Aquestive Therapeutics, Inc. 10-K

Item 9A. Controls and Procedures. Management’s Evaluation of our Disclosure Controls and Procedures We maintain disclosure controls that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding our required disclosures. As of December 31, 2024, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of December 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate controls over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Aquestive Therapeutics, Inc.; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of inherent limitations, internal control over financial reporting may not prevent misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth in the Internal Control-Integrated Framework (2013 ) issued by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Based upon its assessment and those criteria, our management has concluded that our internal control over financial reporting was effective as of December 31, 2024. 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 There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter, that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 78 Item 9B. Other Information . Our Chief Operating Officer Cassie Jung adopted a written sales plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act (the "Jung Plan") on December 10, 2024 . The Jung Plan commences on March 11, 2025 and ends on December 31, 2025 . The maximum number of shares to be sold under the Jung Plan is 108,656 shares; the actual number of shares sold will be dependent on the satisfaction of certain conditions set forth in the Jung Plan. Our Chief Medical Officer Carl Kraus adopted a written sales plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act (the "Kraus Plan") on December 12, 2024 . The Kraus Plan commences on March 17, 2025 and ends on February 27, 2026 . The maximum number of shares to be sold under the Kraus Plan is 75,000 . The actual number of shares sold will be dependent on the satisfaction of certain conditions set forth in the Kraus Plan. Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections. None. 79 PART III Item 10. Directors, Executive Officers, and Corporate Governance The information required by this item will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference. Item 11. Executive Compensation The information required by this item will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference. Item 13. Certain Relationships and Related Party Transactions and Director Independence The information required by this item will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The information required by this item will be included in our Proxy Statement to be filed with the SEC and is incorporated herein by reference. 80 PART IV Item 15. Exhibits, Financial Statement Schedules. (a)(1) Financial Statements. The response to this portion of Item 15 is set forth under Item 8 hereof. (a)(2) Financial Statement Schedules. All financial statement schedules have been omitted because they are not applicable, not required or the required information is given in the Financial Statements or Notes thereto. (a)(3) Exhibits. The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Annual Report on Form 10-K are listed in the Exhibit Index immediately preceding the signature page of this Annual Report on Form 10-K. The exhibits listed in the Exhibit Index are incorporated by reference herein. Item 16. Form 10-K Summary Not applicable. Exhibit Index The exhibits below are filed as part of this Form 10-K other than Exhibit 32.1 and Exhibit 32.2, which shall be deemed furnished. Number Description 3.1 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). 3.2 Amended and Restated Bylaws of Aquestive Therapeutics, Inc. (filed as Exhibit 3.1 to the Current Report on Form 8-K of the Company, as filed on October 16, 2024, and incorporated by reference herein). 4.1 Form of Common Stock Certificate of Aquestive Therapeutics, Inc. (filed as Exhibit 4.1 to the Registration Statement on Form S-1 of the Company (File No. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 4.2 Indenture dated July 15, 2019, among Aquestive Therapeutics, Inc., as Issuer, any Guarantor that becomes party thereto and U.S. Bank National Association, as Trustee and Collateral Agent (filed as Exhibit 4.1 to the Current Report on Form 8-K filed on July 16, 2019, and incorporated by reference herein). 4.3 First Supplemental Indenture dated November 3, 2020, among Aquestive Therapeutics, Inc., as Issuer, any Guarantor that becomes party thereto and U.S. Bank National Association, as Trustee and Collateral Agent (filed as Exhibit 4.3 to the Annual Report on Form 10-K of the Company, as filed on March 9, 2021, and incorporated by reference herein). 4.4 Second Supplemental Indenture dated November 20, 2020, among Aquestive Therapeutics, Inc., as Issuer, any Guarantor that becomes party thereto and U.S. Bank National Association, as Trustee and Collateral Agent (filed as Exhibit 4.4 to the Annual Report on Form 10-K of the Company, as filed on March 9, 2021, and incorporated by reference herein). 4.5 Third Supplemental Indenture dated August 6, 2021, among Aquestive Therapeutics, Inc., as Issuer, any Guarantor that becomes party thereto and U.S. Bank 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 August 9, 2021, and incorporated by reference herein). 4.6 Fourth Supplemental Indenture dated October 7, 2021, among Aquestive Therapeutics, Inc., as Issuer, any Guarantor that becomes party thereto and U.S. Bank 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 August 8, 2021, and incorporated by reference herein). 4.7 Form of 2019 Warrant (filed as Exhibit 4.2 to the Current Report on Form 8-K of the Company, filed on July 16, 2019, and incorporated by reference herein). 4.8 Form of 2020 Warrant (filed as Exhibit 4.6 to the Annual Report of Form 10-K of the Company, as filed on March 9, 2021, and incorporated by reference herein). 4.9 Form of 2022 Pre-Funded Warrant (filed as Exhibit 4.1 to the Current Report on Form 8-K of the Company, as filed on June 8, 2022, and incorporated by reference herein). 4.10 Form of 2022 Common Stock Warrant (filed as Exhibit 4.2 to the Current Report on Form 8-K of the Company, as filed on June 8, 2022, and incorporated by reference herein). 81 4.11 Registration Rights Agreement, dated as of June 24, 2018, by and between Aquestive Partners, LLC and certain of the holders of its membership interests (filed as Exhibit 4.3 to the Registration Statement on Form S-1 of the Company (File No. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 4.12 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). 4.13 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). 4.14 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) 10.1 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. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 10.2 Form of Purchase Agreement in connection with the 2019 issuance of 12.5% Senior Secured Notes (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on July 16, 2019, and incorporated by reference herein). 10.3 Form of 2020 Purchase Agreement in connection with the 2020 issuance of 12.5% Senior Secured Notes (filed as Exhibit 10.3 to the Annual Report of Form 10-K of the Company, as filed on March 9, 2021, and incorporated by reference herein). 10.4 Collateral Agreement in connection with issuance of 12.5% Senior Secured Notes, dated as of July 15, 2019, among Aquestive Therapeutics, Inc., as Issuer, the Other Grantors from time to time party thereto, U.S. Bank National Association, as Trustee, and U.S. Bank National Association, as Collateral Agent (filed as Exhibit 10.2 to the Current Report on Form 8-K of the Company, as filed on July 16, 2019, and incorporated by reference herein). 10.5 + Executive Employment Agreement, dated as of July 15, 2022, by and between Aquestive Therapeutics, Inc. and Daniel Barber (filed as Exhibit 10.1 to the Current Report on Form 10-Q of the Company, as filed on August 2, 2022, and incorporated by reference herein). 10.6+ Executive Employment Agreement, dated as of July 9, 2018, by and between Aquestive Therapeutics, Inc. and A. Mark Schobel (filed as Exhibit 10.8 to the Pre-Effective Amendment No. 1, as filed on July 16, 2018, to the Registration Statement on Form S-1 of the Company (File No. 333-225924), and incorporated by reference herein). 10.7† Commercial Exploitation Agreement, by and between MonoSol Rx, LLC (now Aquestive Therapeutics, Inc.) and Reckitt Benckiser Pharmaceuticals Inc., dated as of August 15, 2008 (as amended on August 19, 2009, November 13, 2009, March 30, 2010, October 13, 2010, December 15, 2010, December 9, 2011, December 1, 2012, October 14, 2013 (by Addendum A), July 30, 2014 (by Addendum B), and January 12, 2017) (filed as Exhibit 10.9 to the Registration Statement on Form S-1 of the Company (File No. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 10.8† Agreement, by and between MonoSol Rx, LLC (now Aquestive Therapeutics, Inc.) and Indivior UK Limited, dated as of September 24, 2017 (filed as Exhibit 10.10 to the Registration Statement on Form S-1 of the Company (File No. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 10.9 † Amendment No. 11 to Commercial Exploitation Agreement, dated as of August 15, 2008 (filed herewith). 10.10† Agreement to Terminate CLA, by and between MonoSol Rx, LLC (now Aquestive Therapeutics, Inc.) and KemPharm, Inc., dated as of March 20, 2012 (filed as Exhibit 10.11 to the Registration Statement on Form S-1 of the Company (File No. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 10.11† License Agreement, by and between MonoSol Rx, LLC (now Aquestive Therapeutics, Inc.) and Cynapsus Therapeutics Inc., dated as of April 1, 2016 (filed as Exhibit 10.12 to the Registration Statement on Form S-1 of the Company (File No. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 10.12† First Amendment to License Agreement, by and between Aquestive Therapeutics, Inc. and Sunovion Pharmaceuticals, Inc., dated as of March 16, 2020 (filed as Exhibit 10.14 to the Annual Report of Form 10-K of the Company, as filed on March 9, 2021, and incorporated by reference herein). 10.13† Second Amendment to License Agreement, by and between Aquestive Therapeutics, Inc. and Sunovion Pharmaceuticals, Inc., dated as of October 23, 2020 (filed as Exhibit 10.15 to the Annual Report of Form 10-K of the Company, as filed on March 9, 2021, and incorporated by reference herein). 82 10.14 Industrial Lease Agreement, by and between Ashland Northwest Partners, L.P. and MonoSol Rx, LLC (now Aquestive Therapeutics, Inc.), dated as of October 24, 2006 (as amended on October 24, 2011 and February 8, 2018) (filed as Exhibit 10.13 to the Registration Statement on Form S-1 of the Company (File No. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 10.15+ Aquestive Therapeutics, Inc. 2018 Equity Incentive Plan, as amended (filed as Exhibit 4.1 to the Registration Statement on Form S-8 of the Company (File No. 333-273857), as filed on August 9, 2023 and incorporated by reference herein). 10.16+ Aquestive Therapeutics, Inc. Employee Stock Purchase Plan as Amended (filed as Exhibit 10.18 to the Annual Report of Form 10-K of the Company, as filed on March 9, 2021, and incorporated by reference herein). 10.17+ Form of Stock Option Agreement (filed as Exhibit 10.16 to the Registration Statement on Form S-1 of the Company (File No. 333-225924), as filed on June 27, 2018, and incorporated by reference herein). 10.18+ Form of Stock Option Agreement under the Aquestive Therapeutics, Inc. 2018 Equity Incentive Plan (filed as Exhibit 10.17 to the Pre-Effective Amendment No. 1, as filed on July 16, 2018, to the Registration Statement on Form S-1 of the Company (File No. 333-225924) and incorporated by reference herein). 10.19+ Form of Restricted Stock Unit Agreement under the Aquestive Therapeutics, Inc. 2018 Equity Incentive Plan (filed as Exhibit 10.18 to the Pre-Effective Amendment No. 1, as filed on July 16, 2018, to the Registration Statement on Form S-1 of the Company (File No. 333-225924) and incorporated by reference herein). 10.20+ Executive Employment Agreement, dated as of September 10, 2018, by and between Aquestive Therapeutics, Inc. and Lori J. Braender (filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q of the Company, as filed on November 6, 2018, and incorporated by reference herein). 10.21 Purchase and Sale Agreement, dated as of November 3, 2020, by and between Aquestive Therapeutics, Inc. and MAM Pangolin Royalty, LLC (filed as Exhibit 10.23 to the Annual Report on Form 10-K of the Company, as filed on March 9, 2021, and incorporated by reference herein). 10.22 Amendment No.1 to Purchase Agreement, dated as of August 6, 2021, by and between Aquestive Therapeutics, Inc. 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). 10.23 Amendment No. 2 to Purchase Agreement, dated as of May 13, 2022, by and between Aquestive Therapeutics, Inc. and the Purchasers signatory thereto (as 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). 10.24 Consent Fee Letter, dated October 7, 2021, among Aquestive Therapeutics, Inc. and the Noteholder parties thereto (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on October 8, 2021, and incorporated by reference herein). 10.25 + First Amendment to Executive Employment Agreement, dated as of June 30, 2021, by and between Aquestive Therapeutics, Inc. and Alexander Mark Schobel (as filed as Exhibit 10.25 to the Annual Report on Form 10-K of the Company, as filed on March 8, 2022, and incorporated by reference herein). 10.26 + First Amendment to Executive Employment Agreement, dated as of June 30, 2021, by and between Aquestive Therapeutics, Inc. and Keith J. Kendall (as filed as Exhibit 10.26 to the Annual Report on Form 10-K of the Company, as filed on March 8, 2022, and incorporated by reference herein). 10.27† License and Supply Agreement, dated as of September 26, 2022, by and between Aquestive Therapeutics, Inc. and Atnahs Pharma UK Limited (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company, as filed on November 1, 2022, and incorporated by reference herein). 10.28 † License, Development and Supply Agreement, dated as of March 2022, by and between Aquestive Therapeutics, Inc. and Haisco Pharmaceutical Group Co., Ltd. (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company, as filed on May 4, 2022, and incorporated by reference herein). 10.29 † License Agreement, dated as of October 26, 2022, by and between Aquestive Therapeutics, Inc. 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). 10.30 Separation Agreement, dated as of May 17, 2022, by and between Aquestive Therapeutics, Inc. and Keith J. 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). 10.31 Form of Securities Purchase Agreement, dated as of June 6, 2022, by and between Aquestive Therapeutics, Inc. and the purchasers (filed as Exhibit 10.1 to the Current Report on Form 8-K of the Company, as filed on June 8, 2022, and incorporated by reference herein). 10.32 Purchase Agreement, dated as of April 12, 2022, by and between the Company and Lincoln Park (filed as Exhibit 10.1 to the Current Report on Form 8-K of the Company, as filed on April 13, 2022, and incorporated by reference herein). 83 10.33 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). 10.34 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) 10.35 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) 10.36 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). 10.37 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). 10.38 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). 10.39† 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). 10.40 Amendment to License and Supply Agreement between Aquestive and Atnahs Pharma UK Limited entered into March 27, 2023 (filed as Exhibit 10.40 to the Annual Report on Form 10-K of the Company, as filed on March 5, 2024, and incorporated by reference herein). 19.1 Insider Trading Policy. 23.1 Consent of KPMG LLP, Independent Registered Public Accounting Firm (filed herewith). 31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 97* Incentive Compensation Recovery Policy (filed as Exhibit 97 to the Annual Report on Form 10-K of the Company, as filed on March 5, 2024 and incorporated by reference herein). 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). 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 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. † Certain portions of this exhibit have been omitted because the omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. 84 Item 16. Form 10-K Summary None. 85 SIGNATURES Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AQUESTIVE THERAPEUTICS, INC. March 5, 2025 By: /s/ Daniel Barber Daniel Barber President and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capabilities and on the dates indicated. Signature Title Date /s/ Daniel Barber President, Chief Executive Officer and Member of the Board of Directors March 5, 2025 Daniel Barber (Principal Executive Officer) /s/ A. Ernest Toth, Jr. Senior Vice President, Chief Financial Officer March 5, 2025 A. Ernest Toth, Jr. (Principal Financial Officer and Principal Accounting Officer) /s/ Gregory B. Brown Chairman of the Board of Directors March 5, 2025 Gregory B. Brown, M.D. /s/ Abigail L. Jenkins Member of the Board of Directors March 5, 2025 Abigail L. Jenkins /s/ John S. Cochran Member of the Board of Directors March 5, 2025 John S. Cochran /s/ Julie Krop Member of the Board of Directors March 5, 2025 Julie Krop, M.D /s/ Marco Taglietti Member of the Board of Directors March 5, 2025 Marco Taglietti, M.D. /s/ Timothy Morris Member of the Board of Directors March 5, 2025 Timothy Morris 86 Index to Financial Statements Page Number Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY, Auditor Firm ID: 185 ) 2 Balance Sheets as of December 31, 2024 and 2023 4 Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2024 and 2023 5 Statements of Changes in Stockholders’ Deficit for the Years Ended December 31, 2024 and 2023 6 Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 7 Notes to the Financial Statements 8 F-1 To the Stockholders and the Board of Directors Aquestive Therapeutics, Inc.: Opinion on the Financial Statements We have audited the accompanying balance sheets of Aquestive Therapeutics, Inc. (the Company) as of December 31, 2024 and 2023, the related statements of operations and comprehensive loss, changes in stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. 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 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 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 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 financial statements, the Company has experienced a history of net losses. The Company’s accumulated deficit totaled $363,214 thousand as of December 31, 2024. 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 equity capital markets through its ATM facility provide liquidity to fund its operating needs for at least 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. The following are the primary procedures we performed to address this critical audit matter. 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 on the Company’s going concern assessment. We assessed the reasonableness of the Company’s forecasted expenses by comparing to management’s communications 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. F-2 /s/ KPMG LLP We have served as the Company’s auditor since 2006. Short Hills, New Jersey March 5, 2025 F-3 AQUESTIVE THERAPEUTICS, INC. Balance Sheets (In thousands, except per share/unit amounts) December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 71,546 $ 23,872 Trade and other receivables, net 7,344 8,471 Inventories, net 6,044 6,769 Prepaid expenses and other current assets 3,286 1,854 Total current assets 88,220 40,966 Property and equipment, net 3,799 4,179 Right-of-use assets, net 5,182 5,557 Intangible assets, net — 1,278 Other non-current assets 4,223 5,438 Total assets $ 101,424 $ 57,418 Liabilities and stockholders’ deficit Current liabilities: Accounts payable $ 10,287 $ 8,926 Accrued expenses 5,907 6,497 Lease liabilities, current 510 390 Deferred revenue, current 1,048 1,551 Liability related to the sale of future revenue, current 1,000 922 Royalty obligations, current 87 — Loans payable, current 26 22 Total current liabilities 18,865 18,308 Notes payable, net 32,500 27,508 Royalty obligations, net 20,129 14,761 Liability related to the sale of future revenue, net 62,718 63,568 Lease liabilities 4,968 5,399 Deferred revenue, net of current portion 20,005 32,345 Other non-current liabilities 2,395 2,016 Total liabilities 161,580 163,905 Contingencies (Note 23) Stockholders’ deficit: Common stock, 0.001 par value. Authorized 250,000,000 shares; 91,413,742 and 68,533,085 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively 91 69 Additional paid-in capital 302,967 212,521 Accumulated deficit ( 363,214 ) ( 319,077 ) Total stockholders’ deficit ( 60,156 ) ( 106,487 ) Total liabilities and stockholders’ deficit $ 101,424 $ 57,418 See accompanying notes to the financial statements. F-4 AQUESTIVE THERAPEUTICS, INC. Statements of Operations and Comprehensive Loss (In thousands, except per share data amounts) Year Ended December 31, 2024 2023 Revenues $ 57,561 $ 50,583 Costs and expenses: Manufacture and supply 17,872 20,831 Research and development 20,280 13,104 Selling, general and administrative 50,180 31,750 Total costs and expenses 88,332 65,685 Loss from operations ( 30,771 ) ( 15,102 ) Other income (expenses): Interest expense ( 11,122 ) ( 6,337 ) Interest expense related to royalty obligations, net ( 5,459 ) ( 905 ) Interest expense related to the sale of future revenue ( 236 ) ( 220 ) Interest income and other income, net 3,437 16,321 Loss on the extinguishment of debt — ( 1,382 ) Net loss before income taxes ( 44,151 ) ( 7,625 ) Income taxes benefit (expense) 14 ( 245 ) Net loss $ ( 44,137 ) $ ( 7,870 ) Comprehensive loss $ ( 44,137 ) $ ( 7,870 ) Loss per share attributable to common stockholders: Basic and diluted (in dollars per share) $ ( 0.51 ) $ ( 0.13 ) Weighted-average number of common shares outstanding: Basic and diluted (in shares) 86,726,211 61,255,864 See accompanying notes to the financial statements. F-5 AQUESTIVE THERAPEUTICS, INC. Statements of Changes in Stockholders’ Deficit (In thousands, except per share amounts) Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Deficit Common Stock Shares Amount Balance at December 31, 2022 54,827,734 $ 55 $ 192,598 $ ( 311,207 ) $ ( 118,554 ) 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 — — ( 552 ) — ( 552 ) Shares issued under employee stock purchase plan 36,168 — 66 — 66 Vested restricted stock units, net 19,515 — ( 11 ) — ( 11 ) Share-based compensation expense — — 2,662 — 2,662 Options exercised, net 1,875 — 1 — 1 Net loss — — — ( 7,870 ) ( 7,870 ) Balance at December 31, 2023 68,533,085 69 212,521 ( 319,077 ) ( 106,487 ) Common Stock issued under public equity offering-ATM 4,557,220 4 12,381 — 12,385 Costs of common stock issued under public equity offering-ATM — — ( 602 ) — ( 602 ) Common Stock issued under public equity offering 17,226,468 18 77,502 — 77,520 Costs of common stock issued under public equity offering — — ( 5,546 ) — ( 5,546 ) Common Stock issued upon warrant exercises 30,645 — 165 — 165 Shares issued under employee stock purchase plan 35,374 — 109 — 109 Share-based compensation expense — — 7,056 — 7,056 Vested restricted stock units, net 673,925 — ( 1,351 ) — ( 1,351 ) Options exercised, net 357,025 — 732 — 732 Net loss — — — ( 44,137 ) ( 44,137 ) Balance at December 31, 2024 91,413,742 $ 91 $ 302,967 $ ( 363,214 ) $ ( 60,156 ) See accompanying notes to the financial statements. F-6 AQUESTIVE THERAPEUTICS, INC. Statements of Cash Flows (In thousands) Year Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 44,137 ) $ ( 7,870 ) Adjustments to reconcile net loss to net cash used for operating activities: Depreciation, amortization, and impairment 718 1,345 Share-based compensation 7,099 2,689 Amortization of debt issuance costs and discounts 10,714 1,972 Gain on contract termination ( 300 ) — Loss on the extinguishment of debt — 1,029 Other, net 104 ( 204 ) Changes in operating assets and liabilities: Trade receivables and other receivables, net 1,094 ( 3,073 ) Inventories 725 ( 989 ) Prepaid expenses and other assets ( 223 ) 1,290 Accounts payable 2,782 ( 1,020 ) Accrued expenses and other liabilities ( 1,492 ) ( 2,515 ) Deferred revenue ( 12,843 ) 966 Net cash used for operating activities ( 35,759 ) ( 6,380 ) Cash flows from investing activities: Capital expenditures ( 159 ) ( 995 ) Net cash used for investing activities ( 159 ) ( 995 ) Cash flows from financing activities: Proceeds from issuance of common stock under public equity offering-ATM, net 11,783 8,912 Proceeds from common stock issued under public equity offering, net 71,974 — Proceeds from exercise of warrants, net 165 8,307 Proceeds from shares issued under employee stock purchase plan 67 39 Proceeds from exercise of stock options 732 1 Proceeds from issuance of debt — 31,144 Proceeds from issuance of Royalty Rights Agreements — 13,856 Repayment of debt principal including lease liabilities ( 23 ) ( 51,529 ) Payments for royalty obligations ( 5 ) — Payments for financing costs — ( 4,643 ) Premium paid to retire debt — ( 2,102 ) Payments for taxes on share-based compensation ( 1,101 ) ( 11 ) Net cash provided by financing activities 83,592 3,974 Net increase (decrease) in cash and cash equivalents 47,674 ( 3,401 ) Cash and cash equivalents: Beginning of period 23,872 27,273 End of period $ 71,546 $ 23,872 Supplemental disclosures of cash flow information: Cash payments for interest $ 7,097 $ 4,602 Cash payments for income taxes $ 305 $ — Non-cash investing activities: capital expenditures in accounts payable $ 78 $ — Non-cash financing activities: accrued taxes on share-based compensation $ 250 $ — See accompanying notes to the financial statements. F-7 AQUESTIVE THERAPEUTICS, INC. Notes to Financial Statements (In thousands, except share and per share information) Note 1. Company Overview and Equity Transactions Company Overview Aquestive Therapeutics, Inc. is a pharmaceutical company advancing medicines to bring meaningful improvement to patients’ lives through innovative science and delivery technologies. The Company is developing pharmaceutical products to deliver complex molecules through alternative administrations to invasive and inconvenient standard of care therapies. The Company has a proprietary commercial product, Libervant® (diazepam) Buccal Film for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity ( i.e. , seizure clusters, acute repetitive seizures) that are distinct from a patient’s usual seizure pattern in patients between two and five years of age, which was launched in April 2024. The Company is also advancing a product pipeline for the treatment of severe allergic reactions, including anaphylaxis, under the Anaphylm™ trade name, and its Adrenaverse™ epinephrine prodrug pipeline platform. The Company has five licensed commercialized products which are marketed by its licensees in the U.S. and around the world. The Company is the exclusive manufacturer of these licensed products. The Company also collaborates with pharmaceutical companies to bring new molecules to market using proprietary, best-in-class technologies, like PharmFilm®, and has proven drug development and commercialization capabilities. The Company’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 Equity Offering of Common Stock The Company established its first ATM facility in September 2019, and since inception to December 31, 2024, the Company has sold 19,857,518 shares of Common Stock under its ATM Facility which has generated net cash proceeds of approximately $ 60,524 , net of commissions and other transactions costs of $ 3,119 . On April 3, 2024, the Company filed a new shelf registration statement on Form S-3, the 2024 Registration Statement, which was declared effective by the SEC on April 23, 2024. Included in the 2024 Registration Statement are (i) a base prospectus registering the offer, issuance and sale of up to $ 250,000 worth of Common Stock, preferred stock, debt securities, warrants, rights and units and (ii) a $ 100,000 ATM facility prospectus. For the year ended December 31, 2024, the Company sold 4,557,220 shares of common stock pursuant to the ATM prospectus and the Amended Equity Distribution Agreement with Piper Sandler & Co. (successor to Piper Jaffray & Co.), which provided net proceeds of approximately $ 11,821 after deducting commissions and other transaction costs of $ 564 . 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 . The remaining authorized balance of the ATM facility was $ 100,000 as of December 31, 2024. 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 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 exceeding 9.99 % of the Company's then outstanding Common Stock. Lincoln Park has covenanted under the Lincoln Park Purchase Agreement not to cause or engage in any manner whatsoever any direct or indirect short selling or hedging of our Common Stock. For the years ended December 31, 2024 and 2023, the Company did not sell shares in connection with the Lincoln Park Purchase Agreement. The Company has no current intent to use the Lincoln Park facility and the Lincoln Park Purchase agreement will expire on April 12, 2025. On March 22, 2024, the Company completed the underwritten public offering of 16,666,667 shares of its common stock at the public offering price of $ 4.50 per share. In addition, pursuant to the partial exercise of the underwriters' option, on April 22, 2024, the Company sold an additional 559,801 shares of Common Stock. Net proceeds from the underwritten public offering, including the exercise of underwriters' option were $ 72,868 , after deducting underwriting discounts of $ 4,651 . In addition to the underwriting discounts related to this offering, the Company incurred professional fees and other costs totaling $ 894 as of December 31, 2024. Note 2. Basis of Presentation and Principles of Consolidation These 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. Certain reclassifications were made to conform to the current year presentation. As of March 31, 2024, the Company dissolved its subsidiaries and no longer prepares its financial statements on a consolidated basis. The dissolution of the subsidiaries did not have a material impact on the Company’s financial statements as of December 31, 2024 or the consolidated financial statements as of December 31, 2023. 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. F-8 Note 3. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and contingent liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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 of Libervant for patients between two to five years of age, 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, 2024 and 2023, cash and cash equivalents consisted of cash in bank accounts and money market Treasury mutual funds. Concentration of Credit Risk 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. Concentration of the Company’s significant customers as of December 31, 2024 and 2023 is outlined in Note 6, Revenues and Trade Receivables, Net. Trade Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company’s credit terms generally range from 30 to 60 days, depending on the customer and type of invoice. The Company maintains an allowance for credit losses on accounts receivable, which is recorded as a reduction to accounts receivable. Changes in the allowance are classified as Selling, general and administrative expenses in the Statements of Operations and Comprehensive Loss. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when it identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status. It also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. On an ongoing basis, management evaluates the adequacy of these reserves. The allowance for credit losses, was $ 0 and $ 14 as of December 31, 2024 and 2023, respectively. Inventories Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, determined by the first-in, first-out method, or net realizable value. The Company regularly reviews its inventories for impairment and reserves are established when necessary. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence and shelf life expiration. This evaluation includes analysis of historical sales levels by product, projections of future demand, the risk of competitive obsolescence for products, general market conditions, and a review of the shelf life expiration dates for products. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products, or use them in production, prior to their expiration, the Company records allowances to adjust the carrying value to estimated net realizable value as necessary. The Company expenses inventory related to the Company’s research and development activities when the Company purchases or manufactures it. Before the regulatory approval of the Company’s product candidates, the Company recognizes research and development expense for the manufacture of drug products that could potentially be available to support the commercial launch of the Company’s drug candidates, if approved by regulatory authorities. F-9 Property and Equipment Property and equipment are stated at cost net of accumulated depreciation and amortization, which is computed by the straight-line method based on the estimated useful lives of the respective assets, as discussed below. Leasehold improvements are amortized over the shorter of the lease terms or the estimated useful lives of the leased assets. Maintenance and repair costs are charged to expense as incurred, and expenditures for major renewals and improvements are capitalized. Upon disposition of property and equipment, the related cost and accumulated depreciation and amortization are removed from the accounts, and any gain or loss is reflected in the Statements of Operations and Comprehensive Loss. Intangible Assets Intangible assets included 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 amortized these assets using the straight-line method over the shorter of their legal lives or estimated useful lives. As of December 31, 2024, the balance of the Company's intangible assets was zero , see Note 12, Intangible Assets, Net for additional information. Impairment of Long-Lived Assets Long lived assets, such as property, plant, and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In these circumstances, the Company compares undiscounted cash flows expected to be generated by that asset or asset group to the corresponding carrying amounts. If this comparison is indicative of impairment, an impairment charge is recognized to the extent that the carrying amount exceeds its fair value. 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. No impairment was recognized for the year ended December 31, 2024. The impairment charge of $ 216 was recognized for the year ended December 31, 2023. Leases 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 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 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 its incremental borrowing rate. The calculation of the operating lease assets includes any lease payments made and excludes any lease incentives. Our lease terms may include options to extend or terminate the lease and are included when it is reasonably certain that the Company will exercise the option. The Company records operating lease assets and lease liabilities in its Balance Sheets. 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. 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; Loans payable, current and Notes payable, net on the Balance Sheets. Royalty Obligations, net On November 1, 2023, in connection with the issuance of the 13.5 % Notes, the Company and the Note Holders entered into the Royalty Rights Agreements, which provide 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 Statements of Operations and Comprehensive Loss. The 13.5 % Notes are discussed in Note 15, Long-Term Debt , to its financial statements. F-10 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 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 Statements of Operations and Comprehensive Loss. For further discussion of the sale of the future revenue, see Note 17, Sale of Future Revenue. Revenue Recognition The Company’s revenues include (i) sales of manufactured products pursuant to contracts with commercialization licensees, (ii) license and royalty revenues, (iii) co-development and research fees generally in the form of milestone payments, and (iv) sales of its proprietary CNS product, Libervant, for patients between two to five years of age. See Note 6, 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. To achieve this core principle, a five-step model is applied that includes (1) identifying the contract with a customer, (2) identifying the performance obligation in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing when, or as, an entity satisfies a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the current revenue recognition standard. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. At contract inception, the Company assesses the goods promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a distinct good. When identifying performance obligations, the Company considers all goods or services promised in a contract regardless of whether explicitly stated in the contract or implied by customary business practice. The Company’s performance obligations consist mainly of transferring goods and services identified in the contracts, purchase orders, invoices or statements of work. Manufacture and supply revenue – this revenue is derived from products manufactured exclusively for specific customers according to their strictly-defined specifications, subject only to specified quality control inspections. Accordingly, at the point in time when quality control requirements are satisfied, revenue net of related discounts is recorded. License and Royalty Revenue – license revenues are determined based on an assessment of whether the license is distinct from any other performance obligations that may be included in the underlying licensing arrangement. If the customer is able to benefit from the license without provision of any other performance obligations by the Company and the license is thereby viewed as a distinct or functional license, the Company then determines whether the customer has acquired a right to use the license or a right to access the license. For functional licenses that do not require further development or other ongoing activities by the Company, the customer is viewed as acquiring the right to use the license as, and when, transferred and revenues are generally recorded at a point in time, subject to contingencies or constraints. 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. 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. Royalty revenue is estimated and recognized when sales under supply agreements with commercial licensees are recorded, absent any contractual constraints or collectability uncertainties. Royalties based on sales of licensed products have been recorded in this manner. Revenue recognition arising from milestone payments is dependent upon the facts and circumstances surrounding the milestone payments. Milestone payments based on a non-sales metric such as a development-based milestone ( e.g. , an NDA filing or obtaining regulatory approval) represent variable consideration and are included in the transaction price subject to any constraints. If the milestone payments relate to future development, the timing of recognition depends upon historical experience and the significance a third party has on the outcome. For milestone payments to be received upon the achievement of a sales threshold, the revenue from the milestone payments is recognized at the later of when the actual sales occur or the performance obligation to which the sales relate to has been satisfied. F-11 Co-development and Research Fees – Co-development and research fees are earned through performance of specific tasks, activities or completion of stages of development defined within a contractual development or feasibility study agreement with a customer. The nature of these performance obligations, broadly referred to as milestones or deliverables, are usually dependent on the scope and structure of the project as contracted, as well as the complexity of the product and the specific regulatory approval path necessary for that product. Accordingly, the duration of the Company’s research and development projects may range from several months to approximately three years . 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 FDA and the commercial launch of the product. Proprietary product sales, net – this net revenue is recognized when product is shipped and title passes to the customer, typically at time of delivery. At the time of sale, estimates for various revenue allowances are recorded based on historical trends and judgmental estimates . For sales of Libervant for patients between two to five years of age, returns allowances and prompt pay discounts are estimated based on contract terms and historical return rates, if available, and these estimates are recorded as a reduction of accounts receivables. Similarly determined estimates are recorded relating to wholesaler service fees, co-pay support redemptions, and other rebates, and these estimates are reflected as a component of accrued liabilities. Once all related variable considerations are resolved and uncertainties as to collectable amounts are eliminated, estimates are adjusted to actual allowance amounts. Provisions for these estimated amounts are reviewed and adjusted on no less than a quarterly basis. Contract Assets - in certain situations, customer contractual payment terms provide for invoicing in arrears. Accordingly, some or all performance obligations may be completely satisfied before the customer may be invoiced under such agreements. 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, net within the Balance Sheets. As of December 31, 2024 and 2023, such contract assets were $ 578 and $ 1,662 , respectively, consisting primarily of products and services provided under specific contracts to customers for which earnings processes have been met prior to shipment of goods or full delivery of completed services, as well as estimated receivables from contracts with third parties. Contract Liabilities - in certain situations, customer contractual payment terms are structured to permit invoicing in advance of delivery of a good or service. In such instances, the customer’s cash payment may be received before satisfaction of some, or any, performance obligations that are specified. In these situations, billing occurs in advance of revenue recognition, which results in contract liabilities. These contract liabilities are reflected as deferred revenue within the Balance Sheets. As remaining performance obligations are satisfied, an appropriate portion of the deferred revenue balance is credited to earnings. As of December 31, 2024 and 2023, such contract liabilities were $ 21,053 and $ 33,896 , respectively. Costs to obtain contracts - in certain situations, the Company may incur incremental costs of obtaining a contract with a customer. These costs, if expected to be recovered, are recognized as an asset and reflected as other assets within the Balance Sheets. The asset is amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. As of December 31, 2024 and 2023, such costs to obtain contracts were $ 480 and $ 715 , respectively. Research and Development Research and development, or R&D, expenses are recorded in accordance with ASC 730, Research and Development and are expensed as incurred. 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. CROs activities include preclinical laboratory experiments and clinical studies. Other activity expenses include regulatory consulting and other costs. 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 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. F-12 Income Taxes Income taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes , or ASC 740, which provides for deferred taxes using an asset and liability approach. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Tax benefits are recognized when it is more likely than not that a tax position will be sustained during an audit. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Uncertain tax positions are accounted for in accordance with the provision of ASC 740. When uncertain tax positions exist, the tax benefit is recognized to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position, as well as consideration of the available facts and circumstances. To date, the Company has not had any significant uncertain tax positions. Share-Based Compensation The Company records share-based compensation expenses for awards of stock options and RSUs under ASC 718, Compensation — Stock Compensation . For awards to non-employees for periods prior to the adoption of ASU 2018-07, Compensation-Stock Compensation: Improvements to Non-employee Share-Based Payment Accounting, on January 1, 2019, the Company had applied ASC 505-50, Equity-based Payments to Non-Employees . 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 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. 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, • exercise price, • both the contractual and estimated expected term of the option, • an estimate of stock price volatility based on that of an industry peer group, • 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 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 Statements of Operations and Comprehensive Loss. As part of the Company’s share-based compensation plan, shares are withheld to satisfy tax withholding obligations upon the vesting of RSUs. During the years ended December 31, 2024 and 2023, the fair value of the shares withheld was $ 1,351 and $ 11 , respectively, and was recorded a reduction of Additional paid-in capital in the Statements of Changes in Stockholders’ Deficit and as a financing activity in the Statements of Cash Flows. The portion of shares yet to be remitted as of 12/31/24 was $ 250 and is disclosed as a non-cash financing activity in the Statements of Cash Flows. F-13 Per Share Data Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of Common Stock outstanding during the period. Diluted net income per common share is calculated by dividing net income available to common stockholders as adjusted for the effect of dilutive securities, if any, by the weighted average number of shares of Common Stock and dilutive Common Stock outstanding during the period. Potentially dilutive common shares include the shares of Common Stock issuable upon the exercise of outstanding stock options and warrants, the shares of issued but unvested RSUs and the purchase of shares from the Company’s employee stock purchase plan (using the treasury stock method). For all periods presented, potential common shares have been excluded from the calculation of EPS because their effect would be anti-dilutive. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ deficit that may result from transactions and economic events other than those with stockholders, such as unrealized gains or losses on investments. For the periods ended December 31, 2024 and 2023, the Company’s comprehensive loss included only its net loss. 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 — Quoted prices in active markets for identical assets or liabilities. Cash and cash equivalents consisted of cash in bank accounts and money market Treasury mutual funds 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. The Company currently has no Level 2 assets or liabilities. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including 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, 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 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 16, Warrants for further information on these warrants. 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 15, 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 2024 and 2023, there were no material changes to the significant unobservable F-14 inputs used to recognize the Royalty Right Agreements liability. Management has updated the projected years of payments to 2034 and the effective interest rate by 0.56 %. See Note 15, Long-Term Debt for further discussion. Segment Information Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company manages its operations as a single segment for purposes of assessing performance and making operating decisions. For additional information regarding the adoption of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, see Note 5, Segment Reporting. Recent Accounting Pronouncements 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. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. Recently Adopted Accounting Pronouncements: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ASU 2023-0 7 , which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures. The guidance in this update is effective for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024. The Company adopted the new disclosure requirements as of and for the years ended December 31, 2024 and December 31, 2023. Refer to Note 5, Segment Reporting for the required disclosure. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) : Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . This Accounting Standards Update was issued to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Among other provisions, the amendments in this ASU significantly change the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer conversion features will require separate recognition, and fewer freestanding instruments, like warrants, will require liability treatment. More specifically, the ASU reduces the number of models that may be used to account for convertible instruments from five to three, amends diluted EPS calculations for convertible instruments, modifies the requirements for a contract that may be settled in an entity’s own shares to be classified in equity and requires expanded disclosures intended to increase transparency. The Company adopted the new guidance on January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820) : Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions . This Accounting Standards Update was issued to clarify the guidance in Topic 820, Fair Value Measurement , when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, and to introduce new disclosure requirements for such equity securities. The Company adopted the new guidance on January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s financial statements. Recent Accounting Pronouncements Not Adopted as of December 31, 2024: In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 will require the Company to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, included in certain expense captions in the Statements of Operations, and Comprehensive Loss as well as qualitatively describe the remaining amounts included in those captions. ASU 2024-03 will also require the Company to disclose both the amount and the Company’s definition of selling expenses. These disclosure requirements will be effective for the Company for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact from the adoption of ASU 2024-03 on disclosures to its 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 F-15 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 disclosure on an annual basis of the following information about income taxes paid: 1. 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: 1. 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 financial statements. Note 4. Risks and Uncertainties The Company assesses liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company’s cash requirements for 2025 and beyond include expenses related to continuing development and clinical evaluation of its products, manufacture and supply costs, costs of regulatory filings, patent prosecution expenses and litigation expenses, expenses related to commercialization of its products, as well as costs to comply with the requirements of being a public company operating in a highly regulated industry. As of December 31, 2024, the Company had $ 71,546 of cash and cash equivalents. The Company has experienced a history of net losses. The Company’s accumulated deficit totaled $ 363,214 as of December 31, 2024. The net losses and accumulated deficits were partially offset by gross margins from sales of commercialized licensed and proprietary products, license fees, milestone and royalty payments from commercial licensees and co-development parties. The Company’s funding requirements have been met by its cash and cash equivalents, as well as its existing equity and debt offerings, including the 13.5 % Senior Secured Notes, as further discussed in Note 15, Long-Term Debt , the ATM facility and other equity offerings, including the underwritten public offering as discussed in Note 1, Company Overview and Equity Transactions. 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, 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. Note 5. Segment Reporting Operating segments are defined as components of an entity for which separate discrete financial information is available for evaluation by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. For the year ended December 31, 2024, the Company has identified one operating and reportable segment. The Company defines its operating segment based on internally reported financial information that is regularly reviewed by the CODM to analyze financial performance, make decisions, and allocate resources. The Company's Chief Executive Officer (“CEO”) is the CODM. The Company manages its operations as a single segment for purposes of assessing performance and making operating decisions. This segment encompasses the development and advancement of a product pipeline for the treatment of severe allergic reactions, including anaphylaxis, and the Adrenaverse epinephrine prodrug pipeline platform. Additionally, the Company serves as the exclusive manufacturer for its proprietary product, Libervant, and four licensed commercialized products. The CODM reviews the segment's profit or loss based on net loss reported on the Statements of Operations and Comprehensive Loss. The CODM also considers forecast-to-actual variances on a monthly basis for expenses deemed significant. Furthermore, the CODM reviews the segment's assets based on total assets reported on the Balance Sheets. All long-lived assets are held in the United States. While the Company generated $ 57,561 and $ 50,583 in revenues in 2024 and 2023, respectively, management expects the Company to continue to incur significant expenses and operating losses for the foreseeable future as it advances product candidates through all stages of development and clinical trials, ultimately seeking regulatory approval. The CODM uses cash forecast models to guide investment decisions and assess entity-wide operating results and performance. Net loss is used to monitor budget and rolling forecasts versus actual results. The CODM views specific categories within research and development expenses, selling expenses, and general and administrative expenses as significant due to their direct correlation with cash burn and profitability. F-16 The following table reconciles reported revenues to net loss under the significant expense principle for the years ended December 31, 2024, and 2023: Year Ended December 31, 2024 2023 Revenues $ 57,561 $ 50,583 Costs and expenses: Total Manufacture and Supply Expenses 17,872 20,831 R&D Project expenses: Anaphylm project expenses 9,471 5,826 AQST-108 project expenses 786 — Libervant project expenses 2 ( 887 ) R&D other expenses: Personnel costs 1 7,724 6,231 Other 2 2,297 1,934 Total Research and Development Expenses 20,280 13,104 Selling expenses: Personnel costs 1 2,382 864 Other 3 5,164 775 Total Selling expenses 7,546 1,639 General & Administrative expenses: Personnel costs 1 21,064 10,770 Other 4 21,570 19,341 Total General and Administrative Expenses 42,634 30,111 Total Selling, General and Administrative Expenses 50,180 31,750 Total costs and expenses 88,332 65,685 Loss from operations ( 30,771 ) ( 15,102 ) Other (expenses) income ( 13,380 ) 7,477 Net loss before income taxes ( 44,151 ) ( 7,625 ) Income taxes benefits (expense) 14 ( 245 ) Net loss $ ( 44,137 ) $ ( 7,870 ) Comprehensive loss $ ( 44,137 ) $ ( 7,870 ) 1 - Personnel costs include payroll expenses, share-based compensation expenses and severance 2 - Other Research and Development expenses include preclinical, consulting, maintenance, and testing fees 3 - Other Selling expenses include commercialization and other related expenses 4 - Other General and Administrative expenses include legal/patent fees, insurance fees, IT expenses, investor relations expenses, regulatory fees, facility and other costs F-17 Note 6. Revenues and Trade Receivables, Net The Company’s revenue was comprised of the following: Year Ended December 31, 2024 2023 Manufacture and supply revenue $ 39,976 $ 43,805 License and royalty revenue 15,345 5,376 Co-development and research fees 1,925 1,402 Proprietary product revenue, net 315 — Total revenues $ 57,561 $ 50,583 Disaggregation of Revenue The following table provides disaggregated net revenue by geographic area: Year Ended December 31, 2024 2023 United States $ 39,930 $ 37,104 Ex-United States 17,631 13,479 Revenues $ 57,561 $ 50,583 For the year ended December 31, 2024, United States revenues were derived primarily from Indivior (manufacture and supply revenue, and co-development and research fees), MTPA (license and royalty revenue that was previously recorded as deferred revenue and now recognized due to the termination of the contract), and Assertio (manufacture and supply revenue, license and royalty revenue and co-development and research fees). Ex-United States revenues were derived primarily from Haisco (license and royalty revenue that was previously recorded as deferred revenue and now recognized due to the termination of the contract), Indivior (manufacture and supply revenue, license and royalty revenue and co-development and research fees), and Hypera (manufacture and supply revenue, license and royalty revenue and co-development and research fees) for revenue markets outside of the United States. For the year ended December 31, 2023, United States revenues were derived primarily from Indivior (manufacture and supply revenue, and co-development and research fees), Assertio (manufacture and supply revenue, and license and royalty revenue), and Zevra (license and royalty revenue). Ex-United States revenues were derived primarily from Indivior (manufacture and supply revenue, license and royalty revenue and co-development and research fees) and Hypera (manufacture and supply revenue and license and royalty revenue) for revenue markets outside of the United States. Trade and other receivable, net consist of the following: December 31, 2024 2023 Trade receivables $ 4,919 $ 5,570 Contract and other receivables 2,473 2,915 Less: allowance for credit losses — ( 14 ) Less: sales-related allowances ( 48 ) — Trade and other receivables, net $ 7,344 $ 8,471 Contract and other receivables totaled $ 2,473 and $ 2,915 as of December 31, 2024 and 2023, 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, as well as estimated receivables from contracts with third parties. Other receivables include the current portion related to the Monetization royalty receivable and other receivables. Sales-related allowances as of December 31, 2024 were estimated in relation to revenues recognized for sales of Libervant for patients between two to five years of age. F-18 The following table presents the changes in the allowance for credit losses: December 31, 2024 2023 Balance at beginning of the period $ 14 $ 40 Allowance reduction ( 14 ) ( 26 ) Balance at end of the period $ — $ 14 Sales-Related Allowances Revenues from sales of products are recorded net of prompt payment discounts, wholesaler service fees, returns allowances, rebates and co-pay support redemptions. These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale. The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts and other related information that may become known in the future. The adequacy of these provisions is reviewed on a quarterly basis. The following table presents the changes in sales-related allowances: December 31, 2024 2023 Balance at beginning of period $ — $ 669 Provision 71 — Payments / credits ( 23 ) ( 87 ) Reclassifications $ — $ ( 582 ) Balance at end of period $ 48 $ — 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 other rebates are reflected as current liabilities. The accrued balances relative to these provisions included in Trade and other receivables, net and accrued expenses were $ 48 and $ 665 , respectively, as of December 31, 2024, and $ 0 and $ 645 , respectively, as of December 31, 2023. See Note 14, 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, 2024, Indivor and Haisco represented approximately 62 % and 12 % of total revenue, including the one-time recognition of deferred revenue for Haisco, respectively. As of December 31, 2024, Indivor and Cosmed exceeded the 10% threshold for outstanding receivable balances and represented 41 % and 16 %, 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. exceeded the 10% threshold for outstanding receivable balances and represented 65 % and 13 %, respectively of total trade and other receivables . Note 7. Material Agreements Commercial Exploitation Agreement with Indivior 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 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 an agreed upon purchase price per unit until January 1, 2025 and, thereafter, that is subject to annual adjustments based on F-19 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. The Indivior License Agreement contains customary contractual termination provisions, including with respect to a filing for bankruptcy or corporate dissolution, an invalidation of the intellectual property surrounding Suboxone, and commission of a material breach of the Indivior License Agreement by either party. Additionally, Indivior may terminate the Indivior License Agreement if the FDA or other applicable regulatory authority declares the Company’s manufacturing site to no longer be suitable for the manufacture of Suboxone or Suboxone is no longer suitable to be manufactured due to health or safety reasons. The initial term of the Indivior License Agreement was seven years from the commencement date. 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 covered under the Indivior License Agreement; and (ii) agreeing to transfer pricing and payment terms for supplied product under the Indivior License Agreement. During the year ended December 31, 2023, in consideration of the agreements between the parties, the Company received a payment of $ 11,482 from Indivior, of which amount $ 5,482 represented: (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. During the year ended December 31, 2023, the Company recognized $ 5,482 , of which $ 1,682 was related to the 2022 price increases, in Manufacture and supply revenue and $ 6,000 in Interest income and other income , net on the Statements of Operations and Comprehensive Loss. There were no retroactive price adjustments included in Manufacture and supply revenue for year ended December 31, 2024. Supplemental Agreement with Indivior On September 24, 2017, the Company entered into an agreement with Indivior, or the Indivior Supplemental Agreement. Pursuant to the Indivior Supplemental Agreement, the Company conveyed to Indivior all existing and future rights in the settlement of various ongoing patent enforcement legal actions and disputes related to the Suboxone product. The Company also conveyed to Indivior the right to sublicense manufacturing and marketing capabilities to enable an Indivior licensed generic buprenorphine product to be produced and sold by parties unrelated to Indivior or Aquestive. Under the Indivior Supplemental Agreement, the Company 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. Through February 20, 2019, the at-risk launch date of the competing generic products of Dr. 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 was finalized. No further payments are due to the Company under the Indivior Supplemental Agreement. See Note 23, Contingencies for details. All payments made by Indivior to the Company pursuant to the Indivior Supplemental Agreement were in addition to, and not in place of, any amounts owed by Indivior to the Company pursuant to the Indivior License Agreement. License Agreement with Sunovion Pharmaceuticals, Inc. On April 1, 2016, the Company entered into a license agreement with Cynapsus Therapeutics Inc. (which was later succeeded to in interest by Sunovion), referred to as the Sunovion License Agreement, pursuant to which Sunovion obtained an exclusive, worldwide license (with the right to sub-license) to certain intellectual property, including existing and future patents and patent applications, covering all oral films containing apomorphine for the treatment of off episodes in Parkinson’s disease patients. Sunovion used this intellectual property to develop its apomorphine product KYNMOBI, which was approved by the FDA on May 21, 2020. This approval triggered Sunovion’s obligation to remit a payment of $ 4,000 , due on the earlier of: (a) the first day of product availability at a pharmacy in the United States; or (b) within six months of FDA approval of the product. This amount was received as of September 30, 2020 and was included in License and royalty revenues for the twelve months ended December 31, 2020. Effective March 16, 2020, the Company entered into 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: (i) including the United Kingdom and any other country currently in the EU which later withdraws as a member country in the EU for purpose of determining the satisfaction of the condition triggering the obligation to pay the third milestone due under the Sunovion License Agreement, (ii) extending the date after which Sunovion has the right to terminate the Sunovion License Agreement for convenience from December 31, 2024 to March 31, 2028, (iii) modifying the effective inception date of the first F-20 minimum annual royalty due from Sunovion to the Company form January 1, 2020 to April 1, 2020, and (iv) modifying the termination provision to reflect the Company’s waiver of the right to terminate the Sunovion License Agreement in the event that KYNMOBI was not commercialized by January 1, 2020. This Sunovion License Agreement will continue until terminated by Sunovion in accordance with the termination provisions of the Amendment to the Sunovion License Agreement. The Sunovion License Agreement continues (on a country-by-country basis) until the expiration of all applicable licensed patents unless earlier terminated under the termination provisions contained therein. Upon termination of the Sunovion License Agreement, all rights to intellectual property granted to Sunovion to develop and commercialize apomorphine-based products will revert to the Company. On October 23, 2020, the Company 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. 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 have been received 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, 2024 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 17, Sale of Future Revenue for further details on the accounting for the Monetization Agreement. Agreement to Terminate CLA with Zevra Therapeutics, Inc. (formerly KemPharm) 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, including the product Azstarys ® . Licensing and Supply Agreement with Haisco for Exservan™ (Riluzole Oral Film) for ALS Treatment in China The Company entered into the Haisco Agreement with Haisco, a Chinese limited company listed on the Shenzhen Stock Exchange, effective as of March 3, 2022, pursuant to which Aquestive granted Haisco 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 was 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 in September 2022, and was entitled to 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. In June 2024, the Haisco Agreement was terminated, and the Company will not receive any contingent payments under the Haisco Agreement. The Company recognized previously deferred revenue of $ 7,000 for the upfront payment received in September 2022 on the Company's Statements of Operations and Comprehensive Loss for the year ended December 31, 2024. The termination agreement released all parties from any existing or ongoing obligations. Commissions of $ 134 that had been capitalized were expensed immediately in Selling, general, and administrative expenses on the Statements of Operations and Comprehensive Loss. F-21 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. In connection with his departure, Mr. Kendall and the Company entered into a Separation Agreement, including a Consulting Agreement, dated as of May 17, 2022. Under the Separation Agreement, in addition to other severance benefits already received by Mr. Kendall in 2022, Mr. Kendall received a monthly severance payment for eighteen months following the Termination Date, or November 22, 2023. By the end of December 31, 2023, all payments due to Mr. Kendall were made. Licensing and Supply Agreement with Atnahs Pharma UK Limited 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 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 include 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 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. Serial No. 16/561,573, and payment by the Company of the related allowance fee. The Company received the notice of allowance from the PTO and paid the related allowance fee on October 27, 2022. Further, under the Assertio Agreement, the Company will receive royalties from Assertio for the sale of the product through the expiration of the Assertio Agreement. The Company also entered into a long-term supply agreement with Assertio for Sympazan pursuant to which the Company is the exclusive sole worldwide manufacturer and supplier of the product and will receive manufacturing fees from Assertio for the product through the expiration of such supply agreement. Licensing Agreement with Mitsubishi Tanabe Pharma America, Inc. In January 2021, the Company announced that Aquestive granted an exclusive license to MTPA for the commercialization of Exservan in the United States. MTPA is a multinational pharmaceutical company with a focus on patients with ALS. The product was launched by MTPA in June 2021. Under the terms of the MTPA license agreement, Aquestive was the exclusive manufacturer and supplier of Exservan for MTPA in the United States. In June 2024, under the Second Amendment to the License and Supply Agreement, MTPA and the Company mutually agreed to terminate the agreement. As of June 30, 2024 and as part of the termination, the parties were released from any existing or ongoing obligations (except for certain limited non-material post-termination obligations). Upon termination, previously deferred revenue of $ 3,317 was recognized in the Statements of Operations and Comprehensive Loss for the year ended December 31, 2024 for milestone payments that had been received. Commissions of $ 57 that had been capitalized were expensed immediately in Selling, general, and administrative expenses on the Statements of Operations and Comprehensive Loss for the year ended December 31, 2024. Note 8. 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. F-22 • 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 16 , 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 15, 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. Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide. See Note 16 , 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. Those warrants were valued based on Level 3 inputs and their fair value was based primarily on an independent third-party appraisal prepared as of the grant date consistent with generally accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide. See Note 16 , 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. 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 b. 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 15, Long-Term Debt for further discussion. F-23 Note 9. Inventories, Net Inventory consists of the following: December 31, 2024 2023 Raw material $ 3,266 $ 2,118 Packaging material 2,135 3,028 Finished goods 643 1,623 Total inventory $ 6,044 $ 6,769 Note 10. Property and Equipment, Net December 31, Useful Lives 2024 2023 Machinery 3 - 15 years $ 20,317 $ 20,248 Furniture and fixtures 3 - 15 years 769 769 Leasehold improvements (a) 21,419 21,386 Computer, network equipment and software 3 - 7 years 2,685 2,627 Construction in progress 2,110 2,033 47,300 47,063 Less: accumulated depreciation and amortization ( 43,501 ) ( 42,884 ) Total property and equipment, net $ 3,799 $ 4,179 (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 was $ 640 and $ 1,153 for the years ended December 31, 2024 and 2023, respectively. No impairment losses were recognized for the year ended December 31, 2024. 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 Statements of Operations and Comprehensive Loss. Note 11. Right-of-Use Assets and Lease Obligations The Company leases all realty used at its production and warehouse facilities, corporate headquarters, commercialization operations center and research and laboratory facilities. None of these three leases include the characteristics specified in ASC 842, Leases, that require classification as financing leases and, accordingly, these leases are accounted for as operating leases. These leases, as amended, provide remaining terms between 3.3 years and 8.8 years, including renewal options expected to be exercised to extend the lease periods. 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, and Notes Payable, net on the 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 Balance Sheets. For longer-term lease arrangements that are recognized on the Company's Balance sheets, the right-of-use asset and lease liability is initially measured at the commencement date based upon the present value of the lease payments due under the lease. These payments represent the combination of the fixed lease and fixed non-lease components that are due under the arrangement. The costs associated with the Company’s short-term leases, as well as variable costs relating to the Company’s lease arrangements, are not material to the financial results. The implicit interest rates of the Company’s lease arrangements are generally not readily determinable and as such, the Company applies an incremental borrowing rate, which is established based upon the information available at the lease commencement date, to determine the present value of lease payments due under an arrangement. Measurement of the operating lease liability reflects 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 Statements of Operations and Comprehensive Loss. For the years ended December 31, 2024 and F-24 2023, total operating lease expenses totaled $ 1,814 and $ 1,745 , respectively, including variable lease expenses such as common area maintenance and operating costs of $ 487 and $ 447 , respectively. The Company’s payments due under its operating leases are as follows: Amount 2025 $ 1,284 2026 1,318 2027 1,346 2028 1,180 2029 and thereafter 3,915 Total lease payments 9,043 Less: imputed interest ( 3,565 ) Total operating lease liabilities $ 5,478 Note 12. Intangible Assets, Net The following table provides the components of identifiable intangible assets, all of which are finite lived. December 31, 2024 2023 Purchased intangible $ 3,858 $ 3,858 Purchased patent 509 509 4,367 4,367 Less: accumulated amortization ( 4,367 ) ( 3,089 ) Intangible assets, net — 1,278 Amortization expense was $ 78 and $ 157 for each of the years ended December 31, 2024 and 2023, respectively. In June 2024, in connection with a termination of an agreement, the Company recorded a gain on termination of the contract in the amount of $ 1,500 , which was partially offset by an adjustment to the remaining balance of $ 1,200 of the intangible asset. The net gain of $ 300 was recorded within Other income, net on the Statements of Operations and Comprehensive Loss for the year ended December 31, 2024. See Note 7, Material Agreements. Note 13. Other Non-Current Assets The following table provides the components of other non-current assets: December 31, 2024 2023 Royalty receivable $ 3,000 $ 4,000 Other 1,223 1,438 Total other non-current assets $ 4,223 $ 5,438 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. As of December 31, 2024 and 2023, Royalty receivable consists of four and five , respectively, 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 17, Sale of Future Revenue for further details on how this receivable relates to the Monetization Agreement transaction. Non-current portion of commissions capitalized under ASC 340, Other Assets and Deferred Costs, is recorded within Other non-current assets on the Balance Sheets. Commissions of $ 191 were expensed in Selling, general, and administrative expenses on the Statements of Operations and Comprehensive Loss for the year ended December 31, 2024 due to the termination of the underlying contracts. F-25 Note 14. Accrued Expenses Accrued expenses consisted of the following: December 31, 2024 2023 Accrued compensation $ 4,732 $ 4,202 Real estate and personal property taxes 365 337 Accrued distribution expenses and sales returns provision 665 645 Interest payable 17 1,013 Other 128 300 Total accrued expenses $ 5,907 $ 6,497 The increase in Accrued compensation is mostly related to an increase in the current portion of accrued severance as of December 31, 2024. The decrease in Interest payable is due to the timing of interest payments on the 13.5 % Senior Notes. The fourth quarter 2024 interest payment on the 13.5 % Senior Notes was made on December 30, 2024. As of December 31, 2023, interest payable on the 13.5 % Senior Notes was due on January 2, 2024. See Note 15, Long-Term Debt, for discussion of 13.5 % Notes and related interest payable. Accrued distribution expenses and sales returns provision mostly represent estimated liabilities for wholesaler service fees, co-pay support redemptions and other rebates related to the proprietary product Libervant and returns related to the period prior to the outlicensing of our proprietary product, Sympazan. Note 15. 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 . On November 3, 2020, the Company entered into the First Supplemental Indenture (the "First Supplemental Indenture" and, together with all other subsequent supplemental indentures and the Base Indenture, collectively, the "Indenture") by and among the Company and U.S. Bank National Association, as Trustee (the "Trustee") and Collateral Agent thereunder to the Base Indenture, by and between the Company and the Trustee. Under the Second Supplemental Indenture, dated November 20, 2020, the Company repaid $ 22,500 of its $ 70,000 outstanding 12.5 % Notes from the upfront proceeds received under the Monetization Agreement. 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. The $ 4,000 principal issuance would be repaid proportionally over the same maturities as the other 12.5 % Notes. The Company also paid to one of its noteholders a $ 2,250 premium as result of the early retirement of debt. The Company accounted for the $ 22,500 debt repayment as a debt modification of the 12.5 % Notes. The fees paid to the noteholders inclusive of (i) $ 2,250 early premium prepayment and (ii) $ 4,000 issuance of Additional Notes in lieu of paying a prepayment penalty were recorded as additional debt discount, amortized over the remaining life of the 12.5 % Notes using the effective interest method. Loan origination costs of $ 220 associated with the Additional Notes were expensed as incurred. 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 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 in June 30, 2023. Based on the valuation study, the put option was valued at $ 0 . The resulting $ 45 decrease in the put option fair value was recorded in interest income and other income, net on the Statements of Operations and Comprehensive Loss for the year ended December 31, 2023. 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 F-26 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. As of December 31, 2023, the put option was no longer in place due to the refinancing of the 12.5 % Notes. 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. The last Consent Fee installment of $ 675 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. 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 12.5 % 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. During the year ended December 31, 2023, the Company redeemed $ 5,647 of its outstanding 12.5 % Notes. The Company also paid a $ 353 prepayment premium as a result of the early retirement of debt which was reflected as a loss on extinguishment of debt on the Company's Statements of Operations and Comprehensive Loss for the year ended December 31, 2023. The Company also made three scheduled principal payments totaling $ 11,463 during the year ended December 31, 2023. Amortization expense arising from deferred debt issuance costs and debt discounts related to the 12.5 % Notes for the year ended December 31, 2023 was $ 13 . 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 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: a. 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 i. 1.0 % of the principal redeemed; and ii. 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; and b. 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. F-27 The Indenture permits the Company, upon the continuing satisfaction of certain conditions, including that the Company has at least $ 100,000 of net revenues for the most recently completed twelve calendar month period, to enter into an ABL facility not to exceed $ 10,000 . 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. 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 b. 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. 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. 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. 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 the 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. 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 As of December 31, 2024, there were no material changes to the significant unobservable inputs used to recognize the Royalty Right Agreements liability. Management has updated the projected years of payments to 2034 and the effective interest rate by 0.56 %. 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. 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, 2024 was 5,019 and $ 5,459 , respectively. 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 $ 12,646 for the 13.5 % Notes and $ 36,706 for royalty obligations as of December 31, 2024. Unamortized discounts totaled $ 17,665 for the 13.5 % Notes and $ 42,165 for royalty obligations as of December 31, 2023. F-28 Long-term notes and unamortized debt discount balances are as follows: December 31, 2024 2023 Total outstanding notes $ 45,000 $ 45,000 Unamortized discount, including Exit Fee ( 12,646 ) ( 17,665 ) Notes payable, long-term 32,354 27,335 Finance lease, long-term 146 173 Notes payable, net $ 32,500 $ 27,508 December 31, 2024 2023 Royalty obligations $ 56,922 $ 56,926 Unamortized discount ( 36,706 ) ( 42,165 ) Current portion of royalty obligation ( 87 ) — Royalty obligations, net $ 20,129 $ 14,761 Scheduled principal payments on the 13.5 % Notes as of December 31, 2024 are as follows: 2025 $ — 2026 9,540 2027 14,535 2028 20,925 Total $ 45,000 Note 16. Warrants Warrants Issued to 12.5 % Senior Secured Noteholders Warrants that were issued in conjunction with the Initial Notes (the “Initial Warrants”) and Additional Notes (the “Additional Warrants”) expire on June 30, 2025 and entitle the noteholders to purchase up to 2,143,000 shares of Common Stock and included specified registration rights. Management estimated the fair value of the Initial Warrants to be $ 6,800 and the Additional Warrants to be $ 735 , each based on an assessment by an independent third-party appraiser. The fair value of the respective warrants was treated as a debt discount, amortizable over the term of the respective warrants, with the unamortized 12.5 % Notes portion applied to reduce the aggregate principal amount of the 12.5 % Notes. Additionally, since the Initial Warrants and Additional Warrants issued do not provide warrant redemption or put rights within the control of the holders that could require the Company to make a payment of cash or other assets to satisfy the obligations under the warrants, except in the case of a “cash change in control”, the fair value attributed to the warrants is presented in Additional Paid-in Capital in the Company’s Balance Sheets. During the year ended December 31, 2024, 30,645 of the Additional Warrants were exercised with the Company receiving proceeds of $ 165 . There were no warrants exercised during the year ended December 31, 2023. Warrants to purchase a total of 1,683,784 shares of Common Stock with exercise prices of $ 4.25 and $ 5.38 for 1,571,429 warrants and 112,355 warrants, respectively, remained outstanding as of December 31, 2024. 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, remained outstanding as of December 31, 2023 See Note 15, 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 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 is presented in Additional Paid-in Capital in the Company’s Balance Sheets. 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 . F-29 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 Balance Sheets. 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. There were no warrants issued or exercised as it relates to the Warrants Issued Under Securities Purchase Agreements during the year ended December 31, 2024. As of December 31, 2024, in addition to the warrants to purchase 2,750,000 shares of Common Stock described above, there remained outstanding warrants to purchase 160,548 shares of Common Stock at an exercise price of $ 0.96 and warrants to purchase 1,683,784 shares of Common Stock outstanding related to the original issuance of the 12.5 % Notes prior to the debt refinancing described above in this Note 15, Long-Term Debt , with exercise prices of $ 4.25 and $ 5.38 for 1,571,429 warrants and 112,355 warrants, respectively. Note 17. Sale of Future Revenue On November 3, 2020, the Company entered into the Monetization Agreement with Marathon. Under the terms of the Monetization Agreement, the Company sold all of its contractual rights to receive royalties and milestone payments due under the Sunovion License Agreement related to Sunovion’s apomorphine product, KYNMOBI, an apomorphine film therapy for the treatment of off episodes in Parkinson’s disease patients, which received approval from the FDA on May 21, 2020. In exchange for the sale of these rights, the Company received an upfront payment of $ 40,000 and an additional payment of $ 10,000 through the achievement of the first milestone. The Company has received an aggregate amount of $ 50,000 through December 31, 2024 under the Monetization Agreement. Under the Monetization Agreement, additional contingent payments of up to $ 75,000 may be due to the Company upon the achievement of worldwide royalty and other commercial targets within a specified timeframe, which could result in total potential proceeds of $ 125,000 . The Company recorded the upfront proceeds of $ 40,000 and subsequent first milestone of $ 10,000 , reduced by $ 2,909 of transaction costs, as a liability related to the sale of future revenue that will be amortized using the effective interest method over the life of the Monetization Agreement. As future contingent payments are received, they will increase the balance of the liability related to the sale of future revenue. Although the Company sold all of its rights to receive royalties and milestones, as a result of ongoing obligations related to the generation of these royalties, the Company will account for these royalties as revenue. Its ongoing obligations include the maintenance and defense of the intellectual property and to provide assistance to Marathon in executing a new license agreement for KYNMOBI in the event Sunovion terminates the Sunovion License Agreement in one or more jurisdictions of the licensed territory under the Sunovion License Agreement. The accounting liabilities, as adjusted over time, resulting from this transaction and any non-cash interest expenses associated with those liabilities do not and will not represent any obligation to pay or any potential future use of cash. During the second quarter of 2020, under the Sunovion License Agreement, the Company recognized $ 8,000 of royalty revenue and corresponding royalty receivable, related to the $ 1,000 annual minimum guaranteed royalty that is due. In connection with the Monetization Agreement, the Company performed an assessment under ASC 860, Transfer and Servicing to determine whether the existing receivable was transferred to Marathon and concluded that the receivable was not transferred. As royalties are remitted to Marathon from Sunovion, the collection of the royalty receivable and balance of the liability related to the sale of future revenue will be effectively repaid over the life of the agreement. In order to determine the amortization of the liability related to the sale of future revenue, the Company is required to estimate the total amount of future royalty and milestone payments to Marathon over the life of the Monetization Agreement and contingent milestone payments from Marathon to the Company. The sum of future royalty payments less the $ 50,000 in proceeds received and future contingent payments will be recorded as interest expense over the life of the Monetization Agreement. At execution, the F-30 estimate of this total interest expense resulted in an effective annual interest rate of approximately 24.9 %. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the life of the Monetization Agreement. The Company assesses the estimated royalty and milestone payments to Marathon from Sunovion and contingent milestone payments from Marathon to the Company. To the extent the amount or timing of such payments is materially different from the original estimates, an adjustment will be recorded 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. 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. dollars (USD) while a portion of the underlying sales of KYNMOBI will be made in currencies other than USD, and other events or circumstances that are not currently foreseen. Changes to any of these factors could result in increases or decreases to both royalty revenue and interest expense related to the sale of future revenue. 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: December 31, 2024 2023 Liability related to the sale of future revenue, net at beginning of the period $ 64,490 $ 65,259 Royalties related to the sale of future revenue ( 1,008 ) ( 989 ) Amortization of issuance costs 236 220 Liability related to the sale of future revenue, net at end of the period (includes current portion of $ 1,000 and $ 922 , respectively) $ 63,718 $ 64,490 Note 18. Other Non-Current Liabilities The Company’s other non-current liabilities at December 31, 2024 consisted of AROs of $ 2,039 and severance liabilities of $ 356 . The Company’s other non-current liabilities at December 31, 2023 consisted of AROs of $ 2,016 . 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. Depreciation expense related to the ARO assets included in overall depreciation expense for the periods ended December 31, 2024 and 2023 were $ 11 and $ 7 , respectively. Below is a schedule of activity in the Company’s liability for AROs for the year ended December 31, 2024 and 2023. Balance at December 31, 2022 $ 1,989 Additions — Accretion 27 Balance at December 31, 2023 2,016 Additions — Accretion 23 Balance at December 31, 2024 $ 2,039 F-31 Note 19. 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. Diluted EPS is adjusted by the effect of dilutive securities, including options and awards under the Company’s equity compensation plans, warrants and ESPP. As a result of the Company’s net loss incurred for the years ended December 31, 2024 and 2023, all potentially dilutive instruments outstanding would have anti-dilutive effects on per-share calculations. Therefore, basic and diluted net loss per share are the same for the years ended December 31, 2024 and 2023 as reflected below. Year Ended December 31, 2024 Year Ended December 31, 2023 Numerator: Net loss $ ( 44,137 ) $ ( 7,870 ) Denominator: Weighted-average number of common shares – basic and diluted 86,726,211 61,255,864 Loss per common share – basic and diluted $ ( 0.51 ) $ ( 0.13 ) (a) For the years ended December 31, 2024 and 2023, outstanding stock options of 6,301,364 and 5,733,064 to purchase shares of Common Stock, respectively, were anti-dilutive. (b) For the years ended December 31, 2024 and 2023, outstanding restricted stock units of 3,692,876 and 3,280,313 to purchase shares of Common Stock, respectively were anti-dilutive. (c) For the years ended December 31, 2024 and 2023, outstanding warrants of 4,594,332 and 4,624,977 to purchase shares of Common Stock, respectively, were anti-dilutive. Note 20. Share-Based Compensation The Company provides certain employees, non-employee directors and consultants with performance incentives under the Aquestive Therapeutics, Inc. Equity Incentive Plan (“the Plan”), adopted by the Board of Directors on June 15, 2018. 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. 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, 2024, there were approximately 2.0 million shares available for grant. The Company recognized share-based compensation in its Statements of Operations and Comprehensive Loss during the periods presented as follows: Expense classification: Year Ended December 31, 2024 Year Ended December 31, 2023 Manufacture and supply $ 374 $ 191 Research and development 1,215 456 Selling, general and administrative 5,510 2,042 Total share-based compensation expenses $ 7,099 $ 2,689 Share-based compensation from: Restricted Stock Units 4,545 993 Stock Options 2,512 1,669 Employee Stock Purchase Plan 42 27 Total share-based compensation expenses $ 7,099 $ 2,689 F-32 The following tables provide information about the Company’s restricted stock unit and stock option activity during the year ended December 31, 2024 and 2023. Restricted Stock Units The following tables summarize the Company’s awards of service-based and market conditions vesting-based restricted stock units for the years 2024 and 2023: Restricted Stock Unit Awards (RSUs) - Service-based: Number of Units Weighted Average Grant Date Fair Value Per Share (In thousands) Unvested as of December 31, 2022 162 $ 2.38 Granted 1,874 0.91 Forfeited ( 31 ) 2.33 Vested ( 57 ) 2.03 Unvested as of December 31, 2023 1,948 $ 0.97 Granted 1,470 5.52 Forfeited ( 43 ) 1.58 Vested ( 765 ) 1.45 Unvested as of December 31, 2024 2,610 $ 3.38 Expected to vest as of December 31, 2024 2,459 $ 3.35 The Company granted 1,470,300 service-based restricted stock units during 2024. The Company granted 1,874,300 service-based restricted stock units during 2023. During 2024, the total grant date fair market value of shares vested was $ 1,112 . As of December 31, 2024, $ 5,772 of total unrecognized compensation expenses related to unvested service-based restricted stock units are expected to be recognized over a remaining weighted average period of 1.73 years. 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 In accordance with NASDAQ Listing Rule 5635(c)(4), 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. There were no awards outstanding under this Plan as of December 31, 2024. Restricted Stock Unit Awards (RSUs) - Market conditions vesting-based: Number of Units Weighted Average Grant Date Fair Value Per Share (In thousands) Unvested as of December 31, 2022 — $ — Granted 1,332 2.40 Forfeited — — Vested — — Unvested as of December 31, 2023 1,332 $ 2.40 Granted — — Forfeited — — Vested ( 250 ) 2.41 Unvested as of December 31, 2024 1,082 $ 2.40 Expected to vest as of December 31, 2024 1,010 $ 2.40 There were no market conditions vesting-based restricted stock units granted in 2024. The Company granted 1,332,000 market conditions vesting-based restricted stock units during 2023. F-33 As of December 31, 2024, $ 1,133 of total unrecognized compensation expenses related to unvested market conditions vesting-based restricted stock units are expected to be recognized over a remaining weighted average period of 1.34 years. 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, 2023 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 The following table summarizes the Company’s stock option activity for the years during 2024 and 2023: (in 000s, except share price data) Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term in Years Aggregate Intrinsic Value Outstanding as of December 31, 2022 6,028 $ 5.48 7.50 $ 38 Granted 150 $ 2.02 Exercised ( 1 ) $ 0.88 Forfeited and Expired ( 444 ) $ 2.27 Outstanding as of December 31, 2023 5,733 $ 5.58 6.41 $ 1,082 Granted 1,024 4.83 Exercised ( 357 ) $ 2.05 Forfeited and Expired ( 99 ) $ 3.84 Outstanding as of December 31, 2024 6,301 $ 5.68 6.08 $ 4,009 Expected to vest as of December 31, 2024 6,234 $ 5.69 6.05 $ 3,980 Exercisable as of December 31, 2024 4,861 $ 6.24 5.33 $ 2,898 The weighted average grant date fair value of stock options granted during 2024 and 2023 was $ 3.98 and $ 1.50 , respectively. During the year ended December 31, 2024, 1,023,900 stock options were granted with an exercise price of $ 4.83 and accordingly, given the Company’s share price of $ 3.56 at December 31, 2024, the intrinsic value provided by certain shares granted during this period was de minimis. F-34 The fair values of stock options granted were estimated using the Black-Scholes model based on the following assumptions: Year Ended December 31, 2024 2023 Expected dividend yield 0 % 0 % Expected volatility 104 % - 107 % 100 % Expected term (years) 5.50 - 6.13 5.50 Risk-free interest rate 4.1 % - 4.5 % 4.0 % Exercise prices $ 2.50 - $ 5.68 $ 2.02 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 using the historical trading data of the Company's publicly-traded Common Stock at the time of grant. 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. The risk-free interest rates are derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected term of the options. As of December 31, 2024, $ 2,867 of total unrecognized compensation expenses related to non-vested stock options is expected to be recognized over a remaining weighted average period of 1.35 years. These option grants provided a maximum contract term of 10 years from grant date, with a weighted average remaining contract life of 6.08 years. 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. Employee Stock Purchase Plan The Company’s Employee Stock Purchase Plan (the "ESPP"), as amended and restated effective as of January 1, 2019, features two six-month offering periods per year, running from January 1 to June 30 and July 1 to December 31. Under the ESPP, employees of the Company may elect to purchase the Company’s Common Stock at the lower of 85 % of the fair value of shares on either the first or last day of the offering period. Under the ESPP, a total of 250,000 shares of Common Stock were initially reserved for issuance. During the year ended 2024 and 2023, 35,374 and 36,168 shares were purchased and issued through the ESPP at total discounts of $ 42 and $ 27 , respectively. Note 21. Employee Benefit Plans The Company sponsors a defined-contribution 401(k) plan covering all full-time employees and makes matching employer contributions as defined by the terms of that plan. The Company may also make discretionary contributions. Total contributions made to the plan by the Company for the years ended December 31, 2024 and 2023 were $ 849 and $ 761 , respectively. Note 22. Income Taxes The components of the provision for income taxes are as follows: Expense classification: Year Ended December 31, 2024 2023 Current Federal $ ( 14 ) $ 245 State — — Total ( 14 ) 245 Deferred Federal — — State — — Total — — Provision for Income Tax $ ( 14 ) $ 245 F-35 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, 2024 and 2023 are as follows: December 31, 2024 2023 Deferred tax assets: Accounts receivable $ — $ 4 Inventory 337 345 Accrued expenses 186 73 NOL carryforwards 34,689 27,120 Interest limitation imposed by the TJCA 11,594 9,880 Stock Compensation 6,862 6,529 Deferred Revenue 5,157 7,662 Royalty Monetization 16,117 16,750 Property and Equipment 2,690 2,756 Orphan Drug and R&D Tax Credits 5,099 4,805 Intangible Assets 137 154 Section 174 R&D Capitalization 7,263 5,039 Sales of Royalty Rights 3,438 3,520 OID and Deferred Financing Cost 1,636 — Other 143 58 95,348 84,695 Deferred tax liabilities: OID and Deferred Financing Cost — ( 193 ) Prepaid expenses ( 795 ) ( 449 ) ( 795 ) ( 642 ) Valuation Allowance ( 94,553 ) ( 84,053 ) Net deferred tax asset/(liability) $ — $ — At December 31, 2024 and 2023, the Company had federal net operating loss carryforwards of $ 128,658 and $ 101,029 , respectively, a significant portion of which carryforward for an indefinite period. At December 31, 2024 and 2023, the Company also had state net operating loss carryforwards of $ 139,189 and $ 104,478 , respectively, which begin expiring in 2034. As a result of the December 2017 U.S. Tax Cuts and Jobs Act (“TCJA”), updated regulations under section 163(j) create new limitations on deductible interest expense. For the year ended December 31, 2024, the Company’s interest expense deduction under 163(j) will be limited for tax purposes based on a calculation of 30% of its EBIT on a tax basis. 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. Valuation allowances of $ 94,553 , and $ 84,053 have been established at December 31, 2024 and 2023, respectively. The Company may also be subject to the net operating loss utilization provisions of Section 382 of the Internal Revenue Code due to ownership changes. As a result, the use of NOL carry forwards from the current and prior periods are subject to annual limitations. 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, 2024 and 2023, the capitalized R&D costs were $ 17.3 million and $ 12.6 million, respectively. The Company will amortize these costs for tax purposes over five years if the R&D was performed in the U.S. and over 15 years if the R&D was performed outside the U.S. Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that there were no uncertain positions as of December 31, 2024 and 2023. F-36 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 years ended December 31, 2024 and 2023, respectively, as follows: Year Ended December 31, 2024 2023 Income taxes at statutory rate 21.00 % 21.00 % Increase (decrease) resulting from: State income tax 3.27 4.00 Permanent differences ( 1.10 ) ( 0.43 ) Valuation allowance ( 23.50 ) ( 26.53 ) Return to provision 1.06 ( 3.28 ) State rate change ( 0.69 ) ( 1.78 ) FDII Deductions 0.00 3.80 Other ( 0.01 ) — Effective tax rate 0.03 % ( 3.22 ) % During the year ended December 31, 2023, the Company received an ERTC refund of $ 1,250 , which is included in Interest income and other income, net on the Company's Statements of Operations and Comprehensive Loss. Note 23. 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, securities, civil tort, and commercial litigation, and environmental or other regulatory matters. Kentucky Litigation - Humana Humana Inc. v. 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. The parties to this case reached a settlement on November 27 2024, the terms of which are confidential. Aquestive had no obligation, cost or liability in the settlement as all were assumed by Indivior. California Litigation Neurelis, Inc. v. Aquestive Therapeutics, Inc. On December 5, 2019, Neurelis, Inc. ("Neurelis") 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”); (2) Defamation; and (3) Malicious Prosecution. Neurelis filed a First Amended Complaint on December 9, 2019, alleging the same three causes of action. The Company filed a Motion to Strike Neurelis’s Complaint under California’s anti-SLAPP (“strategic lawsuit against public participation”) statute on January 31, 2020, which Neurelis opposed. On August 6, 2020, the Court issued an order granting in part and denying in part the Company’s anti-SLAPP motion. The parties cross-appealed the ruling to the California Court of Appeal. The appeals court held oral argument on the appeal on October 14, 2021, and issued its ruling on November 17, 2021. Under the ruling, the court struck the entirety of the malicious prosecution claim and struck portions of the UCL and defamation claims. On April 12, 2022, Neurelis filed a Second Amended Complaint in response to the Court of Appeal’s decision. The Second Amended Complaint also added a cause of action for Trade Libel. On May 3, 2022, the Company filed a "demurrer" challenge to the sufficiency of the allegations of the Second Amended Complaint. Oral argument on the Company’s motion for attorney fees related to the anti-SLAPP motion and on the Second Amended Complaint and demurer challenge was held on June 17, 2022. The Court entered an order granting the Company’s motion for attorney fees, awarding $ 156 and ordering Neurelis to pay the fees within 60 days of June 17, 2022. The Court denied the Company’s demurrer and the parties 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. Hearings on motions for summary judgement are scheduled for May 16, 2025. The trial in this matter is scheduled for July 18, 2025. 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. F-37 Neurelis FDA Lawsuit Neurelis, Inc. v. Califf, et al . , U.S. District Court for the District of Columbia In May 2024, Neurelis filed a complaint in the U.S. District Court for the District of Columbia against the U.S. Food and Drug Administration, the U.S. Department of Health and Human Services, and certain government officials. The complaint in this matter alleges that the defendants violated the Administrative Procedure Act by approving Aquestive’s NDA for Libervant for ARS patients aged between two and five years, and asks the Court to vacate that approval and enjoin the defendants from approving Libervant for this pediatric patient population until January 10, 2027, the scheduled date for the expiration of the U.S. orphan drug market exclusivity granted by the FDA to the Valtoco nasal spray product of Neurelis. Aquestive intervened in this litigation to defend the approval of Libervant for this ARS pediatric patient population and, on June 25, 2024, the Court entered a scheduling order governing further proceedings in the case. Pursuant to that order, Neurelis filed a motion for summary judgment on August 19, 2024; Aquestive and the federal defendants each filed their own cross-motions for summary judgment and opposed Neurelis’s motion for summary judgment on September 18, 2024. Neurelis filed its combined reply brief in support of its motion for summary judgment and in opposition to the defendants’ cross-motions on October 9, 2024, and Aquestive and the federal defendants filed their closing briefs on October 30, 2024. Following the FDA's award of ODE to Libervant for ARS patients between two and five years of age, Neurelis filed a motion for preliminary injunction requesting an expedited order to vacate FDA's approval and enjoining the sale of Libervant. On February 14, 2025, the Court ruled in favor of Neurelis, granting its summary judgment motion, and against the FDA's and Aquestive's cross-motions for summary judgment. In an accompanying opinion, the Court directed the FDA to vacate the approval of Libervant. Because the Court entered a final appealable judgment in favor of Neurelis, Neurelis' motion for an expedited preliminary injunction was denied as moot by the Court. On February 18, 2025, Aquestive filed an appeal of the Court's decision with the U.S. Circuit Court of Appeals for the District of Columbia (the "DC Appellate Court") and, on the same day, filed an emergency motion with the District Court to stay its order pending a decision on the appeal with the DC Appellate Court. The District Court set a scheduling order governing filings of all briefs on the motion for stay, ending on March 5, 2025. No dates have been set for arguments on the stay of the District Court's order or proceedings on the appeal at the DC Appellate Court. 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. Suboxone Product Liability Litigation The Company was named as a defendant in a multitude of product liability lawsuits, along with Indivior and several other named defendants, in which the individual plaintiffs in those cases allege that their use of Suboxone® Sublingual Film, a prescription drug product for opioid use disorder, caused them dental injuries. On February 2, 2024, this litigation became a Multidistrict Litigation (“MDL") consolidated in the U.S District Court for the Northern District of Ohio. One case alleging the same allegations as contained in the MDL has been filed in a state court in the State of New Jersey. The parties to the MDL have agreed to a tolling of unfiled claimants in several states. Indivior has agreed to defend the Company in these litigation matters. Discovery is underway and no trial date has been set in the MDL matter. The Company's motion to dismiss the MDL matter was granted as to all claims by plaintiffs except design defect claims. 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. The Company was named as a defendant in three proposed class action lawsuits filed in Canada, along with Indivior and several other named defendants, in which the individual plaintiffs in those cases allege that their use of Suboxone® products caused them dental injuries. two of these cases have been filed in British Columbia, and the plaintiffs in those cases are seeking assignment of a case management judge. The anticipated next step in British Columbia will involve applications by the plaintiffs to determine which of the two cases will proceed towards a certification hearing and which will be stayed. The third case has been filed in Quebec and is proceeding towards an authorization hearing, the date of which has not yet been set. The authorization and certification hearings will determine whether the Courts will allow the cases to proceed as class actions. Pre-discovery and case management proceedings are underway and no trial date has yet been set. Given the early stages of these proceedings, 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 litigation. Note 24. Subsequent Events Utilization of the At-The-Market Facility In the period subsequent to December 31, 2024 through March 5, 2025, the Company sold 7,457,627 shares under its ATM facility, which generated net proceeds of approximately $ 21,400 net of commissions of $ 605 . The remaining authorized balance of the ATM facility was $ 78,000 as of March 5, 2025. F-38