What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-02 compared with 2022-05-04 · 230 added, 134 removed, 688 unchanged (35% of the section changed)

34 unchanged sentences

Authorized 250,000,000 shares;

41,620,388 and 41,228,736 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

53,343,989 and 41,228,736 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 189,908 174,621

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Revenues $ 13,265 $ 15,345 $ 25,535 $ 26,467

5 unchanged sentences

Loss from operations ( 12,762 ) ( 6,517 ) ( 22,500 ) ( 15,042 )

Other expenses:

Other income/ (expenses):

Interest expense ( 1,635 ) ( 2,757 ) ( 3,253 ) ( 5,518 )

Interest expense related to the sale of future revenue, net ( 1,937 ) ( 3,466 ) ( 3,798 ) ( 6,800 )

Interest and other expense, net ( 3 ) ( 52 )

Interest and other income, net 32 373 29 321

Net loss before income taxes ( 16,302 ) ( 12,367 ) ( 29,522 ) ( 27,039 )

22 unchanged sentences

Balance at March 31, 2022 41,620,388 41 176,833 ( 270,017 ) ( 93,143 )

Fair value of warrants issued — — 5,874 — 5,874

Common Stock issued under private equity offering 6,686,491 7 4,622 — 4,629

Costs of common stock issued under private equity offering — — ( 824 ) — ( 824 )

Common Stock issued upon warrant exercises 4,000,000 4 ( 4 ) — —

Common Stock issued under public equity offering 1,013,226 1 1,251 — 1,252

Costs of common stock issued under public equity offering — — ( 77 ) — ( 77 )

Shares issued under employee stock purchase plan 23,884 — 15 — 15

Share-based compensation expense — — 2,219 — 2,219

Vested restricted stock units — — — — —

Other — — ( 1 ) 1 —

Net loss — — — ( 16,302 ) ( 16,302 )

Balance at June 30, 2022 53,343,989 $ 53 $ 189,908 $ ( 286,318 ) $ ( 96,357 )

Balance at December 31,2020 34,569,254 $ 35 $ 137,725 $ ( 186,257 ) $ ( 48,497 )

5 unchanged sentences

Balance at March 31, 2021 36,241,358 36 149,095 ( 200,929 ) ( 51,798 )

Common Stock issued under public equity offering 2,304,949 3 9,238 — 9,241

Costs of common stock issued under public equity offering — — ( 627 ) — ( 627 )

Shares issued under employee stock purchase plan 19,270 — 76 — 76

Share-based compensation expense — — 1,710 — 1,710

Vested restricted stock units 2,665 — ( 4 ) — ( 4 )

Net loss — — — ( 12,367 ) ( 12,367 )

Balance at June 30, 2021 38,568,242 39 159,488 ( 213,296 ) ( 53,769 )

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Operating activities:

18 unchanged sentences

Financing activities:

Proceeds from issuance of common stock, net 1,298 9,891

Proceeds from common stock issued under public equity offering, net 2,473 18,505

Proceeds from common stock issued under private equity offering, net 3,805 —

Proceeds from issuance and exercise of warrants 5,878 —

Proceeds from shares issued under employee stock purchase plan 15 76

Premium paid to retire debt ( 675 ) —

Payments for taxes on share-based compensation — ( 4 )

Net cash provided by financing activities 11,496 18,577

Net decrease in cash and cash equivalents ( 13,288 ) ( 4,309 )

Net (decrease) increase in cash and cash equivalents ( 10,329 ) 2,427

Cash and cash equivalents at beginning of period 28,024 31,807

24 unchanged sentences

On March 26, 2021, the Company filed a prospectus supplement to offer up to an additional $ 50,000 of shares of common stock under the ATM facility.

For the three months ended March 31, 2022, the Company sold 391,652 shares which provided net proceeds of approximately $ 1,298 after deducting commissions and other transaction costs of $ 62 .

For the three months ended March 31, 2021, the Company sold 1,672,104 shares which provided net proceeds of approximately $ 9,891 after deducting commissions and other transaction costs of $ 306 .

This ATM facility has approximately $ 36,043 available at March 31, 2022.

Basis of Presentation

For the six months ended June 30, 2022, the Company sold 1,404,878 shares which provided net proceeds of approximately $ 2,473 after deducting commissions and other transaction costs of $ 139 .

For the six months ended June 30, 2021, the Company sold 3,977,053 shares which provided net proceeds of approximately $ 18,505 after deducting commissions and other transaction costs of $ 933 .

This ATM facility has approximately $ 34,791 available at June 30, 2022.

On April 12, 2022, the Company entered into a purchase agreement ("Lincoln Park Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), which provides that, upon the terms and subject to the conditions and limitations set forth in the Lincoln Park Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park up to $ 40,000 worth of shares of its common stock from time to time over the 36 -month term of the Lincoln Park Purchase Agreement.

The Lincoln Park Purchase Agreement contains an ownership limitation such that we will not issue, and Lincoln Park will not purchase, shares of common stock if it would result in their beneficial ownership exceeding 9.99%.

Lincoln Park has covenanted under the Lincoln Park Purchase Agreement not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company's common stock.

For the six months ended June 30, 2022, the Company sold 1,611,181 shares including commitment shares, which provided proceeds of approximately $ 1,987 in connection with the Lincoln Park Purchase Agreement .

On April 13, 2022, the Company filed a prospectus supplement in connection with this offering.

On June 6, 2022, the Company entered into securities purchase agreements ("Securities Purchase Agreements") with certain purchasers.

The Securities Purchase Agreements provided for the sale and issuance by the Company of an aggregate of:

(i) 4,850,000 shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to 4,000,000 shares of common stock and (iii) common stock warrants to purchase up to 8,850,000 shares of common stock.

The Company received net proceeds of approximately $ 7,796 , after deducting placement agent fees and expenses and estimated offering expenses payable by the Company.

The Company intends to use the net proceeds from the offering for general corporate purposes.

On June 8, 2022, the Company filed a prospectus supplement in connection with this equity offering.

The accompanying interim unaudited condensed consolidated financial statements were prepared in conformity with U.S.

1 unchanged sentence

GAAP”) and with Article 10 of Regulation S-X for interim financial reporting.

In compliance with those rules, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S.

In compliance with those rules, certain information and footnote disclosures normally included in annual consolidated financial

Table of Content

statements prepared in accordance with U.S.

GAAP have been condensed or omitted.

6 unchanged sentences

GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Table of Content

Summary of Significant Accounting Policies

2 unchanged sentences

The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption .

Recent Accounting Pronouncements Not Adopted as of March 31, 2022:

Recent Accounting Pronouncements Not Adopted as of June 30, 2022:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) , amending existing guidance on the accounting for credit losses on financial instruments within its scope.

2 unchanged sentences

The new guidance is effective for the Company beginning after December 15, 2022.

The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

The Company does not expect the new accounting guidance to have a material impact on the Company's consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) :

10 unchanged sentences

The Company does not expect the new accounting guidance to have a material impact on the Company's consolidated financial statements.

Table of Content

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820) :

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

This Accounting Standards Update was issued to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, and to introduce new disclosure requirements for such equity securities.

These amendments will be effective for the Company beginning January 1, 2024, with early adoption of the amendments permitted.

The Company is currently evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements.

Risks and Uncertainties

5 unchanged sentences

The Company’s cash requirements for 2022 and beyond include expenses related to continuing development and clinical evaluation of its products, manufacture and supply costs, costs of regulatory filings, patent prosecution expenses and litigation expenses, expenses related to commercialization of its products, as well as costs to comply with the requirements of being a public company operating in a highly regulated industry.

As of March 31, 2022, the Company had $ 14,736 of cash and cash equivalents.

As of June 30, 2022, the Company had $ 17,695 of cash and cash equivalents.

The Company has experienced a history of net losses.

The Company's accumulated deficits totaled $ 270,017 as of March 31, 2022.

The net losses and accumulated deficits were partially offset by gross margins from sales of commercialized

Table of Content

licensed and proprietary products, license fees, milestone and royalty payments from commercial licensees and co-development parties.

The Company's accumulated deficits totaled $ 286,318 as of June 30, 2022.

The net losses and accumulated deficits were partially offset by gross margins from sales of commercialized licensed and proprietary products, license fees, milestone and royalty payments from commercial licensees and co-development parties.

The Company's funding requirements have been met by its cash and cash equivalents, as well as its existing equity and debt offerings, including the Senior Secured Notes due 2025 (the " 12.5 % Notes").

1 unchanged sentence

The Company began utilizing its ATM facility in November 2020.

Since inception to March 31, 2022, the Company sold 7,873,071 shares which generated net cash proceeds of approximately $ 37,131 , net of commissions and other transaction costs of $ 1,826 .

For the three months ended March 31, 2022, the Company sold 391,652 shares which provided net proceeds of approximately $ 1,298 , net of commissions and other transaction costs of $ 62 .

This ATM facility has approximately $ 36,043 available at March 31, 2022.

Since inception to June 30, 2022, the Company sold 8,886,297 shares which generated net cash proceeds of approximately $ 38,306 , net of commissions and other transaction costs of $ 1,903 .

For the six months ended June 30, 2022, the Company sold 1,404,878 shares which provided net proceeds of approximately $ 2,473 , net of commissions and other transaction costs of $ 139 .

This ATM facility has approximately $ 34,791 available at June 30, 2022.

The Company’s ability to execute its business objectives and achieve profitability over the longer term cannot be assured.

1 unchanged sentence

However, there can be no assurance that the Company will be able to obtain sufficient additional liquidity when needed or under acceptable terms, if at all.

See Note 20 for details.

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

6 unchanged sentences

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

At contract inception, the Company assesses the goods promised in its contracts with customers and identify a performance obligation for each promise to transfer to the customer a distinct good.

At contract inception, the Company

Table of Content

assesses the goods promised in its contracts with customers and identify a performance obligation for each promise to transfer to the customer a distinct good.

When identifying performance obligations, the Company considers all goods or services promised in a contract regardless of whether explicitly stated in the contract or implied by customary business practice.

9 unchanged sentences

License and Royalty Revenu e – license revenues are determined based on an assessment of whether the license is distinct from any other performance obligations that may be included in the underlying licensing arrangement.

If the customer is able to benefit from the license without provision of any other performance obligations by the Company and the license is thereby viewed as a distinct or functional license, the Company then determines whether the customer has acquired a right to

Table of Content

use the license or a right to access the license.

For functional licenses that do not require further development or other ongoing activities by the Company, the customer is viewed as acquiring the right to use the license as, and when, transferred and revenues are generally recorded at a point in time, subject to contingencies or constraints.

16 unchanged sentences

These contract assets are reflected as a component of other receivables within Trade and other receivables within the Condensed Consolidated Balance Sheet.

As of March 31, 2022, and December 31, 2021, such contract assets were $ 1,823 and $ 3,087 , respectively, consisting primarily of products and services provided under specific contracts to customers for which earnings processes have been met prior to shipment of goods or full delivery of completed services.

As of June 30, 2022,

Table of Content

and December 31, 2021, such contract assets were $ 3,474 and $ 3,087 , respectively, consisting primarily of products and services provided under specific contracts to customers for which earnings processes have been met prior to shipment of goods or full delivery of completed services.

Contract Liabilities - in certain situations, customer contractual payment terms are structured to permit invoicing in advance of delivery of a good or service.

3 unchanged sentences

As remaining performance obligations are satisfied, an appropriate portion of the deferred revenue balance is credited to earnings.

As of March 31, 2022, and December 31, 2021, such contract liabilities were $ 15,489 and $ 7,887 , respectively.

Table of Content

As of June 30, 2022, and December 31, 2021, such contract liabilities were $ 15,089 and $ 7,887 , respectively.

The Company’s revenues were comprised of the following:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Manufacture and supply revenue $ 9,874 $ 10,665 $ 19,045 $ 17,176

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

United States $ 11,257 $ 13,107 $ 22,338 $ 22,957

10 unchanged sentences

Trade and other receivables, net $ 19,165 $ 12,120

Table of Content

The following table presents the changes in the allowance for doubtful accounts:

9 unchanged sentences

The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved.

The calculation of some of these items requires management

Table of Content

to make estimates based on sales data, historical return data, contracts and other related information that may become known in the future.

The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts and other related information that may become known in the future.

The adequacy of these provisions is reviewed on a quarterly basis.

The following table provides a summary of activity with respect to sales related allowances and accruals for the three months ended March 31, 2022:

The following table provides a summary of activity with respect to sales related allowances and accruals for the six months ended June 30, 2022:

Total Sales Related Allowances

2 unchanged sentences

Payments / credits ( 625 )

Balance at March 31, 2022 $ 506

Total reductions of gross product sales from sales-related allowances and accruals were $ 178 for the three months ended March 31, 2022.

Balance at June 30, 2022 $ 509

Total reductions of gross product sales from sales-related allowances and accruals were $ 529 for the six months ended June 30, 2022.

Accruals for returns allowances and prompt pay discounts are reflected as a direct reduction of trade receivables and accruals for wholesaler service fees, co-pay support redemptions and rebates as current liabilities.

The accrued balances relative to these provisions included in Trade and other receivables, net and Accounts payable and accrued expenses were $ 506 and $ 2,563 , respectively, as of March 31, 2022 and $ 605 and $ 2,224 , respectively, as of December 31, 2021.

The accrued balances relative to these provisions included in Trade and other receivables, net and Accounts payable and accrued expenses were $ 509 and $ 2,656 , respectively, as of June 30, 2022 and $ 605 and $ 2,224 , respectively, as of December 31, 2021.

Concentration of Major Customers

Customers are considered major customers when net revenue exceeds 10% of total revenue for the period or outstanding receivable balances exceed 10% of total receivables.

For the three months ended March 31, 2022, Indivor exceeded the 10% threshold for revenue and represented approximately 78 % of total revenue.

As of March 31, 2022, Indivior and Haisco Pharmaceutical Group Co., Ltd.

For the six months ended June 30, 2022, Indivor exceeded the 10% threshold for revenue and represented approximately 77 % of total revenue.

As of June 30, 2022, Indivior and Haisco Pharmaceutical Group Co., Ltd.

("Haisco") exceeded the 10% threshold for outstanding receivables and represented 38 % and 37 %, respectively, of outstanding receivables.

For the three months ended March 31, 2021, Indivior exceeded the 10% threshold for revenue and represented approximately 64 % of total revenue.

For the six months ended June 30, 2021, Indivior exceeded the 10% threshold for revenue and represented approximately 68 % of total revenue.

As of December 31, 2021, two customers exceeded the 10% threshold for outstanding receivables which were Indivior and Cardinal Health Inc.

7 unchanged sentences

was later succeeded to in interest by Indivior Inc.

Pursuant to the Indivior License Agreement, the Company agreed to manufacture and supply Indivior’s requirements for Suboxone, a sublingual film formulation, both inside and outside the United States on an exclusive basis.

Pursuant to the Indivior License Agreement, the

Table of Content

Company agreed to manufacture and supply Indivior’s requirements for Suboxone®, a sublingual film formulation, both inside and outside the United States on an exclusive basis.

Under the terms of the Indivior License Agreement, the Company is required to manufacture Suboxone in accordance with current Good Manufacturing Practice standards and according to the specifications and processes set forth in the related quality agreements with Indivior.

5 unchanged sentences

Indivior remains obligated to pay royalties for all sales outside the United States.

The Indivior License Agreement contains customary contractual termination provisions, including with respect to a filing for bankruptcy or corporate dissolution, an invalidation of the intellectual property surrounding Suboxone, and

Table of Content

commission of a material breach of the Indivior License Agreement by either party.

Additionally, Indivior may terminate the Indivior License Agreement if the FDA or other applicable regulatory authority declares the Company’s manufacturing site to no longer be suitable for the manufacture of Suboxone or Suboxone is no longer suitable to be manufactured due to health or safety reasons.

22 unchanged sentences

The FDA approval triggered Sunovion's obligation to remit a payment of $ 4,000 which was received in September 2020 and was included in License and royalty revenues for the year ended December 31, 2020.

Table of Content

In consideration of the rights granted to Sunovion under the Sunovion License Agreement, the Company has received aggregate payments totaling $ 22,000 to date.

7 unchanged sentences

The Sunovion License Agreement continues (on a country-by-country basis) until the expiration of all applicable licensed patents.

Upon termination of the Sunovion

Table of Content

License Agreement, all rights to intellectual property granted to Sunovion to develop and commercialize apomorphine-based products will revert to the Company.

Upon termination of the Sunovion License Agreement, all rights to intellectual property granted to Sunovion to develop and commercialize apomorphine-based products will revert to the Company.

On October 23, 2020, the Company entered into a Second Amendment to the Sunovion License Agreement for the purpose of clarifying the rights and obligations of Sunovion and the Company with respect to the prosecution and maintenance of the patents covered under the Sunovion License Agreement and to provide that, on and after March 31, 2028, in respect of any jurisdiction or jurisdictions covered under the Sunovion License Agreement, Sunovion may terminate its rights to the licensed Patents under the Sunovion License Agreement upon 180 days prior written notice.

5 unchanged sentences

In exchange for the sale of these rights, the Company received an upfront payment of $ 40,000 and an additional payment of $ 10,000 through the achievement of the first milestone.

The Company has received an aggregate amount of $ 50,000 through March 31, 2022 under the Monetization Agreement.

The Company has received an aggregate amount of $ 50,000 through June 30, 2022 under the Monetization Agreement.

Under the Monetization Agreement, additional aggregate contingent payments of up to $ 75,000 may be due to us upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $ 125,000 .

Based on the current forecast by Sunovion of estimated KYNMOBI sales as of March 31, 2022, the Company may not receive any of the additional aggregate contingent payments under the Monetization agreement.

Based on the current forecast by Sunovion of estimated KYNMOBI sales as of June 30, 2022, the Company may not receive any of the additional aggregate contingent payments under the Monetization agreement.

See Note 15 Sale of Future Revenue for further details on the accounting for the Monetization Agreement.

5 unchanged sentences

The Company received payment of $ 500 under this arrangement during June 2020 in connection with the FDA's acceptance of a New Drug Application ("NDA") filing for KP-415.

On March 2, 2021 KemPharm announced FDA approval of KP 415 (AZTARYS TM ) a new once-daily treatment for ADHD.

On March 2, 2021 KemPharm announced FDA approval of KP 415 (AZTARYS TM ) a new once-

Table of Content

daily treatment for ADHD.

During the second quarter of 2021, the Company received $ 2,000 of milestone payments in connection with the FDA approval and other regulatory activities.

Licensing and Supply Agreement with Haisco for Exservan ™ (Riluzole Oral Film) for ALS Treatment in China

The Company entered into a License, Development and Supply Agreement with Haisco Pharmaceutical Group Co., Ltd., a Chinese limited company listed on the Shenzhen Stock Exchange ("Haisco") effective as of March 3, 2022 ("Haisco Agreement"), pursuant to which Aquestive granted Haisco an exclusive license to develop and commercialize Exservan™ (riluzole oral film) for the treatment of amyotrophic lateral sclerosis, or ALS (“Exservan), in China and Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China.

The Company entered into a License, Development and Supply Agreement with Haisco, a Chinese limited company listed on the Shenzhen Stock Exchange effective as of March 3, 2022 ("Haisco Agreement"), pursuant to which Aquestive granted Haisco an exclusive license to develop and commercialize Exservan™ (riluzole oral film) for the treatment of amyotrophic lateral sclerosis, or ALS (“Exservan"), in China and Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China.

Under the Haisco Agreement, Haisco is obligated to pay the Company a $ 7,000 upfront cash payment, regulatory milestone payments, and double-digit royalties on net sales of Exservan in China, and the Company will earn manufacturing revenue upon the sale of Exservan in China, as the exclusive supplier of Exservan.

Table of Content

Effective as of July 7, 2022, the Company and Haisco amended the terms of the Haisco Agreement which amendment provides that the due date of the $ 7 upfront payment due from Haisco under the Haisco Agreement will be the first to occur of:

(i) the date that Haisco receives an official written confirmation from the Chinese equivalent of the FDA (the "NMPA") that the NMPA will receive and accept a Regulatory Approval Application with respect to Exservan in China that recognizes the Company as the Marketing Authorization Holder ("MAH"), and (ii) 21 business days after Haisco receives a copy of a written acknowledgement from the FDA that the U.S.

NDA for Exservan was transferred to the Company from a third-party licensee of Exservan in the United States.

The amendment further provides that the Haisco Agreement may be terminated by Haisco upon written notice to the Company if the Company is not the holder of the NDA for Exservan in the United States within six months from the effective date of the amendment and Haisco has not received an official written confirmation from the NMPA that the NMPA accepts a Regulatory Approval Application with respect to Exservan that recognizes the Company as the MAH in China.

We may not receive any payments under the Haisco Agreement.

Refer to Note 20 and Part II, Item 1A.

Risk Factors for details.

Compensatory Arrangements of Certain Officers

On May 17, 2022, the Company announced that Keith J.

Kendall, President and Chief Executive Officer of the Company, was leaving the Company and Board of Directors effective May 17, 2022.

In connection with his departure, Mr.

Kendall and the Company entered into a Separation Agreement, including a Consulting Agreement (collectively, the “Separation Agreement”) dated as of May 17, 2022.

Pursuant to the Separation Agreement, Mr.

Kendall’s employment with the Company ceased effective as of May 17, 2022 (the “Termination Date”).

The Separation Agreement provides Mr.

Kendall with the following principal severance benefits, contingent upon Mr.

Kendall execution and delivery of a customary release of claims:

(i) a cash payment consisting of the sum of any previously unpaid base salary through the Termination Date and any accrued and unused vacation time for the 2022 calendar year;

(ii) a cash payment consisting of his pro-rata portion of his target bonus in the amount of $ 279,863 ;

(iii) a cash payment in the amount of $ 150,000 , representing 90 days of his base pay in lieu of the required notice period under Mr.

Kendall’s employment agreement, (iv) severance payments consisting of (a) a cash payment of $ 262,500 , which represents an acceleration of the first three installments of Mr.

Kendall’s 18 -month severance he is entitled to under his employment agreement, (b) monthly severance payments of $ 52,571.43 per month for the first through the seventh months following the Termination Date, (c) $ 69,500 paid for the eighth month after the Termination Date, and (d) monthly severance payments of $ 87,500 for the ninth through eighteenth months following the Termination Date, (v) accelerated vesting of unvested outstanding equity awards, with options remaining exercisable for the duration of the stated term of each award, and (vi) continuing coverage under the Company’s group health and life insurance plans at the same levels and on the same terms and conditions as are provided to similarly-situated executives, for a period of 18 months.

Under the terms of the Separation Agreement, Mr.

Kendall will serve as a consultant to the Company, on an as-needed basis providing transition services, strategic planning, financial planning, merger and acquisition advice and consultation, for a period from the Separation Date to December 31, 2022.

For these services, Mr.

Kendall will receive a consulting fee of $ 10,000 per month.

Financial Instruments – Fair Value Measurements

5 unchanged sentences

• Level 2 — Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Table of Content

• Level 3 — Unobservable inputs that are supported by little or no market activity, such as pricing models, discounted cash flow methodologies and similar techniques.

6 unchanged sentences

See Note 13 12.5 % Senior Secured Notes and Loans Payable for further discussion.

In June 2022, the Company issued pre-funded warrants to purchase up to 4,000,000 shares of common stock and common stock warrants to purchase up to 8,850,000 shares of common stock in connection with its Securities Purchase Agreements with certain purchasers.

Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide.

See Note 14 Warrants for further information on these warrants.

Inventories, Net

7 unchanged sentences

Property and Equipment, Net

Lives March 31,

Lives June 30,

2022 December 31,

9 unchanged sentences

(a) Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives.

Total depreciation, amortization, and impairment related to property and equipment was $ 714 and $ 743 for the three-month periods ended March 31, 2022 and 2021, respectively.

Total depreciation, amortization, and impairment related to property and equipment was $ 655 and $ 728 for the three-month periods ended June 30, 2022 and 2021, respectively.

For the respective six-month periods, these expenses totaled $ 1,369 and $ 1,471 .

Right-of-Use Assets and Lease Obligations

10 unchanged sentences

The Company's lease costs are recorded in manufacture and supply, research and development and selling, general and administrative expenses in its consolidated statements of income.

For the three-months ended March 31, 2022, total operating lease expenses totaled $ 419 , including variable lease expenses such as common area maintenance and operating costs of $ 96 .

For the three-months ended March 31, 2021, total operating lease expenses totaled $ 433 , including variable lease expenses such as common area maintenance and operating costs of $ 119 .

For the three and six-months ended June 30, 2022, total operating lease expenses totaled $ 424 and $ 843 , respectively, including variable lease expenses such as common area maintenance and operating costs of $ 127 and $ 223 , respectively.

For the three and six-months ended June 30, 2021, total operating lease expenses totaled $ 430 and $ 863 , respectively, including variable lease expenses such as common area maintenance and operating costs of $ 116 and $ 235 , respectively.

Maturities of the Company’s operating lease liabilities are as follows:

11 unchanged sentences

Intangible assets, net 25 51

Amortization expense was $ 13 and $ 13 for each of the three-month periods ended March 31, 2022 and 2021.

During the remaining life of the purchased patent, estimated annual amortization expense is $ 50 in 2022.

Amortization expense was $ 12 and $ 12 for each of the three-month periods ended June 30, 2022 and 2021.

For the corresponding six-month periods, these expenses totaled $ 25 and $ 25 , respectively.

During the remaining life of the purchased patent, estimated remaining amortization expense is $ 25 in 2022.

Other non-current Assets

6 unchanged sentences

In connection with the Monetization Agreement, the Company performed an assessment under ASC 860 Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded it was not transferred.

Royalty receivable consists of six annual minimum payments due from Sunovion, the last of which is due in March 2028.

Royalty receivable consists of five annual minimum payments due from Sunovion, the last of which is due in March 2028.

The current portion of the royalty receivable is included in Trade and other receivables, net.

See Note 15 Sale of Future Revenue for further details on how this receivable relates to the Monetization Agreement transaction.

Table of Content

Accrued Expenses

Accrued expenses consisted of the following:

Table of Content

2022 December 31,

13 unchanged sentences

Further, the Company entered into an additional Purchase Agreement with its lenders whereby the Company issued in aggregate $ 4,000 of additional 12.5 % Notes (the "Additional Notes") in lieu of paying a prepayment premium to two lenders on the early repayment of the 12.5 % Notes discussed above.

The result of these two transactions reduced the net balance of the Company's 12.5 % Senior Notes outstanding in the aggregate to $ 51,500 at December 31, 2020, and such aggregate principal amount remains outstanding as of March 31, 2022.

The $ 4,000 principal issuance will be repaid proportionally over the same maturities as the other 12.5 % Notes.

6 unchanged sentences

This repurchase offer is capped at 30 % of the cash proceeds received by the Company as the contingent milestones are attained, if any, up through June 30, 2025.

A valuation study was performed by an independent third party appraiser and updated as of March 31, 2022.

Based on the valuation study, the put option was valued at $ 133 , of which $ 33 has been recorded in Accrued expenses and $ 100 has been recorded in Other non-current liabilities.

A valuation study was performed by an independent third party appraiser and updated as of June 30, 2022.

Based on the valuation study, the put option was valued at $ 105 and has been recorded in Other non-current liabilities.

The embedded put option is deemed to be a derivative under ASC 815 Derivatives and Hedging , which requires the recording of the embedded put option at fair value and subject to remeasurement at each reporting period.

In addition, as of the closing of this transaction, the Company issued to the holders of the 12.5 % Notes warrants to purchase 143,000 shares of its common stock.

On August 6, 2021, pursuant to the Third Supplemental Indenture, the holders of the 12.5 % Notes extended to June 30, 2022 from December 31, 2021, the Company's ability to access, at the Company's option, $ 30,000 of 12.5 % Notes re-openers under the Indenture.

The first $ 10,000 of 12.5 % Notes represents a commitment of such amount by current holders of 12.5 % Notes, at the option of the Company, contingent upon FDA approval of the Company's product candidate Libervant (diazepam) Buccal Film for the management of seizure clusters.

A second $ 20,000 12.5 % Notes re-opener represents a right, at the Company's option, to market to current holders of the Company's 12.5 % Notes, and or other lenders, additional 12.5 % Notes up

Table of Content

to such amount, contingent upon FDA approval of Libervant for U.S.

market access.

under the Indenture.

Under the Third Supplemental Indenture, the first $ 10,000 of 12.5 % Notes re-openers represented a commitment of such amount by current holders of 12.5 % Notes, at the option of the Company, contingent upon FDA approval of the Company's product candidate Libervant (diazepam) Buccal Film for the management of seizure clusters ("First Additional Securities").

In addition, under the Third Supplemental Indenture, a second $ 20,000 12.5 % Notes re-opener represented a right, at the Company's option, to market to current holders of the Company's 12.5 % Notes, and or other lenders, additional 12.5 % Notes up to such amount, contingent upon FDA approval of Libervant for U.S.

market access ("Second Additional Securities").

If and to the extent that the Company accesses these re-openers, it will grant warrants to purchase up to 714,000 shares of common stock, with the strike price calculated based on the 30-day volume weighted average closing price of the Company's common stock at the warrant grant date.

The 12.5 % Notes provide a stated fixed interest rate of 12.5 %, payable quarterly in arrears, with the initial quarterly principal repayment of 12.5 % Notes due on September 30, 2021 and the final quarterly payment due at maturity on June 30, 2025.

Principal payments are scheduled to increase annually from 10 % of the face amount of the debt then outstanding during the first four quarters to 40 % of the 12.5 % Notes during the final four quarters.

As of March 31, 2022, the Company recorded its principal payments as Loans payable, net on its Condensed Consolidated Balance Sheet.

On May 13, 2022, pursuant to the Fifth Supplemental Indenture, the holders of the 12.5 % Notes further extended to March 31, 2023 from June 30, 2022, the Company's ability to access, at the Company's option, $ 30,000 of 12.5 % Notes re-openers under the Indenture.

The Fifth Supplemental Indenture also provided that the Company's access to the First Additional Securities and Second Additional Securities is subject to the full approval of Libervant by the U.S Food and Drug Administration for sale in the United States, which full approval includes U.S.

market access for Libervant.

In addition, the Fifth Supplemental Indenture provides that the holders of 12.5 % Notes have the right, but not the obligation, to purchase the First Additional Securities and Second Additional Securities.

A debt maturity table is presented below:

1 unchanged sentence

Total $ 51,500

As of June 30, 2022, the Company recorded its principal payments as Loans payable, net on its Condensed Consolidated Balance Sheet.

The Company may elect, at its option, to redeem the 12.5 % Notes at any time at premiums that range from 101.56 % of outstanding principal if prepayment occurs on or after the fifth anniversary of the issue date of the Initial Notes to 112.50 % if payment occurs during the third year after the issuance of the Notes.

6 unchanged sentences

In connection with the Fourth Supplemental Indenture, the Company entered into a Consent Fee Letter with the holders of the Notes (the “Consent Fee Letter”), pursuant to which the Company has agreed to pay the holders of the Notes an additional cash payment ("Consent Fee") of $ 2,700 in the aggregate, payable in four quarterly payments beginning May 15, 2022.

The Company has recorded the current portion of the Consent Fee as Loans payable, current, and the long-term portion of the Consent Fee as Other non-current liabilities on its Consolidated Balance Sheet.

The Company has recorded the current portion of the Consent Fee as Loans payable, current, on its Consolidated Balance Sheet.

Additionally, the Company recognized a loss on the extinguishment of debt of $ 13,822 for fees and expenses related to the Fourth Supplemental Indenture during the fourth quarter of 2021.

Table of Content

The Company capitalizes legal and other third-party costs incurred in connection with obtaining debt as deferred debt issuance costs and applies the unamortized portion as a reduction of the outstanding face amount of the related loan.

Similarly, the Company amortizes debt discounts, such as those represented by warrants issued to its lenders, and offsets those as a direct reduction of its outstanding debt.

Amortization expense arising from deferred debt issuance costs and debt discounts related to the 12.5 % Notes for the three months ended March 31, 2022 were $ 4 , while comparative amortization expenses for the three months ended March 31, 2021 were $ 1,152 .

Unamortized deferred debt issuance costs and deferred debt discounts totaled $ 39 and $ 43 as of March 31, 2022 and December 31, 2021, respectively.

Amortization expense arising from deferred debt issuance costs and debt discounts related to the 12.5 % Notes for the three and six months ended June 30, 2022 were $ 4 and $ 8 , respectively, while comparative amortization expenses for the three and six months ended June 30, 2021 were $ 1,165 and $ 2,317 , respectively.

Unamortized deferred debt issuance costs and deferred debt discounts totaled $ 35 and $ 43 as of June 30, 2022 and December 31, 2021, respectively.

Collateral for the loan under the 12.5 % Notes consists of a first priority lien on substantially all property and assets, including intellectual property of the Company.

This secured obligation provides payment rights that are senior to all existing and future subordinated indebtedness of the Company and provides Lenders with perfected security interests in substantially all of the Company’s assets.

Table of Content

Warrants that were issued in conjunction with the Initial Notes (the “Initial Warrants”) and Additional Notes (the “Additional Warrants”) expire on June 30, 2025 and entitle the noteholders to purchase up to 2,143,000 shares of the Company's common stock at $ 0.001 per share and included specified registration rights.

1 unchanged sentence

The fair value of the respective warrants is treated as a debt discount, amortizable over the term of the respective warrants, with the unamortized 12.5 % Notes portion applied to reduce the aggregate principal amount of the 12.5 % Notes in the Company’s unaudited condensed balance sheet.

Additionally, since the warrants issued do not provide warrant redemption or put rights within the control of the holders that could require the Company to make a payment of cash or other assets to satisfy the obligations under the warrants, except in the case of a “cash change in control”, the fair value attributed to the warrants is presented in Additional Paid-in Capital in Company’s unaudited condensed balance sheet.

There were no warrants exercised during the three-months ended March 31, 2022 or 2021, respectively.

There were no warrants exercised during the six-months ended June 30, 2022 or 2021, respectively.

In June 2022, the Company issued pre-funded warrants and common stock warrants to certain purchasers in connection with the Securities Purchase Agreements.

The pre-funded warrants will expire when exercised in full and entitle purchasers to purchase up to 4,000,000 shares of the Company's common stock at $ 0.0001 per share.

The common stock warrants expire on June 8, 2027 and entitle the purchasers to purchase up to 8,850,000 shares of the Company's common stock at a price ranging from $ 0.96 to $ 1.09 per share.

Management estimated the fair value of the pre-funded warrants and common stock warrants to be $ 5,874 based on an assessment by an independent third-party appraiser.

The fair value of the pre-funded and common stock warrants is treated as equity and presented in Additional Paid-in Capital in the Company’s unaudited condensed balance sheet.

The pre-funded warrants were fully exercised and no common stock warrants issued pursuant to the Securities Purchase Agreements were exercised during the six-months ended June 30, 2022.

Sale of Future Revenue

3 unchanged sentences

In exchange for the sale of these rights, the Company received an upfront payment of $ 40,000 and an additional payment of $ 10,000 through the achievement of the first milestone.

The Company has received an aggregate amount of $ 50,000 through March 31, 2022 under the Monetization Agreement.

The Company has received an aggregate amount of $ 50,000 through June 30, 2022 under the Monetization Agreement.

Under the Monetization Agreement, additional aggregate contingent payments of up to $ 75,000 may be due to the Company upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $ 125,000 .

2 unchanged sentences

Although the Company sold all of its rights to receive royalties and milestones, as a result of ongoing obligations related to the generation of these royalties, the Company will account for these royalties as revenue.

Its ongoing obligations include the maintenance and defense of the intellectual property and to provide assistance to Marathon in executing a new license agreement for KYNMOBI in the event Sunovion terminates the Sunovion License Agreement in one or more jurisdictions of the licensed territory under the Sunovion License Agreement.

Table of Content

Agreement in one or more jurisdictions of the licensed territory under the Sunovion License Agreement.

The accounting liabilities, as adjusted over time, resulting from this transaction and any non-cash interest expenses associated to those liabilities do not and will not represent any obligation to pay or any potential future use of cash.

During the second quarter of 2020, under the Sunovion License Agreement, the Company recognized $ 8,000 of royalty revenue and corresponding royalty receivable, related to the $ 1,000 annual minimum guaranteed royalty that is due in each of the next eight years .

In connection with the Monetization Agreement, the Company performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded that the receivable was not transferred.

5 unchanged sentences

The Company will periodically assess the estimated royalty and milestone payments to Marathon from Sunovion and contingent milestone payments from Marathon to the Company.

To the extent the amount or timing of such payments is materially different from the original estimates, an adjustment will be recorded

Table of Content

prospectively to increase or decrease interest expense.

To the extent the amount or timing of such payments is materially different from the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense.

There are a number of factors that could materially affect the amount and timing of royalty and milestone payments to Marathon from Sunovion, and correspondingly, the amount of interest expense recorded by the Company, most of which are not under the Company's control.

2 unchanged sentences

Changes to any of these factors could result in increases or decreases to both royalty revenue and interest expense related to the sale of future revenue.

The following table shows the activity of the liability related to the sale of future for the three months ended March 31, 2022 :

The following table shows the activity of the liability related to the sale of future revenue for the six months ended June 30, 2022 :

Liability related to the sale of future revenue, net at December 31, 2021

3 unchanged sentences

Liability related to the sale of future revenue, net (includes current portion of $ 1,445 )

Table of Content

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares.

As a result of the Company’s net loss incurred for the three months ended March 31, 2022 and 2021, all potentially dilutive instruments outstanding would have anti-dilutive effects on per-share calculations for the periods.

As a result of the Company’s net loss incurred for the three and six months ended June 30, 2022 and 2021, all potentially dilutive instruments outstanding would have anti-dilutive effects on per-share calculations for the periods.

Therefore, basic and diluted net loss per share were the same for all periods presented as reflected below.

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net loss $ ( 16,302 ) $ ( 12,367 ) $ ( 29,522 ) $ ( 27,039 )

1 unchanged sentence

Loss per common share – basic and diluted $ ( 0.36 ) $ ( 0.33 ) $ ( 0.68 ) $ ( 0.74 )

As of March 31, 2022 and 2021, respectively, the Company’s potentially dilutive instruments included 5,259,847 and 3,905,192 options to purchase common shares and 166,700 and 13,491 unvested restricted stock units that were excluded from the computation of diluted weighted average shares outstanding because these securities had an antidilutive impact due to the losses reported.

Similarly excluded as of March 31, 2022 and 2021, were potentially dilutive warrants for the purchase of 1,714,429 for both periods.

As of June 30, 2022 and 2021, respectively, the Company’s potentially dilutive instruments included 5,284,447 and 4,431,267 options to purchase common shares and 169,950 and 7,757 unvested restricted stock units that were excluded from the computation of diluted weighted average shares outstanding because these securities had an antidilutive impact due to the losses reported.

Similarly excluded as of June 30, 2022 and 2021, were potentially dilutive warrants for the purchase of 10,564,429 and 1,571,429 shares of common stock for the respective periods.

Share-Based Compensation

The Company recognized share-based compensation in its Condensed Consolidated Statements of Operations and Comprehensive Loss during 2022 and 2021 as follows:

Table of Content

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Manufacture and supply $ 45 $ 71 $ 93 $ 153

8 unchanged sentences

Share-Based Compensation Equity Awards

The following tables provide information about the Company’s restricted stock unit and stock option activity during the three-month period ended March 31, 2022:

The following tables provide information about the Company’s restricted stock unit and stock option activity during the six-month period ended June 30, 2022:

Table of Content

Restricted Stock Unit Awards (RSUs):

5 unchanged sentences

Forfeited ( 22 ) $ 2.24

Unvested as of March 31, 2022 166 $ —

Grant date fair value of shares vested during the period $ —

Unrecognized compensation costs as of March 31, 2022 $ 377

Unvested as of June 30, 2022 170 $ 2.39

Vested and expected to vest as of June 30, 2022 154 $ 2.39

Stock Option Awards:

5 unchanged sentences

Exercised, Forfeited, Expired ( 112 ) $ 5.96

Outstanding as of March 31, 2022 5,260 $ 6.27

Vested and expected to vest as of March 31, 2022 5,047 $ 6.39

Exercisable as of March 31, 2022 2,496 $ 9.25

The fair values of stock options granted during the three months ended March 31, 2022 were estimated using the Black-Scholes pricing model based on the following assumptions:

Outstanding as of June 30, 2022 5,284 $ 6.14

Vested and expected to vest as of June 30, 2022 5,155 $ 6.22

Exercisable as of June 30, 2022 3,461 $ 7.65

As of June 30, 2022, $ 334 of unrecognized compensation expense related to unvested restricted stock units is expected to be recognized over a weighted average period of 2.71 years from the date of grant.

The fair values of stock options granted during the six months ended June 30, 2022 were estimated using the Black-Scholes pricing model based on the following assumptions:

Expected dividend yield — %

2 unchanged sentences

Risk-free interest rate 2.0 % - 3.2 %

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2022 was $ 2.03 .

During the three-month period ended March 31, 2022, stock options were granted with an exercise price of $ 2.55 and

The weighted average grant date fair value of stock options granted during the six months ended June 30, 2022 was $ 1.88 .

During the six-month period ended June 30, 2022, stock options were granted with an exercise price ranging from $ 0.71 to $ 2.55 and accordingly, given the Company’s share price of $ 0.64 at June 30, 2022, the intrinsic value provided by certain shares granted during this period was de minimus.

As of June 30, 2022, $ 2,866 of unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted average period of 1.88 years from the date of grant.

Employee Stock Purchase Plan

The Company's Employee Stock Purchase Plan ("ESPP"), as amended and restated effective as of January 1, 2019, features two six-month offering periods per year, running from January 1 to June 30 and July 1 to December 31.

Under the ESPP, employees may elect to purchase the Company’s common stock at the lower of 85 % of the fair value of shares on either the first or last day of the offering period.

During the six months ended June 30, 2022 and 2021, respectively, 23,884 and 19,270 shares were purchased and issued through the ESPP at total discounts of $ 2 and $ 11 .

Table of Content

accordingly, given the Company’s share price of $ 2.61 at March 31, 2022, the intrinsic value provided by certain shares granted during this period was de minimus.

As of March 31, 2022, $ 5,098 of unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted average period of 2.07 years from the date of grant.

As of March 31, 2022, $ 377 of unrecognized compensation expense related to unvested restricted stock units is expected to be recognized over a weighted average period of 2.94 years from the date of grant.

The Company has accounted for income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts and respective tax bases of existing assets and liabilities, as well as net operating loss carryforwards and research and development credits.

1 unchanged sentence

The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items.

For the three months ended March 31, 2022 and 2021, the Company recorded no income tax benefit from its pretax losses of $ 13,220 and $ 14,672 .

The primary factor impacting the effective tax rate for the three and three months ended March 31, 2022 is the anticipated full year operating loss which will require full valuation allowances against any associated net deferred tax assets.

For the three months ended June 30, 2022 and 2021, the Company recorded no income tax benefit from its pretax losses of $ 16,302 and $ 12,367 .

Similarly for the six months ended June 30, 2022 and 2021, the Company recorded no income tax benefit from its pretax losses of $ 29,522 and $ 27,039 .

The primary factor impacting the effective tax rate for the three and six months ended June 30, 2022 is the anticipated full year operating loss which will require full valuation allowances against any associated net deferred tax assets.

Contingencies

21 unchanged sentences

On January 8, 2020, the Court entered a stipulated order of non-infringement of the ’305 patent based on the Court’s claim construction ruling, and the Company and Indivior preserved the right to appeal the claim construction ruling.

The Company is not able to determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or losses, if any, in this matter .

On June 28, 2022, pursuant to a settlement agreement between the parties, the Court entered a Stipulation and Order of Dismissal, dismissing all claims and counterclaims with prejudice.

Indivior Inc., Indivior UK Ltd., and Aquestive Therapeutics, Inc.

9 unchanged sentences

Alvogen Pine Brook LLC ,

Table of Content

On September 14, 2017, Indivior initiated a lawsuit against Alvogen Pine Brook LLC (“Alvogen”) asserting infringement of the ’454 patent.

6 unchanged sentences

On November 21, 2019, Alvogen filed an amended answer and counterclaims asserting monopolization, attempted monopolization, and conspiracy to monopolize against us and Indivior under federal and New Jersey antitrust laws.

The court denied the Company's motion to dismiss Alvogen’s counterclaims on August 24, 2020.

Table of Content

denied the Company's motion to dismiss Alvogen’s counterclaims on August 24, 2020.

On November 2, 2020, Alvogen filed a second amended answer and counterclaims, removing its allegations of monopolization and attempted monopolization against us and asserting only conspiracy to monopolize against us.

44 unchanged sentences

Indivior Inc., Reckitt Benckiser Healthcare (UK) Ltd., Indivior PLC, and MonoSol Rx, LLC ,

Table of Content

On September 22, 2016, forty-one states and the District of Columbia, or the States, brought a lawsuit against Indivior and us in the U.S.

3 unchanged sentences

While the Company was not named as a defendant in the original Suboxone MDL cases, the action brought by the States alleges that the Company participated in an antitrust conspiracy with Indivior in connection with Indivior’s launch of Suboxone Sublingual Film and engaged in related conduct in violation of federal and state antitrust law.

The Company moved to dismiss the States’ conspiracy claims, but by order dated October 30, 2017, the Court denied the Company's motion to dismiss.

The Company moved to dismiss the States’ conspiracy claims, but by order dated October 30, 2017, the Court

Table of Content

denied the Company's motion to dismiss.

The Company filed an answer denying the States’ claims on November 20, 2017.

2 unchanged sentences

On March 8, 2021, Aquestive filed a motion for summary judgment, and briefing on summary judgment motions was completed on May 28, 2021.

The hearing on Aquestive’s motion for summary judgment will be held on May 18, 2022.

The hearing on Aquestive’s motion for summary judgment was held on May 18, 2022, and the parties are awaiting the Court’s ruling on the motion.

No trial date has yet been set.

37 unchanged sentences

The Second Amended Complaint also added a cause of action for Trade Libel.

On May 3, 2022, Aquestive filed a "demurer" challenge to the sufficiency of the

Table of Content

allegations of the Second Amended Complaint.

Oral argument on Aquestive's motion for attorney fees related to the anti-SLAPP motion and on the Second Amended Complaint and demurer challenge will be held on June 17, 2022.

The Company is not able to determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.

On May 3, 2022, Aquestive filed a "demurer" challenge to the sufficiency of the allegations of the Second Amended Complaint.

Oral argument on Aquestive's motion for attorney fees related to the anti-SLAPP motion and on the Second Amended Complaint and demurer challenge was held on June 17, 2022.

The Court entered an order granting Aquestive’s motion for attorney fees, awarding $ 156 and ordering Neurelis to pay the fees within 60 days of June 17, 2022.

The Court denied Aquestive’s demurrer and the parties are proceeding with discovery on the claims in the Second Amended Complaint.

No trial date has been set.

Company is not able to determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.

Neurelis IPR Litigation

Table of Content

In the first quarter of 2019, Aquestive requested institution of three Inter Partes Reviews (“IPRs”) against Neurelis’ Orange Book method of treatment patent, US Patent No.

26 unchanged sentences

On April 4, 2022, the plaintiff filed an amended complaint asserting the same claims against the same defendants.

The Company filed a motion to dismiss the amended complaint on April 25, 2022.

Plaintiff’s opposition brief is due May 25, 2022, and the Company’s reply brief is due June 27, 2022.

The Company filed a motion to dismiss the amended complaint on April 25, 2022, which became fully briefed as of June 27, 2022.

The Company is not able to determine or predict the ultimate outcome of this proceeding or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.

Subsequent Events

Continued Utilization of the At-The-Market Facility

The Company continued utilization of its At-The-Market facility from April 1 through April 30, 2022 and sold 318,156 shares which generated net proceeds of approximately $ 505 .

Lincoln Park Purchase Agreement

On April 12, 2022, the Company entered into a purchase agreement ("Lincoln Park Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), which provides that, upon the terms and subject to the conditions and limitations set forth in the Lincoln Park Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park up to $ 40,000 worth of shares of its common stock from time to time over the 36-month term of the Lincoln Park Purchase Agreement.

Concurrently with entering into the Lincoln Park Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park, pursuant to which the Company agreed to register the sale of the shares of its common stock that have been and may be issued to Lincoln Park under the Lincoln Park Purchase Agreement pursuant to its existing shelf registration statement on Form S-3 or a new registration statement.

Lincoln Park has covenanted under the

Nasdaq Stock Market Notification

On July 14, 2022, the Company received a notice from the Nasdaq Stock Market (“Nasdaq”) that the Company is not in compliance with Nasdaq’s Listing Rule 5450(a)(1), as the minimum bid price of the Company’s common stock has been below $1.00 per share for 30 consecutive business days (the “Minimum Bid Price Requirement”).

The notification of noncompliance has no immediate effect on the listing or trading of the Company’s common stock on The Nasdaq Global Market.

The Company has 180 calendar days, or until January 10, 2023, to regain compliance with the Minimum Bid Price Requirement.

To regain compliance, the minimum bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-calendar day grace period.

In the event the Company does not regain compliance with the Minimum Bid Price Requirement by January 10, 2023, the Company may be eligible for an additional 180-calendar day compliance period if it elects to transfer to The Nasdaq Capital Market to take advantage of the additional compliance period offered on that market.

If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the compliance period (or the second compliance period, if applicable), the Company’s common stock will become subject to delisting.

In the event that the Company receives notice that its common stock is being delisted, the Nasdaq listing rules permit the Company to appeal a delisting determination by the Staff to a hearings panel.

The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement, including initiating a reverse stock split.

However, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules.

Table of Content

Lincoln Park Purchase Agreement not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company's common stock.

Since inception through April 30, 2022, the Company issued 403,982 shares which generated sale proceeds of approximately $ 707 in connection with the Lincoln Park Purchase Agreement .

Haisco Receivable

The Company entered into a License, Development and Supply Agreement with Haisco Pharmaceutical Group Co., Ltd., a Chinese limited company listed on the Shenzhen Stock Exchange ("Haisco") effective as of March 3, 2022 ("Haisco Agreement") pursuant to which Aquestive granted Haisco an exclusive license to develop and commercialize Exservan™ (riluzole oral film) for the treatment of amyotrophic lateral sclerosis, or ALS (“Exservan) in China and Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China.

Pursuant to the Haisco License Agreement, Haisco has been appointed to serve as Aquestive’s agent for matters relating to the commercialization of Exservan in China, including obtaining approval to market and sell ("Marketing Authorization") Exservan in China .

Subsequent to the execution of the Haisco Agreement in March 2022, the Chinese equivalent of the FDA (the "NMPA") raised an issue regarding the named holder of the U.S.

New Drug Application (NDA) for Exservan in relation to the application for Marketing Authorization of Exservan in China.

It is not clear whether the NMPA will require that Aquestive be the holder of the NDA in order to approve the Marketing Authorization for Exservan in China, or whether the NMPA will find that Aquestive's qualifications as the exclusive licensor, manufacturer and innovator of Exservan will be sufficient for the NMPA to approve Aquestive as the drug sponsor for Exservan in China and grant the Marketing Authorization for Exservan in China.

Prior to entering into the Haisco Agreement, the Company had assigned the NDA for Exservan to another third-party in connection with a license agreement in the U.S.

for Exservan and is not currently the named holder of the NDA.

The Company is collaborating with Haisco to resolve this issue with the NMPA.

As a result of this issue, the Company has not received the $ 7,000 upfront payment due from Haisco under the Haisco Agreement and expects to agree with Haisco to extend the period of time under which Haisco is obligated to make said upfront payment consistent with the decision of the NMPA on this issue, or as otherwise agreed to by the Company and Haisco.

Effective as of July 7, 2022, the Company and Haisco amended the terms of the Haisco Agreement, pursuant to which Haisco Agreement Aquestive granted Haisco an exclusive license to develop and commercialize Exservan™ (riluzole oral film) for the treatment of amyotrophic lateral sclerosis, or ALS, in China and Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China.

The amendment provides that the due date of the $ 7,000 upfront payment due from Haisco under the Haisco Agreement will be the first to occur of:

(i) the date that Haisco receives an official written confirmation from the NMPA that the NMPA will receive and accept a Regulatory Approval Application with respect to Exservan in China that recognizes the Company as the MAH, and (ii) 21 business days after Haisco receives a copy of a written acknowledgement from the FDA that the U.S.

NDA for Exservan was transferred to the Company from a third-party licensee of Exservan in the United States.

Table of Content

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

What changed 10-Q

Item 1. Financial Statements