What changed in this filing

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Item 1. Financial Statements

2023-05-02 compared with 2022-11-01 · 287 added, 379 removed, 574 unchanged (54% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

2023 December 31,

29 unchanged sentences

Authorized 250,000,000 shares;

53,852,126 and 41,228,736 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

55,922,361 and 54,827,734 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 193,848 192,598

5 unchanged sentences

AQUESTIVE THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share data amounts)

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Revenues $ 11,134 $ 12,270

9 unchanged sentences

Interest and other income (expense), net 14,513 ( 3 )

Net loss before income taxes ( 12,536 ) ( 14,555 ) ( 42,058 ) ( 41,594 )

Loss on extinguishment of debt ( 353 ) —

Net income (loss) before income taxes 8,068 ( 13,220 )

Income taxes — —

Net loss $ ( 12,536 ) $ ( 14,555 ) $ ( 42,058 ) $ ( 41,594 )

Comprehensive loss $ ( 12,536 ) $ ( 14,555 ) $ ( 42,058 ) $ ( 41,594 )

Net loss per share - basic and diluted $ ( 0.23 ) $ ( 0.37 ) $ ( 0.90 ) $ ( 1.12 )

Weighted-average number of common shares outstanding - basic and diluted 53,424,922 39,224,863 46,828,218 37,297,892

Net income (loss) $ 8,068 $ ( 13,220 )

Comprehensive income (loss) $ 8,068 $ ( 13,220 )

Earnings (loss) per share attributable to common stockholders:

Basic (in dollars per share) $ 0.15 $ ( 0.32 )

Diluted (in dollars per share) $ 0.11 $ ( 0.32 )

Weighted average common shares outstanding:

Basic (in shares) 55,631,947 41,465,798

Diluted (in shares) 73,792,886 41,465,798

See accompanying notes to the condensed consolidated financial statements.

13 unchanged sentences

Share-based compensation expense — — 344 — 344

Other — — 1 ( 1 ) —

Net loss — — — ( 13,220 ) ( 13,220 )

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

Other — — ( 1 ) 1 —

Net loss — — — ( 16,302 ) ( 16,302 )

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

Common Stock issued under public equity offering 501,472 1 641 — 642

Costs of common stock issued under public equity offering — — ( 98 ) — ( 98 )

Share-based compensation expense — — 535 — 535

Vested restricted stock units 16,005 ( 8 ) ( 8 )

Other — — ( 1 ) — ( 1 )

Net loss — — — ( 12,536 ) ( 12,536 )

Balance at September 30, 2022 53,852,126 $ 54 $ 190,982 $ ( 298,855 ) $ ( 107,819 )

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Net Income — — — 8,068 8,068

Balance at March 31, 2023 55,922,361 56 193,848 ( 303,139 ) ( 109,235 )

Balance at December 31, 2021 41,228,736 $ 41 $ 174,621 $ ( 256,796 ) $ ( 82,134 )

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

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 )

Common Stock issued under public equity offering 1,509,818 1 6,221 — 6,222

Costs of common stock issued under public equity offering — — ( 135 ) — ( 135 )

Share-based compensation expense — — 1,900 — 1,900

Vested restricted stock units 5,185 — ( 9 ) — ( 9 )

Other — — 1 — 1

Net loss — — — ( 14,555 ) ( 14,555 )

Balance at September 30, 2021 40,083,245 $ 40 $ 167,466 $ ( 227,851 ) $ ( 60,345 )

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

Net loss $ ( 42,058 ) $ ( 41,594 )

Net income (loss) $ 8,068 $ ( 13,220 )

Adjustments to reconcile net loss to net cash used for operating activities:

11 unchanged sentences

Deferred revenue 4,874 7,602

Loans payable 675 —

Net cash used for operating activities 8,816 ( 14,482 )

1 unchanged sentence

Capital expenditures ( 2 ) ( 104 )

Additions to intangible assets ( 1,500 ) —

Net cash used for investing activities ( 2 ) ( 104 )

1 unchanged sentence

Proceeds from common stock issued under public equity offering, net 916 1,298

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

Proceeds from issuance and exercise of warrants 5,874 —

Proceeds from shares issued under employee stock purchase plan 15 76

Repayment of debt principal ( 9,086 ) —

Premium paid to retire debt ( 1,027 ) —

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Aquestive Therapeutics, Inc.

(together with its subsidiary, “Aquestive” or “the Company”) is a pharmaceutical company advancing current standards of care to solve patients’ problems through simplifying complex delivery methods.

The Company is developing pharmaceutical products to deliver complex molecules through alternative administrations to invasive and inconvenient standard of care therapies.

Aquestive has five licensed commercialized products which are marketed by our licensees in the U.S.

( together with its subsidiary, “ we ” , “Aquestive” or the “Company”) is a pharmaceutical company advancing medicines to solve patients' problems with current standards of care and provide transformative products to improve their lives.

The Company is developing pharmaceutical products that deliver complex molecules through alternative administrations to invasive and inconvenient standard of care therapies.

The Company has five licensed commercialized products which are marketed by its licensees in the U.S.

and around the world.

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The Company also collaborates with pharmaceutical companies to bring new molecules to market using proprietary, best-in-class technologies, like PharmFilm ® , and has proven drug development and commercialization capabilities.

The Company is advancing an early stage product pipeline for the treatment of severe allergic reactions, including anaphylaxis.

The Company is advancing a product pipeline for the treatment of severe allergic reactions, including anaphylaxis.

The Company has also developed a product pipeline focused on treating diseases of the central nervous system, or CNS.

The Company's production facilities are located in Portage, Indiana, and our corporate headquarters, sales and commercialization operations and primary research laboratory facilities are based in Warren, New Jersey.

The Company's production facilities are located in Portage, Indiana, and its corporate headquarters and primary research laboratory facilities are based in Warren, New Jersey.

(B) Equity Transactions

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On November 20, 2020, the Company began utilizing the ATM facility.

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

The 2019 Registration Statement expired under its terms on September 17, 2022.

On September 7, 2022, the Company filed a prospectus supplement to register the offer and sale of up to $ 35,000 worth of shares of Common Stock pursuant to the Amended Equity Distribution Agreement under a shelf registration statement on Form S-3 (Registration Statement No.

On March 26, 2021, the Company filed a prospectus supplement to offer up to an additional $ 50,000 worth of shares of Common Stock under the ATM (the "2021 Prospectus").

The 2019 registration statement covering the shares under the ATM expired under its terms on September 17, 2022.

On September 7, 2022, the Company filed a prospectus supplement to register the offer and sale of up to $ 35,000 worth of shares of Common Stock pursuant to the Amended Equity Distribution Agreement with Piper Sandler Companies (successor to Piper Jaffray & Co.) under a shelf registration statement on Form S-3 (Registration Statement No.

333-254775), or the 2021 Registration Statement, that was declared effective by the Securities and Exchange Commission (SEC) on April 5, 2021.

The Company discontinued using the 2021 Prospectus upon the filing of the prospectus supplement on September 7, 2022.

For the nine months ended September 30, 2022, the Company sold 1,906,350 shares of Common Stock under the ATM which provided net proceeds of approximately $ 3,017 after deducting commissions and other transaction costs of $ 237 .

For the nine months ended September 30, 2021, the Company sold 5,486,871 worth of shares of Common Stock under the ATM which provided net proceeds of approximately $ 24,592 after deducting commissions and other transaction costs of $ 1,068 .

This ATM facility has approximately $ 34,358 worth of shares of Common Stock available at September 30, 2022.

For the three months ended March 31, 2023, the Company sold 1,078,622 shares of Common Stock under the ATM which provided net proceeds of approximately $ 916 after deducting commissions and other transaction costs of $ 77 .

This ATM facility has approximately $ 32,422 worth of shares of Common Stock available at March 31, 2023.

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 .

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 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%.

The Lincoln Park Purchase Agreement contains an ownership limitation such that the Company will not issue, and Lincoln Park will not purchase, shares of Common Stock if it would result in Lincoln Park's beneficial ownership exceeding 9.99% of the Company's then outstanding Common Stock.

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 nine months ended September 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 .

In 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 Company did not sell shares in connection with the Lincoln Park Purchase Agreement in the first quarter of 2023.

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

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

1 unchanged sentence

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 Company used the net proceeds from the offering for general corporate purposes.

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

The pre-funded warrants were fully exercised in 2022 and no Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised during the three-months ended March 31, 2023.

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

The notification of noncompliance had no immediate effect on the listing or trading of the Company’s Common Stock on The Nasdaq Global Market.

The Company had 180 calendar days, or until June 28, 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.

On April 13, 2023, the Company received a notice from Nasdaq informing the Company that it had regained compliance with Nasdaq's Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market, as the minimum bid price of the Company’s Common Stock had met or exceeded $1.00 per share for a minimum of ten consecutive business days during this 180-day calendar period.

See Note 20, Subsequent Events for details.

(D) Basis of Presentation

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

7 unchanged sentences

The accompanying financial statements reflect certain reclassifications from previously issued financial statements to conform to the current presentation.

The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited condensed financial statements.

The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited condensed consolidated financial statements.

Any reference in these notes to applicable guidance refers to the authoritative U.S.

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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 September 30, 2022:

Recent Accounting Pronouncements Adopted as of March 31, 2023:

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.

1 unchanged sentence

The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries).

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

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

The Company adopted the new guidance on January 1, 2023.

The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

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In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.

The accounting standard update was issued to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange.

The Company adopted the new guidance on January 1, 2023.

The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements Not Adopted as of March 31, 2023:

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) :

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

The accounting standard update was issued to clarify and reduce diversity in an issuer’s accounting for

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modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange.

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

Early adoption is permitted.

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

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

4 unchanged sentences

Risks and Uncertainties

These consolidated financial statements have been prepared in accordance with U.S.

GAAP assuming the Company will continue as a going concern.

The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

However, substantial doubt about the Company’s ability to continue as a going concern exists.

The Company assesses liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities.

The Company’s cash requirements for 2023 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 September 30, 2022, the Company had $ 18,649 of cash and cash equivalents.

The Company has experienced a history of net losses.

The Company's accumulated deficits totaled $ 298,855 as of September 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").

However, the Company will require additional liquidity to continue its operations over the next 12 months.

As of March 31, 2023, the Company had $ 26,882 of cash and cash equivalents.

The Company has experienced a history of net losses in prior periods.

The Company's accumulated deficits totaled $ 303,139 as of March 31, 2023.

The net losses and accumulated deficits were partially offset by gross margins from 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 12.5 % Senior Secured Notes.

The Company began utilizing its ATM facility in November 2020.

Since inception to September 30, 2022, the Company sold 9,387,769 shares of Common Stock which generated net cash proceeds of approximately $ 38,850 , net of commissions and other transaction costs of $ 2,001 .

For the nine months ended September 30, 2022, the Company sold 1,906,350 shares of Common Stock which provided net proceeds of approximately $ 3,017 , net of commissions and other transaction costs of $ 237 .

This ATM facility has approximately $ 34,358 worth of shares of Common Stock available at September 30, 2022.

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

The Company's on-going business, existing cash and equivalents, expense management activities as well as access to the equity capital markets, including through its ATM facility and under the Lincoln Park Purchase Agreement, provide near term funding opportunities for the Company.

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.

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.

Since inception to March 31, 2023, the Company sold 11,420,579 shares of Common Stock which generated net cash proceeds of approximately $ 40,656 , net of commissions and other transaction costs of $ 2,130 .

For the three months ended March 31, 2023, the Company sold 1,078,622 shares of Common Stock which provided net proceeds of approximately $ 916 , net of commissions and other transaction costs of $ 77 .

This ATM facility has approximately $ 32,422 worth of shares of Common Stock available at March 31, 2023.

The Company is subject to the SEC general instructions of Form S-3 known as the "baby shelf rules." Under these instructions, the amount of funds the Company can raise through primary public offerings of securities in any 12-month period using its registration statement on Form S-3 is limited to one-third of the aggregate market value of the shares of the Company’s Common Stock held by non-affiliates.

Therefore, the Company will be limited in the amount of proceeds it is able to raise by selling shares of its Common Stock using its Form S-3, including under the ATM facility and the Lincoln Park Purchase Agreement, until such time as its public float exceeds $75 million.

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While the Company’s ability to execute its business objectives and achieve profitability over the longer term cannot be assured, the Company's on-going business, existing cash, expense management activities, including, but not limited to potentially ceasing nearly all R&D activities, as well as access to the equity capital markets, including through its ATM facility and under the Lincoln Park Purchase Agreement, provide near term liquidity for the Company to fund its operating needs, including making the principal and interest payments on the 12.5 % Senior Secured Notes, for at least the next twelve months as it continues to execute its business strategy.

See Note 13, 12.5 % Senior Secured Notes and Loans Payable for details.

Revenues and Trade Receivables, Net

The Company’s revenues include (i) sales of manufactured products pursuant to contracts with commercialization licensees, (ii) sales of its proprietary clobazam-based Sympazan oral film product, (iii) license and royalty revenues and (iv) co-development and research fees generally in the form of milestone payments.

The Company’s revenues include (i) sales of manufactured products pursuant to contracts with commercialization licensees, (ii) license and royalty revenues, and (iii) co-development and research fees generally in the form of milestone payments.

The Company recognizes revenue to reflect the transfer of 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.

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transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing when, or as, an entity satisfies a performance obligation.

To achieve this core principle, a five-step model is applied that includes (1) identifying the contract with a customer, (2) identifying the performance obligation in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing when, or as, an entity satisfies a performance obligation.

Performance Obligations

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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 assesses the goods promised in its contracts with customers and identifies 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.

The Company's performance obligations consist mainly of transferring of goods and services identified in the contracts, purchase orders or invoices.

The Company's performance obligations consist mainly of transferring goods and services identified in the contracts, purchase orders or invoices.

Manufacture and supply revenue – this revenue is derived from products manufactured exclusively for specific customers according to their strictly-defined specifications, subject only to specified quality control inspections.

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At the time of sale, estimates for various revenue allowances are recorded based on historical trends and judgmental estimates.

For sales of Sympazan, returns allowances and prompt pay discounts are estimated based on contract terms and historical return rates, if available, and these estimates are recorded as a reduction of receivables.

For sales of Sympazan (prior to its outlicensing by the Company to Otter Pharmaceuticals, LLC in October 2022), returns allowances and prompt pay discounts are estimated based on contract terms and historical return rates, if available, and these estimates are recorded as a reduction of receivables.

Similarly determined estimates are recorded relating to wholesaler service fees, co-pay support redemptions, Medicare, Medicaid and other rebates, and these estimates are reflected as a component of accrued liabilities.

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Royalty revenue is estimated and recognized when sales under supply agreements with commercial licensees are recorded, absent any contractual constraints or collectability uncertainties.

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Co-development and Research Fees – co-development and research fees are earned through performance of specific tasks, activities or completion of stages of development defined within a contractual development or feasibility study agreement with a customer.

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If the milestone payments relate to future development, the timing of recognition depends upon historical experience and the significance a third party has on the outcome.

For milestone payments to be received upon the achievement

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of a sales threshold, the revenue from the milestone payments is recognized at the later of when the actual sales are incurred or the performance obligation to which the sales relate to has been satisfied.

For milestone payments to be received upon the achievement of a sales threshold, the revenue from the milestone payments is recognized at the later of when the actual sales are incurred or the performance obligation to which the sales relate to has been satisfied.

Contract Assets - in certain situations, customer contractual payment terms provide for invoicing in arrears.

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

As of September 30, 2022, and December 31, 2021, such contract assets were $ 2,150 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 March 31, 2023, and December 31, 2022, such contract assets were $ 3,507 and $ 2,139 , 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.

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

As of September 30, 2022, and December 31, 2021, such contract liabilities were $ 18,396 and $ 7,887 , respectively.

As of March 31, 2023, and December 31, 2022, such contract liabilities were $ 37,804 and $ 32,930 , respectively.

The Company’s revenues were comprised of the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Manufacture and supply revenue $ 9,762 $ 9,171

3 unchanged sentences

Total revenues $ 11,134 $ 12,270

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Disaggregation of Revenue

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Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

United States $ 8,165 $ 11,081

1 unchanged sentence

Total revenues $ 11,134 $ 12,270

Ex-United States revenues are derived primarily from Indivior Inc.

Ex-United States revenues are derived primarily from Hypera Pharma ("Hypera") and Indivior Inc.

("Indivior") for product manufactured for markets outside of the United States.

Trade and other receivables, net consist of the following:

September 30,

2023 December 31,

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Trade and other receivables, net $ 7,551 $ 4,704

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

September 30,

2023 December 31,

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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 nine months ended September 30, 2022:

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The following table provides a summary of activity with respect to sales-related allowances and accruals for the three months ended March 31, 2023:

Total Sales-Related Allowances

Balance at December 31, 2022 $ 669

Provision 1,121

Payments / credits ( 49 )

Balance at September 30, 2022 $ 731

Total reductions of gross product sales from sales-related allowances and accruals were $ 1,121 for the nine months ended September 30, 2022.

Reclassifications $ ( 582 )

Balance at March 31, 2023 $ 38

Total reductions of gross product sales from sales-related allowances and accruals were $ 0 for the three months ended March 31, 2023.

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 $ 731 and $ 2,229 , respectively, as of September 30, 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 $ 38 and $ 793 , respectively, as of March 31, 2023 and $ 669 and $ 1,012 , respectively, as of December 31, 2022.

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 nine months ended September 30, 2022, Indivor exceeded the 10% threshold for revenue and represented approximately 75 % of total revenue.

As of September 30, 2022, Indivior and Cardinal Health Inc.

exceeded the 10% threshold for outstanding receivables and represented 60 % and 12 %, respectively, of outstanding receivables.

For the nine months ended September 30, 2021, Indivior exceeded the 10% threshold for revenue and represented approximately 73 % of total revenue.

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

which represented 51 % and 12 %, respectively, of total trade and other receivables.

For the three months ended March 31, 2023, Indivior and Hypera exceeded the 10% threshold for revenue and represented approximately 77 % and 14 % of total revenue, respectively.

As of March 31, 2023, Indivior and Hypera exceeded the 10% threshold for outstanding receivables and represented 68 % and 11 %, respectively, of outstanding receivables.

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

As of December 31, 2022, Indivior exceeded the 10% threshold for outstanding receivables and represented 80 % of total trade and other receivables.

Material Agreements

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was later succeeded to in interest by Indivior Inc.

Pursuant to the Indivior License Agreement, the

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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.

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.

Additionally, the Company is required to obtain Active Pharmaceutical Ingredients ("API") for the manufacture of Suboxone directly from Indivior.

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The Indivior License Agreement provides for payment by Indivior of a purchase price per unit that is subject to adjustment based on the Company’s ability to satisfy minimum product thresholds.

In addition to the purchase price for the Suboxone supplied, Indivior is required to make certain single digit percentage royalty payments tied to net sales (as provided for in the Indivior License Agreement) in each of the United States and in the rest of the world subject to annual maximum amounts and limited to the life of the related United States or international patents.

In 2012, Indivior exercised its right to buy out its future royalty obligations in the United States under the Indivior License Agreement.

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

In addition to the purchase price for the Suboxone supplied, Indivior is required to make certain single digit percentage royalty payments tied to net sales value (as provided for in the Indivior License Agreement) outside of the U.S., subject to annual maximum amounts and limited to the life of the related patents.

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

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The initial term of the Indivior License Agreement was seven years from the commencement date.

Thereafter, the Indivior License Agreement automatically renews for successive one-year periods, unless either party provides the other with written notice of its intent not to renew at least one year prior to the expiration of the initial or renewal term.

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the Indivior License Agreement automatically renews for successive one-year periods, unless either party provides the other with written notice of its intent not to renew at least one year prior to the expiration of the initial or renewal term.

Effective as of March 2, 2023, the Company entered into Amendment No.

11 to the Indivior License Agreement (the “Indivior Amendment”).

The Indivior Amendment was entered into for the primary purpose of amending the Agreement as follows:

(i) extending the term of the Agreement until August 16, 2026 and thereafter providing for automatic renewal terms of successive one year periods unless Indivior delivers notice to the Company, at least twelve months prior to the expiration of the then current term, of Indivior’s intent not to renew, subject to the earlier termination rights of the parties under the Agreement, and providing that the Agreement will not automatically renew for any renewal term beginning after the expiration of the last to expire of the product patents;

and (ii) agreeing to transfer pricing and payment terms for supplied product.

Supplemental Agreement with Indivior

On September 24, 2017, the Company entered into an agreement with Indivior (the "Indivior Supplemental Agreement").

On September 24, 2017, the Company entered into an agreement with Indivior, or the Indivior Supplemental Agreement.

Pursuant to the Indivior Supplemental Agreement, the Company conveyed to Indivior all existing and future rights in the settlement of various ongoing patent enforcement legal actions and disputes related to the Suboxone product.

The Company also conveyed to Indivior the right to sublicense manufacturing and marketing capabilities to enable an Indivior licensed generic buprenorphine product to be produced and sold by parties unrelated to Indivior or Aquestive.

Under the Indivior Supplemental Agreement, the Company is entitled to receive certain payments from Indivior commencing on the date of the agreement through January 1, 2023.

Under the Indivior Supplemental Agreement, the Company was entitled to receive certain payments from Indivior commencing on the date of the Indivior Supplemental Agreement through January 1, 2023.

Once paid, all payments made under the Indivior Supplemental Agreement are non-refundable.

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Reddy’s Labs and Alvogen, the Company received an aggregate of $ 40,750 from Indivior under the Indivior Supplemental Agreement.

Further payments under the Indivior Supplemental Agreement are suspended until adjudication of related patent infringement litigation is finalized.

If such litigation is successful, in addition to the amounts already received as described in the foregoing, the Company may receive up to an additional $ 34,250 , consisting of (i) up to $ 33,000 in the aggregate from any combination of (a) performance or event-based milestone payments and (b) single digit percentage royalties on net revenue earned by Indivior on sales of Suboxone and (ii) an additional $ 1,250 that was earned through the issuance of additional process patent rights to the Company.

The aggregate payments under this Indivior Supplemental Agreement are capped at $ 75,000 .

All payments made by Indivior to the Company pursuant to the Indivior Supplemental Agreement are in addition to, and not in place of, any amounts owed by Indivior to the Company pursuant to the Indivior License Agreement.

Indivior’s payment obligations under the Indivior Supplemental Agreement are subject to certain factors affecting the market for Suboxone and may terminate prior to January 1, 2023 in the event certain contingencies relating to that market occur.

Further payments under the Indivior Supplemental Agreement were suspended until adjudication of related patent infringement litigation is finalized.

As a result of the settlement and dismissal of all claims under the lawsuit with Dr.

Reddy’s Labs on June 28, 2022, no further payments are due to the Company under the Indivior Supplemental Agreement.

See Note 19, Contingencies for details.

All payments made by Indivior to the Company pursuant to the Indivior Supplemental Agreement were in addition to, and not in place of, any amounts owed by Indivior to the Company pursuant to the Indivior License Agreement.

License Agreement with Sunovion Pharmaceuticals, Inc.

On April 1, 2016, the Company entered into a license agreement with Cynapsus Therapeutics Inc.

(the "Sunovion License Agreement").

Cynapsus Therapeutics was later succeeded to in interest by Sunovion Pharmaceuticals, Inc.

("Sunovion").

Pursuant to the Sunovion License Agreement, Sunovion obtained an exclusive, worldwide license (with the right to sub-license) to certain intellectual property, including existing and future patents and patent applications, covering all oral films containing apomorphine for the treatment of off episodes in Parkinson’s disease patients.

Sunovion used this intellectual property to develop its apomorphine product KYNMOBI ® , which was approved by the United States Food and Drug Administration (FDA) on May 21, 2020 and commercially launched by Sunovion in September 2020.

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.

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

In addition to the upfront payment of $ 5,000 , the Company has also earned an aggregate of $ 17,000 in connection with specified regulatory and development milestones in the United States and Europe (the “Initial Milestone Payments”).

As a result of the Monetization Agreement, the Company is no longer entitled to receive the remaining contingent royalty or milestone payments related to net sales thresholds of KYNMOBI.

During the second quarter of 2020, the Company recorded minimum royalty revenue of $ 8,000 for minimum royalties which was reflected in License and royalty revenue.

(which was later succeeded to in interest by Sunovion Pharmaceuticals, Inc.), referred to as the Sunovion License Agreement, pursuant to which Sunovion obtained an exclusive, worldwide license (with the right to sub-license) to certain intellectual property, including existing and future patents and patent applications, covering all oral films containing apomorphine for the treatment of off episodes in Parkinson’s disease patients.

Sunovion used this intellectual property to develop its apomorphine product KYNMOBI®, which was approved by the FDA on May 21, 2020.

This approval triggered Sunovion's obligation to remit a payment of $ 4,000 due on the earlier of:

(a) the first day of product availability at a pharmacy in the United States;

or (b) within six months of FDA approval of the product.

This amount was received as of September 30, 2020 and was included in License and royalty revenues for the twelve months ended December 31, 2020.

Effective March 16, 2020, the Company entered into a first amendment (the "First Amendment") to the Sunovion License Agreement.

The First Amendment provides for the following:

(i) inclusion of the United Kingdom and any other country currently in the European Union (EU) that later withdraws as a member country of the EU for purpose of determining the satisfaction of the condition triggering the obligation to pay the third milestone due under the Sunovion License Agreement, (ii) extension of the date after which Sunovion has the right to terminate the Sunovion License Agreement for convenience from December 31 2024 to March 31, 2028, (iii) modification of the effective inception date of the first minimum annual royalty due from Sunovion to the Company from January 1, 2020 to April 1, 2020, and (iv) modification of the termination provisions to reflect the Company's waiver of the right to terminate the Sunovion License Agreement in the event that KYNMOBI was not commercialized by January 1, 2020.

The Sunovion License Agreement will continue until terminated by Sunovion in accordance with the termination provisions of the First Amendment.

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

The Amendment was entered into for the primary purpose of amending the Sunovion License Agreement as follows:

(i) including the United Kingdom and any other country currently in the European Union (EU) which later withdraws as a member country in the EU for purpose of determining the satisfaction of the condition triggering the obligation to pay the third milestone due under the Sunovion License Agreement, (ii) extending the date after which Sunovion has the right to terminate the Sunovion License Agreement for convenience from December 31, 2024 to March 31, 2028, (iii) modifying the effective inception date of the first minimum annual royalty due from Sunovion to the Company form January 1, 2020 to April 1, 2020, and (iv) modifying the termination provision to reflect the Company's waiver of the right to terminate the Sunovion License Agreement in the event that KYNMOBI was not commercialized by January 1, 2020.

This Sunovion License Agreement will continue until terminated by Sunovion in accordance with the termination provisions of the Amendment to the Sunovion License Agreement.

The Sunovion License Agreement continues (on a country-by-country basis) until the expiration of all applicable licensed patents unless earlier terminated under the termination provisions contained therein.

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.

Effective as of July 23, 2021, the Company entered into a Third Amendment to the Sunovion License Agreement for the purpose of clarifying the definition of the term "Field" and certain sublicense rights and obligations of the parties under the Sunovion License Agreement, including the rights of European sublicensees upon termination of the Sunovion License Agreement.

On October 23, 2020, the Company amended the Sunovion License Agreement to clarify the parties' agreement with respect to certain provisions in the Sunovion License Agreement, specifically the date after which Sunovion has the right to terminate the Sunovion License Agreement and the rights and obligations of the parties regarding the prosecution and maintenance of the Company's patents covered under the Sunovion License Agreement.

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

With the Monetization Agreement entered into on November 3, 2020 relating to KYNMOBI as described in the paragraph below, we are no longer entitled to receive any payments under the Sunovion License Agreement.

Purchase and Sale Agreement with an affiliate of Marathon Asset Management ("Marathon")

On November 3, 2020, the Company entered into a Purchase and Sale Agreement (the "Monetization Agreement") with MAM Pangolin Royalty, LLC, an affiliate of Marathon Asset Management ("Marathon").

KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, received approval from the FDA on May 21, 2020.

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 September 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 September 30, 2022, the Company may not receive any of the additional aggregate contingent payments under the Monetization agreement.

On November 3, 2020, we entered into a Purchase and Sale Agreement (the "Monetization Agreement") with MAM Pangolin Royalty, LLC, an affiliate of Marathon Asset Management ("Marathon").

Under the terms of the Monetization Agreement, we sold to Marathon all of our contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI®, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, which received approval from the FDA on May 21, 2020.

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

We have received an aggregate amount of $ 50,000 through March 31, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional 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 public forecast by Sunovion of estimated KYNMOBI sales as of March 31, 2023, the Company likely will not receive any of the additional contingent payments under the Monetization Agreement.

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

Agreement to Terminate CLA with KemPharm

In March 2012, the Company entered into an agreement with KemPharm, Inc.

(“KemPharm”), to terminate a Collaboration and License Agreement entered into by the Company and KemPharm in April 2011.

Under the termination arrangement, the Company has the right to participate in any and all value that KemPharm may derive from the commercialization or any other monetization of KP-415 and KP-484 compounds or their derivatives.

Among these monetization transactions are those related to any business combinations involving KemPharm and collaborations, royalty arrangements, or other transactions from which KemPharm may realize value from these compounds.

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

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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.

Agreement to Terminate CLA with Zevra Therapeutics, Inc.

(formerly KemPharm, Inc.)

In March 2012, the Company entered into an agreement with Zevra Therapeutics, Inc.

(formerly KemPharm, Inc.) (“Zevra”), to terminate a Collaboration and License Agreement entered into by the Company and Zevra in April 2011.

Under this termination arrangement, the Company has the right to participate in any and all value that Zevra may derive from the commercialization or any other monetization of Zevra's KP-415 and KP-484 compounds or their derivatives.

Among these monetization transactions are those related to any business combinations involving Zevra and collaborations, royalty arrangements, or other transactions from which Zevra may realize value from these compounds.

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, 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.

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 (the "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.

Under the terms of the Haisco Agreement, Aquestive will serve as the exclusive sole manufacturer and supplier for Exservan in China.

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

Under the Haisco Agreement, as amended, the Company received a $ 7,000 upfront cash payment in September 2022, and will receive regulatory milestone payments, receive double-digit royalties on net sales of Exservan in China, and earn manufacturing revenue upon the sale of Exservan in China.

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 the Company's Board of Directors, effective May 17, 2022.

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

In connection with his departure, Mr.

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

Kendall's execution and delivery of a customary release of claims:

Kendall's compliance with a customary release of claims entered into at the time:

(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;

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and (d) monthly severance payments of $ 88 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;

(v) accelerated vesting of unvested outstanding equity awards, with options remaining exercisable for the duration of the stated

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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.

Kendall served 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 per month.

Kendall received a consulting fee of $ 10 per month.

Licensing and Supply Agreement with Atnahs Pharma UK Limited

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Under the Pharmanovia Agreement, Pharmanovia will lead the regulatory and commercialization activities for Libervant in the Territory and the Company will serve as the exclusive sole manufacturer and supplier of Libervant in the Territory.

Pursuant to the Pharmanovia Agreement, the Company received $ 3,500 upon agreement execution and will receive additional milestone payments upon the occurrence of certain conditions set forth in the Pharmanovia Agreement, additional milestone payments and profit shares, as well as manufacturing fees and royalty fees through the expiration of the Pharmanovia Agreement.

Pursuant to the Pharmanovia Agreement, the Company received $ 3,500 upon agreement execution and, upon the occurrence of certain conditions set forth in the Pharmanovia Agreement, will receive additional milestone payments and profit shares, as well as manufacturing fees and royalty fees through the expiration of the Pharmanovia Agreement.

Effective March 27, 2023, the Company amended the Pharmanovia Agreement (the "Pharmanovia Amendment") to expand the scope of territory to cover the rest of the world, excluding US, Canada and China.

Under the Pharmanovia Amendment, Pharmanovia will be responsible for seeking appropriate regulatory approval in the expanded territories, which includes Latin America, Africa and Asia Pacific.

Pursuant to the terms of the Pharmanovia Amendment, the Company received a non-refundable payment of $ 2,000 from Pharmanovia in connection with the Pharmanovia Amendment execution.

Licensing Agreement with Assertio Holdings, Inc.

Effective October 26, 2022, the Company entered into a License Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio, to license Sympazan ® (clobazam) oral film for the adjunctive treatment of seizures associated with Lennox‐Gastaut syndrome in patients aged two years of age and older (the "Assertio Agreement").

Under the terms of the Assertio Agreement, the Company granted an exclusive, worldwide license of its intellectual property for Sympazan to Assertio during the term of the Assertio License Agreement for an upfront payment of $ 9,000 .

In addition, Aquestive received a $ 6,000 milestone payment subsequent to Aquestive's receipt of a notice of allowance from the United States Patent and Trademark Office (PTO) of the Company's patent application U.S.

16/561,573, and payment by the Company of the related allowance fee.

The Company received the notice of allowance from the PTO and paid the related allowance fee on October 27, 2022.

Further, under the Assertio Agreement, the Company will receive royalties from Assertio for the sale of the product through the expiration of the Assertio Agreement.

The Company also entered into a long-term supply agreement with Assertio for Sympazan pursuant to which the Company is the exclusive sole worldwide manufacturer and supplier of the product and will receive manufacturing fees from Assertio for the product through the expiration of such supply agreement.

Financial Instruments – Fair Value Measurements

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• Level 1 — Observable quoted prices in active markets for identical assets or liabilities.

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

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The carrying amounts reported in the balance sheets for trade and other receivables, prepaid and other current assets, accounts payable and accrued expenses, and deferred revenue approximate their fair values based on the short-term maturity of these assets and liabilities.

The Company granted warrants to certain note holders in connection with its debt repayment and debt refinancing during 2020 and 2019, respectively.

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The Company granted warrants to certain noteholders in connection with its debt repayment and debt refinancing during 2020 and 2019, respectively.

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, Valuation of Privately-Held Company Equity Securities Issued as Compensation.

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The components of Inventory, net are as follows:

September 30,

2023 December 31,

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Total inventory, net $ 6,981 $ 5,780

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Property and Equipment, Net

Lives September 30,

Lives March 31,

2023 December 31,

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(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 $ 557 and $ 724 for the three-month periods ended September 30, 2022 and 2021, respectively.

For the nine months ended September 30, 2022 and 2021, these expenses totaled $ 1,926 and $ 2,195 , respectively.

Total depreciation, amortization, and impairment related to property and equipment was $ 286 and $ 714 for the three-month periods ended March 31, 2023 and 2022, respectively.

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Right-of-Use Assets and Lease Obligations

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None of these three leases include the characteristics specified in ASC 842, Leases , that require classification as financing leases and, accordingly, these leases are accounted for as operating leases.

These leases provide remaining terms between 0.5 and 4.0 years, including renewal options expected to be exercised to extend the lease periods.

These leases, as amended, provide remaining terms between 5.0 and 10.5 years, including renewal options expected to be exercised to extend the lease periods.

The Company does not recognize a right-to use asset and lease liability for short-term leases, which have terms of 12 months or less on its consolidated balance sheet.

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These payments represent the combination of the fixed lease and fixed non-lease components that are due under the arrangement.

The costs of associated with the Company's short-term leases, as well as variable costs relating to the Company's lease arrangements, are not material to the consolidated financial results.

The costs associated with the Company's short-term leases, as well as variable costs relating to the Company's lease arrangements, are not material to the Company's financial results.

The implicit interest rates of the Company's lease arrangements are generally not readily determinable and as such, the Company applies an incremental borrowing rate, which is established based upon the information available at the lease commencement date, to determine the present value of lease payments due under an arrangement.

Measurement of the operating lease liability reflects an estimated discount rate of 16.9 % applied to minimum lease payments, including expected renewals, based on the incremental borrowing rate experienced in the Company’s collateralized debt refinancing.

Right-of-use assets recorded upon adoption of ASC 842 totaled $ 4,048 .

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 and nine-months ended September 30, 2022, total operating lease expenses totaled $ 424 and $ 1,267 , respectively, including variable lease expenses such as common area maintenance and operating costs of $ 110 and $ 333 , respectively.

For the three and nine-months ended September 30, 2021, total operating lease expenses totaled $ 431 and $ 1,294 , respectively, including variable lease expenses such as common area maintenance and operating costs of $ 117 and $ 352 , respectively.

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Measurement of the operating lease liability reflects a range of an estimated discount rate of 14.8 % to 15.6 % applied to minimum lease payments, including expected renewals, based on the incremental borrowing rate experienced in the Company’s collateralized debt refinancing.

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 Operations and Comprehensive Income (Loss).

For the three-months ended March 31, 2023, total operating lease expenses totaled $ 418 , including variable lease expenses such as common area maintenance and operating costs of $ 108 .

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

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

Remainder of 2023 $ 903

2027 and thereafter 6,319

Total future lease payments 11,018

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The following table provides the components of identifiable intangible assets, all of which are finite lived:

September 30,

2023 December 31,

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Intangible assets, net 1,396 1,435

Amortization expense was $ 39 and $ 13 for each of the three-month periods ended September 30, 2022 and 2021.

For the nine months ended September 30, 2022 and 2021, these expenses totaled $ 64 and $ 38 , respectively.

Amortization expense was $ 39 and $ 13 for each of the three-month periods ended March 31, 2023 and 2022.

During the remaining life of the purchased intangible assets, estimated amortization expense is $ 117 in the remainder of 2023 and $ 156 in 2024, respectively.

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Other non-current Assets

The following table provides the components of other non-current assets:

September 30,

2023 December 31,

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

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Accrued Expenses

Accrued expenses consisted of the following:

September 30,

2023 December 31,

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Real estate and personal property taxes 413 322

Accrued distribution expenses 2,229 2,224

Accrued distribution expenses and sales returns provision 793 1,012

Other 895 244

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12.5 % Senior Secured Notes and Loans Payable

12.5 % Senior Secured Notes

On July 15, 2019, the Company completed a private placement of up to $ 100,000 aggregate principal of its 12.5 % Senior Secured Notes due 2025 (the “ 12.5 % Notes”) and issued warrants for 2,000,000 shares of Common Stock (the “Warrants”), at $ 0.001 par value per share.

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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 September 30, 2022.

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

The Company also paid to one of its lenders a $ 2,250 premium as result of the early retirement of debt.

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.

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

The Company also paid one of its lenders a $ 2,250 premium as result of the early retirement of debt.

The Company accounted for the $ 22,500 debt repayment as a debt modification of the 12.5 % Notes.

The fees paid to lenders inclusive of (i) $ 2,250 early premium prepayment and (ii) $ 4,000 issuance of Additional Notes in lieu of paying a prepayment penalty were recorded as additional debt discount, amortized over the remaining life of the 12.5 % Notes using the effective interest method.

The fees paid to lenders inclusive of (i) $ 2,250 early premium prepayment and (ii) $ 4,000 issuance of Additional Notes in lieu of paying a

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prepayment penalty were recorded as additional debt discount, amortized over the remaining life of the 12.5 % Notes using the effective interest method.

Loan origination costs of $ 220 associated with the Additional Notes were expensed as incurred.

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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 September 30, 2022.

A valuation study was performed by an independent third party appraiser and updated as of March 31, 2023.

Based on the valuation study, the put option was valued at $ 58 and has been recorded in Other non-current liabilities.

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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

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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.

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 noteholders, 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 Common Stock at the warrant grant date.

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 FDA for sale in the United States, which full approval includes U.S.

Under the Third Supplemental Indenture, the Company agreed that, if and to the extent that the Company accessed these re-openers, it would grant to the noteholders 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 Common Stock at the warrant grant date.

On October 7, 2021, the Company entered into the Fourth Supplemental Indenture, pursuant to which the amortization schedule for the 12.5 % Notes was amended to provide for the date of the first amortization payment to be extended from September 30, 2021 to March 30, 2023.

The Fourth Supplemental Indenture did not change the maturity date of the 12.5 % Notes or the interest payment obligation due under the 12.5 % Notes.

In connection with the Fourth Supplemental Indenture, the Company entered into a Consent Fee Letter with the holders of the 12.5 % Notes (the “Consent Fee Letter”), pursuant to which the Company agreed to pay the holders of the 12.5 % Notes an additional cash payment ("Consent Fee") of $ 2,700 in the aggregate, payable in four quarterly payments beginning May 15, 2022.

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.

As of March 31, 2023, the Company completed its $ 2,700 Consent Fee payment to the holders of the 12.5 % Notes.

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, subject to the full approval of Libervant by the FDA for sale in the United States, which full approval included 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.

Because full FDA approval was not obtained by March 31, 2023, the Company's option to access the re-openers expired on such date.

A debt maturity table is presented below:

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Total $ 42,413

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

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

As of March 31, 2023, the Company recorded its principal payments as Loans payable, current and Loans payable, net on its Condensed Consolidated Balance Sheet.

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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.

The Indenture also includes change of control provisions under which the Company may be required to redeem the 12.5 % Notes at 101 % of the remaining principal plus accrued interest at the election of the noteholders.

On October 7, 2021, the Company entered into the Fourth Supplemental Indenture, pursuant to which the amortization schedule for the 12.5% Notes has been amended to provide for the date of the first amortization payment to be extended to March 30, 2023.

The Fourth Supplemental Indenture did not change the maturity date of the 12.5% Notes or the interest payment obligation due under the 12.5% Notes.

In connection with the Fourth Supplemental Indenture, the Company entered into a Consent Fee Letter with the holders of the 12.5% Notes (the “Consent Fee Letter”), pursuant to which the Company agreed to pay the holders of the 12.5% Notes an additional cash payment ("Consent Fee") of $ 2,700 in the aggregate, payable in four quarterly payments beginning May 15, 2022.

As of September 30, 2022, the Company recorded 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.

During the first quarter of 2023, the Company redeemed $ 9,086 of its outstanding 12.5 % Notes.

The Company also paid $ 353 in prepayment premium as result of the early retirement of debt which was reflected as a loss on extinguishment of debt.

The prepayments along with a scheduled principal repayment in the first quarter of 2023 reduced the net balance of the 12.5 % Notes outstanding in the aggregate to $ 42,413 .

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 and nine months ended September 30, 2022 were $ 4 and $ 12 , respectively, while comparative amortization expenses for the three and nine months ended September 30, 2021 were $ 1,171 and $ 3,488 , respectively.

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

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Amortization expense arising from deferred debt issuance costs and debt discounts related to the 12.5 % Notes for the three months ended March 31, 2023 was $ 4 , while comparative amortization expense for the three months ended March 31, 2022 were $ 4 .

Unamortized deferred debt issuance costs and deferred debt discounts totaled $ 22 and $ 27 as of March 31, 2023 and December 31, 2022, 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.

Warrants Issued to 12.5 % Senior Secured Noteholders

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 Common Stock and included specified registration rights.

Management estimated the fair value of the Initial Warrants to be $ 6,800 and the Additional Warrants to be $ 735 , each based on an assessment by an independent third-party appraiser.

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 Initial Warrants and Additional 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 the Company’s unaudited condensed balance sheet.

There were no warrants exercised as it relates to the Initial Warrants and the Additional Warrants during the nine-months ended September 30, 2022 or 2021, respectively.

The fair value of the respective warrants was 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 Consolidated Balance Sheet.

There were no warrants exercised as it relates to the Initial Warrants and the Additional Warrants during the three months ended March 31, 2023 or 2022, respectively.

Warrants Issued Under Securities Purchase Agreements

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 Common Stock.

The pre-funded warrants entitled purchasers to purchase up to 4,000,000 shares of Common Stock and were exercised in full during the year ended December 31, 2022.

The Common Stock warrants expire on June 8, 2027 and entitle the purchasers to purchase up to 8,850,000 shares of 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 nine-months ended September 30, 2022.

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 Consolidated Balance Sheet.

No Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised during the three months ended March 31, 2023.

Sale of Future Revenue

On November 3, 2020, the Company entered into the Monetization Agreement with Marathon.

KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, received approval from the FDA on May 21, 2020.

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 September 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 .

Under the terms of the Monetization Agreement, the Company sold all of its contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion's apomorphine product, KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, which received approval from the FDA on May 21, 2020.

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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, 2023 under the Monetization Agreement.

Under the Monetization Agreement, additional 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 .

The Company recorded the upfront proceeds of $ 40,000 and subsequent first milestone of $ 10,000 , reduced by $ 2,909 of transaction costs, as a liability related to the sale of future revenue that will be amortized using the effective interest method over the life of the Monetization Agreement.

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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.

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.

The accounting liabilities, as adjusted over time, resulting from this transaction and any non-cash interest expenses associated with 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 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.

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As royalties are remitted to Marathon from Sunovion, the collection of the royalty receivable and balance of the liability related to the sale of future revenue will be effectively repaid over the life of the agreement.

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dollars (USD) while a portion of the underlying sales of KYNMOBI will be made in currencies other than USD, and other events or circumstances that are not currently foreseen.

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 revenue for the nine months ended September 30, 2022 :

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

As a result, the Company discontinued recording interest expense related to the sale of future revenue.

The following table shows the activity of the liability related to the sale of future revenue for the three months ended March 31, 2023 :

Liability related to the sale of future revenue, net at December 31, 2022

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Liability related to the sale of future revenue, net (includes current portion of $ 1,147 )

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 and nine months ended September 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.

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Net Earnings (Loss) Per Share

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

The following table reconciles the basic to diluted weighted average shares outstanding for the three months ended March 31, 2023.

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

Therefore, basic and diluted net loss per share were the same for the three months ended March 31, 2022 as reflected below.

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net loss $ ( 12,536 ) $ ( 14,555 ) $ ( 42,058 ) $ ( 41,594 )

Net income (loss) $ 8,068 $ ( 13,220 )

Weighted-average number of common shares – basic 55,631,947 41,465,798

Loss per common share – basic and diluted $ ( 0.23 ) $ ( 0.37 ) $ ( 0.90 ) $ ( 1.12 )

As of September 30, 2022 and 2021, respectively, the Company’s potentially dilutive instruments included 5,967,492 and 4,341,967 options to purchase common shares and 168,050 and no 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

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losses reported.

Similarly excluded as of September 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.

Effect of dilutive stock options and warrants 18,160,939 —

Weighted-average number of common shares – diluted 73,792,886 41,465,798

Earnings per share attributable to common stockholders:

Earnings (Loss) per common share – basic $ 0.15 $ ( 0.32 )

Earnings (Loss) per common share – diluted $ 0.11 $ ( 0.32 )

As of March 31, 2023, the Company’s dilutive instruments included 5,774,772 options, 1,821,738 unvested restricted stock units, and 10,564,429 warrants to purchase common shares.

As of March 31, 2022, the Company’s potentially dilutive instruments included 5,259,847 options, 166,700 unvested restricted stock units and 1,714,429 warrants to purchase common shares that were excluded from the computation of diluted weighted average shares outstanding because these securities had an antidilutive impact due to the loss reported.

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:

The Company recognized share-based compensation in its unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) during 2023 and 2022 as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Manufacture and supply $ 41 $ 48

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Stock options 319 913

Employee stock purchase plan — — 2 11

Total share-based compensation expenses $ 344 $ 913

Share-Based Compensation Equity Awards

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

The following tables provide information about the Company’s restricted stock unit and stock option activity during the three-month period ended March 31, 2023:

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Restricted Stock Unit Awards (RSUs):

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Forfeited ( 39 ) $ 2.55

Unvested as of September 30, 2022 168 $ 2.39

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

Unvested as of March 31, 2023 1,821 $ 0.89

Vested and expected to vest as of March 31, 2023 1,632 $ 0.89

Stock Option Awards:

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Exercised, Forfeited, Expired ( 253 ) $ 2.33

Outstanding as of September 30, 2022 5,967 $ 5.70

Vested and expected to vest as of September 30, 2022 5,800 $ 5.80

Exercisable as of September 30, 2022 3,651 $ 7.62

As of September 30, 2022, $ 301 of unrecognized compensation expense related to unvested restricted stock units is expected to be recognized over a weighted average period of 2.46 years from the date of grant.

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

Expected dividend yield — %

Expected volatility 100 %

Expected term (years) 5.5 - 6.1

Risk-free interest rate 2.0 % - 3.4 %

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2022 was $ 1.54 .

During the nine-month period ended September 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 $ 1.17 at September 30, 2022, the intrinsic value provided by certain shares granted during this period was de minimus.

As of September 30, 2022, $ 2,778 of unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted average period of 2.00 years from the date of grant.

Outstanding as of March 31, 2023 5,775 $ 5.62

Vested and expected to vest as of March 31, 2023 5,666 $ 5.69

Exercisable as of March 31, 2023 4,089 $ 6.92

As of March 31, 2023, $ 1,413 of unrecognized compensation expense related to unvested restricted stock units is expected to be recognized over a weighted average period of 2.89 years from the date of grant.

As of March 31, 2023, $ 2,672 of unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted average period of 1.72 years from the date of grant.

2022 Inducement Equity Incentive Plan

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Under the 2022 Equity Inducement Plan, the Company granted an inducement equity of 100,000 shares of non-qualified Common Stock options award to an officer in September 2022.

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 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 nine months ended September 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 .

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.

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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 September 30, 2022 and 2021, the Company recorded no income tax benefit from its pretax losses of $ 12,536 and $ 14,555 .

Similarly for the nine months ended September 30, 2022 and 2021, the Company recorded no income tax benefit from its pretax losses of $ 42,058 and $ 41,594 .

The primary factor impacting the effective tax rate for the three and nine months ended September 30, 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 March 31, 2023, the effective income tax rate was 0 % and the Company recorded $ 0 from its pretax gain of $ 8,068 .

For the three months ended March 31, 2022, the Company recorded no income tax benefit from its pretax loss of $ 13,220 .

The primary factors impacting the effective tax rate for three months ended March 31, 2023, is the anticipated full year pre-tax book loss, the expected utilization of net operating losses and research and development credits to offset any current year tax liabilities, and a full valuation allowance against any associated net deferred tax assets.

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Contingencies

Litigation and Contingencies

From time to time, the Company has been and may again become involved in legal proceedings arising in the course of its business, including product liability, intellectual property, commercial litigation, or environmental or other regulatory matters.

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From time to time, the Company has been and may again become involved in legal proceedings arising in the course of its business, including product liability, intellectual property, securities, civil tort, and commercial litigation, and environmental or other regulatory matters.

Patent-Related Litigation

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9,687,454 (the "’454 patent”).

On February 19, 2019, the Court granted the parties’ agreed stipulation to drop the ’221 patent from the case.

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.

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 in the lawsuit.

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On April 3, 2018, the Company and Indivior initiated a separate lawsuit against Teva asserting infringement of the ’305 patent.

On May 29, 2018, the lawsuits regarding the ’221 and ’305 patents were consolidated which was originally initiated by Indivior against Teva asserting infringement of the ’454 patent.

On May 29, 2018, the lawsuits regarding the ’221 and ’305 patents were consolidated with a suit originally initiated by Indivior against Teva asserting infringement of the ’454 patent.

The parties agreed that the case would be governed by the final judgment against Dr.

Reddy’s (described above).

Reddy’s Laboratories S.A., which was settled pursuant to a settlement agreement whereby the court entered a Stipulation and Order of Dismissal, dismissing all claims and counterclaims with prejudice in the lawsuit on June 28, 2022.

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

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

On February 7, 2018, the Company and Indivior filed an Amended Complaint, adding the Company as a plaintiff and asserting infringement of U.S.

9,855,221 (the "’221 patent”).

On February 7, 2018, the Company and Indivior filed an Amended Complaint, adding the Company as a plaintiff and asserting infringement of the’221 patent.

On April 3, 2018, the Company and Indivior initiated a separate lawsuit against Alvogen asserting infringement of the ’305 patent.

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On January 9, 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.

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.

On November 21, 2019, Alvogen filed an amended answer and counterclaims asserting monopolization, attempted monopolization, and conspiracy to monopolize against the Company 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.

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.

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

Fact discovery on Alvogen’s antitrust counterclaims concluded on January 29, 2021.

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(BDSI 2014 Lawsuit)

On September 22, 2014, the Company and RB initiated a lawsuit against BioDelivery Sciences International, Inc.

("BDSI") and Quintiles Commercial US, Inc.

On September 22, 2014, the Company and Indivior initiated a lawsuit against BDSI and Quintiles Commercial US, Inc.

(“Quintiles”) asserting infringement of U.S.

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3:14-cv-5892).

On July 22, 2015, the case was transferred to the Eastern District of North Carolina.

On July 22, 2015, the case was transferred to the United States District Court for the Eastern District of North Carolina.

BDSI filed requests for inter partes review (“IPR”) of the ’167 patent before the Patent Trial and Appeal Board (“PTAB”), and on May 6, 2016, the Court stayed the case pending the outcome and final determination of the IPR proceedings.

On March 24, 2016, the PTAB issued final written decisions finding the ’167 patent was not unpatentable, and the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) remanded those decisions for further proceedings before the PTAB.

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before the PTAB.

Following the PTAB’s February 7, 2019 decision on remand denying institution, BDSI appealed that decision to the Federal Circuit.

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BDSI filed a petition for writ of certiorari to the Supreme Court of the United States (“Supreme Court”), which the Supreme Court denied on October 5, 2020.

On April 15, 2021, the Court lifted the stay of the litigation in the Eastern District of North Carolina.

On April 29, 2021, BDSI filed a renewed motion to dismiss the complaint.

In response, the Company and RB filed an amended complaint on May 18, 2021, which, among other things, removed Quintiles as a defendant.

On June 3, 2021, BDSI filed a notice withdrawing its motion to dismiss the original complaint.

On July 7, 2021, the Court entered a scheduling order in the case.

Under the current scheduling order, the parties have completed their exchange of preliminary infringement and validity contentions, have completed claim construction briefing, and are proceeding with fact

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The Court may schedule a claim construction hearing, and the remainder of the schedule is dependent on the timing of the Court’s ruling on claim construction.

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 April 15, 2021, the court lifted the stay of the litigation.

On March 8, 2023, pursuant to a settlement agreement between the parties, the parties filed a Joint Stipulation of Dismissal, dismissing all claims and counterclaims asserted in the lawsuit.

Aquestive Therapeutics, Inc.

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On June 25, 2020, the Company filed a Motion to Dismiss BDSI’s Amended Counterclaim for unenforceability and a Motion to Strike BDSI’s corresponding affirmative defense of unenforceability, which BDSI opposed.

On March 16, 2021, the Court issued an order granting-in-part and denying-in-part Aquestive’s motion to dismiss BDSI’s counterclaims asserting unenforceability of the ’167 patent.

Aquestive filed its answer to the remaining portions of BDSI’s counterclaims on April 6, 2021.

BDSI also filed on April 6, 2021 a renewed motion to dismiss Aquestive’s complaint, which Aquestive opposed.

On August 10, 2021, the Court entered an order denying BDSI’s motion to dismiss.

On July 7, 2021, the Court entered a scheduling order in the case, including the same operative dates as the Court included in the scheduling order for the BDSI 2014 Lawsuit described above, and the parties are proceeding under that same schedule.

On March 16, 2021, the court issued an order granting-in-part and denying-in-part the Company’s motion to dismiss BDSI’s counterclaims asserting unenforceability of the ’167 patent.

On March 8, 2023, pursuant to a settlement agreement between the parties, the parties filed a Joint Stipulation of Dismissal, dismissing all claims and counterclaims asserted in the lawsuit.

Antitrust Litigation

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

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.

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

District Court for the Eastern District of Pennsylvania alleging violations of federal and state antitrust statutes and state unfair trade and consumer protection laws relating to Indivior’s launch of Suboxone Sublingual Film in 2010 and seeking an injunction, civil penalties, and disgorgement.

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

Daubert motions were filed on September 28, 2020, and oppositions were filed on October 19, 2020.

On February 19, 2021, the Court issued an order denying all Daubert motions.

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

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The Company is not able to determine or predict whether the plaintiffs will appeal the order or 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.

Humana and Centene Action s

Indivior Inc, Indivior Solutions Inc., Indivior PLC, Reckitt Benckiser Healthcare (UK) Ltd., and Aquestive Therapeutics, Inc.

Humana and Centene Actions

Centene Corporation, Wellcare Health Plans, Inc., New York Quality Healthcare Corporation d/b/a Fidelis Care, and Health Net, LLC v.

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On September 18, 2020, Humana, Inc.

(“Humana”), a health insurance payor, filed a lawsuit against the Company and Indivior in the Eastern District of Pennsylvania alleging facts similar to those at issue in the Antitrust Case and the Suboxone MDL described above, which lawsuit was assigned to the same judge that is presiding over Antitrust Case and Suboxone MDL.

(“Humana”), a health insurance payor, filed a lawsuit against the Company and Indivior in the United States District Court for the Eastern District of Pennsylvania alleging facts similar to those at issue in the Antitrust Case and the Suboxone MDL described above, which lawsuit was assigned to the same judge that is presiding over Antitrust Case and Suboxone MDL.

Humana’s Complaint alleges five causes of action against the Company, including conspiracy to violate the RICO Act, fraud under state law, unfair and deceptive trade practices under state law, insurance fraud, and unjust enrichment.

On September 21, 2020, Centene Corporation (“Centene”) and other related insurance payors filed a similar lawsuit against the Company and Indivior in the Eastern District of Missouri.

The counsel representing Humana is also representing

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Centene in this matter.

On September 21, 2020, Centene Corporation (“Centene”) and other related insurance payors filed a similar lawsuit against the Company and Indivior in the United States District Court for the Eastern District of Missouri.

The counsel representing Humana is also representing Centene.

On September 21, 2020, the Centene action was provisionally transferred to the Eastern District of Pennsylvania by the United States Judicial Panel on Multidistrict Litigation.

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The court in the Eastern District of Pennsylvania dismissed all complaints against the defendants in these matters on July 22, 2021.

On August 20, 2021, Centene and Humana appealed the decision to the U.S.

Appeals Court for the Third Circuit (“Third Circuit”).

Also, on August 20, 2021, Humana filed a complaint in state court in Kentucky, alleging the same causes of action previously filed in the federal case in the Eastern District of Pennsylvania.

That state court action is stayed pending resolution of the federal appeal in the Third Circuit.

The Third Circuit appeal is fully briefed and oral argument was held on March 31, 2022.

The parties are awaiting a ruling from the Third Circuit on the appeal.

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 August 20, 2021, Centene and Humana appealed the decision to the United States Appeals Court for the Third Circuit (“Third Circuit”).

Also, on August 20, 2021,

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Humana filed a complaint against the Company and Indivior in state court in Kentucky, alleging the same causes of action previously filed in the federal case in the Eastern District of Pennsylvania.

That state court action remains stayed pending further action from the court following resolution of the federal appeal in the Third Circuit.

On December 15, 2022, the Third Circuit issued an opinion and order affirming the district court’s dismissal of the Centene and Humana actions.

The Company is not able to determine or predict the ultimate outcome of the Centene and Humana actions or the state court action in Kentucky by Humana, or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in these matters.

California Litigation

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On August 6, 2020, the Court issued an order granting in part and denying in part the Company’s anti-SLAPP motion.

The Company filed a notice of appeal to the California Court of Appeal on September 1, 2020, and Neurelis filed a notice of cross-appeal on October 5, 2020.

The Company filed its opening appeal brief on January 27, 2021, and briefing on the appeal ended on July 6, 2021.

The parties cross-appealed the ruling to the California Court of Appeal.

The appeals court held oral argument on the appeal on October 14, 2021, and issued its ruling on November 17, 2021.

Under the ruling, the court struck the entirety of the malicious prosecution claim and struck portions of the UCL and defamation claims.

Aquestive filed a motion for attorney fees related to the anti-SLAPP motion on February 11, 2022.

On April 12, 2022, Neurelis filed a Second Amended Complaint in response to the Court of Appeal's decision.

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 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.

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

Oral argument on the Company’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 the Company’s motion for attorney fees, awarding $ 156 and ordering Neurelis to pay the fees within 60 days of June 17, 2022.

The Court denied the Company’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

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.

9,763,876 (‘876 Patent) for nasal administration of benzodiazepines (diazepam).

The PTAB denied two of the requests and instituted the third request, which challenged all claims of the Neurelis ‘876 Patent.

On August 6, 2020, the PTAB issued its final written decision finding all challenged claims of the ’876 Patent to be unpatentable.

Neurelis appealed the decision to the U.S.

Court of the Federal Circuit.

On October 7, 2021, the Federal Circuit Court issued a per curium decision affirming the PTAB's final decision that the '876 Patent was unpatentable.

The Federal Circuit Court issued a mandate closing the appeal period and an IPR Certificate was subsequently issued by the United States Patent and Trademark Office on January 21, 2022.

No further appeals are available on this matter.

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.

Federal Securities Class Action

Deanna Lewakowski v.

Aquestive Therapeutics, Inc.

On March 1, 2021, a securities class action lawsuit was filed in the United States District Court of the District of New Jersey alleging that the Company and certain of its officers engaged in violations of the federal securities laws relating to public statements made by the Company regarding the FDA approval of Libervant.

Aquestive Therapeutics, Inc., et al.

On March 1, 2021, a securities class action lawsuit was filed in the United States District Court for the District of New Jersey alleging that the Company and certain of its officers engaged in violations of the federal securities laws relating to public statements made by the Company regarding the FDA approval of Libervant.

Following the court’s appointment of a lead plaintiff, an amended complaint was filed by the plaintiffs on June 25, 2021.

Defendants filed a motion to dismiss on August 16, 2021, which became fully briefed as of November 1, 2021.

There is no date set for a hearing on the motion to dismiss and no trial date has yet been set.

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 March 14, 2023, the Court entered an order granting Defendants’ motion to dismiss without prejudice and permitting plaintiffs leave to file a final, Second Amended Complaint by April 14, 2023.

On April 7, 2023, the parties filed a Stipulation of Voluntary Dismissal stating that plaintiffs determined not to file an amended complaint and agreed to dismiss the action as to them with prejudice.

On April 10, 2023, the Court so-ordered the stipulation and terminated the lawsuit.

Shareholder Derivative Litigation

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Keith Kendall, et al.

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On December 15, 2021, a purported Aquestive shareholder instituted a derivative action captioned Loreen Niewenhuis v.

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

There is no date set for a hearing on the motion to dismiss and no trial date has yet been set.

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 April 20, 2023, the parties filed a Stipulation of Voluntary Dismissal stating that plaintiff agreed to dismiss the action as to her with prejudice.

On April 21, 2023, the Court so-ordered the stipulation and terminated the lawsuit.

Subsequent Events

Continued Utilization of the At-The-Market Facility

The Company continued utilization of its At-The-Market facility from October 1 through October 31, 2022 and sold 351,150 shares of Common Stock which generated net proceeds of approximately $ 355 .

Positive Decision in States’ Suboxone Antitrust Lawsuit on All Claims

The Company announced that the United States District Court for the Eastern District of Pennsylvania entered an order on October 19, 2022 dismissing all claims against the Company in the Suboxone antitrust lawsuit brought by a group of States’ Attorneys General against Indivior Inc.

(f/k/a Reckitt Benckiser Pharmaceuticals, Inc.) and Aquestive, Case No.

Licensing Agreement with Assertio Holdings, Inc.

Effective October 26, 2022, the Company entered into a License Agreement with Otter Pharmaceuticals, LLC, a subsidiary of Assertio Holdings, Inc.

ASRT) (“Assertio”), a specialty pharmaceutical company offering differentiated products to patients, to license Sympazan® (clobazam) oral film for the adjunctive treatment of seizures associated with Lennox‐Gastaut syndrome in patients aged two years of age or older (the "Assertio License Agreement").

Under the terms of the Assertio License Agreement, the Company granted an exclusive, worldwide license of its intellectual property for Sympazan to Assertio during the term of the Assertio License Agreement for an upfront payment of $ 9,000 .

Under the terms of the Assertio License Agreement, Aquestive will receive a $ 6,000 milestone payment within thirty (30) days after Aquestive's receipt of a notice of allowance from the United States Patent and Trademark Office (PTO) of the Company's patent application U.S.

16/561,573, and payment by the Company of the related allowance fee.

The Company received the notice of allowance from the PTO and paid the related allowance fee on October 27, 2022.

In addition, under the Assertio License Agreement, the Company will receive royalties from Assertio for the sale of the product through the expiration of the Assertio License Agreement.

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Positive Decision in Litigation Matters

On April 10, 2023, the presiding judge in the federal securities class action, Neurelis, Inc.

Aquestive Therapeutics, Inc., filed in the United States Court for the District of New Jersey, ordered the dismissal of the class action with prejudice pursuant to a Stipulation of Voluntary Dismissal filed by the parties in that action.

On April 21, 2023, the same presiding judge ordered the dismissal with prejudice of a related shareholder derivative lawsuit, Loreen Niewenhuis v.

Keith Kendall, et al , pursuant to a Stipulation of Voluntary Dismissal filed by the parties in that action.

Refer to Note 19, Contingencies for details.

Nasdaq's Listing Rule 5450(a)(1) Compliance

On April 13, 2023, the Company received a notice from Nasdaq” informing the Company that it has regained compliance with Nasdaq's Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market, as the minimum bid price of the Company’s Common Stock had met or exceeded $1.00 per share for a minimum of ten consecutive business days during the applicable 180-day review period.

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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