively, in research and development costs with respect to TX-002HR, our progesterone only drug candidate.

During the nine months ended September 30, 2016 and the period from August 2014 (project inception) through September 30, 2016, we have incurred approximately $7,724,000 and $31,282,000, respectively, in research and development costs with respect to TX-004HR, our applicator-free vaginal estradiol softgel drug candidate.

Human resource costs, including salaries, benefits and taxes, for the nine months ended September 30, 2016 increased by approximately $7,665,000, or 79%, to approximately $17,309,000, compared with approximately $9,644,000 for the nine months ended September 30, 2015, primarily as a result of an increase of approximately $2,401,000 in personnel costs in sales, marketing and regulatory areas to support commercialization of our hormone therapy drug candidates and an increase of approximately $5,264,000 in non-cash compensation related to stock awards.

Other operating expense for the nine months ended September 30, 2016 increased by approximately $3,349,000, or 110%, to approximately $6,384,000, compared with approximately $3,035,000 for the nine months ended September 30, 2015, primarily as a result of a write-off of accounts receivable balances of approximately $2,200,000 related to former customers due to our inability to collect the outstanding balances, and higher investor relations, insurance, rent and other office expenses.

Sales and marketing costs for the ~~six~~nine months ended ~~June~~September 30, 2016 increased by approximately ~~$660,000,~~$3,413,000, or ~~22%~~78%, to approximately ~~$3,594,000,~~$7,796,000, compared with approximately ~~$2,934,000~~$4,383,000 for the ~~six~~nine months ended ~~June~~September 30, 2015, primarily as a result of increased expenses associated with sales and marketing ~~and future~~efforts to support commercialization ~~efforts.~~

of our hormone therapy drug candidates coupled with an increase in commission expense.

Professional fees for the ~~six~~nine months ended ~~June~~September 30, 2016 increased by approximately ~~$222,000,~~$543,000, or ~~11%~~18%, to approximately ~~$2,165,000,~~$3,615,000, compared with approximately ~~$1,943,000~~$3,072,000 for the ~~six~~nine months ended ~~June~~September 30, 2015, primarily as a result of increased legal fees and consulting expenses.

As a result of the foregoing, our operating loss decreased approximately ~~$5,993,000,~~$368,000, or ~~12%~~0.5%, to approximately ~~$42,185,000~~$67,313,000 for the ~~six~~nine months ended ~~June~~September 30, 2016, compared with approximately ~~$48,178,000~~$67,681,000 for the ~~six~~nine months ended ~~June~~September 30, 2015, primarily as a result of decreased research and development ~~costs,~~expenses and an increase in our revenue, partially offset by increased stock-based compensation ~~expense,~~expenses, personnel costs and sales and marketing ~~costs~~expenses to support commercialization of our hormone therapy drug candidates coupled with a write-off of accounts receivable balances mentioned above and an increase in professional fees and other operating expenses. As a result of the continued development of our hormone therapy drug candidates, we anticipate that we will continue to have operating losses for the near future until our hormone therapy drug candidates are approved by the FDA and brought to market, although there is no assurance that we will attain such approvals or that any marketing of our hormone therapy drug candidates, if approved, will be successful.

Other non-operating income increased by approximately ~~$105,000,~~$187,000, or ~~188%~~215%, to approximately ~~$161,000~~$274,000 for the ~~six~~nine months ended ~~June~~September 30, 2016 compared with approximately ~~$56,000~~$87,000 for the comparable period in 2015, primarily as a result of increased interest income.

As a result of the net effects of the foregoing, net loss decreased approximately ~~$6,098,000,~~$555,000, or ~~13%~~0.8%, to approximately ~~$42,024,000~~$67,039,000 for the ~~six~~nine months ended ~~June~~September 30, 2016, compared with approximately ~~$48,122,000~~$67,594,000 for the ~~six~~nine months ended ~~June~~September 30, 2015. Net loss per share of Common Stock, basic and diluted, was ($~~0.21)~~0.34) for the ~~six~~nine months ended ~~June~~September 30, 2016, compared with ($~~0.29)~~0.39) per share of Common Stock for the ~~six~~nine months ended ~~June~~September 30, 2015.

We have funded our operations primarily through public offerings of our Common Stock and private placements of equity and debt securities. For the ~~six~~nine months ended ~~June~~September 30, 2016 and the year ended December 31, 2015, we received approximately $134.9 million and $91.4 million in net proceeds, respectively, from the issuance of shares of our Common Stock. As of ~~June~~September 30, 2016, we had a cash ~~and cash equivalents totaling~~balance of approximately ~~$166.5~~$147.5 million, however, changing circumstances may cause us to consume funds significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control.

We believe that our existing cash will allow us to fund our operating plan through at least the next 12 months. If our available cash is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing shareholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect the rights of our existing shareholders. If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or proposed products. Additionally, we may have to grant licenses on terms that may not be favorable to us.

We need substantial amounts of cash to complete the clinical development of our hormone therapy drug candidates. The following table sets forth the primary sources and uses of cash for each of the periods set forth below:

The use of cash in both periods resulted primarily from our net loss adjusted for non-cash charges and changes in components of working capital. The decrease of approximately ~~$9,272,000~~$8,910,000 in cash used in operating activities for the ~~six~~nine months ended ~~June~~September 30, 2016 compared with the comparable period in the prior year was due primarily to changes in research and development, and sales, general, and administrative costs.

An increase in spending on patent and trademarks and fixed assets resulted in an increase in cash used in investing activities for the ~~six~~nine months ended ~~June~~September 30, 2016 compared with the same period in 2015.

Financing activities represent the principal source of our cash flow. Our financing activities for the both the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015 consisted of proceeds from underwritten public offerings of our Common Stock and stock option and warrant exercises.

On ~~April 26,~~October 4, 2016, we entered into an agreement to lease additional administrative office space in Boca Raton, Florida, pursuant to an addendum to our existing ~~63 month~~ non-cancelable operating lease. This addendum ~~was~~is effective beginning ~~May~~November 1, ~~2016~~ 2016.

We have entered into long-term supply agreements with Catalent Pharma Solutions, LLC for the commercial supply of our TX-001HR and ~~extended all operating lease~~TX-004HR hormone therapy drug candidates. Under the terms of the agreements, we will be obligated to ~~October 31, 2021.~~purchase certain minimum annual amounts of each product once we commence commercial sales of such product following regulatory approval of Catalent as a manufacturer of the product. We may terminate the agreement for a particular drug candidate in the event that we cease pursuit of regulatory approval for such drug candidate for certain specified reasons.

Our market risk has not changed materially from the interest rate risk disclosed in Item 7A of our Annual Report.

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, in order to allow timely decisions in connection with required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. Further, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

Effective June 30, 2016, we implemented a new general ledger accounting system. We believe we have taken the necessary steps to maintain appropriate levels of internal control over financial reporting during this period of change and we continuously monitor controls through and around the system to provide reasonable assurance that such controls are effective.

During the three months ended ~~June~~September 30, 2016, there were no other changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we are involved in litigation and proceedings in the ordinary course of our business. We are not currently involved in any legal proceeding that we currently believe would have a material adverse effect on our business or financial condition.

There have been no material changes to the risk factors previously disclosed in our Annual Report.

On May 6, 2016, we issued 61,372 shares of our Common Stock upon the exercise of warrants previously issued to a director of our company and received proceeds of $25,000 in connection with this exercise. On June 30, 2016, we issued 100,000 shares of our Common Stock upon the exercise of warrants previously issued to two consultants and received aggregate proceeds of $38,000 in connection with these exercises. Proceeds from these transactions were used in working capital. The shares of Common Stock were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	~~For the quarterly period ended June 30, 2016~~

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	~~For the transition period from________ to ___________~~

	Nevada				87-0233535
(State or Other Jurisdiction of Incorporation or Organization)				(I.R.S. Employer Identification No.)

	6800 Broken Sound Parkway NW, Third Floor, Boca Raton, FL 33487				(561) 961-1900
(Address of Principal Executive Offices)				(Issuer’s Telephone Number)


Large accelerated filer þ	☒	Accelerated filer ¨☐
Non-accelerated filer ¨	☐	Smaller reporting company ¨☐
(Do not check if a smaller reporting company)

THERAPEUTICSMD, INC. AND SUBSIDIARIES
INDEX
			~~Page~~
~~PART I - FINANCIAL INFORMATION~~
				Page
PART I - FINANCIAL INFORMATION
	~~Item. 1~~	~~Financial Statements~~
	Item. 1	Financial Statements

		Consolidated Balance Sheets as of ~~June~~September 30, 2016 (Unaudited) and December 31, 2015		3

		Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2016 (Unaudited) and 2015 (Unaudited)		4

		Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2016 (Unaudited) and 2015 (Unaudited)		5

		Notes to Consolidated Financial Statements		6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21	20

	Item 3.	Quantitative and Qualitative Disclosures about Market ~~Risks~~Risk	33	32

	Item 4.	Controls and Procedures	33	32

Part II - OTHER INFORMATION			34	33

	Item 1.	Legal Proceedings	34	33

	Item 1A.	Risk Factors	34	33

	Item 2.6.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Exhibits	34

	~~Item 6.~~	~~Exhibits~~	3433

	THERAPEUTICSMD, INC.
(Exact Name of Registrant as Specified in Its Charter)

	N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

								September 30, 2016			December 31, 2015
	June 30, 2016			December 31, 2015				(Unaudited)
	(Unaudited)
ASSETS							ASSETS
Current Assets:
Cash	$	166,532,446		$	64,706,355			$	147,534,065		$	64,706,355
Accounts receivable, net of allowance for doubtful accounts of $529,298 and $81,910, respectively		4,477,308			3,049,715
Accounts receivable, net of allowance for doubtful accounts of $113,034 and $81,910, respectively									5,033,298			3,049,715
Inventory		883,656			690,153				843,398			690,153
Other current assets		2,136,735			2,233,897				2,693,475			2,233,897
Total current assets		174,030,145			70,680,120				156,104,236			70,680,120

Fixed assets, net		444,412			198,592				460,546			198,592

Other Assets:
Intangible assets, net		1,983,829			1,615,251				2,118,378			1,615,251
Prepaid expense		—			1,109,883				—			1,109,883
Security deposit		129,864			125,000				139,036			125,000
Total other assets		2,113,693			2,850,134				2,257,414			2,850,134
Total assets	$	176,588,250		$	73,728,846			$	158,822,196		$	73,728,846

LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	3,039,388		$	3,126,174			$	4,224,419		$	3,126,174
Other current liabilities		6,299,783			7,539,526				8,243,421			7,539,526
Total current liabilities		9,339,171			10,665,700				12,467,840			10,665,700
Total liabilities		9,339,171			10,665,700				12,467,840			10,665,700

Commitments and Contingencies - See Note 15

Stockholders’ Equity:
Preferred stock - par value $0.001; 10,000,000 shares authorized; no shares issued and outstanding		—			—				—			—
Common stock - par value $0.001; 350,000,000 shares authorized; 196,492,195 and 177,928,041 issued and outstanding, respectively		196,492			177,928
Common stock - par value $0.001; 350,000,000 shares authorized; 196,580,212 and 177,928,041 issued and outstanding, respectively									196,580			177,928
Additional paid in capital		428,902,951			282,712,078				433,023,801			282,712,078
Accumulated deficit		(261,850,364	)		(219,826,860	)			(286,866,025	)		(219,826,860	)
Total stockholders’ equity		167,249,079			63,063,146				146,354,356			63,063,146
Total liabilities and stockholders’ equity	$	176,588,250		$	73,728,846			$	158,822,196		$	73,728,846

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015

Revenues, net	$	5,535,685		$	5,190,175		$	14,869,023		$	14,513,158

Cost of goods sold		1,237,446			1,193,965			3,475,997			3,270,695
Gross profit		4,298,239			3,996,210			11,393,026			11,242,463

Operating expenses:
Sales, general, and administration		14,721,710			7,060,944			35,019,268			20,089,998
Research and development		14,664,123			16,421,753			43,602,333			58,789,302
Depreciation and amortization		40,460			16,548			84,319			44,400
Total operating expense		29,426,293			23,499,245			78,705,920			78,923,700

Operating loss		(25,128,054	)		(19,503,035	)		(67,312,894	)		(67,681,237	)

Other income:
Miscellaneous income		109,942			27,630			265,879			71,728
Accreted interest		2,451			2,760			7,850			15,162
Total other income		112,393			30,390			273,729			86,890

Loss before taxes		(25,015,661	)		(19,472,645	)		(67,039,165	)		(67,594,347	)

Provision for income taxes		—			—			—			—

Net loss	$	(25,015,661	)	$	(19,472,645	)	$	(67,039,165	)	$	(67,594,347	)

Net loss per share, basic and diluted	$	(0.13	)	$	(0.11	)	$	(0.34	)	$	(0.39	)

Weighted average number of common shares outstanding, basic and diluted		196,502,327			177,206,168			195,912,173			171,589,595

	Nine Months Ended
	September 30, 2016			September 30, 2015

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(67,039,165	)	$	(67,594,347	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation of fixed assets		45,759			22,104
Amortization of intangible assets		38,560			22,296
Provision for doubtful accounts		2,261,568			37,163
Share-based compensation		13,385,215			4,740,906
Changes in operating assets and liabilities:
Accounts receivable		(4,245,151	)		(1,549,532	)
Inventory		(153,245	)		312,054
Other current assets		379,930			(621,923	)
Other assets		—			(15,162	)
Accounts payable		1,098,245			(1,025,504	)
Deferred revenue		—			(522,613	)
Other current liabilities		703,895			2,546,138
Other long-term liabilities		—			1,213,874
Net cash used in operating activities		(53,524,389	)		(62,434,546	)

CASH FLOWS FROM INVESTING ACTIVITIES
Patent costs		(541,686	)		(117,992	)
Purchase of fixed assets		(307,714	)		(15,559	)
Payment of security deposit		(14,036	)		—
Net cash used in investing activities		(863,436	)		(133,551	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net of costs		134,863,475			91,374,649
Proceeds from exercise of warrants		1,373,000			366,000
Proceeds from exercise of options		979,060			589,829
Net cash provided by financing activities		137,215,535			92,330,478

Increase in cash		82,827,710			29,762,381
Cash, beginning of period		64,706,355			51,361,607
Cash, end of period	$	147,534,065		$	81,123,988

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015

Revenues, net	$	4,403,247		$	4,847,934		$	9,333,338		$	9,322,983

Cost of goods sold		1,130,108			1,033,089			2,238,551			2,076,730
Gross profit		3,273,139			3,814,845			7,094,787			7,246,253

Operating expenses:
Sales, general, and administration		10,619,006			6,865,442			20,297,558			13,029,054
Research and development		13,841,193			24,190,714			28,938,210			42,367,549
Depreciation and amortization		24,262			14,280			43,859			27,852
Total operating expense		24,484,461			31,070,436			49,279,627			55,424,455

Operating loss		(21,211,322	)		(27,255,591	)		(42,184,840	)		(48,178,202	)

Other income:
Miscellaneous income		114,320			25,585			155,937			44,098
Accreted interest		2,863			2,560			5,399			12,402
Total other income		117,183			28,145			161,336			56,500

Loss before taxes		(21,094,139	)		(27,227,446	)		(42,023,504	)		(48,121,702	)

Provision for income taxes		—			—			—			—

Net loss	$	(21,094,139	)	$	(27,227,446	)	$	(42,023,504	)	$	(48,121,702	)

Net loss per share, basic and diluted	$	(0.11	)	$	(0.16	)	$	(0.21	)	$	(0.29	)

Weighted average number of common shares outstanding		196,325,715			172,782,264			195,613,639			168,734,760

	Six Months Ended
	June 30, 2016			June 30, 2015

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(42,023,504	)	$	(48,121,702	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation of fixed assets		19,216			14,248
Amortization of intangible assets		24,643			13,604
Provision for doubtful accounts		447,388			30,767
Share-based compensation		9,200,844			2,968,811
Changes in operating assets and liabilities:
Accounts receivable		(1,874,980	)		(1,190,068	)
Inventory		(193,503	)		(66,606	)
Other current assets		1,001,120			383,194
Other assets		—			(12,410	)
Accounts payable		(86,786	)		(508,511	)
Deferred revenue		—			(522,613	)
Other current liabilities		(1,239,743	)		2,047,264
Other long-term liabilities		—			967,286
Net cash used in operating activities		(34,725,305	)		(43,996,736	)

CASH FLOWS FROM INVESTING ACTIVITIES
Patent costs		(393,221	)		(78,792	)
Purchase of fixed assets		(265,036	)		(15,559	)
Payment of security deposit		(4,864	)		—
Net cash used in investing activities		(663,121	)		(94,351	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net of costs		134,863,475			59,117,827
Proceeds from exercise of warrants		1,373,000			366,000
Proceeds from exercise of options		978,042			491,351
Net cash provided by financing activities		137,214,517			59,975,178

Increase in cash		101,826,091			15,884,091
Cash, beginning of period		64,706,355			51,361,607
Cash, end of period	$	166,532,446		$	67,245,698

	June 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Finished product	$	855,280	$	661,167	$	816,400	$	661,167
Raw material		28,376		28,986		26,998		28,986
TOTAL INVENTORY	$	883,656	$	690,153	$	843,398	$	690,153

	June 30, 2016		December 31, 2015
Prepaid manufacturing costs		—	$	980,985
Prepaid research and development costs		—		128,898
TOTAL PREPAID EXPENSE		—	$	1,109,883

	June 30, 2016									September 30, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Weighted- Average Remaining Amortization Period (yrs.)		Gross Carrying Amount		Accumulated Amortization			Net Amount		Weighted- Average Remaining Amortization Period (yrs.)
Amortizing intangible assets:
OPERA^®software patent	$	31,951	$	(5,492	)	$	26,459		13.25	$	31,951	$	(5,991	)	$	25,960		13
Development costs of corporate website		91,743		(91,743	)		—		n/a		91,743		(91,743	)		—		n/a
Approved hormone therapy drug candidate patents		954,817		(73,490	)		881,327		16.5		959,059		(86,907	)		872,152		16.25
Hormone therapy drug candidate patents (pending)		903,694		—			903,694		n/a		1,037,829		—			1,037,829		n/a
Non-amortizing intangible assets:
Multiple trademarks for vitamins/supplements		172,349		—			172,349		indefinite
Multiple trademarks											182,437		—			182,437		indefinite
TOTAL	$	2,154,554	$	(170,725	)	$	1,983,829			$	2,303,019	$	(184,641	)	$	2,118,378

	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
Accounting system in process	$	310,015		$	149,699
Accounting system							$	296,746		$	149,699
Equipment		226,165			132,150			164,013			132,150
Computer hardware								80,211			—
Furniture and fixtures		80,158			69,454			80,158			69,454
Leasehold improvements								37,888			—
		616,338			351,303			659,016			351,303
Accumulated depreciation		(171,926	)		(152,711	)		(198,470	)		(152,711	)
TOTAL FIXED ASSETS, NET	$	444,412		$	198,592		$	460,546		$	198,592

Year Ending December 31,	Estimated Amortization		Estimated Amortization
2016 (6 months)	$	26,819
2016 (3 months)			$	13,917
2017	$	53,638	$	55,668
2018	$	53,638	$	55,668
2019	$	53,638	$	55,668
2020	$	53,638	$	55,668

	June 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Accrued clinical trial costs	$	3,468,415	$	3,725,377	$	3,778,784	$	3,725,377
Accrued payroll, bonuses and commission costs		1,003,541		2,108,143		1,622,333		2,108,143
Accrued compensated absences		705,326		562,096		772,958		562,096
Accrued legal and accounting expense		237,265		210,309		377,172		210,309
Accrued sales and marketing costs						617,961		—
Other accrued expenses		511,809		546,264		231,037		546,264
Allowance for wholesale distributor fees		80,318		32,659		100,434		32,659
Accrued royalties		36,947		46,851		27,495		46,851
Allowance for coupons and returns		134,568		224,300		564,864		224,300
Accrued rent		121,594		83,527		150,383		83,527
TOTAL OTHER CURRENT LIABILITIES	$	6,299,783	$	7,539,526	$	8,243,421	$	7,539,526

	Six Months Ended June 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Risk-free interest rate		1.26-1.70	%		1.47-1.54	%		1.13-1.70	%		1.47-1.54	%
Volatility		70.44-71.22	%		58.77-62.94	%		70.26-71.22	%		58.77-62.94	%
Term (in years)		6.25			5.27-6.25			6.00-6.25			5.27-6.25
Dividend yield		0.00	%		0.00	%		0.00	%		0.00	%

	Three and Six months ended				Three and Nine months ended,
	June 30, 2016		June 30, 2015		2016		2015
Stock options		20,668,657		17,525,200		20,705,923		17,414,242
Warrants		12,060,571		13,032,431		12,060,571		12,722,431
TOTAL		32,729,228		30,557,631		32,766,494		30,136,673

	Number of Shares Underlying Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value		Number of Shares Underlying Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Balance at December 31, 2015		20,725,325		$	3.28		6.5	$	146,864,184		20,725,325		$	3.28		6.5	$	146,864,184
Granted		373,000		$	7.92		9.7				557,500		$	7.37
Exercised		(417,168	)	$	2.34			$	2,518,090		(544,277	)	$	2.27			$	3,100,742
Expired/Forfeited		(12,500	)	$	6.07						(32,625	)	$	6.22
Balance at June 30, 2016		20,668,657		$	3.38		6.0	$	107,122,188
Vested and Exercisable at June 30, 2016		16,782,792		$	2.45		5.4	$	102,042,737
Unvested at June 30, 2016		3,885,865		$	7.42		9.0	$	5,079,451
Balance at September 30, 2016											20,705,923		$	3.42		5.8	$	77,940,710
Vested and Exercisable at September 30, 2016											17,336,805		$	2.69		5.2	$	75,393,944
Unvested at September 30, 2016											3,369,118		$	7.17		8.8	$	2,546,766

Years Ending December 31,
2016 (6 months)	$	304,557
2017		600,236
2018		673,236
2019		810,234
2020		824,268
Thereafter		698,421
Total minimum lease payments	$	3,910,952

Years Ending December 31,
2016 (3 months)	$	152,278
2017		600,236
2018		673,236
2019		810,234
2020		824,268
Thereafter		698,421
Total minimum lease payments	$	3,758,673

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015		2016		2015		2016		2015
TX-001HR	$	8,324	$	10,718	$	17,350	$	19,329	$	7,751	$	8,175	$	25,101	$	27,504
TX-002HR		—		9		—		12		—		6		—		18
TX-004HR		2,676		8,614		5,113		13,661		2,611		4,581		7,724		18,242
Other research and development		2,841		4,849		6,475		9,365		4,302		3,660		10,777		13,025
	$	13,841	$	24,190	$	28,938	$	42,367	$	14,664	$	16,422	$	43,602	$	58,789

		(000s)			(000s)
Decrease in research and development costs	$	(10,349	)	$	(1,758	)
Increase in human resource costs, including salaries, benefits and taxes		2,717			2,500
Increase in other operating expenses		724			2,112
Increase in sales and marketing, excluding human resource costs		475			2,753
Decrease in professional fees for legal, accounting and consulting		(153	)
Increase in professional fees for legal, accounting and consulting					321
	$	(6,586	)	$	5,928

		(000s)
Decrease in research and development costs	$	(13,429	)
Increase in human resource costs, including salaries, benefits and taxes		5,165
Increase in other operating expenses		1,237
Increase in sales and marketing, excluding human resource costs		660
Increase in professional fees for legal, accounting and consulting		222
	$	6,145

	��	(000s)
Decrease in research and development costs	$	(15,187	)
Increase in human resource costs, including salaries, benefits and taxes		7,665
Increase in other operating expenses		3,349
Increase in sales and marketing, excluding human resource costs		3,413
Increase in professional fees for legal, accounting and consulting		543
	$	(217	)

	Six Months Ended March 31,
	2016			2015
	(000s)
Net cash used in operating activities	$	(34,725	)	$	(43,997	)
Net cash used in investing activities	$	(663	)	$	(94	)
Net cash provided by financing activities	$	137,214		$	59,975

Exhibit	Date	Description
10.1*	October 4, 2016	Third Amendment to Lease between the Company and 6800 Broken Sound, LLC.
31.1*	~~August 5,~~November 4, 2016	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
31.2*	~~August 5,~~November 4, 2016	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
32.1*	~~August 5,~~November 4, 2016	Section 1350 Certification of Chief Executive Officer
32.2*	~~August 5,~~November 4, 2016	Section 1350 Certification of Chief Financial Officer
101.INS*	n/a	XBRL Instance Document
101.SCH*	n/a	XBRL Taxonomy Extension Schema Document
101.CAL*	n/a	XBRL Taxonomy Extension Calculation Linkbase Document

	THERAPEUTICSMD, INC.

	By:	/s/ Robert G. Finizio
		Robert G. Finizio
		Chief Executive Officer
		~~(Principal~~ (Principal Executive Officer)

	By:	/s/ Daniel A. Cartwright
		Daniel A. Cartwright
		Chief Financial Officer
		~~(Principal~~ (Principal Financial and Accounting Officer)