What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-05 compared with 2023-03-31 · 555 added, 393 removed, 921 unchanged (51% of the section changed)

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Based upon its assessment and those criteria, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.

Attestation Report of the Registered Public Accounting Firm

This Annual Report on Form 10-K does not include an attestation of our registered public accounting firm due to an exemption established by the JOBS Act for “emerging growth companies”.

This annual report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered independent public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

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Other Information .

On December 7, 2023 , Mark Schobel , Chief Innovation & Technology Officer of the Company, adopted a written sales plan intended to satisfy the affirmative defense conditions of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, for trading 175,000 shares.

The plan commenced on December 6, 2023 and will expire on December 4, 2024.

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.

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Number Description

Placement Agency Agreement, dated June 6, 2022, between Aquestive Therapeutics, Inc.

and A.G.P./Alliance Global Partners (filed as Exhibit 1.1.

to the Current Report on Form 8-K of the Company, as filed on June 8, 2022, and incorporated by reference herein).

Amended and Restated Certificate of Incorporation of Aquestive Therapeutics, Inc., dated as of July 27, 2018 (filed as Exhibit 3.1 to the Current Report on Form 8-K of the Company, as filed on July 27, 2018, and incorporated by reference herein).

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333-225924), as filed on June 27, 2018, and incorporated by reference herein).

Description of Securities Registered under Section 12 of the Exchange Act (incorporated by reference herein).

Description of Securities Registered under Section 12 of the Exchange Act (filed as Exhibit 4.7 to the Annual Report on Form 10-K of the Company, as filed on March 11, 2020, and incorporated by reference herein).

Fifth Supplemental Indenture, dated as of May 13, 2022, among Aquestive Therapeutics, Inc., as Issuer, any Guarantor that becomes party thereto and U.S.

Bank Trust Company, National Association, as Trustee and Collateral Agent (filed as Exhibit 4.1 to the Current Report on Form 8-K of the Company, as filed on May 17, 20222, and incorporated by reference herein).

Indenture Dated as of November 1, 2023, among Aquestive Therapeutics, Inc., as Issuer, any Guarantor that becomes party thereto, and U.S.

Bank Trust Company, National Association, as Trustee and Collateral Agent (filed as Exhibit 4.1 to the Current Report on Form 8-K of the Company, as filed on November 2, 2023, and incorporated by reference herein)

Form of Indemnification Agreement, by and between Aquestive Therapeutics, Inc and its directors and officers (filed as Exhibit 10.1 to the Registration Statement on Form S-1 of the Company (File No.

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Amendment No.1 to Purchase Agreement, dated as of August 6, 2021, by and between Aquestive Therapeutics, Inc.

and the Purchasers signatory thereto (filed herewith).

and the Purchasers signatory thereto (as filed as Exhibit 10.22 to the Annual Report on Form 10-K of the Company, as filed on March 31, 2021, and incorporated by reference herein).

Amendment No.

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License Agreement, dated as of October 26, 2022, by and between Aquestive Therapeutics, Inc.

and Otter Pharmaceuticals, LLC (filed herewith)

and Otter Pharmaceuticals, LLC (filed herewith) (as filed as Exhibit 10.29 to the Annual Report on Form 10-K of the Company, as filed on March 31, 2023, and incorporated by reference herein).

Separation Agreement, dated as of May 17, 2022, by and between Aquestive Therapeutics, Inc.

Kendall (filed as Exhibit 10.1 to the Current Report on Form 8-K of the Company.

as filed on May 17, 2022, and incorporated by reference herein).

Kendall (filed as Exhibit 10.1 to the Current Report on Form 8-K of the Company, as filed on May 17, 2022, and incorporated by reference herein).

Form of Securities Purchase Agreement, dated as of June 6, 2022, by and between Aquestive Therapeutics, Inc.

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Registration Rights Agreement, dated as of April 12, 2022, by and between the Company and Lincoln Park (filed as Exhibit 10.2 to the Current Report on Form 8-K of the Company, as filed on April 13, 2022, and incorporated by reference herein).

Equity Distribution Agreement, dated September 11, 2019, by and between Aquestive Therapeutics, Inc.

and Piper Sandler & Co.

(filed as Exhibit 1.2 to the Registration Statement on Form S-3 (333-233716) of the Company, as filed on September 11, 2019, and incorporated by reference herein)

Amendment No.

1 to the Equity Distribution Agreement, dated March 26, 2021, by and between Aquestive Therapeutics, Inc.

and Piper Sandler & Co.

(filed as Exhibit 10.1 to the Current Report on Form 8-K of the Company, as filed on March 26, 2021, and incorporated by reference herein)

Inducement Offer to Exercise Common Stock Purchase Warrants Letter Agreement dated August 1, 2023 (filed as Exhibit 10.1 to the Current Report on Form 8-K of the Company, as filed on August 2, 2023, and incorporated by reference herein).

Form of Purchase Agreement for the 13.5% Notes (filed as Exhibit 10.1 to the Current Report on Form 8-K of the Company, as filed on November 2, 2023, and incorporated by reference herein).

Collateral Agreement dated as of November 1, 2023 among Aquestive Therapeutics, Inc., as Issuer, the other Grantors from time to time party thereto, U.S.

Bank Trust Company, National Association, as Trustee, and U.S.

Bank Trust Company, National Association, as Collateral Agent (filed as Exhibit 10.2 to the Current Report on Form 8-K of the Company, as filed on November 2, 2023, and incorporated by reference herein).

Form of Royalty Right Agreement (filed as Exhibit 10.3 to the Current Report on Form 8-K of the Company, as filed on November 2, 2023, and incorporated by reference herein).

Amendment to License and Supply Agreement between Aquestive and Atnahs Pharma UK Limited entered into March 27, 2023 (furnished herewith).

Consent of KPMG LLP, Independent Registered Public Accounting Firm (filed herewith).

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

Incentive Compensation Recovery Policy

101.INS* Inline XBRL Instance Document.

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Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment that has been granted by the Securities and Exchange Commission.

* Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference to any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

* Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act and shall not be deemed to be incorporated by reference to any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

+ Indicates a management contract or compensatory plan.

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AQUESTIVE THERAPEUTICS, INC.

March 31, 2023 By:

March 5, 2024

/s/ Daniel Barber

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Senior Vice President, Chief Financial Officer March 5, 2024

A.Ernest Toth, Jr.

Ernest Toth, Jr.

(Principal Financial Officer and Principal Accounting Officer)

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY, Auditor Firm ID:

Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY,

Auditor Firm ID:

Consolidated Balance Sheets as of December 31, 2023 and 2022

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Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

To the Stockholders and the Board of Directors

Aquestive Therapeutics, Inc.:

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the Company’s ability to continue as a going concern

As discussed in Note 4 to the consolidated financial statements, the Company has experienced a history of net losses.

The Company’s accumulated deficit totaled $319,077 thousand as of December 31, 2023.

Historically, the Company’s sources of liquidity included cash and cash equivalents, equity, and debt offerings.

The Company believes that its ongoing business, existing cash and equivalents, expense management activities, and access to an existing purchase agreement provide liquidity to fund its operating needs for twelve months from the date of issuance of these financial statements.

We identified the evaluation of the Company’s assessment of its ability to continue as a going concern as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate the Company’s forecasted cash flows used in its going concern analysis due to uncertainty in certain assumptions, specifically forecasted expenses and the feasibility of the Company’s expense management activities.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design of the internal control over the Company’s going concern assessment and forecasted cash flows.

We compared the Company’s historical forecasted cash flows to actual results to assess the Company’s ability to accurately forecast.

We performed sensitivity analyses over the Company’s forecasted cash flows by evaluating the effect of changes to the forecasted expenses and expense management activities on the Company’s going concern assessment.

We assessed the feasibility of the Company’s expense management activities, which included comparing to management’s plans communicated to the Board of Directors and

public information disseminated by the Company.

We assessed the Company’s disclosures related to its going concern assessment by comparing the disclosures to the audit evidence obtained.

We have served as the Company’s auditor since 2006.

New York, New York

Short Hills, New Jersey

March 5, 2024

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Liability related to the sale of future revenue, current 922 1,147

Loans payable, current 18,700 2,025

Notes payable, current

Total current liabilities 18,308 39,528

Loans payable, net 33,448 51,551

Notes payable, net

27,508 33,448

Royalty obligations, net

Liability related to the sale of future revenue, net 63,568 64,112

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Interest expense ( 6,337 ) ( 6,552 )

Interest expense related to royalty obligations, net

Interest expense related to the sale of future revenue ( 220 ) ( 5,891 )

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Balance at January 1, 2022 41,228,736 $ 41 $ 174,621 $ ( 256,796 ) $ ( 82,134 )

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 2,860,538 3 4,193 — 4,196

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Shares issued under employee stock purchase plan 45,304 — 34 — 34

Exercise of stock options 61,000 — 185 — 185

Vested restricted stock units 6,665 — ( 3 ) — ( 3 )

Share-based compensation expense — — 4,371 — 4,371

Other — — 3 ( 1 ) 2

Net loss — — — ( 54,410 ) ( 54,410 )

Balance at December 31, 2022 54,827,734 55 192,598 ( 311,207 ) ( 118,554 )

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 8,689,452 9 8,333 — 8,342

Costs of common stock issued under private equity offering — — ( 35 ) — ( 35 )

Common Stock issued under public equity offering 4,958,341 5 9,459 — 9,464

Costs of common stock issued under public equity offering — — ( 289 ) — ( 289 )

Common Stock issued under public equity offering — — ( 552 ) — ( 552 )

Shares issued under employee stock purchase plan 36,168 — 66 — 66

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Share-based compensation expense — — 2,662 — 2,662

Options exercised

Other — — — — —

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Deferred revenue 966 25,043

Loans Payable 675 —

Notes Payable

Net cash used for operating activities ( 6,380 ) ( 9,819 )

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Cash flows from financing activities:

Proceeds from issuance of common stock under public equity offering, warrants and warrant exercises, net 9,751 29,780

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

Proceeds from issuance of common stock under public equity offering, net

Proceeds from common stock and warrants issued under private equity offering, net

Proceeds from exercise of warrants, net

Proceeds from shares issued under employee stock purchase plan 39 34

Proceeds from exercise of stock options 1 —

Proceeds from issuance of debt 31,144 —

Proceeds from issuance of Royalty Rights Agreements

Debt repayments

Payments for financing costs ( 4,643 ) —

Premium paid to retire debt ( 2,102 ) ( 2,025 )

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Aquestive Therapeutics, Inc.

(together with its subsidiary, “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.

(together with its subsidiaries, “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.

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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 has also developed a product pipeline focused on treating diseases of the CNS.

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.

Equity Transactions

On September 11, 2019, the Company established an “At-The-Market” (ATM) facility pursuant to which the Company may offer up to $ 25,000 worth of shares of common stock, par value $ 0.001 per share, of the Company (the "Common Stock").

On September 11, 2019, the Company established an ATM facility pursuant to which the Company may offer up to $ 25,000 worth of shares of Common Stock.

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

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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.

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

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

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

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For the year ended December 31, 2022, the Company sold 2,860,538 shares which provided net proceeds of approximately $ 3,907 after deducting commissions and other transaction costs of $ 289 .

On April 12, 2022, the Company entered into a purchase agreement (the "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 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 of our outstanding Common Stock exceeding 9.99 %.

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

For the year ended December 31, 2022, the Company sold 1,600,000 shares in addition to issuing 236,491 commitment shares, which provided gross proceeds of approximately $ 1,987 in connection with the Lincoln Park Purchase Agreement.

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

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

On April 12, 2022, the Company entered into the Lincoln Park Purchase Agreement, which provides that, upon the terms and subject to the conditions and limitations under 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 the Company's 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 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 of our outstanding Common Stock exceeding 9.99 %, which is equivalent to 6,486,623 shares at December 31, 2023.

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 our Common Stock.

For the year ended December 31, 2023, the Company did not sell shares in connection with the Lincoln Park Purchase Agreement.

For the year ended December 31, 2022, the Company sold 1,600,000 shares in addition to issuing 236,491 commitment shares, which provided proceeds of approximately $ 1,987 in connection with the Lincoln Park Purchase Agreement.

On June 6, 2022, the Company entered into the Securities Purchase Agreements which provided for the sale and issuance by the Company of an aggregate of:

(i) 4,850,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 4,000,000 shares of Common Stock and (iii) Common Stock warrants to purchase up to 8,850,000 shares of Common Stock.

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

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

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

Refer to Note 13, Warrants for further details.

Nasdaq Stock Market Notification

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

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

The Company has 180 calendar days, or until 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.

In the event the Company does not regain compliance with the Minimum Bid Price Requirement by June 28, 2023, the Company may be eligible for an additional 180-calendar day compliance period if it elects to transfer to The Nasdaq Capital Market to take advantage of the additional compliance period offered on that market.

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

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

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

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

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

The pre-funded warrants were fully exercised in 2022.

On June 14, 2023, warrants to purchase 3,689,452 shares of Common Stock issued pursuant to the Securities Purchase Agreements were exercised with proceeds paid to the Company thereon of approximately $ 3,542 .

On August 1, 2023, the Company entered into the Letter Agreement with a holder (the “Exercising Holder”) of 5,000,000 of the remaining Common Stock Warrants.

Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Common Stock Warrants for shares of Common Stock lying thereunder at $ 0.96 per share of Common Stock, the exercise price of the Common Stock Warrants.

Pursuant to the Letter Agreement, in consideration of the Exercising Holder exercising the 5,000,000 Common Stock Warrants, the Company issued New Warrants to the Exercising Holder to purchase up to an aggregate of 2,750,000 shares of Common Stock to the Exercising Holder.

The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are issuable only for cash,

subject to exception if exercise of the New Warrants is not registered in accordance with the terms of the Letter Agreement, in which case the New Warrants may also be exercised, in whole or in part, at such time by means of a "cashless exercise".

The New Warrants have an exercise price of $ 2.60 per share.

On August 2, 2023, 5,000,000 of the Common Stock Warrants were exercised pursuant to the Securities Purchase Agreement with the Exercising Holder, with the Company receiving gross proceeds therefrom of $ 4,800 .

In total, warrants to exercise 8,689,452 shares of Common Stock issued pursuant to the Securities Purchase Agreements, with proceeds of approximately $ 8,342 paid to the Company thereon, were exercised during the year ended December 31, 2023.

The Company incurred $ 35 in relation to this transaction.

Basis of Presentation and Principles of Consolidation

These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America, and in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC").

These consolidated financial statements have been prepared in accordance with GAAP in the United States of America, and in accordance with the rules and regulations of the SEC.

The accounts of wholly owned subsidiaries are included in the consolidated financial statements.

Other than corporate formation activities, no such subsidiaries have conducted any commercial, developmental or operational activities and none have customers or vendors.

Certain reclassifications were made to conform to the current presentation.

Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Certain reclassifications were made to conform to the current year presentation.

Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the ASC and ASU of FASB.

Summary of Significant Accounting Policies

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These estimates and assumptions often involve assessments of matters that are inherently uncertain and accordingly actual results could differ from those estimates.

Significant items subject to estimates and assumptions include those related to revenue recognition, inventory costs, allowances for rebates from proprietary product sales, allowances for sales returns, the useful lives of fixed assets, the valuations of warrants issued and of share-based compensation, and contingencies.

Significant items subject to estimates and assumptions include those related to revenue recognition, inventory costs, allowances for rebates from proprietary product sales prior to out-licensing to Assertio, allowances for sales returns, the useful lives of fixed assets and the valuations of warrants issued, royalty obligations, sale of future revenues, share-based compensation, and contingencies.

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

At December 31, 2022 and 2021, cash and cash equivalents consisted of cash in bank accounts and money market funds.

At December 31, 2023 and 2022, cash and cash equivalents consisted of cash in bank accounts.

Concentration of Credit Risk

Cash and cash equivalents are maintained are held by federally insured financial institutions that management believes are of high credit quality.

Cash and cash equivalents are held by federally insured financial institutions that management believes are of high credit quality.

The Company has not experienced any losses in such accounts and such amounts may exceed federally-insured limits of $250.

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The Company’s credit terms generally range from 30 to 60 days, depending on the customer and type of invoice.

The Company performs a regular review of our customers' credit risk and payment histories, including payments made subsequent to year-end.

The Company performs a regular review of its customers’ credit risk and payment histories, including payments made subsequent to year-end.

The Company evaluates the collectability of accounts receivable based on a combination of factors.

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Intangible Assets

Intangible assets include the costs of acquired composition and process technologies, the costs of purchased patents used in the manufacture of orally soluble film and the costs of acquired New Drug Application (NDA).

Intangible assets include the costs of acquired composition and process technologies, the costs of purchased patents used in the manufacture of orally soluble film and the costs of acquired NDA.

The Company amortizes these assets using the straight-line method over the shorter of their legal lives or estimated useful lives.

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Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered most appropriate.

The impairment charge of $ 216 was recognized for the year ended December 31, 2023.

No impairment was recognized for the year ended December 31, 2022.

Determination if an arrangement is a lease is made at inception.

An arrangement is determined to contain a lease if the contract conveys the right to control the use of an identified property and equipment for a period of time in exchange for consideration.

If the Company can benefit from the various underlying assets of a lease on their own or together with other resources that are readably available, or if the various underlying assets are neither highly dependent or highly interrelated with underlying assets in the arrangements, they are considered to be a separate lease component.

If the Company can benefit from the various underlying assets of a lease on their own or together with other resources that are readably available, or if the various underlying assets are neither highly dependent nor highly interrelated with underlying assets in the arrangements, they are considered to be a separate lease component.

In the event multiple underlying assets are identified, the lease consideration is allocated to the various components based on each on the component’s relative fair value.

Operating lease assets represent our right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease arrangement.

Operating lease assets represent the Company's right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease arrangement.

Operating lease assets and operating lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As most of the Company's leases do not provide an implicit rate, in determining the operating lease liability, the Company uses an estimate of our incremental borrowing rate.

As most of the Company’s leases do not provide an implicit rate, in determining the operating lease liability, the Company uses an estimate of its incremental borrowing rate.

The calculation of the operating lease assets includes any lease payments made and excludes any lease incentives.

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The Company records operating lease assets and lease liabilities in its consolidated balance sheets.

Lease expenses for lease payments is recognized on a straight-line bases over the lease term.

Lease expenses for lease payments are recognized on a straight-line bases over the lease term.

Short-term leases, or leases that have a lease term of 12 months or less at consummation date, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease.

The Company has not entered into any material short-term lease or financing leases as of December 31, 2022.

During the year ended December 31, 2023, the Company recognized a lease supporting its manufacturing

facilities as a finance lease.

Commitments under finance leases are not significant, and are included in Property and equipment, net;

Notes Payable, current and Notes Payable, net on the Consolidated Balance Sheets.

Royalty Obligations, net

In connection with the issuance of the 13.5 % Notes, the Company entered into a Royalty Rights Agreement with each of the Note Holders granting the Note Holders a tiered royalty between 1.0 % and 2.0 % of annual worldwide net sales of Anaphylm (epinephrine) Sublingual Film for a period of eight years from the first sale of Anaphylm on a global basis.

The Note Holders are also entitled to a tiered royalty between 1.0 % to 2.0 % of annual worldwide net sales of Libervant (diazepam) Buccal Film until the earlier of (1) the first sale of Anaphylm and (2) eight years from the first sale of Libervant.

The Royalty Rights Agreements are classified as debt, and the value of the $ 45,000 13.5 % Notes has been allocated between debt and the royalty obligations based on their relative fair market values.

The fair value of the royalty obligation is being amortized over the life of the Royalty Rights Agreements and such amortization is reflected as interest expense related to royalty obligations in the Consolidated Statements of Operations and Comprehensive Loss.

The 13.5 % Notes are discussed in Note 14, Long-Term Debt , to its consolidated financial statements.

Liability Related to the Sale of Future Revenue

The Company treats the liability related to the sale of future revenue as debt financing, amortized under the effective interest rate method over the estimated life of the related expected royalty stream.

The liability related to the sale of future revenue and the related interest expense are based on our current estimates of future royalties expected to be paid over the life of the arrangement.

The Company will periodically assess the expected royalty payments using a combination of internal projections and forecasts from third-party manufacturers.

To the extent our future estimates of royalty payments are greater or less than previous estimates or the interest timing of such payments is materially different than its previous estimates, the Company will prospectively recognize related interest expense.

Royalty revenue related to the sale of future revenue is reflected as royalty revenue, and amortization of debt is reflected as interest expense related to the sale of future

revenue in the Consolidated Statement of Operations and Comprehensive Loss.

For further discussion of the sale of the future revenue, refer to Note 14, Sale of Future Revenue.

The liability related to the sale of future revenue and the related interest expense are based on its current estimates of future royalties expected to be paid over the life of the arrangement.

The Company periodically assesses the expected royalty payments using a combination of internal projections and forecasts from external resources.

To the extent its future estimates of royalty payments are greater or less than previous estimates or the timing of such payments is materially different than its previous estimates, the Company will prospectively recognize related interest expense.

Amortization of debt is reflected as interest expense related to the sale of future revenue in the Consolidated Statements of Operations and Comprehensive Loss.

For further discussion of the sale of the future revenue, see Note 16, Sale of Future Revenue.

Revenue Recognition

The Company’s revenues include (i) sales of manufactured products pursuant to contracts with commercialization licensees, (ii) sales of the Company's proprietary clobazam-based Sympazan oral film product used as a treatment for LGS-related seizures prior to its outlicensing to Assertio Holdings, Inc.

("Assertio") in October 2022, (iii) license and royalty revenues and (iv) co-development and research fees generally in the form of milestone payments.

See Note 5, Revenues and Trade Receivables, Net for further details.

The Company’s revenues include (i) sales of manufactured products pursuant to contracts with commercialization licensees, (ii) sales of the Company’s proprietary clobazam-based Sympazan oral film product used as a treatment for LGS-related seizures prior to its outlicensing to Assertio in October 2022, (iii) license and royalty revenues and (iv) co-development and research fees generally in the form of milestone payments.

See Note 5, Revenues and Trade Receivables, Net .

for further details.

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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For symbolic licenses providing substantial value only in conjunction with other performance obligations to be provided by the Company, revenues are generally recorded over the term of the license agreement.

Such other obligations provided by the Company generally include manufactured products, additional development services or other deliverables that are contracted to be provided during the license term.

Such other obligations provided by the Company generally include manufactured products, additional development services or other deliverables that are contracted to be provided during the

license term.

Payments received in excess of amounts ratably or otherwise earned are deferred and recognized over the term of the license or as contingencies or other performance obligations are met.

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Although each contractual arrangement is unique, common milestones included in these arrangements include those for the performance of efficacy and other tests, reports of findings, formulation of initial prototypes, production of stability clinical and/or scale-up batches, and stability testing of those batches.

Additional milestones may be established and linked to clinical results of the product submission and/or approval of the product by the Food and Drug Administration ("FDA") and the commercial launch of the product.

Additional milestones may be established and linked to clinical results of the product submission and/or approval of the product by the FDA and the commercial launch of the product.

Revenue recognition arising from milestone payments is dependent upon the facts and circumstances surrounding the milestone payments.

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In these situations, billing occurs after revenue recognition, which results in a contract asset supported by the estimated value of the completed portion of the performance obligation.

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

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

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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Research and development, or R&D, expenses are recorded in accordance ASC 730, Research and Development and are expensed as incurred.

R&D expenses include R&D activities, services of external contract research organizations, or CROs, costs of their clinical research sites, scale-up and validation costs, and other activities.

R&D expenses include R&D activities, services of external CROs, costs of their clinical research sites, scale-up and validation costs, and other activities.

Internal R&D activity expenses include laboratory supplies, salaries, benefits, and non-cash share-based compensation expenses.

CRO activities include preclinical laboratory experiments and clinical studies.

CROs activities include preclinical laboratory experiments and clinical studies.

Other activity expenses include regulatory consulting and other costs.

The activities undertaken by a regulatory consultants that were classified as R&D expense include assisting, communicating with, and advise our in-house staff with respect to various FDA submission processes, clinical trial processes and scientific writing matters, including preparing protocols and FDA submissions.

These consulting expenses were direct costs associated with preparing, receiving and understanding work for our clinical trials and investigative drugs.

The activities undertaken by regulatory consultants that were classified as R&D expense include assisting, communicating with, and advise its in-house staff with respect to various FDA submission processes, clinical trial processes and scientific writing matters, including preparing protocols and FDA submissions.

These consulting expenses were direct costs associated with preparing, receiving and understanding work for its clinical trials and investigative drugs.

Payments made to CROs based on agreed-upon terms, which may include payments in advance of a study start date.

The Company expenses non-refundable advance payments for goods and services that will be used in future R&D activities when the activity has been performed or when goods or services have been received rather than when payment was made.

The Company reviews and accrues CRO expenses and clinical trial study expenses based on services performed and rely on estimates of those costs applicable to the completion state of study as provided by CRO's.

Estimated CRO costs subject to revisions as such studies progress to completion.

The Company reviews and accrues CROs expenses and clinical trial study expenses based on services performed and rely on estimates of those costs applicable to the completion state of study as provided by CROs.

Estimated CROs costs subject to revisions as such studies progress to completion.

The Company charges revisions to expense in the period when the facts that give rise to the revision become known.

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ASC 718 establishes guidance for the recognition of expenses arising from the issuance of stock-based compensation awards at their fair value at the grant date.

The Company’s stock-based compensation includes grants of stock options and restricted stock units (RSUs) to employees, consultants and non-employee directors.

The Company’s stock-based compensation includes grants of stock options and RSUs to employees, consultants and non-employee directors.

Beginning in 2019, the Company also offered employees an opportunity to participate in an employee stock purchase plan.

Expenses arising from these grants are recorded in the accompanying financial statements based on their grant date fair values as ratably earned during their respective vesting periods.

The Company’s estimates of the fair value of options at their grant dates is based on the Black-Scholes option valuation model and considers various variables and assumptions, including:

The Company’s estimates of the fair value of options at their grant dates are based on the Black-Scholes option valuation model and considers various variables and assumptions, including:

• the stock price at the grant date,

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• an estimate of stock price volatility based on that of an industry peer group,

• expected dividends,

• no dividends for the foreseeable future, and

• expected dividends, if any, and

• risk-free interest rate.

The Company’s estimates of the fair value of RSUs at their grant or valuation dates vary based on whether the awards' vesting conditions are based on market conditions or service conditions.

For awards with the vesting based on market conditions, the Company uses a Monte Carlo simulation that considers various variables and assumptions, including:

• simulated 30 -day average at the end of the requisite service period,

• discount period based on the vesting term of the awards

• an estimate of stock price volatility based on that of an industry peer group,

• expected dividends, if any, and

• risk-free interest rate.

These assumptions require estimates and judgements and changes in those inputs could impact the amount of expenses that are charged to earnings.

The Company recognizes compensation expense for the fair value of RSU and stock option awards over the requisite service period of the award.

All excess tax benefits, taxes and tax deficiencies from stock-based compensation are included in the provision for income taxes in the Consolidated Statement of Operations.

The Company recognizes compensation expense for the fair value of RSUs and stock option awards over the requisite service period of the awards.

All excess tax benefits, taxes and tax deficiencies from stock-based compensation are included in the provision for income taxes in the Company's Consolidated Statements of Operations and Comprehensive Loss.

Per Share Data

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

Cash and cash equivalents consisted of cash in bank checking accounts and money market funds which are all Level 1 assets.

Cash and cash equivalents consisted of cash in bank accounts which are all Level 1 assets.

• Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable 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, accrued expenses and deferred revenue approximate fair value based on the short-term maturity of these assets and liabilities.

The Company previously granted warrants to certain holders of the Company's 12.5 % Senior Secured Notes due 2025 (the 12.5 % Notes") in connection with its debt repayment and debt refinancing.

Additionally in 2022, the Company issued pre-funded warrants and Common Stock warrants to certain purchasers in connection with the Securities Purchase Agreements.

The Company previously granted warrants to certain holders of the Company’s the 12.5 % Notes in connection with its debt repayment and debt refinancing.

The Company also issued pre-funded warrants and warrants in 2022 and warrants in 2023 to purchase shares of Common Stock to certain purchasers in connection with the Securities Purchase Agreements.

The warrants were valued based on the Black-Scholes valuation model performed by 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.

See Note 15, Warrants for further information on these warrants.

The Company's 12.5 % Notes contain a repurchase offer or put option which gives holders of the option the right, but not the obligation, to receive a specified amount of future royalties up to a capped amount.

The Company's 12.5 % Notes contained a repurchase offer or put option which gave holders of the option the right, but not the obligation, to receive a specified amount of future royalties up to a capped amount.

This put option was valued based on Level 3 inputs and its fair value was based primarily on an independent third-party appraisal consistent with generally-accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants Accounting and Valuation Guide.

See Note 12, 12.5 % Senior Secured Notes and Loans Payable for further discussion.

See Note 14, Long-Term Debt for further discussion.

In connection with the issuance of the 13.5 % Notes on November 1, 2023, the Company and the Note Holders entered into the Royalty Right Agreements.

The Royalty Right Agreements were valued based on Level 3 inputs, and their fair value is estimated by applying probability-weighted cash flows for future sales, which are then discounted to present value.

Changes to fair value of the Royalty Rights Agreements can result from changes to one or a number of the aforementioned inputs.

A significant change in unobservable inputs could result in a material increase or decrease to the effective interest rate of the Royalty Right Agreements liability.

During the remainder of 2023, there were no material changes to the significant unobservable inputs used to recognize the Royalty Right Agreements liability.

See Note 14, Long-Term Debt for further discussion.

Segment Information

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Recent Accounting Pronouncements

As a public emerging growth company, the Company has elected to take advantage of the extended transition period afforded by Jumpstart Our Business Startups Act for the implementation of new or revised accounting standards and, as a result, the Company will comply with new or revised accounting standards by the relevant dates on which adoption of such standards is required for public emerging growth companies.

The Company complies with new or revised accounting standards by the relevant dates on which adoption of such standards is required for smaller reporting companies.

From time to time, new accounting pronouncements are issued by the FASB and adopted by the Company as of the specified effective date.

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Recently Adopted Accounting Pronouncements:

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.

The guidance provides for use of a forward-looking expected loss model for estimating credit losses, replacing the incurred loss model that is based on past events and current conditions.

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 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.

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.

In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50) Disclosure of Supplier Finance Program Obligations , to increase the transparency of supplier finance programs regarding the use of such programs by the buyer party (that is, the disclosing entity) and the programs’ effects on an entity’s working capital, liquidity, and cash flows.

ASU 2022-04 is effective for all entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

The requirement on rollforward information is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

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 December 31, 2023:

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

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

The Company is currently evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements but does not expect 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) :

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

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

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.

The guidance provides for use of a forward-looking expected loss model for estimating credit losses, replacing the incurred loss model that is based on past events and current conditions.

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 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.

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 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.

The Company is currently evaluating the impact from the adoption of ASU 2020-03 on its consolidated financial statements but does not expect to have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09— Income Taxes (Topic 740)—Improvements to Income Tax Disclosures.

This Accounting Standards Update was issued to enhance the transparency and decision usefulness of income tax disclosures.

The ASU requires that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate).

It further requires discloses on an annual basis of the following information about income taxes paid:

The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes 2.

The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).

Additionally, it requires the following information disclosure:

Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign 2.

Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

The ASU eliminates certain current disclosure requirements.

These disclosure requirements will be effective for the Company beginning January 1, 2025, with early adoption of the amendments permitted.

The Company is currently evaluating the impact from the adoption of ASU 2023-09 on disclosures to its consolidated financial statements.

Risks and Uncertainties

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The Company has experienced a history of net losses.

The Company's accumulated deficits totaled $ 311,207 as of December 31, 2022.

The Company’s accumulated deficit totaled $ 319,077 as of December 31, 2023.

The net losses and accumulated deficits were partially offset by gross margins from sales of commercialized licensed and proprietary products (prior to the licensing agreement of Sympazan with Assertio), license fees, milestone and royalty payments from commercial licensees and co-development parties.

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The Company began utilizing its ATM facility in November 2020.

Since inception to December 31, 2022, the Company sold 10,341,957 shares of Common Stock which generated net cash proceeds of approximately $ 39,740 , net of commissions and other transaction

costs of $ 2,053 .

Since inception to December 31, 2023, the Company sold 15,300,298 shares of Common Stock which generated net cash proceeds of approximately 48,703 , net of commissions and other transaction costs of 2,555 .

For the year ended December 31, 2023, the Company sold 4,958,341 shares which provided net proceeds of approximately $ 8,962 after deducting commissions and other transaction costs of $ 502 .

This ATM facility has approximately $ 23,952 available at December 31, 2023.

As of the filing of this Annual Report on Form 10-K, the Company will be 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.

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 and equivalents, expense management activities, including, but not limited to the ceasing of 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 for at least the next twelve months as it continues to execute its business strategy.

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 and cash equivalents, expense management activities, including, but not limited to the ceasing of R&D activities, as well as access to the equity capital markets through its ATM facility (see Note 23 , Subsequent Events) and under the Lincoln Park Purchase Agreement, provide near term liquidity for the Company to fund its operating needs for at least the next twelve months as it continues to execute its business strategy.

Revenues and Trade Receivables, Net

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Contract and other receivables totaled $ 2,915 and $ 2,139 as of December 31, 2023 and 2022, respectively, consisting primarily of contract assets and other receivables.

Contract assets consist 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.

Sales-related allowances for both periods presented are estimated in relation to revenues recognized for sales of Sympazan prior to the licensing agreement the Company entered into with Assertio in October 2022.

Contract assets consist of products and services provided under specific contracts to customers for which earnings processes have been met.

Sales-related allowances as of December 31, 2022 were estimated in relation to revenues recognized for sales of Sympazan prior to the licensing agreement the Company entered into with Assertio in October 2022.

See details in Note 6 , Material Agreements.

There were no additions to or write-downs charged against the allowance for doubtful accounts for the years ended December 31, 2022 and 2021, respectively.

The allowance for doubtful accounts was $ 40 for each of the years ending December 31, 2022 and 2021.

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

Allowance for doubtful accounts at beginning of the period $ 40 $ 40

Allowance expense (reduction)

Write-downs charged against the allowance — —

Allowance for doubtful accounts at end of the period $ 14 $ 40

The allowance for doubtful accounts was $ 14 and $ 40 for each of the years ending December 31, 2023 and 2022.

There was a reduction of $ 26 to th e allowance for doubtful accounts for the year ended December 31, 2023.

There were no additions to or write-downs for the year ended December 31, 2022.

The following table presents the changes in sales-related allowances:

Balance at December 31, 2021 $ 605 $ 416

Beginning Balance

Provision related to sales in 2022 — 1,365

Credits and payments ( 87 ) ( 1,301 )

Balance at December 31, 2022 $ 669 $ 605

Reclassifications $ ( 582 ) $ —

Ending Balance

Total reductions of gross product sales from sales-related allowances and accruals were $ 0 the year ended December 31, 2023 due to the outlicensing of Sympazan.

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 Accrued expenses were $ 0 and $ 645 , respectively, as of December 31, 2023, and $ 669 and $ 1,012 , respectively, as of December 31, 2022.

See Note 13, Accrued Expenses.

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 year ended December 31, 2022, Indivior Inc.

("Indivor") exceeded the 10% threshold for revenue and represented approximately 76 % of total revenue.

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

For the year ended December 31, 2021, Indivor 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 year ended December 31, 2023, Indivor represented approximately 80 % of total revenue.

As of December 31, 2023, Indivor and Zevra Therapeutics, Inc.

represented 65 % and 13 %, respectively, of total trade and other receivables.

For the year ended December 31, 2022, Indivor represented approximately 76 % of total revenue.

As of December 31, 2022, Indivior represented 80 % of total trade and other receivables.

Material Agreements

Commercial Exploitation Agreement with Indivior

In August 2008, the Company entered into a Commercial Exploitation Agreement with Reckitt Benckiser Pharmaceuticals, Inc.

(with subsequent amendments collectively, the “Indivior License Agreement”).

Reckitt Benckiser Pharmaceuticals, Inc.

was later succeeded to in interest by Indivior, Inc.

In August 2008, the Company entered into the Indivior License Agreement (with subsequent amendments) with Reckitt Benckiser Pharmaceuticals, Inc.

who was later succeeded to in interest by 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.

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 the Company entered into with Indivior.

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

Additionally, the Company is required to obtain API for the manufacture of Suboxone directly from Indivior.

The Indivior License Agreement specifies a minimum annual threshold quantity of Suboxone that the Company is obligated to fill and requires Indivior to provide the Company with a forecast of its requirements at various specified times throughout the year.

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.

The Indivior License Agreement provides for payment by Indivior of an agreed upon purchase price per unit until January 1, 2025 and, thereafter, that is subject to annual adjustments based on changes in an agreed upon price index.

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.

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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.

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

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

Thereafter, the Indivior License Agreement automatically renewed for successive one -year periods.

Effective as of March 2, 2023, the Company and Indivior entered into the Indivior Amendment to the Indivior License Agreement.

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.

See Note 21, Subsequent Events for details.

and (ii) agreeing to transfer pricing and payment terms for supplied product under the Indivior License Agreement.

In consideration of the agreements between the parties, the Company received a payment of $ 11,482 from Indivior, of which amount $ 5,482 represents:

(a) payment of the portion of a 2022 price increase that had not been previously paid and (b) an estimated payment in 2023 for certain price increases.

As of December 31, 2023, the $ 5,482 price increase has been fully recognized in Manufacture and supply revenue and $ 6,000 is included in Interest income and other income, net on the Consolidated Statements of Operations and Comprehensive Loss .

Supplemental Agreement with Indivior

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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 was 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 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.

Further payments under the Indivior Supplemental Agreement were suspended until adjudication of

related patent infringement litigation is finalized.

No further payments are due to the Company under the Indivior Supplemental Agreement.

See Note 22, Contingencies for details.

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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 (the "FDA Approval Milestone Payment") due on the earlier of:

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) with six months of the FDA approval.

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.

In consideration of the rights granted to Sunovion under the Sunovion License Agreement, the Company 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”), all of which of which has been received to date.

With the Monetization Agreement, we are no longer entitled to receive certain contingent one-time milestone payments of $ 23,000 related to product availability and regulatory approval in Europe, certain one-time milestone payments based on the achievement of specific annual net sales thresholds of KYNMOBI®, and ongoing mid-single digit percentage royalty payments related to the net sales of KYNMOBI (subject to reduction to low-single digit percentage royalty payments in certain circumstances), subject to certain minimum payments.

There are minimum annual guaranteed royalty payments under the contract and during the second quarter of 2020, the Company recorded minimum royalty revenue of $ 8,000 for minimum royalties, reflected 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.

Effective March 16, 2020, the Company entered into the First Amendment to the Sunovion License Agreement.

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

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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.

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 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.

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

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 December 31, 2022 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 forecast by Sunovion of estimated KYNMOBI sales as of December 31, 2022, the Company may likely not receive any of the additional contingent payments under the Monetization agreement.

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 (defined below) entered into on November 3, 2020 relating to KYNMOBI as described in the paragraph below, the Company is no longer entitled to receive any payments under the Sunovion License Agreement.

Purchase and Sale Agreement with an affiliate of Marathon

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

Under the terms of the Monetization Agreement, the Company sold to Marathon all of its contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion’s apomorphine product, KYNMOBI.

In exchange for the sale of these rights, the Company received an upfront payment from Marathon 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 December 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 .

In June 2023, Sunovion announced that it has voluntarily withdrawn KYNMOBI from the U.S.

and Canadian markets, therefore, the Company likely will not receive any of the additional contingent payments under the Monetization agreement.

See Note 16, Sale of Future Revenue for further details on the accounting for the Monetization Agreement.

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(formerly KemPharm)

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.

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

For the year ended December 31, 2021, the Company received payment of $ 2,000 under this arrangement, which was included in License and royalty revenues.

During the year ended December 31, 2023, the Company has recognized $ 1,500 as milestone revenues for Zevra.

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 (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.

The Company entered into the Haisco Agreement, pursuant to which Aquestive granted Haisco, a Chinese limited company listed on the Shenzhen Stock Exchange, an exclusive license to develop and commercialize Exservan (riluzole oral film) for the treatment of ALS 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 and 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, former 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 (the “Termination Agreement”).

In connection with his departure, Mr.

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

Kendall and the Company entered into a Separation Agreement, including a Consulting Agreement, dated as of May 17, 2022.

Pursuant to the Separation Agreement, Mr.

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

Kendall’s employment with the Company ceased effective as of May 17, 2022.

Under the Separation Agreement, Mr.

Kendall received the following principal severance benefits, the outstanding portions of which are contingent upon Mr.

Kendall received the following principal severance benefits contingent upon Mr.

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

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(iv) severance payments consisting of (a) a cash payment of $ 263 , which represents an acceleration of the first three installments of Mr.

Kendall’s 18 -month severance he is entitled to under his employment agreement;

Kendall’s 18 -months severance which he is entitled to under his employment agreement;

(b) monthly severance payments of $ 53 per month for the first through the seventh months following the Termination Date;

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Under the terms of the Separation Agreement, Mr.

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 received a consulting fee of $ 10 per month.

As of December 31, 2023, all obligations related to Mr.

Kendall have been completed.

Licensing and Supply Agreement with Atnahs Pharma UK Limited

The Company entered into a License and Supply Agreement with Atnahs Pharma UK Limited, a company registered in England and Wales ("Pharmanovia"), effective as of September 26, 2022 (the "Pharmanovia Agreement"), pursuant to which the Company granted Pharmanovia an exclusive license to certain of the Company's intellectual property to develop and commercialize Libervant™ (diazepam) Buccal Film for the treatment of prolonged or acute, convulsive seizures in all ages in certain countries of the European Union, the United Kingdom, Switzerland, Norway and the Middle East and North Africa (the "Territory") during the term of the Pharmanovia Agreement.

The Company entered into the Pharmanovia Agreement, effective as of September 26, 2022, pursuant to which the Company granted Pharmanovia an exclusive license to certain of the Company’s intellectual property to develop and commercialize Libervant (diazepam) Buccal Film for the treatment of prolonged or acute, convulsive seizures in all ages in the Territory during the term of the Pharmanovia Agreement.

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.

The Company expanded its exclusive license and supply agreement with Pharmanovia in March 2023.

See Note 21, Subsequent Events for details.

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 to expand the scope of territory for the license of Libervant to cover the rest of the world, excluding the U.S., Canada and China.

Under the Pharmanovia Amendment, Pharmanovia will be responsible for seeking applicable 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 execution of the Pharmanovia Amendment.

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, 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

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.

Effective as of October 26, 2022, the Company entered into the Assertio Agreement 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.

Under the terms of the Assertio Agreement, the Company granted to Assertio 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 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 License Agreement, the Company will receive royalties from Assertio for the sale of the product through the expiration of the Assertio License Agreement.

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

Certain assets and liabilities are reported on a recurring basis at fair value.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

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

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

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

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 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.

See Note 15 , Warrants for further information on these warrants.

The Company’s 12.5 % Senior Secured Notes contained a repurchase offer or put option which gives holders of the option the right, but not the obligation, to require the Company to redeem the 12.5 % Notes up to a capped portion of milestone payments resulting from the Monetization Agreement.

This put option was valued based on Level 3 inputs and its fair value was based primarily on an independent third-party appraisal consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants Accounting and Valuation Guide.

See Note 14, Long-Term Debt for further discussion.

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

See Note 15 , Warrants for further information on these warrants.

On August 1, 2023, the Company entered into the Letter Agreement with the Exercising Holder of the remaining warrants to purchase 5,000,000 of the shares of Common Stock.

Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $ 0.96 per share of Common Stock, the current exercise price of the Existing Warrants.

Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder new warrants to purchase up to an aggregate of 2,750,000 shares of New Warrants at $ 2.60 per share.

Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide.

See Note 15 , Warrants for further information on these warrants.

On November 1, 2023, in connection with the issuance of the 13.5 % Notes, the Company and the Note Holders entered into the Royalty Right Agreements dated as of November 1, 2023, which provides the Note Holders:

a tiered royalty between 1.0 % and 2.0 % of annual worldwide net sales of Anaphylm (epinephrine) Sublingual Film for a period of eight years from the first sale of Anaphylm on a global basis, and

a tiered royalty between 1.0 % to 2.0 % of annual worldwide net sales of Libervant (diazepam) Buccal Film until the earlier of (1) the first sale of Anaphylm and (2) eight years from the first sale of Libervant.

Those Royalty Agreements were valued based on Level 3 inputs and their fair value was based primarily on internal management estimates developed based on third-party data and reflect management’s judgements, current market conditions, and forecasts.

The initial fair value measurement of the Royalty Right Agreements was determined based on significant unobservable inputs, including the discount rate, estimated probabilities of success, and the estimated amount of future sales of Anaphylm and Libervant.

See Note 14, Long-Term Debt for further discussion.

Inventories, Net

Inventory consists of the following:

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

Total depreciation and amortization related to property and equipment were $ 2,270 and $ 2,912 for the years ended December 31, 2022 and 2021, respectively.

Total depreciation and amortization related to property and equipment was $ 1,153 and $ 2,270 for the years ended December 31, 2023 and 2022, respectively.

For the year ended December 31, 2023 the Company recognized a $ 216 impairment of an asset held in Construction in progress account that was assessed by management as no longer usable.

Such impairment charge is included in the Manufacture and supply expenses on the Consolidated Statements of Operations and Comprehensive Loss.

No impairment losses were recognized for the year ended December 31, 2022.

Right-of-Use Assets and Lease Obligations

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See Part II, Properties for details.

During the year ended December 31, 2023, the Company recognized a lease supporting its manufacturing facilities as a finance lease.

Commitments under finance leases are not significant, and are included in Property and equipment, net, Notes Payable, current and Notes Payable, net on the Consolidated Balance Sheets.

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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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 a range of an

estimated discount rate of 14.8 % to 16.9 % applied to minimum lease payments, including expected renewals, based on the incremental borrowing rate experienced in the Company’s collateralized debt refinancing.

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 Loss.

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Total operating lease liabilities $ 5,808

Intangible Assets, Net and Other non-current assets

The following table provides the components of identifiable intangible assets, all of which are finite lived and other non-current assets:

Intangible Assets, Net

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

Purchased intangible $ 3,858 $ 3,858

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Intangible assets, net 1,278 1,435

Amortization expense was $ 157 and $ 116 for each of the years ended December 31, 2023 and 2022, respectively.

During the remaining life of the purchased intangible, estimated annual amortization expense is $ 157 for the year ending 2024 and beyond.

As of December 31, 2023, the remaining weighted-average life of all intangible assets subject to amortization is 8.1 years.

The estimated aggregate amortization expense for each of the following fiscal years ending December 31 is presented below:

Total estimated amortization expenses

Other Non-Current Assets

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

Royalty receivable $ 4,000 $ 5,000

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Total other non-current assets $ 5,438 $ 6,451

Amortization expense was $ 116 and $ 51 for each of the years ended December 31, 2022 and 2021, respectively.

During the remaining life of the purchased intangible, estimated annual amortization expense is $ 156 for the year ending 2023.

Other non-current assets consisted of royalty receivable related to the five $ 1,000 annual minimum guaranteed royalty that is due in the remaining term of the Monetization Agreement, value-added tax receivable, non-current security deposits, and capitalized cost to obtain revenue contracts.

Refer to Note 14, Sale of Future Revenue for detail on the Monetization Agreement royalty receivable.

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 eight $ 1,000 annual minimum guaranteed royalty payments that are due to the Company.

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

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

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

See Note 16 .

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

Accrued Expenses

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Accrued distribution expenses 645 1,012

Other 244 198

Interest payable

Total accrued expenses $ 6,497 $ 7,967

12.5% Senior Secured Notes and Loans Payable

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

Upon closing of the indenture for the 12.5 % Notes (the "Base Indenture"), the Company issued $ 70,000 of the 12.5 % Notes (the “Initial Notes”) along with the Warrants and rights of first offer (the “First Offer Rights”) to the noteholders participating in this transaction.

The reduction in Accrued compensation is mostly related to payments of accrued severance costs and accrued commission expenses during the year ended December 31, 2023.

The increase in Interest payable is due to the timing of interest payments on the 13.5 % Senior Notes that were due on January 2nd, 2024.

See Note 6, Material Agreements, for a discussion of the Termination agreement with certain officers and related severance accrued expenses recorded in Accrued compensation as of December 31, 2022.

See Note 14, Long-Term Debt, for discussion of 13.5 % Notes and related interest payable.

Long-Term Debt

12.5 % Senior Secured Notes

On July 15, 2019, the Company completed the private placement of up to $ 100,000 aggregate principal of its 12.5 % Notes due 2025 and issued Warrants to purchase 2,000,000 shares of Common Stock, at $ 0.001 par value per share.

Upon closing of the Base Indenture, the Company issued $ 70,000 of the 12.5 % (the "Initial Notes") along with the Warrants and rights of first offer (the “First Offer Rights”) to the noteholders participating in this transaction.

Issuance of the Initial Notes and Warrants provided net proceeds of $ 66,082 .

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Further, the Company entered into an additional Purchase Agreement with its noteholders 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 noteholders 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 December 31, 2022.

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

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Existing deferred discounts and loan origination fees on the 12.5 % Notes are amortized as an adjustment of interest expense over the remaining term of modified debt using the effective interest method.

The First Supplemental Indenture contains a provision whereby, as the Company receives any cash proceeds from the Monetization Agreement, each noteholder has the right to require the Company to redeem all or any part of such noteholder's outstanding 12.5 % Notes at a repurchase price in cash equal to 112.5 % of the principal amount, plus accrued and unpaid interest.

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.

The First Supplemental Indenture contained a provision whereby, as the Company receives any cash proceeds from the Monetization Agreement, each noteholder has the right to require the Company to redeem all or any part of such noteholder’s outstanding 12.5 % Notes at a repurchase price in cash equal to 112.5 % of the principal amount, plus accrued and unpaid interest.

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

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

Based on the valuation study, the put option was valued at $ 45 and has been recorded in Other non-current liabilities.

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

In addition, as of the closing of this transaction, the Company issued to the holders of the 12.5 % Notes warrants to purchase 143,000 shares of our Common Stock.

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

In addition, as of the closing of this transaction, the Company issued to the holders of the 12.5 % Notes warrants to purchase 143,000 shares of the Company's Common Stock.

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

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 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 (pursuant to the terms currently in effect, as amended by the Fifth Supplemental Indenture described below), 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.

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.

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.

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

For the year ending December 31, 2021, the Company recognized a loss on the extinguishment of debt of $ 13,822 for fees and expenses related to the Fourth Supplemental Indenture.

As of December 31, 2022, the Company recorded the remaining Consent Fee to be paid of $ 675 as Loans payable, current, on its Consolidated Balance Sheet.

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.

market access for Libervant prior to March 31, 2023.

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 upon the exercise by the Company of the option to access the re-openers.

A debt maturity table as of December 31, 2022 is presented below:

As of December 31, 2022, the Company recorded the remaining Consent Fee to be paid of $ 675 as Notes payable, current, on its Consolidated Balance Sheet.

The payment was made in February 2023.

The 12.5 % Notes provided 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 December 31, 2022, the Company recorded its principal payments due as Notes Payable, current and Notes Payable, net on its Consolidated Balance Sheet.

The Company could have elected, 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 included change of control provisions under which the Company may have been required to redeem the 12.5 % Notes at 101 % of the remaining principal plus accrued interest at the election of the noteholders.

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

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

On November 4, 2022 and December 16, 2022, the Company issued two separate notices of partial redemption pursuant to the Indenture, dated as of July 15, 2021, between the Company and the Trustee and collateral agent governing the 12.5 % Notes.

Pursuant to each of the notice of partial redemption, the Company gave holders of the 12.5 % Notes notice that the Company intended to redeem $ 3,765 and $ 1,882 , respectively, of its outstanding 12.5 % Notes at a redemption price pursuant to the formula set forth in the Indenture governing the 12.5 % Notes, plus accrued and unpaid interest and fees.

Such partial redemptions occurred in January and February 2023, respectively.

The Company also paid $ 353 in a prepayment premium as a result of the early retirement of debt which was reflected as a loss on extinguishment of debt in Loss on the Extinguishment of Debt in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

Further, during 2023 the Company made three scheduled principal payments totaling $ 11,463 .

Amortization expense arising from deferred debt issuance costs and debt discounts related to the 12.5 % Notes for the years ended December 31, 2023 and December 31, 2022 was $ 13 and $ 16 , respectively.

Unamortized deferred debt issuance costs and deferred debt discounts related to the 12.5 % Notes were $ 0 and $ 27 as of December 31, 2023 and December 31, 2022, respectively.

On November 1, 2023, the Company issued the 13.5 % Notes, as described below, and used the proceeds from the issuance to repay the outstanding principal balance under the 12.5 % Notes of $ 36,014 , including accrued and unpaid interest and a redemption fee.

The Company accounted for this transaction as an extinguishment of debt and recognized a debt extinguishment charge of $ 1,029 for the year ended December 31, 2023.

The debt extinguishment charge is included in Loss on the extinguishment of debt in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

13.5 % Senior Secured Notes

On November 1, 2023, the Company entered into an Indenture Agreement with certain institutional investors (the “Note Holders”) and issued $ 45,000 aggregate principal amount of its 13.5 % Notes due 2028.

The Company received net proceeds of approximately $ 4,326 from this transaction after the repayment of the 12.5 % Notes and deduction of debt discount, and debt issuance costs.

The 13.5 % Notes are senior secured obligations of the Company and mature on November 1, 2028.

The 13.5 % Notes bear interest at a fixed rate of 13.5 % per year, payable quarterly commencing on December 30, 2023 with the first interest payment due on January 2, 2024.

On each payment date commencing on June 30, 2026, the Company will pay an installment of principal of the 13.5 % Notes pursuant to a fixed amortization schedule, along with the applicable Exit Fee.

The Exit Fee totals $ 2,000 .

The Company may, at its option, redeem the 13.5 % Notes in full or in part:

if such redemption occurs prior to November 1, 2025, at a redemption price equal to 100 % of the principal amount plus accrued and unpaid interest, plus the applicable Exit Fee, plus an Applicable Premium which is the greater of

1.0 % of the principal redeemed;

the amount, if any, by which the present value of the principal to be redeemed on November 1, 2025, plus all required interest due on such date, computed using a discount rate equal to the Treasury Rate, plus 100 basis points, exceeds the amount of principal to be redeemed;

if such redemption occurs after November 1, 2025, the redemption price is equal to 108.50 % of the principal amount plus accrued and unpaid interest, plus the applicable Exit Fee.

If the Company undergoes a change of control, the Note Holders may require the Company to repurchase for cash all or any portion of the 13.5 % Notes at a change of control repurchase price equal at 108.5 % plus the Exit Fee of the remaining principal, plus accrued interest at the election of the Note Holders.

The Indenture permits the Company, upon the continuing satisfaction of certain conditions, including that the Company (on a consolidated basis) has at least $ 100,000 of net revenues for the most recently completed twelve calendar month period, to enter into an asset-based borrowing facility not to exceed $ 10,000 (the “ABL Facility”).

The ABL Facility may be collateralized only by assets of the Company constituting inventory, accounts receivable, and the proceeds thereof.

In connection with the issuance of 13.5 % Notes, the Company and the Note Holders entered into the Royalty Right Agreements dated as of November 1, 2023, which provides Note Holders:

a tiered royalty between 1.0 % and 2.0 % of annual worldwide net sales of Anaphylm (epinephrine) Sublingual Film for a period of eight years from the first sale of Anaphylm on a global basis, and

Both, the 13.5 % Notes and Royalty Right Agreements, represent freestanding instruments which were issued in conjunction with each other.

They are classified as debt within the scope of ASC 470, Debt and are subsequently measured on an amortized cost basis.

These inputs are derived using internal management estimates developed based on third-party data and reflect management’s judgements, current market conditions, and forecasts.

The Royalty Right Agreements fair value is estimated by applying probability-weighted cash flows for future sales, which are then discounted to present value.

Changes to fair value of the Royalty Rights Agreements can result from changes to one or a number of the aforementioned inputs.

A significant change in unobservable inputs could result in a material increase or decrease to the effective interest rate of the Royalty Right Agreements liability.

During the remainder of 2023, there were no material changes to the significant unobservable inputs used to recognize the Royalty Right Agreements liability.

The following table summarizes the significant unobservable inputs used in the initial fair value measurement of the Royalty Right Agreements as of December 31, 2023:

Valuation Methodology Significant Unobservable Input Weighted Average (range, if applicable)

Discount Rate 15 %

Royalty Right Agreements Probability weighted

income approach Probability of Success 75 %

Projected Years of Payments 2025 - 2033

Since the Royalty Right Agreements were issued in connection with the 13.5 % Notes, the Company allocated the proceeds to the two instruments based on their relative fair values.

The Company allocated approximately $ 13,856 to the Royalty Right Agreements.

The Company determined the allocated fair value by calculating the present value of estimated future royalties to be paid to Note Holders over the life of the arrangement.

The excess of future estimated royalty payments of $ 56,926 over the $ 13,856 of allocated fair value is recognized as a discount related to the Royalty Right Agreements and is amortized as interest expense using the effective interest method.

Consequently, the Company calculated an imputed rate of interest on the unamortized portion of the Royalty Right Agreements liability, which was approximately 9.68 % as of December 31, 2023.

The allocated amounts of $ 13,856 when combined with the Exit Fee of $ 2,000 , original issue discount of $ 1,125 and debt issuance costs of $ 3,517 , resulted in debt discount of $ 20,498 .

The debt discount is being amortized over the term of 13.5 % Notes using the effective interest method.

Amortization expense arising from the discounts related to the 13.5 % Notes and Royalty Right Agreements for the year ended December 31, 2023 was $ 833 and $ 905 , respectively.

Unamortized discounts totaled $ 17,665 for the 13.5 % Notes and $ 42,165 for Royalty obligations as of December 31, 2023.

Long-term notes and unamortized debt discount balances are as follows:

Total outstanding notes

$ 45,000 $ 51,500

Unamortized discount, including Exit Fee

( 17,665 ) ( 27 )

Current portion of long-term debt — ( 18,025 )

Notes payable, long-term

$ 27,335 $ 33,448

Finance lease

Notes payable, net

$ 27,508 $ 33,448

Royalty obligations

Unamortized discount ( 42,165 )

Royalty obligations, net

Scheduled principal payments on the 13.5 % Notes as of December 31, 2023 are as follows:

Total $ 45,000

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 December 31, 2022, the Company recorded its principal payments as Loans payable, current and Loans payable, net on its Consolidated Balance Sheet.

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

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.

See Note 21, Subsequent Events for details.

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 noteholders, 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 years ended December 31, 2022 and 2021 were $ 16 and $ 3,572 , respectively.

Unamortized deferred debt issuance costs and deferred debt discounts totaled $ 27 and $ 43 as of December 31, 2022 and December 31, 2021, respectively.

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

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

Warrants Issued to 12.5 % Senior Secured Noteholders

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There were no warrants exercised as it relates to the Initial Warrants and the Additional Warrants during the year ended December 31, 2023 and December 31, 2022, respectively.

Warrants to purchase a total of 1,714,429 shares of Common Stock with exercise prices of $ 4.25 and $ 5.38 for 1,571,429 warrants and 143,000 warrants, respectively, remain outstanding as of December 31, 2023 and December 31, 2022.

Long-Term Debt.

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 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 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 as of 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 Consolidated Balance Sheet.

No Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised during the year ended December 31, 2022.

The fair value of the pre-funded and Common Stock warrants is treated as equity and is presented in Additional Paid-in Capital in the Company’s Consolidated Balance Sheet.

On June 14, 2023, 3,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements were exercised with proceeds of approximately $ 3,542 .

On August 1, 2023, the Company entered into the Letter Agreement with the Exercising Holder of 5,000,000 of the remaining Common Stock Warrants.

Pursuant to the Letter Agreement, the Exercising Holder and the Company agreed that the

Exercising Holder would exercise all of its Existing Warrants for shares of Common Stock underlying the Existing Warrants at $ 0.96 per share of Common Stock, the current exercise price of the Existing Warrants.

Under the Letter Agreement, in consideration of the Exercising Holder exercising the Existing Warrants, the Company issued to the Exercising Holder New Warrants to purchase up to an aggregate of 2,750,000 shares of Common Stock.

The New Warrants are exercisable after February 2, 2024, expire on February 2, 2029 and are issuable only for cash, subject to exception if the shares of Common Stock underlying the New Warrants are not registered in accordance with the terms of the Letter Agreement, in which case the New Warrants may also be exercised, in whole or in part, at such time by means of a "cashless exercise".

The New Warrants have an exercise price of $ 2.60 per share.

Management estimated the fair value of the warrants to be $ 4,671 based on an assessment by an independent third-party appraiser.

The fair value of the New warrants is treated as equity and is presented in Additional Paid-in Capital in the Company’s Consolidated Balance Sheet.

On August 2, 2023, 5,000,000 of the Existing Warrants were exercised pursuant to the Securities Purchase Agreement with the Exercising Holder, with the Company receiving gross proceeds therefrom of $ 4,800 .

In total, 8,689,452 Common Stock warrants issued pursuant to the Securities Purchase Agreements with proceeds of approximately $ 8,307 were exercised during the year ended December 31, 2023.

The Company incurred $ 35 in relation to this transaction.

As of December 31, 2023, in addition to the New Warrants to purchase of 2,750,000 shares of Common Stock described above, there remain outstanding Common Stock Warrants to purchase 160,548 shares of Common Stock with an exercise price of $ 1.09 of the original Securities Purchase Agreements .

Sale of Future Revenue

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

There are a number of factors that could materially affect the amount and timing of royalty and

milestone payments to Marathon from Sunovion and, correspondingly, the amount of interest expense recorded by the Company, most of which are not under the Company's control.

There are a number of factors that could materially affect the amount and timing of royalty and milestone payments to Marathon from Sunovion and, correspondingly, the amount of interest expense

recorded by the Company, most of which are not under the Company’s control.

Such factors include, but are not limited to, changing standards of care, the initiation of competing products, manufacturing or other delays, generic competition, intellectual property matters, adverse events that result in government health authority imposed restrictions on the use of products, significant changes in foreign exchange rates as the royalties remitted to Marathon are made in U.S.

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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.

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

As a result, the Company discontinued recording interest expense related to the sale of future revenue during the fourth quarter of 2022.

In June 2023, Sunovion announced that it has voluntarily withdrawn KYNMOBI from the U.S.

and Canadian markets, therefore, the Company likely will not receive any of the additional contingent payments under the Monetization agreement.

Further, the Company discontinued recording interest expense related to the sale of future revenue during the fourth quarter of 2022.

The following table shows the activity of the Liability related to the sale of future revenue for the year ended December 31, 2023:

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Other Non-Current Liabilities

The Company’s other non-current liabilities at December 31, 2022 consisted of asset retirement obligations ("AROs") of $ 1,989 , and the fair value of the put option on the 12.5 % Notes of $ 45 .

The Company’s other non-current liabilities at December 31, 2021 consisted of AROs of $ 1,712 , the long term portion of the Consent Fee related to the 12.5 % Senior Secured Note of $ 675 and the long-term portion of fair value of the put option on the 12.5 % Notes of $ 98 .

The Company’s other non-current liabilities at December 31, 2023 consisted of AROs of $ 2,016 , and the fair value of the put option on the 12.5 % Notes of $ 0 .

The Company’s other non-current liabilities at December 31, 2022 consisted of AROs of $ 1,989 and the long-term portion of fair value of the put option on the 12.5 % Notes of $ 45 .

See Note 14, Long-Term Debt for discussion of 12.5 % Notes.

AROs consists of estimated future spending related to removing certain leasehold improvements at the Company’s facilities in Portage, Indiana and Warren, New Jersey, and returning all facilities to their original condition.

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Balance at December 31, 2021 $ 1,712

Accretion 187

Balance at December 31, 2021 1,712

Additions 110

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Balance at December 31, 2022 1,989

Net Loss Per Share

Balance at December 31, 2023 $ 2,016

Note 18 .Net Loss Per Share

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

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

As a result of the Company’s net loss incurred for the years ended December 31, 2023 and 2022, 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 below.

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Loss per common share – basic and diluted $ ( 0.13 ) $ ( 1.12 )

As of December 31, 2022 and 2021, respectively, the Company’s potentially dilutive instruments included 6,028 thousand and 4,146 thousand of options to purchase shares of Common Stock, as well as 162 thousand and zero unvested restricted stock units that were excluded from the computation of diluted weighted average shares outstanding because these securities had an antidilutive impact due to the losses reported.

Similarly excluded as of December 31, 2022 and 2021 were potentially dilutive warrants for the purchase of 10,564 thousand and 1,714 thousand common shares for the respective periods.

(a) For the years ended December 31, 2023 and 2022, outstanding stock options of 5,733,064 and 6,027,997 to purchase shares of Common Stock, respectively, were anti-dilutive.

(b) For the years ended December 31, 2023 and 2022, outstanding restricted stock units of 3,280,313 and 161,750 to purchase shares of Common Stock, respectively were anti-dilutive.

(c) For the years ended December 31, 2023 and 2022, outstanding warrants of 4,624,977 and 10,564,429 to purchase shares of Common Stock, respectively, were anti-dilutive.

Share-Based Compensation

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Under this Plan, the Company may grant restricted stock units, stock options, or other stock-based awards in order to align the long-term financial interests of selected participants with those of its stockholders, strengthen the commitment of such persons to the Company, and attract and retain competent and dedicated persons whose efforts will enhance long-term growth, profitability and share value.

Restricted stock units and stock options that have been awarded are subject to graded vesting over a service period, which is typically three years .

Compensation cost is recognized for these awards on a pro-rata basis over the requisite service period for each award granted.

The service-based restricted stock units and stock options that have been awarded are subject to graded vesting over a service period, which is typically three years .

The restricted stock units with vesting based on market conditions were awarded in 2023 and vest in three years on the anniversary of the first tranche award.

Compensation cost is recognized for restricted stock units, both service-based awards and market conditions vesting-based awards, on a straight line basis over the requisite service period for each award granted.

Compensation cost for stock option awards is recognized based on a pro-rata basis over the requisite period for each award granted.

At December 31, 2023, there were approximately 1.8 million shares available for grant.

The Company recognized share-based compensation in its Consolidated Statements of Operations during the periods presented as follows:

The Company recognized share-based compensation in its Consolidated Statements of Operations and Comprehensive Loss during the periods presented as follows:

Expense classification:

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Total share-based compensation expenses $ 2,689 $ 4,381

The following tables provide information about the Company’s restricted stock unit and stock option activity during the year ended December 31, 2023 and 2022.

Restricted Stock Units

The following table summarizes the Company’s awards of restricted stock units for the years during 2021 and 2022:

The following tables summarize the Company’s awards of service-based and market conditions vesting-based restricted stock units for the years 2023 and 2022:

Restricted Stock Unit Awards (RSUs) - Service-based:

of Units Weighted Average

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Unvested, December 31, 2021

Granted 192 2.37

Forfeited ( 20 ) 2.21

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Unvested, December 31, 2023 1,948 $ 0.97

The Company granted 192 thousand restricted stock units during 2022.

The Company did not grant restricted stock units during 2021.

The Company granted 1,874,300 service-based restricted stock units during 2023.

The Company granted 192,000 service-based restricted stock units during 2022.

During 2023, the total grant date fair market value of shares vested was $ 72 .

As of December 31, 2022, $ 261 of total unrecognized compensation expenses related to restricted stock units awards is expected to be recognized over a weighted average period of 2.21 years from the date of grant.

The restricted stock units previously granted to employees were subject to a three-year graduated vesting schedule and were not subject to performance-based criteria other than continued employment.

As of December 31, 2023, $ 1,278 of total unrecognized compensation expenses related to unvested service-based restricted stock units are expected to be recognized over a weighted average period of 2.18 years from the date of grant.

The service-based restricted stock units granted to employees are subject to a three -year graduated vesting schedule and are not subject to performance-based criteria other than continued employment.

2022 Inducement Equity Incentive Plan

The Company adopted the 2022 Equity Inducement Plan approved by the Compensation Committee of the Board of Directors of the Company effective as of July 29, 2022 pursuant to which the Compensation Committee of the Board of Directors may make inducement grants in accordance with Nasdaq Listing Rule 5635(c)(4).

There were 150,000 awards granted and outstanding under this Plan as of December 31, 2023 and included in the service-based restricted stock units granted as described in the table above.

Restricted Stock Unit Awards (RSUs) - Market conditions vesting-based:

of Units Weighted Average

Grant Date Fair

Value Per Share

(In thousands)

Unvested, December 31, 2022 — $ —

Granted 1,332 2.40

Forfeited — —

Unvested, December 31, 2023 1,332 $ 2.40

The Company granted 1,332,000 market conditions vesting-based restricted stock units during 2023.

There were no market conditions vesting-based restricted stock units granted in 2022.

As of December 31, 2023, $ 2,314 of total unrecognized compensation expenses related to unvested market conditions vesting-based restricted stock units are expected to be recognized over a weighted average period of 2.34 years from the date of grant.

The market conditions vesting-based restricted stock units vest based on a Performance Price measured as the 30 -day average of the closing prices of the Company’s common stock as reported on the Nasdaq Stock Market immediately prior to and including the last calendar day of the three -year performance period (which ends on the third anniversary of the grant date).

To the extent the Performance Price is less than $ 1.75 , the Vesting Percentage will be zero .

To the extent the Performance Price

is $ 1.75 , the Vesting Percentage will be 50 %.

To the extent the Performance Price is $ 1.76 or greater, but less than $ 2.50 , the Vesting Percentage will be a prorated amount between 50.01 % and 99.99 %, based on straight-line interpolation.

To the extent the Performance Price is $ 2.50 , the Vesting Percentage will be 100 %.

To the extent the Performance Price is $ 2.51 or greater, but less than $ 3.25 , the Vesting Percentage will be a prorated amount between 100.01 % and 149.99 %, based on straight-line interpolation.

To the extent the Performance Price is $ 3.25 or greater, the Vesting Percentage will be 150 %.

In no event will the Vesting Percentage exceed 150 %.

The Company’s estimates of the fair value of market conditions vesting-based awards at their grant or valuation dates were based on a Monte Carlo simulation and considered various variables and assumptions, including a simulated 30 -day average at the end of the Performance period including the following assumptions:

Year Ended December 31,

Expected dividend yield 0 %

Expected volatility 92 % - 95 %

Expected term (years) 2.74 - 3.00

Risk-free interest rate 3.6 % - 4.4 %

Stock price at grant date

$ 2.01 - $ 2.04

Stock option awards

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Outstanding at December 31, 2021

4,146 $ 7.28 7.88 $ 1,423

Granted 2,015 $ 1.83

Forfeited and Expired ( 133 ) $ 7.81

Exercised ( 61 )

Outstanding at December 31, 2022 6,028 $ 5.48 7.50 $ 38

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Forfeited and Expired ( 444 ) $ 2.27

Exercised — $ —

Outstanding at December 31, 2023 5,733 $ 5.58 6.41 $ 1,082

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The weighted average grant date fair value of stock options granted during 2023 and 2022 was $ 1.50 and $ 1.46 , respectively.

During the year ended December 31, 2022, stock options were granted with an exercise price ranging from $ 0.71 to $ 2.55 and accordingly, given the Company’s share price of $ 0.90 at December 30, 2022, the intrinsic value provided by certain shares granted during this period was de minimus.

During the year ended December 31, 2023, 150,000 stock options were granted with an exercise price of $ 2.02 and accordingly, given the Company’s share price of $ 2.02 at December 31, 2023, the intrinsic value provided by certain shares granted during this period was de minimis.

The fair values of stock options granted were estimated using the Black-Scholes model based on the following assumptions:

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Exercise prices $ 2.02 $ 0.71 - $ 2.55

We anticipate reinvesting earnings for the foreseeable future in product development and other avenues of share-value growth and therefore used a dividend yield of zero .

The estimate of volatility was determined based on the historical trading data of comparable public companies at the time of grant given the lack of sufficient history for our own publicly-traded Common Stock.

The Company anticipates reinvesting earnings for the foreseeable future in product development and other avenues of share-value growth and therefore used a dividend yield of zero .

The estimate of volatility was determined based on an estimate of stock price volatility based on the historical trading data of comparable public companies at the time of grant given the lack of sufficient history for the Company's publicly-traded Common Stock.

The expected term of the award was calculated using the simplified method and weighted average was utilized taking into account the vesting periods and contractual life.

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These option grants provided a maximum contract term of 10 years from grant date, with a weighted average remaining contract life of 6.41 years.

Options granted to senior management and key employees are subject to a three-year graded vesting schedule while options granted to the board of directors are subject to a one year cliff vesting schedule.

Options granted to senior management and key employees are subject to a 3-year graded vesting schedule while options granted to the Board of Directors are subject to a one year cliff vesting schedule.

These stock options are not subject to performance-based criteria other than continued employment.

2022 Inducement Equity Incentive Plan

In accordance with Nasdaq Listing Rule 5635(c)(4), the Company adopted the Aquestive Therapeutics, Inc.

2022 Equity Inducement Plan approved by the Compensation Committee of the Board of Directors of the Company effective as of July 29, 2022.

In September 2022, the Company granted a nonqualified option to purchase 100,000 shares of Common Stock to an officer of the Company.

Employee Stock Purchase Plan

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Under the ESPP, a total of 250,000 shares of Common Stock were initially reserved for issuance.

During 2022 and 2021, 45,304 and 40,146 shares were purchased and issued through the ESPP at total discounts of $ 10 and $ 24 , respectively.

During the year ended 2023 and 2022, 36,168 and 45,304 shares were purchased and issued through the ESPP at total discounts of $ 27 and $ 10 , respectively.

Employee Benefit Plans

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Total contributions made to the plan by the Company for the year ended December 31, 2023 and 2022 were $ 761 and $ 815 , respectively.

The components of the provision for income taxes are as follows:

Expense classification:

Year Ended December 31,

Provision for Income Tax

The tax effect of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022 are as follows:

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Stock Compensation 6,529 5,813

Other 2,408 2,122

Sale of Future Revenue 17,139 16,595

Deferred Revenue

Royalty Monetization

16,750 17,139

Property and equipment 2,756 2,576

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Section 174 R&D Capitalization 5,039 3,770

Royalty Obligations

84,695 84,312

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For the year ended December 31, 2023, the Company’s interest expense deduction under 163(j) will be limited for tax purposes based on a calculation of 30% of its EBITDA on a tax basis.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act, which we refer to as the "U.S.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act, which the Company refers to as the "U.S.

CARES ACT," was signed into law.

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Additionally, the U.S.

CARES Act allowed us to fully offset 2020 taxable income with prior years' NOL carried forward.

CARES Act allowed the Company to fully offset 2020 taxable income with prior years’ NOL carried forward.

The Company has determined, based upon available evidence, that is more likely than not that the net deferred tax asset will not be realized and, accordingly, has provided a full valuation allowance against its net deferred tax assets.

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As a result, the use of NOL carry forwards from the current and prior periods are subject to annual limitations.

The Tax Cuts and Jobs Act (TCJA) requires taxpayers to capitalize and amortize research and experimental (R&D) expenditures under section 174 for tax years beginning after December 31, 2021.

This rule became effective for the Company during the year and resulted in the capitalization of R&D costs of $ 16,560 .

The TCJA requires taxpayers to capitalize and amortize R&D expenditures under section 174 for tax years beginning after December 31, 2021.

For the years ended December 31, 2023 and 2022, the capitalized R&D costs were $ 12.6 million and $ 16.6 million, respectively.

The Company will amortize these costs for tax purposes over five years if the R&D was performed in the U.S.

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The Company has analyzed its tax positions and has concluded that there were no uncertain positions as of December 31, 2023 and 2022.

The Company did no t have any unrecognized tax benefits and has no t accrued any interest or penalties for the years ended December 31, 2022 and 2021.

The Company’s U.S.

federal and state net operating losses have occurred since its election to be treated as a C Corporation in 2017 and.

as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities.

In early 2020, the U.S.

Internal Revenue Service began an examination of the Company’s federal income tax return for 2018 which was concluded in 2021 with no significant adjustments required.

A reconciliation of income tax benefit and the amount computed by applying the statutory federal income tax rates of 21% to loss before taxes for the year ended December 31, 2023 and 2022, respectively, as follows:

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Permanent differences ( 0.43 ) ( 0.20 )

Research & development credit 0.20 0.12

Return to provision 0.11 ( 0.63 )

Valuation allowance ( 26.53 ) ( 20.69 )

Return to provision ( 3.28 ) 0.11

State rate change ( 1.78 ) ( 4.67 )

Other — ( 0.74 )

FDII Deductions

Effective tax rate ( 3.22 ) % ( 0.02 ) %

On July 1, 2018, the New Jersey governor signed into law a bill which included significant changes to the New Jersey taxation of corporations.

Chiefly, this legislation imposes a 2.5% surtax on taxpayers with allocated net income over $1 million for 2018 and 2019, and a 1.5% surtax for taxpayers with allocated net income over $1 million for 2020 and 2021.

Subsequently, on September 29, 2020, Assembly Bill 4721 extended the additional corporation business tax surtax of 2.5% for the tax years 2020 through 2023.

In addition, the state is changing its filing requirements from separate entity reporting to combined reporting on a water’s edge basis.

In 2023, the Pennsylvania corporate rate will be decreasing by one percentage point to 8.99%, followed by an annual 0.5% reduction through 2031, ending with a corporate tax rate of 4.99%.

Further, there are changes to the state’s computation of its dividend received deduction and application of IRC section 163(j).

The Company has considered these changes and does not believe this change in law will have a material impact due to availability of significant New Jersey NOL carryforwards to set off against future taxable income and a full valuation allowance against the net deferred tax assets.

The Company received an ERTC refund of $ 1,250 .

It is included in Interest income and other income, net on the December 31, 2023 Company's Consolidated Statements of Operations and Comprehensive Loss.

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.

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

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

Reddy’s Labs.

Reddy’s Labs., Inc.

On February 7, 2018, we and Indivior Inc.

Reddy’s Laboratories S.A.

Reddy’s Laboratories, Inc.

On February 7, 2018, the Company and Indivior Inc.

and Indivior UK Ltd.

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9,855,221 (the "221 patent”).

On April 3, 2018, we and Indivior initiated a separate lawsuit against Dr.

On April 3, 2018, the Company and Indivior initiated a separate lawsuit against Dr.

Reddy’s asserting infringement of U.S.

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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 our rights to appeal the claim construction ruling.

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 its rights 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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Reddy’s (described above).

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 January 31, 2024, the Court entered a Stipulation and Order of Dismissal, dismissing all claims and counterclaims with prejudice in the lawsuit.

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

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On February 26, 2019, the court granted the parties’ agreed stipulation to drop the ’221 patent from the case.

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 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 the Company and Indivior under federal and New Jersey antitrust laws.

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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.

Expert discovery concluded on October 8, 2021, and dispositive motions were filed on October 26, 2021.

The Court heard oral argument on the dispositive motions on August 29, 2022, and the parties are awaiting a ruling from the Court.

There is no trial date set.

Reckitt Benckiser Pharmaceuticals, Inc.

and MonoSol Rx, LLC v.

BioDelivery Sciences International, Inc.

and Quintiles Commercials US, Inc.

(BDSI 2014 Lawsuit)

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

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

8,765,167 (the "’167 patent”) in the District of New Jersey (Civil Action No.

3:14-cv-5892).

On July 22, 2015, the case was transferred to 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.

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

The Federal Circuit granted the Company’s motion to dismiss the appeal, and denied BDSI’s request for rehearing en banc.

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 Indivior 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 discovery.

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.

Aquestive Therapeutics, Inc.

BioDelivery Sciences International, Inc.

On November 11, 2019, the Company initiated a lawsuit against BDSI asserting infringement of the ’167 patent in the Eastern District of North Carolina.

On April 1, 2020, the Court denied BDSI’s motion to stay and its motion to dismiss the complaint.

On April 16, 2020, BDSI filed its Answer and Counterclaims to the complaint, including counterclaims for non-infringement, invalidity, and unenforceability of the ’167 patent.

On May 7, 2020, the Company filed a Motion to Dismiss BDSI’s unenforceability counterclaim and a Motion to Strike BDSI’s corresponding affirmative defenses.

On May 28, 2020, BDSI amended its counterclaims and filed an Answer and Amended Counterclaims, which included additional allegations in support of BDSI’s unenforceability counterclaim.

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 the Company’s motion to dismiss BDSI’s counterclaims asserting unenforceability of the ’167 patent.

The Company 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 the Company’s complaint, which the Company 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.

Antitrust Litigation

State of Wisconsin, et al.

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 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.

After filing the lawsuit, the case was consolidated for pre-trial purposes with the In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation, MDL No.

2445, or the Suboxone MDL, a multidistrict litigation relating to putative class actions on behalf of various private plaintiffs against Indivior relating to its launch of Suboxone Sublingual Film.

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 its 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.

The hearing on Aquestive’s motion for summary judgment was held on May 18, 2022 and, on October 19, 2022, the Court entered an order dismissing all claims against the Company in the lawsuit.

The order dismissing all claims

against the Company could be appealed by the plaintiffs in this case.

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 Actions

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

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

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

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’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 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.

On January 15, 2021, the Company filed a motion to dismiss the Centene and Humana complaints.

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 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.

On November 9, 2023, 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.

Patent Litigation Settlement with BDSI

The Company reached a settlement effective March 3, 2023 in the patent infringement lawsuits related to the sale of BDSI’s Bunavail and Belbuca drug film products in the United States.

Under the terms of the settlement agreement, all pending patent claims have been resolved between BDSI and Aquestive, as well as Indivior Inc., co-plaintiff in the Belbuca lawsuit, in exchange for a one-time, lump-sum payment of $ 8,500 to the Company.

This settlement continues the Company's focus on resolving outstanding litigation matters, where possible and appropriate.

The payment is included in Interest income and other income, net on the Company's Consolidated Statements of Operations and Comprehensive Loss.

Kentucky Litigation - Humana

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

On August 20, 2021, Humana filed a complaint in state court in Kentucky, alleging conspiracy to violate the RICO Act, fraud under state law, unfair and deceptive trade practices under state law, insurance fraud, and unjust enrichment against the Company relating to Indivior’s launch of Suboxone Sublingual Film in 2010.

The Humana action was stayed pending related litigation, and the stay was lifted on October 30, 2023.

No schedule has been set in the action and there is no trial date set.

The Company is not able to determine or predict the ultimate outcome of 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 this matter.

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On December 5, 2019, Neurelis Inc.

filed a lawsuit against us in the Superior Court of California, County of San Diego alleging the following three causes of action:

filed a lawsuit against the Company in the Superior Court of California, County of San Diego alleging the following three causes of action:

(1) Unfair Competition under California Business and Professional Code § 17200 (“UCL”);

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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.

The Court denied the Company’s demurrer and the parties proceeded with discovery on the claims in the Second Amended Complaint.

The plaintiff filed a motion to file a third amended complaint.

which the Court granted on November 17, 2023.

The Third Amended Complaint alleges additional facts but includes the same claims as the Second Amended Complaint.

Trial in this matter is scheduled for October 25, 2024.

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.

2 unchanged sentences

Aquestive Therapeutics, Inc., et al.

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.

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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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.

Subsequent Events

Continued Utilization of the At-The-Market Facility

The Company continued utilization of its "at-the-market" (ATM) facility from January 1 through March 7, 2023 and sold 1,078,622 shares which generated net proceeds of approximately $ 964 .

Partial Redemption of 12.5 % Senior Secured Notes due 2025

On November 4, 2022 and December 16, 2022, the Company issued two separate notices of partial redemption pursuant to the indenture, dated as of July 15, 2021 (the “Indenture”), between the Company and U.S.

Bank Trust Company, National Association (as successor in interest to U.S.

Bank National Association) as trustee and collateral agent governing its 12.5 % Senior Secured Notes due 2025 (the “12.5% Notes”).

On January 3, 2023 and February 14, 2023, the Company redeemed $ 3,765 and $ 1,882 of its outstanding 12.5% Notes, respectively.

In addition to the two principal repayments along with accrued and unpaid interest, the Company also paid $ 352 in prepayment premium as result of the early retirement of debt, which will be reflected on the Company's Condensed Consolidated Statements of Operations and Comprehensive Loss in the first quarter of 2023.

The result of these two prepayments reduced the net balance of the 12.5 % Notes outstanding in the aggregate to $ 45,853 .

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.

Commercial Agreements

Amendment to the Indivior Commercial Exploitation Agreement

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

11 (the “Indivior Amendment”) to the Commercial Exploitation Agreement (the “Indivior Agreement"), dated as of August 15, 2008, with Indivior Inc.

(formerly, Reckitt Benckiser Pharmaceuticals Inc., and referred to herein as “Indivior”).

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

Effective as of March 2, 2023, the Company and Indivior entered into Indivior Amendment 11.

The Indivior Amendment 11 was entered into for the primary purpose of amending the Indivior License Agreement, dates as of August 15, 2008 as follows:

(i) extending the term of the Indivior License 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 Indivior License Agreement, and providing that the Indivior License 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.

In addition, Indivior agreed to pay the Company reimbursable amounts due to the Company under the Agreement.

In addition, Indivior agreed to pay the Company reimbursable amounts due to the Company under the Invidior License Agreement.

In consideration of the agreements between the parties, the Company received a payment of $ 11,482 from Indivior, of which amount $ 5,482 represents:

(a) payment of the portion of a 2022 price increase that had not been previously paid and (b) an estimated payment in 2023 for certain price increases.

The payments will be reflected on the Company's Condensed Consolidated Statements of Operations and Comprehensive Loss in 2023.

Patent Litigation Settlement with BioDelivery Sciences International, Inc.

The Company reached a settlement effective March 3, 2023 in the patent infringement lawsuits related to the sale of BDSI’s Bunavail and Belbuca drug film products in the United States.

This settlement continues the Company's focus on resolving outstanding litigation matters, where possible and appropriate.

The payment will be reflected on the Company's Condensed Consolidated Statements of Operations and Comprehensive Loss in 2023.

Expansion of Licensing and Supply Agreement with Pharmanovia

Effective March 27, 2023, the Company amended its exclusive license and supply agreement with Pharmanovia ("Pharmanovia Amendment") for its patented diazepam buccal film formulation.

The Pharmanovia Amendment expanded the scope of territory to cover the rest of the world, excluding US, Canada and China.

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.

The $ 5,482 payment is included in Manufacture and supply revenue and $ 6,000 is included in Interest income and other income, net on the Company's Consolidated Statements of Operations and Comprehensive Loss.

Subsequent Events

Continued Utilization of the At-The-Market Facility

The Company continued utilization of its ATM facility from January 1 through March 4, 2024 and sold 4,557,220 shares which generated net proceeds of approximately $ 12,014 .

Product Liability Litigation

As of February 21, 2024, the Company has been named as a defendant in 40 product liability lawsuits along with Indivior and several other defendants.

These individual plaintiffs allege that their use of Suboxone Sublingual Film caused them dental injuries.

On February 2, 2024, this litigation became a Multidistrict Litigation (“MDL") consolidated in the United States District Court for the Northern District of Ohio.

Indivior has agreed to defend the Company in this litigation.

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

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-K

Item 9A. Controls and Procedures