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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


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

For the quarterly period ended March 31, 2021

For the quarterly period ended September 30, 2020


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

For the transition period from ______________________ to_______________________

Commission File Number 001-08568

Teligent, Inc.

(Formerly IGI Laboratories, Inc.)

(Exact name of registrant as specified in its charter)


Delaware			01-0355758
(State or other Jurisdiction of			(I.R.S. Employer Identification No.)
incorporation or organization)

105 Lincoln Avenue
Buena, New Jersey			08310
(Address of Principal Executive Offices)			(Zip Code)

(856) 697-1441

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading symbol(s)

Name of each exchange on

Common Stock, Par Value $0.01 Per Share

TLGT

The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

☑

Smaller reporting company

☑

Emerging growth company

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The number of shares outstanding of the issuer's common stock was 2192,~~754~~817,~~223~~493 shares as of ~~December 24~~May 21, ~~2020~~2021.

OTHER INFORMATION

When used in this report, the terms, “we,” the “Company,” “our,” and “us” refer to Teligent, Inc., a Delaware corporation (formerly IGI Laboratories, Inc.), and its consolidated subsidiaries.

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

TELIGENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share information)


	March 31, 2021 (unaudited)		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	27,454	$	5,946
Restricted cash	206		206
Accounts receivable, net of allowance for doubtful accounts of $2,749 and $2,399, as of March 31, 2021 and December 31, 2020, respectively	9,891		11,257
Inventories	20,936		23,396

Prepaid expenses and other receivables	2,678		3,486
Total current assets	61,165		44,291
Property, plant and equipment, net	15,949		16,131
Intangible assets, net	19,473		22,964
Goodwill	508		501
Other assets	3,683		3,901
Total assets	$	100,778	$	87,788

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	4,734	$	7,972
Accrued expenses	8,763		14,713

Capital lease obligation, current	435		436
Total current liabilities	13,932		23,121


Series C Senior Secured Convertible Notes, net of debt discount and debt issuance costs (face of $0 and $50,323 as of March 31, 2021 and December 31, 2020, respectively)	—		31,922
Series D Senior Convertible Notes, net of debt discount and debt issuance costs (face of $277 and $3,352 as of March 31, 2021 and December 31, 2020, respectively)	297		5,796
Revolver, net of debt issuance costs (face of $25,000 and $25,000 as of March 31, 2021 and December 31, 2020, respectively)	25,000		25,000
2023 Term Loans, net of debt issuance costs (face of $83,515 and $102,905 as of March 31, 2021 and December 31, 2020, respectively )	88,870		99,490
Derivative liabilities	—		7,507
Deferred tax liability	192		190
Other long term liabilities	4,807		4,914
Total liabilities	133,098		197,940
Commitments and Contingencies
Mezzanine equity:
Redeemable, convertible preferred stock, Series D preferred stock, $0.01 par value, 1,000,000 shares authorized; 85.412 shares issued and outstanding as of March 31, 2021	15,374		—
Stockholders’ deficit:
Common stock, $0.01 par value, 100,000,000 shares authorized; 89,428,513 and 21,754,223 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	1,198		220
Additional paid-in capital	195,297		135,218
Accumulated deficit	(241,343)		(243,496)
Accumulated other comprehensive loss	(2,846)		(2,094)
Total stockholders’ deficit	(47,694)		(110,152)
Total liabilities, mezzanine equity and stockholders' deficit	$	100,778	$	87,788

	September 30, 2020 (unaudited)		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	9,698	$	15,508
Restricted cash	206		206
Accounts receivable, net of allowance for doubtful accounts of $2,422 and $2,208, as of September 30, 2020 and December 31, 2019, respectively	16,394		20,374
Inventories	26,917		23,031
Assets held for sale	133		—
Other prepaid expenses and receivables	976		2,525
Total current assets	54,324		61,644
Property, plant and equipment, net	96,305		96,349
Intangible assets, net	35,329		44,645
Goodwill	479		491
Other assets	3,816		3,776
Total assets	$	190,254	$	206,905
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	8,794	$	6,875
Accrued expenses	9,236		9,285
Government Grant Advance	3,378		—
Capital lease obligation, current	477		446
Total current liabilities	21,885		16,606
Series A Senior Convertible Notes, net of debt discount and debt issuance costs (face of $0 and $66,090 as of September 30, 2020 and December 31, 2019, respectively)	—		53,093
Series B Senior Convertible Notes, net of debt discount and debt issuance costs (face of $0 and $34,405 as of September 30, 2020 and December 31, 2019, respectively)	—		21,824
Series C Senior Secured Convertible Notes, net of debt discount and debt issuance costs (face of $50,323 and 0 as of September 30, 2020 and December 31, 2019, respectively)	30,992		—
Series D Senior Convertible Notes, net of debt discount and debt issuance costs (face of $26,396 and $0 as of September 30, 2020 and December 31, 2019, respectively)	47,419		—
Revolver, net of debt issuance costs (face of $25,000 and $25,000 as of September 30, 2020 and December 31, 2019, respectively)	25,000		25,000
2023 Term Loans, net of debt issuance costs (face of $99,209 and $88,464 as of September 30, 2020 and December 31, 2019, respectively )	95,407		86,452
Derivative liabilities	6,726		6,776
Deferred tax liability	274		205
Other long term liabilities	2,641		2,256
Total liabilities	230,344		212,212
Commitments and Contingencies
Stockholders’ deficit:
Common stock, $0.01 par value, 100,000,000 shares authorized; 6,391,569 and 5,385,043 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	66		56
Additional paid-in capital	126,282		118,469
Accumulated deficit	(163,152)		(121,474)
Accumulated other comprehensive loss	(3,286)		(2,358)
Total stockholders’ deficit	(40,090)		(5,307)
Total liabilities and stockholders' deficit	$	190,254	$	206,905

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELIGENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except shares and per share information)

(Unaudited)

	Three months ended September 30,				Nine months ended September 30,
			Three months ended March 31,
	2020		2019		2020		2019
					2021		2020
Revenue, net	$	~~14,339~~	$	~~18,466~~	$	3511,~~372~~588	$	497,~~929~~447
Costs and expenses:
Cost of revenues	~~14,225~~		~~11,186~~		3312,~~919~~799		288,~~346~~610
Selling, general and administrative expenses	~~6,543~~		~~5,007~~		186,~~249~~272		156,~~707~~717
Impairment charges	—		—		~~8,373~~24		—8,373
Product development and research expenses	~~2,370~~		~~2,064~~		61,~~050~~463		71,~~721~~800
Total costs and expenses	~~23,138~~		~~18,257~~		6620,~~591~~558		5125,~~774~~500
Operating income/(loss)	(8,799)		209		(31,219)		(1,845)
Operating loss					(8,970)		(18,053)
Other Expense:
Foreign currency exchange gain/(loss)	1,856		(2,167)		2,384		(2,458)
Foreign currency exchange loss					(2,092)		(1,597)
Debt partial extinguishment of 2019 Notes	—		—		—		(185)
Interest and other expense, net					(4,119)		(5,876)
Interest and other expense, net	(8,056)		(5,160)		(21,452)		(15,262)
Gain on debt restructuring					22,439		—
Gain on debt restructuring	10,882		—		10,882		—
Inducement loss					(1,889)		—
Inducement loss	(701)		—		(701)		—
Change in the fair value of derivative liabilities					(3,186)		(1,258)
Change in the fair value of derivative liabilities	4,326		—		(1,523)		—
Income/(loss) before income tax expense					2,183		(26,784)
Loss before income tax expense/(benefit)	(492)		(7,118)		(41,629)		(19,750)
Income tax expense					30		52
Income tax expense/(benefit)	18		(5)		49		76
Net income/(loss) attributable to common shareholders					$	2,153	$	(26,836)
Net loss attributable to common shareholders	$	(510)	$	(7,113)	$	(41,678)	$	(19,826)
Basic income/(loss) per share					$	0.04	$	(4.98)
Basic and diluted loss per share	$	(0.08)	$	(1.32)	$	(7.32)	$	(3.68)
Diluted income/(loss) per share					$	0.03	$	(4.98)
Weighted average shares of common stock outstanding:
Basic and diluted shares	6,082,517		5,385,041		5,690,164		5,383,531
Basic shares					58,472,427		5,387,933
Diluted shares					77,142,350		5,387,933

The accompanying notes are an integral part of the condensed consolidated financial statements

TELIGENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(in thousands)

(Unaudited)

	Three months ended September 30,				Nine months ended September 30,
			Three months ended March 31,
	2020		2019		2020		2019
					2021		2020
Net loss	$	(510)	$	(7,113)	$	(41,678)	$	(19,826)
Net income/(loss)					$	2,153	$	(26,836)
Other comprehensive income/(loss), net of tax:
Other comprehensive (loss)/income, net of tax:
Foreign currency translation adjustment	~~(496)~~		36		(~~928~~752)		~~331~~(199)
Other comprehensive income/(loss), net of tax	(496)		36		(928)		331
Other comprehensive (loss)/income, net of tax					(752)		(199)
Comprehensive loss	$	(1,006)	$	(7,077)	$	(42,606)	$	(19,495)
Comprehensive income/(loss)					$	1,401	$	(27,035)

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELIGENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

(in thousands, except share information)

				~~Additional~~				~~AccumulatedOther~~Additional		~~Total~~		AccumulatedOther		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Redeemable, Convertible Preferred Stock			Common Stock				Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares (*)	Amount (*)		Capital (*)		Deficit		Loss		Deficit
	Series D Shares	Amount		Shares (*)		Amount (*)		Capital (*)		Deficit		Loss		Deficit
Balance, December 31, 2019 (audited)	5,385,043	$	56	$	118,469	$	(121,474)	$	(2,358)	$	(5,307)
Balance, December 31, 2020 (audited)	—	—		21,754,223		$	220	$	135,218	$	(243,496)	$	(2,094)	$	(110,152)
Stock based compensation expense	—	—		~~807~~—		—		—70		~~807~~—		—		70
Issuance of stock for vested restricted stock units	~~4,906~~—	—		—181		—2		—		—		—		2
Reclassification of derivative liabilities to equity	—	—		8,460		—		—		8,460
Fair value of conversion feature on Convertible 2023 Series Notes	—	—		2,049,997		21		2,012		—		—		2,033
Warrant issuance	—	—		329		—		—		329
ATM	—	—		35,322,875		353		31,419		—		—		31,772
APIC related to Series C Convertible Notes	—	—		(2,528)		—		—		(2,528)
Issuance of shares for debt exchange	—	—		30,002,611		303		—		—		—		303
Fair value of conversion feature on Convertible 2023 Series D Notes	1,000,000	10		745		—		—		755
Series C Extinguishment	—	—		298,626		299		26,578		—		—		26,877
Cumulative translation adjustment	—	—		—		—		(928)		(928)
Issuance of preferred shares to settle Second Lien Credit Agreement paid-in- kind interest	85,412	15,374		—		—		—		—		—		—
Net loss	—	—		—		(41,678)		—		(41,678)
Cumulative translation adjustment	—	—		—		—		—		—		(752)		(752)
Share rounding as a result of the reverse stock split	1,620	—		—		—		—		—
Net income										2,153				2,153
Balance, September 30, 2020 (unaudited)	6,391,569	$	66	$	126,282	$	(163,152)	$	(3,286)	$	(40,090)
	85,412	15,374		89,428,513		$	1,198	$	195,297	$	(241,343)	$	(2,846)	$	(47,694)

(*) Adjusted to reflect the 1-for-10 reverse stock split effectuated at 12:01 a.m. Eastern Time on May 28, 2020.

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELIGENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Nine months ended September 30,
	Three months ended March 31,
	2020		2019
	2021		2020
Cash flows from operating activities:
Net loss	$	(41,678)	$	(19,826)
Net income/(loss)	$	2,153	$	(26,836)
Reconciliation of net loss to net cash (used in) provided by operating activities:
Depreciation of fixed assets and leases	~~2,933~~182		~~2,700~~985
Provision for bad debt	~~214~~350		~~(97)~~85
Provision for write down of inventory	5(1,~~074~~077)		~~(295)~~1,394
Stock based compensation	~~795~~70		~~896~~491
Amortization of debt costs and debt discount	~~6,254~~186		41,~~657~~704
Amortization of intangible assets	~~2,032~~589		~~2,260~~741
Non cash lease expense	~~320~~91		~~308~~103
Deferred income taxes	70		—
Foreign currency exchange (gain)/loss	2,092		1,597
Foreign currency exchange (gain)/loss	(2,384)		2,458
Loss on impairment of intangible assets	24		8,373
Partial extinguishment of Convertible 3.75% Senior Notes	—		185
Non cash interest expense	3,134		1,984
Write down of fixed assets	398		—
Gain on debt restructuring	(22,439)		—
Loss on impairment of intangible assets	8,373		—
Inducement loss	1,889		—
Non cash interest expense	12,985		6,359
Change in the fair value of derivative liabilities	3,186		1,258
Gain on debt restructuring	(10,882)		—
Inducement loss	701		—
Change in the fair value of derivative liabilities	1,523		—
Changes in operating assets and liabilities:
Accounts receivable	31,~~764~~037		(411,~~018)~~637
Inventories	(83,~~906)~~590		(58,~~970~~186)
Prepaid expenses, other current receivables, and assets	~~1,581~~365		~~1,666~~(58)
Accounts payable and accrued expenses	1(6,~~540~~187)		21,~~747~~889
Operating liabilities	(~~314~~109)		(~~265~~107)
Deferred income	—		(2,426)
Net cash used in operating activities	(10,874)		(2,946)
Net cash used in operating activities	(15,607)		(8,661)
Cash flows from investing activities:
Capital expenditures	(~~3,164~~47)		(~~6,082~~880)
Net cash used in investing activities	(~~3,164~~47)		(~~6,082~~880)
Cash flows from financing activities:
Proceeds from exercise of common stock options	—		—
Proceeds from Term Loan 2023	1,465		—
Proceeds from Revolver	—		12,500
Proceeds from ATM	34,940		—
Proceeds from 2023 Series C Senior Notes	12,000		—
Debt issuance costs	(3,986)		—
Debt issuance costs	(2,776)		(269)
Principal paid on lease obligation	(4)		(3)
Repurchase of 3.75% senior notes	—		(2,686)
Net cash provided by (used in) financing activities	32,415		(3)
Government grant advance	3,378		—
Effect of exchange rate on cash and cash equivalents	104		(651)
Principal paid on lease obligation	(10)		(9)
Net increase (decrease) in cash, cash equivalents and restricted cash	21,598		(4,480)
Net cash provided by financing activities	12,592		9,536
Cash, cash equivalents and restricted cash at beginning of period	6,712		16,182
Effect of exchange rate on cash and cash equivalents	369		(481)
Cash, cash equivalents and restricted cash at end of period	$	28,310	$	11,702
Net decrease in cash, cash equivalents and restricted cash	(5,810)		(5,207)
Cash, cash equivalents and restricted cash at beginning of period	16,182		13,069
Cash, cash equivalents and restricted cash at end of period	$	10,372	$	7,381
Supplemental Cash flow information:
Cash payments for interest	$	~~2,795~~441	$	~~3,211~~388
Cash payments for income taxes	6416		6834
Non-cash operating, investing and financing transactions:
Acquisition of capital expenditures in accounts payable and accrued expenses	~~220~~24		~~938~~183
Capitalized stock compensation in capital expenditures	12—		235
Issuance of Series D preferred stock	15,374		—

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELIGENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on its Form 10-K ('~~Original~~ Form 10-K"') for the year ended December 31, ~~2019~~2020, as updated by other reports we may file from time to time with the Securities and Exchange Commission ("SEC"). The condensed consolidated balance sheet as of December 31, ~~2019~~2020, has been derived from those audited consolidated financial statements. ~~The Company filed an Amendment No. 1 Form 10-K/A to its Original Form 10-K solely to include the information required by Items 10 through 14 of Part III.~~ Operating results for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020~~2021.

1. Nature of the Business and Going Concern

Nature of the Business

Teligent, Inc. ~~and its subsidiaries~~ (~~collectively~~ the “Company”) is a ~~specialty~~ generic pharmaceutical company. ~~Teligent’s~~All ~~mission~~references is to ~~become a leader in the specialty generic pharmaceutical market in alternate dosage forms. Under its own label~~"Teligent," the "Company," ~~markets and sells generic topical~~"we," ~~branded generic~~"us," and ~~generic~~"our" ~~injectable~~refer ~~pharmaceutical~~to ~~products~~Teligent, inInc. ~~the United States~~ and ~~Canada~~its subsidiaries. In Our ~~the~~mission ~~United~~is ~~States,~~to ~~the~~become ~~Company~~a ~~currently~~leader ~~markets~~in ~~thirty~~high-~~eight~~barrier ~~generic~~to ~~topical~~entry ~~pharmaceutical~~generic ~~products~~pharmaceuticals. ~~and~~Our ~~four~~platform ~~branded~~for ~~generic~~growth ~~pharmaceutical~~is ~~products. In~~centered ~~Canada,~~around the ~~Company~~development, ~~sells~~manufacturing ~~thirty-six generic~~ and ~~branded~~marketing ~~generic~~of ~~injectable~~a ~~products~~portfolio ~~and~~of ~~medical~~generic ~~devices. Generic~~ pharmaceutical products ~~are~~under ~~bioequivalent~~our toown ~~their~~label ~~brand~~and ~~name~~private ~~counterparts. The~~labeled ~~Company~~for ~~also~~other ~~provides~~pharmaceutical ~~contract~~companies ~~manufacturing~~in ~~services to the pharmaceutical~~topical, ~~over~~injectable ~~the~~and ~~counter~~other ~~(“OTC”)~~high-barrier ~~and~~dosage ~~cosmetic markets~~forms. ~~The~~We ~~Company~~believe ~~operates~~that ~~its~~expanding ~~business~~our ~~under~~development ~~one~~and ~~segment.~~commercial ~~Its~~base ~~common~~beyond ~~stock~~topical isgenerics, ~~traded~~historically on the ~~Nasdaq~~cornerstone ~~Global~~of ~~Select~~our ~~Market~~expertise, ~~under~~to ~~the~~include ~~trading~~injectable ~~symbol~~generics ~~“TLGT.” The~~and ~~Company’s~~other ~~principal~~high-barrier ~~executive office~~generics, ~~laboratories,~~will ~~and~~leverage ~~manufacturing~~our ~~facilities~~existing ~~are~~expertise ~~located~~and ~~at 105 Lincoln Avenue~~capabilities, ~~Buena,~~and ~~New~~broaden ~~Jersey.~~our Itplatform ~~has~~for ~~additional~~more ~~offices~~diversified ~~located~~strategic ~~in Iselin, New Jersey, Mississauga, Canada, and Tallinn, Estonia~~growth.

~~Impact~~We ~~Related~~currently market and sell generic topical and generic and branded generic injectable pharmaceutical products in the United States and Canada. In the United States, we market 37 generic topical pharmaceutical products and 2 branded injectable pharmaceutical products. We have received FDA approvals for 36 topical generic products from our internally developed pipeline and we have 7 Abbreviated New Drug Applications, ("ANDAs") on topical products and 3 New Drug Application ("NDA") Prior Approval Supplements ("PASs") for sterile injectable products submitted to ~~COVID~~the FDA that are awaiting approval. We market 25 generic injectable, 3 generic topical, and 3 generic ophthalmic products. We have 1 Abbreviated New Drug Submission (“ANDS”) pending at Health Canada. In the United States, approved ANDA generic drugs are usually interchangeable with the innovator drug. This means that the generic version may generally be substituted for the branded product by either a physician or pharmacist when dispensing a prescription. We also provide contract development and manufacturing services to the prescription and over-19the-counter ~~Pandemic~~("OTC") pharmaceutical and cosmetic markets. We operate our business under one operating segment. Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TLGT.” Our principal executive office, laboratories and manufacturing facilities are located at 105 Lincoln Avenue, Buena, New Jersey. We have additional offices located in Iselin, New Jersey, and Mississauga, Canada. In late 2020, we decided to reposition the research and development operation mainly performed at our Tallinn, Estonia office to our US manufacturing site at Buena, New Jersey and consequently we have divested our limited assets in Estonia and are in the process of formally dissolving our Estonian operations.

InThe ~~March~~manufacturing ~~2020,~~and ~~the~~commercialization ~~World Health Organization declared the outbreak~~ of ~~novel~~generic ~~coronavirus~~pharmaceutical ~~disease~~products ~~(“COVID-19”)~~is ~~as a pandemic~~competitive, and ~~the~~there ~~Company~~are ~~expects~~established ~~its~~manufacturers, ~~operations~~suppliers inand ~~all~~distributors ~~locations~~actively toengaged ~~be affected as the virus continues to proliferate. In alignment with the directives~~ in ~~the~~all ~~state~~phases of ~~New~~our ~~Jersey, as a Pharmaceutical manufacturing facility, Teligent is considered "essential" and the Company has remained open for its~~ business. ~~The~~We ~~Company~~currently ~~will~~manufacture ~~stay~~and ~~open~~sell astopical, ~~long~~injectable ~~as permitted~~ and ~~conditions~~ophthalmic ~~remain~~generic ~~safe~~pharmaceutical ~~for~~products ~~its~~under ~~employees~~our toown ~~continue~~label toin ~~supply~~both ~~its products to~~ the ~~patients~~US ~~that~~and ~~need them~~Canada.

~~Teligent’s~~Liquidity ~~first priority is the health~~ and ~~safety~~Capital ofResources; ~~its~~Going employees while positioning its business to manage throughout this pandemic. The outbreak and any preventative or protective actions that Teligent, its customers, suppliers or other third parties with which it has business relationships, or governments may take in respect of the COVID-19 outbreak could disrupt its business and the business of its customers. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the countries in which the Company or the third parties with whom it engages operate. In addition, the COVID-19 outbreak could result in a severe economic downturn and has already significantly affected the financial markets of many countries. A severe or prolonged economic downturn or political disruption could result in a variety of risks to its business, including its ability to raise capital when needed on acceptable terms, if at all. A weak or declining economy or political disruption could also strain its suppliers or third party CMOs, possibly resulting in supply disruption, or cause its customers to delay purchases or payments for its products. The COVID-19 pandemic may also create delays in the review and approval of its regulatory submissions as well as its pending reinspection related to the Company's warning letter and pre-approval inspection for commercial production on the newly installed injectable line at the Company’s New Jersey facility by the FDA. Given these uncertainties, the Company is unable to predict the overall impact that the COVID-19 pandemic will have on its business as of the date of this filing. Concern

~~The~~We ~~Company~~have ~~has~~incurred ~~taken~~significant ~~preventative~~losses ~~measures~~and togenerated ~~help~~negative ~~ensure~~cash ~~business~~flows ~~continuity~~from ~~while~~operations ~~maintaining~~in ~~safe~~recent years, and ~~stable~~we ~~operations.~~expect Itto ~~has~~continue ~~directed~~to ~~all~~incur ~~non-production~~losses ~~employees~~and togenerate ~~work~~negative ~~from~~cash ~~home~~flows infrom ~~accordance~~operations ~~with~~for ~~state~~the ~~and~~foreseeable ~~local~~future. ~~guidelines~~We ~~and~~are ~~has~~not ~~implemented~~currently ~~social~~generating ~~distancing~~revenues ~~measures~~from ~~on-site~~operations atthat ~~its~~are ~~manufacturing~~sufficient ~~facility~~ to ~~protect~~cover ~~employees~~our operating expenses, and ~~its~~our ~~products.~~available ~~Its~~capital ~~employees~~resources are ~~provided~~not ~~daily~~sufficient ~~personal~~for ~~protective~~us ~~equipment~~to ~~upon~~continue ~~their~~to ~~arrival~~meet toour ~~the~~obligations ~~facility~~as ~~and~~they ~~the~~become ~~Company~~due, ~~has~~presenting ~~implemented~~substantial ~~temperature~~doubt ~~monitoring~~as ~~services~~to atour ~~its~~ability ~~newly~~to ~~established~~continue ~~single~~as ~~point~~a ofgoing ~~entrance~~concern. ~~The~~Our ~~Company~~cash ~~has~~and ~~also~~cash ~~implemented~~equivalents aat ~~routine~~March 31, ~~sanitization~~2021 ~~process~~were ofapproximately ~~the facility~~$28.3 million, Itcompared ~~has~~to ~~adjusted~~approximately ~~its~~$11.7 ~~production~~at ~~schedule~~March 31, to2020. ~~concentrate~~We oncontinue ~~high~~to ~~demand~~work ordiligently ~~low~~with ~~stock~~our ~~product~~financial toand ~~help~~strategic ~~reduce~~advisors ~~employee~~to ~~concentrations~~critically ~~while~~assess ~~continuing~~the tostrengths ~~focus~~of onthe ~~production~~company ~~levels~~which ~~necessary~~we tocan ~~meet~~leverage ~~our~~moving ~~customer demand~~forward.

~~The~~As ~~Company's~~of ~~year~~the to date ~~results~~of ~~and~~this ~~anticipated~~Form ~~future~~10-Q ~~results~~filing, ~~have~~our ~~been~~cash ~~negatively~~and ~~impacted~~cash ~~due~~equivalents toare ~~COVID-19~~approximately $24.6 million. ~~Under~~In the ~~provisions~~absence of ~~ASC~~additional ~~360-10-55~~liquidity, ~~the~~we ~~Company~~anticipate ~~continues to review its long-lived assets for impairment whenever events or changes in circumstances indicate~~ that ~~the~~existing ~~carrying amount of the assets may not be recoverable. The Company performs the analysis by comparing the expected future~~ cash ~~flows~~resources, ofafter ~~the~~giving ~~assets~~effect to ~~the carrying value of the related long-lived assets. The Company recorded impairment charges of~~ $8.4 .6 million in ~~the~~interim ~~first~~funding ~~quarter~~under ofthe ~~2020~~Second ~~related~~Lien toCredit ~~trademarks~~Agreement, ~~and~~with ~~technology~~the ofequity ~~$4.9~~raise ~~million~~ and ~~product~~our ~~acquisition~~continued ~~costs~~focus ofon ~~$3.5~~cash ~~million~~conservation, ~~(Note~~we ~~10).~~estimate ~~There~~that ~~were~~we nowill ~~changes~~have tosufficient ~~the~~operating ~~assumptions~~cash ~~made~~until at the ~~first~~end ~~quarter~~ of ~~this~~2021 ~~year~~or ~~that~~into ~~would suggest further impairment. The Company did not have impairment triggers related to~~ the ~~long-lived assets after the~~ first quarter of ~~this year~~2022.

We have been and are actively pursuing potential sources of additional liquidity, including:

•Equity Financing. We completed the at-the-market offering on March 31, 2021 with aggregate gross proceeds of $38,712,036 from the sale of shares of our common stock at an average price of $0.993 per share.

•Debt Financing. We have undertaken several deleveraging transactions to reduce our indebtedness and our related costs of capital. Additionally, we have worked with our lenders under the Senior Credit Facilities to obtain short-term financing to meet our immediate liquidity needs, including $4.6 million in interim funding under the Second Lien Credit Agreement. At the commencement of the ATM offering, we and Ares agreed to

~~The~~amendments ~~Company's~~of ~~financial~~the ~~performance~~Senior ~~has~~Credit ~~been~~Agreements ~~adversely~~to ~~impacted~~provide byfor ~~the~~an ~~unprecedented~~extension ~~COVID-19~~of ~~pandemic.~~relief Infrom ~~the~~certain ~~first~~financial ~~quarter~~covenants ~~of 2020~~(including, ~~the~~among ~~Company~~others, ~~initiated~~our aminimum ~~company-wide~~liquidity ~~cost~~covenant ~~reduction~~through ~~initiative~~March ~~targeted~~31, at2022). ~~eliminating~~There ~~discretionary~~can ~~spending~~be ~~and~~no ~~ensuring~~assurances that ~~remaining~~our ~~expenditures~~senior ~~are~~lenders ~~reduced~~will incontinue ~~line with the lower demand for its products in light of COVID-19 impact~~ to ~~the~~provide ~~business.~~interim ~~Effective~~financing onor ~~May~~other 4,relief ~~2020,~~from the ~~Company's~~covenants ~~Executive~~contained ~~Leadership~~in ~~Team~~our ~~and~~Senior ~~all~~Credit ~~employees with annual salaries exceeding $100~~Agreements,~~000~~ ~~accepted~~from awhich ~~20%~~we ~~and~~may ~~15%~~need ~~eight-week~~one ~~reduction~~or inmore ~~pay,~~additional ~~respectively.~~waivers ~~Over~~based ~~the~~on ~~same~~our ~~eight-week~~currently ~~period,~~expected ~~the Company furloughed a portion of employees at its Buena, NJ manufacturing facility~~results. ~~Effective~~In ~~on June 19, 2020,~~ the ~~Company~~event ~~initiated~~such awaivers ~~reduction-in-force,~~are ~~terminating~~not 53extended ~~employees~~ and ~~furloughing~~we anviolate ~~additional~~one 15or ~~employees~~more ~~thus~~of ~~reducing~~certain ~~the~~specified ~~employee~~covenants ~~base~~in atour ~~its~~Senior ~~Buena~~Credit Agreements, NJsuch ~~facility.~~violation ~~Terminated~~may ~~employees~~lead ~~were~~to ~~offered~~one aor ~~severance~~more ~~package~~events ~~and the Company will pay both the employee and employer portion~~ of ~~health~~default ~~benefits~~under ~~for~~ the ~~employees~~Senior ~~that~~Credit ~~were furloughed. At September 30~~Agreements, ~~2020,~~which ~~the~~may ~~Company’s~~trigger ~~employee~~certain ~~base after these actions and a company~~cross-~~wide~~default ~~effort~~provisions tounder ~~reduce recruitment is down 31% from~~ the ~~start~~terms of ~~the~~any ~~year.~~other ~~The~~indebtedness ~~associated~~then ~~one-time~~in ~~employee severance costs totaled $0~~effect.3 ~~million~~We ~~and~~continue ~~are~~to ~~reflected~~engage ~~primarily~~with inour ~~cost~~business, offinancial ~~revenues~~ and ~~the~~legal ~~product~~advisors ~~development~~to ~~and~~further ~~research~~analyze ~~expenses~~and inexplore ~~the~~new ~~Company’s~~potential ~~Condensed~~transactions ~~Consolidated~~to ~~Statement~~refinance ofor ~~Operations~~restructure inour ~~the~~remaining ~~nine~~outstanding ~~months ended September 30, 2020~~debt.

On•Strategic ~~May~~Alternatives ~~15,~~and ~~2020,~~Further ~~the Company received $3~~Deleveraging.4 ~~million~~We ofexpect ~~proceeds~~to ~~from~~continually ~~the~~engage ~~U.S.~~in ~~Small~~such ~~Business~~exploratory ~~Administration~~discussions ~~Paycheck~~with ~~Protection~~potential ~~Program~~partners ~~(the "Government Grant Advance")~~ and ~~has~~counterparties ~~been~~in ~~utilizing~~regard ~~the advance~~ to ~~balance~~strategic ~~its~~transactions ~~employee-related~~and ~~actions~~further ~~previously~~deleveraging ~~taken~~transactions ~~with~~as ~~the~~we ~~business~~and ~~needs~~our toboard ~~ensure a significant portion~~ of ~~the~~directors ~~loan~~determine ~~will~~are ~~be forgiven~~appropriate. ~~The~~We ~~Advance~~are ~~matures~~continuing into 2diligently ~~years~~pursue with ~~accrued~~our ~~interest~~financial atand anstrategic ~~annual~~advisors ~~rate~~critical ofassessments ~~1.00%, being deferred for payments until the date~~ of ~~forgiveness~~our oroperational 24and ~~weeks~~strategic ~~from~~strengths ~~the~~and ~~date~~how ~~when~~we ~~the~~can ~~fund~~best ~~was~~leverage ~~received~~them bymoving ~~the Company~~forward. ~~According to ASC 450-30~~ However, ~~Gain Contingencies,~~ the ~~Company~~outcome ~~recorded the $3.4 million~~ of ~~proceeds~~these inactivities ~~the~~is ~~Government~~uncertain ~~Grant~~at ~~Advance~~this ~~line~~time onand ~~its~~there ~~Condensed~~can ~~Consolidated~~be ~~Balance~~no ~~Sheet~~assurance asthat ofwe ~~September~~will ~~30,~~be ~~2020.~~able ~~The~~to ~~Company~~complete ~~will~~any ~~record~~such ~~the~~potential ~~related~~transaction ~~earnings impact~~ on ~~its~~terms ~~Condensed~~that ~~Consolidated~~are ~~Statement~~acceptable ~~of Operations in the period when the associated conditions attached~~ to ~~the~~us, ~~Advance~~if ~~are~~at ~~reasonably assured to be met~~all.

InIt ~~May~~has ~~2020~~been very difficult to estimate our liquidity requirements, future cash burn rates and future operating results, during the ~~Company~~last ~~modified~~12 ~~one~~months ofdue ~~its~~to ~~office~~the ~~lease~~COVID-19 ~~agreements~~pandemic. ~~and~~Further, ~~obtained~~it ahas ~~deferral~~been difficult to determine when our operating environment will change to allow us to return to more normalized operations, including in respect of 2the ~~months~~effects ~~rental~~of ~~payments~~the ~~amid~~COVID-19 pandemic. By way of example, the ~~Pandemic~~COVID-19 atpandemic has resulted in a significant decrease in elective visits to dermatologists in the ~~company's~~United ~~choice~~States, onwhich has led to a ~~later~~reduction ~~date~~in the volume of prescriptions written for topical products customarily supplied by us, which has negatively impacted our revenue. ~~According~~Further, the FDA Warning Letter (discussed further below) has prevented us from launching our new sterile injectable product line to ~~FASB~~be ~~Staff~~produced ~~Q&A~~at onour ~~Topic~~new ~~842~~facility, and ~~841~~due to regulatory and inventory production requirements, ~~because~~as ~~the~~well ~~amount~~as certain issues of ~~the~~non-conformance ~~total~~with ~~consideration~~respect ~~paid~~to ~~under~~certain products identified during our review undertaken in connection with the ~~modified~~FDA ~~lease~~Warning ~~agreement~~Letter is(including, ~~substantially~~among other matters, product recalls, long-term production pauses, short-term clear path to market production pauses, and continued production with minor process correction), we anticipate continuing to experience a significant delay in the ~~same~~launch asof such product line even after the ~~original~~restrictions ~~agreement,~~imposed ~~except~~by the ~~deferral~~FDA Warning Letter are rescinded (if such restrictions are rescinded at all). We also continue to experience significant pressures on our liquidity related to remediation efforts arising in respect of the ~~lease~~FDA ~~payments~~Warning ~~which~~Letter. ~~only~~While ~~affect~~we believe we have made substantial progress in remediating the ~~timing~~issues ofidentified in the ~~payments~~FDA Warning Letter and in subsequent internal reviews, the ~~Company~~FDA ~~accounted~~has ~~for~~significantly reduced its on-site inspections during the ~~concession~~COVID-19 aspandemic. ifAs a result, there can be no ~~changes~~assurances as to when the ~~lease~~FDA ~~contract~~will ~~were~~re-inspect ~~made~~our Buena, NJ facility and ~~continues~~whether (and to ~~recognize~~what ~~expenses~~extent) ~~during~~the FDA will agree to remove the ~~deferral~~restrictions ~~period~~imposed by the FDA Warning Letter following such re-inspection.

InAs ~~addition~~such, ~~the~~there ~~Company~~is ~~decided~~substantial doubt as to ~~shift~~when ~~its~~the ~~research~~restrictions ~~and~~imposed ~~development~~by ~~operation~~the ~~being~~FDA ~~performed~~Warning inLetter ~~its~~and ~~Tallinn,~~the ~~Estonia~~reinspection ~~office~~of toour ~~its~~Buena, USNJ ~~manufacturing~~facility ~~site~~will atbe ~~Buena~~realized or that, ~~New~~when ~~Jersey~~realized, ~~and~~our ~~subsequently~~increased ability to ~~wind-down~~operate ~~its~~will ~~Estonia~~generate ~~operation.~~sufficient Inliquidity ~~September~~required ofby ~~2020,~~us ~~the~~until ~~Company~~we ~~entered~~are ~~into~~able ato ~~letter~~achieve ofmore ~~intent~~normalized ~~with~~operating ~~its~~results. ~~former~~Further, ~~Chief~~given ~~Executive~~the ~~Officer,~~substantial doubts of our ability to proceed as a ~~related~~going ~~party~~concern ofand the ~~Company,~~significant tooperational ~~sell~~challenges ~~certain~~we offace ~~Estonia's~~in ~~assets,~~the ~~primarily~~near- ~~lab~~and ~~machinery~~long-term, ~~equipment~~there ~~and~~can ~~office~~be ~~furniture~~no ~~for~~assurances athat ~~sales~~any ~~price~~or all these potential sources of ~~$125 thousand~~liquidity inwill ~~cash. The~~be ~~transaction~~available ~~was~~to ~~closed~~us on ~~October~~commercially 23acceptable terms, ~~2020~~if ~~(Note~~at 6)all.

~~The Company markets a portfolio of~~ FDA~~-approved~~ ~~medicines,~~Warning including several generic alternatives in the United States. These products include both injectable and topical prescription medicines. From late March to the end of April 2020, several data sources suggested that patient visits to the dermatologist in the United States were down more than 50% in comparison to the typical number of dermatologist visits realized prior to shelter-in-place guidelines. As a consequence of COVID-19, dermatology visits are still down versus pre-pandemic levels. But, as shelter-in-place guidelines across the country were relaxed, several data sources reflected an increase in dermatology visits and thus patient demand for topical pharmaceutical products. Although estimates vary, beginning in late May and into early June, there have been positive signs that the market for dermatology pharmaceutical products is rebounding driven by increased 90-day prescription refills approved by the Pharmacy Benefit Managers and the emergence of stronger telehealth networks. In fact, since mid-June data sources have shown the category return to 80% of pre-pandemic levels. Teligent sales have mostly mirrored these increases, although percentages vary by product. The Company remains cautiously optimistic given the consequences of COVID-19 in some locations have proven to change rapidly. Due to the level of uncertainty and potential consequences of less stringent guidelines, it is still extremely challenging to predict the pace of the anticipated increase and whether or not there might be a second wave of decline. Letter

~~Going~~As ~~Concern~~part of our efforts to remediate the issues identified in the FDA’s warning letter issued in November 2019 (the “FDA Warning Letter”) and to strengthen our quality systems, we undertook a comprehensive review of all of our products. This review was completed in December 2020. While the review did not identify material issues with many of our products, it identified certain issues of non-conformance with respect to certain products which have resulted in recalls and halting the production of certain products, that we are actively reviewing and remediating. We have experienced and may continue to experience, among other matters, product recalls, long-term production pauses, short-term clear path to market production pauses, and continued production with minor process corrections. We believe the foregoing disruptions with respect to certain of our products and the diversion of resources to remediate the product quality issues will have a negative impact on our business, financial position, results of operations and cash flows during 2021, including reducing our revenue, negatively impacting operating/(loss), and possibly resulting in impairment and other charges. Further, we anticipate that the FDA’s issuance of the warning letter and review of our processes will continue to delay the FDA’s pre-approval inspection for commercial production on the newly installed injectable line at the Buena, NJ facility. The continued failure

ASU 205-40 – Presentation of Financial Statements – Going Concern requires management to evaluate an entity’s ability to continue as a going concern within one year after the date the financial statements are available for issuance. Specifically, management is required to evaluate whether the presence of negative conditions or events, when considered

~~individually~~to ~~and~~address in the ~~aggregate,~~issues ~~raise~~identified ~~substantial~~by ~~doubt~~the ~~about~~FDA anin ~~entity’s~~its ~~ability~~warning toletter ~~continue~~and asthose asubsequently ~~going~~identified ~~concern.~~by ~~Substantial~~us ~~doubt~~in ~~exists~~our ~~when~~comprehensive itproduct isquality ~~probable~~review ~~that~~as ~~the~~well ~~entity will be unable to meet its obligations~~ as ~~they~~the ~~become~~continued ~~due~~delay ~~within~~in ~~one~~obtaining ~~year after~~ the ~~date~~FDA’s ~~the~~pre-approval ~~financial~~inspection ~~statements are available~~ for ~~issuance.~~commercial ~~Management~~production ~~has~~on ~~identified~~ the ~~following~~newly ~~negative~~installed ~~conditions~~injectable ~~and~~line ~~events~~at ~~that raise substantial doubt about~~ the ~~Company’s~~Buena, ~~ability~~NJ tofacility ~~continue~~will ashave a ~~going~~negative ~~concern~~impact ason ofour ~~September 30~~business, ~~2020~~financial ~~and~~position, asresults of ~~December~~operations ~~31,~~and ~~2020,~~cash ~~the date these financial statements are available for issuance~~flows.

•The Company has incurred significant losses and generated negative cash flows from operations in recent years and expects to continue to incur losses and generate negative cash flow for the foreseeable future. As a result, the Company had an accumulated deficit of $163.2 million, total principal amount of outstanding borrowings of $198.8 million, and limited capital resources to fund ongoing operations at September 30, 2020. These capital resources were comprised of cash and equivalents of $10.4 million at September 30, 2020 and the generation of cash inflows from working capital. The Company is not currently generating revenues from operations that are sufficient to cover its operating expenses, and its available capital resources are not sufficient for it to continue to meet its obligations as they become due. As a result, the Company has engaged financial and legal advisors to assist it in, among other things, analyzing all available strategic alternatives to address its liquidity and capital structure including, but not limited to, making significant changes to its operating plan, pursuing a merger or other transaction involving a change of control, or restructuring its outstanding debt via out of court or inCOVID-~~court~~19 methods, including the pursuit of a plan of reorganization which would be filed under Chapter 11 of the U.S. Bankruptcy Code and/or ceasing its operations. The Company cannot provide assurances that additional capital will be available when needed or that any strategic alternatives or restructuring pursued will be on acceptable terms. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.Response

•As ~~disclosed in Note 8, on July 20, 2020, the Company entered into (i)~~ a ~~Consent~~pharmaceutical ~~and~~manufacturing ~~Amendment No. 3 to First Lien Revolving Credit Agreement (the “First Lien Amendment”)~~facility, ~~and~~we ~~(ii)~~are aconsidered ~~Consent and Amendment No. 5 to Second Lien Credit Agreement (the~~ “~~Second Lien Amendment~~essential”). ~~The~~under ~~First~~applicable ~~Lien~~directives ~~Amendment~~from ~~amends~~ the ~~First~~state ~~Lien~~of ~~Credit~~New ~~Agreement~~Jersey. ~~to,~~During ~~among other things, (i) permit~~ the ~~issuance~~COVID-19 ofPublic ~~the~~Health ~~2023~~Emergency ~~Series C Notes~~ and ~~the~~State ~~other transactions contemplated by the Indenture, (ii) modify the terms~~ of ~~certain~~Emergency ~~mandatory~~we ~~prepayments,~~maintained ~~(iii)~~our ~~modify~~manufacturing ~~certain~~operations ~~negative covenants~~ and ~~(iv)~~monitored ~~modify~~conditions ~~certain~~in ~~financial~~order ~~covenants. The Second Lien Amendment amends the Second Lien Credit Agreement~~ to, ~~among~~maintain ~~other~~a ~~things,~~safe ~~(i)~~workplace ~~permit~~for ~~the~~our ~~issuance~~employees. ofAmong ~~the 2023 Series C Notes and the~~ other ~~transactions~~preventative ~~contemplated by the Indenture~~measures, ~~(ii)~~we ~~modify~~have ~~the~~directed ~~terms~~all ofemployees ~~certain~~that ~~mandatory~~could ~~prepayments,~~perform ~~(iii)~~their ~~modify~~function ~~certain~~remotely ~~negative covenants, (iv) modify certain financial covenants and (v) extend the time period in which the Company may elect~~ to ~~pay~~work ~~interest~~from inhome ~~kind. These amendments superseded the financial covenants included~~ in ~~the~~accordance ~~original~~with ~~and~~applicable ~~amended~~guidelines, ~~agreements~~implemented associal ~~disclosed~~distancing inmeasures ~~Note~~on-site 8.at ~~The~~our ~~Company~~manufacturing ~~reversed~~facility, ~~the~~provided ~~event~~daily ofpersonal ~~default~~protective ~~liability~~equipment ofto ~~$5.6~~our ~~million~~onsite inemployees ~~the~~upon ~~third~~their ~~quarter~~arrival ofto ~~2020 based on amendment 3 of~~ the ~~first~~site ~~lien~~ and ~~amendment~~implemented 5temperature ofmonitoring ~~the~~services ~~second lien which terminates the previous revenue covenant under the Senior Credit Facilities. The current covenants under the Senior Credit Facility includes a minimum liquidity test of $3 million~~ at ~~all~~our ~~times~~newly ~~along~~established ~~with~~single ~~quarterly~~point ~~financial covenants~~ of ~~a minimum net revenue test and a quarterly minimum EBITDA test starting in Q2 2021~~entrance. InWe ~~the~~have ~~event~~also ~~that~~implemented ~~the Company is unable to comply with its covenants, or obtain~~ a ~~waiver~~more ~~from~~frequent ~~its~~sanitization ~~lenders,~~process ~~the lender shall have the right, but not the obligation, to permanently reduce the commitment in whole or in part or to declare all or any portion~~ of the ~~outstanding balance due and payable~~facility. ~~Furthermore,~~As in the ~~event~~Public ~~that~~Health ~~outstanding balances under the Ares Credit agreements are declared due and payable by the lender~~Emergency, ~~the~~State ~~holders~~ of ~~the~~Emergency ~~2023 Series C Secured Convertible Notes~~ and ~~2023~~restrictions ~~Series D Convertible Notes shall~~ have ~~the right~~abated, ~~but~~we ~~not~~are in the ~~obligation,~~process ~~to declare all~~ of ~~the~~implementing ~~outstanding~~a ~~balance~~phased ~~due~~‘return ~~and payable as well. If the Company is unable~~ to ~~raise~~office’ ~~additional~~protocol ~~capital~~under towhich ~~meet~~we ~~these obligations, the Company~~ will ~~have~~maintain tosocial ~~seek~~distanced ~~other~~workspace ~~strategic~~and ~~alternatives,~~continue ~~including~~to ~~pursuing~~sanitize aour ~~merger or other transaction involving a change of control, restructuring its outstanding debt, seeking relief under the U~~facilities.~~S. Bankruptcy Code, or ceasing its operations. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties.~~

~~•The~~In ~~Company~~order ~~was~~to inpreserve ~~compliance~~cash ~~with~~and ~~its~~align ~~financial~~manufacturing-related ~~covenants~~resources aswith ofdownward ~~September~~adjustments ~~30,~~made ~~2020.~~to ~~However,~~our ~~the~~production ~~Company~~schedule, iswe atinitiated ~~risk~~a ofreduction ~~failing~~in ~~the~~force ~~trailing~~at ~~twelve~~our ~~month~~Buena, ~~Adjusted~~NJ ~~EBITDA~~manufacturing ~~covenant~~facility ~~for~~effective ~~the~~June ~~second~~19, ~~quarter~~2020. ofIn ~~2021.~~connection Ifwith the ~~Company~~reduction, ~~fails~~we toterminated ~~comply~~53 ~~with its financial covenants~~employees, anfurloughed ~~event~~another of15 ~~default~~employees ~~under~~and eliminated the ~~Credit~~2nd ~~Agreements~~shift ~~would~~packaging beoperation. ~~triggered~~Many ~~and~~of ~~its obligations under~~ the ~~Senior~~furloughed ~~Credit~~employees ~~Facilities~~have ~~(defined~~now inbeen ~~Note~~recalled 8)and orour ~~other~~employee ~~agreements~~base ~~(including~~has asstabilized aand ~~result~~begun ofto ~~cross-default~~rebound ~~provisions~~as ofwe ~~the~~recruit ~~indentures~~and ~~relating~~fill tocritical ~~the~~positions. ~~2023~~Our ~~Series~~employee Cbase ~~Secured~~is ~~Convertible~~currently ~~Notes~~146 ~~and~~versus ~~the~~153 ~~2023~~on ~~Series~~December D31, ~~Convertible~~2020, ~~Notes)~~down ~~may be accelerated~~4. 6%.

In addition, we decided to shift our research and development operation being performed in our Tallinn, Estonia office to our US manufacturing site at Buena, New Jersey and subsequently to wind-down our Estonia operation. On September 30, 2020, we sold certain of our assets located in Estonia.

Government Grant Advance

On May 15, 2020, the Company received $3.4 million of proceeds from the U.S. Small Business Administration (the "SBA") Paycheck Protection Program (the "Government Grant Advance") and utilized the advance to balance its employee-related actions previously taken with the business needs to ensure a significant portion of the loan will be forgiven. The Government Grant Advance matures in 2 years with accrued interest at an annual rate of 1.00%, being deferred for payments on amounts not forgiven at the later of (a) 10 months following the borrower's covered period, or (b) when the SBA remits any amounts forgiven to the lender. According to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, the Company recorded $3.4 million in other income on the Consolidated Statements of Operations for the year ended December 31, 2020.

Nasdaq Delisting Notice

On April 9, 2021, the Company received a notice (the “Notice”) from The Nasdaq Stock Market informing the Company that for the last 30 consecutive business days, the bid price of the Company’s securities had closed below $1.00 per share, which is the minimum required closing bid price for continued listing on Nasdaq pursuant to Listing Rule 5450(a)(1) (the “Bid Price Requirement”). The Notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock. The Company has 180 calendar days, or until October 6, 2021, to regain compliance. To regain compliance, the closing bid price of the Company’s securities must be at least $1.00 per share for a minimum of ten consecutive business days. If the Company does not regain compliance by October 6, 2021, the Company may be eligible for additional time to regain compliance or if the Company is otherwise not eligible, the Company may request a hearing before a Hearings Panel.

The negative financial conditions described above raise substantial doubt about our ability to continue as a going concern as of March 31, 2021. To that end, and as described above, the Company is not currently generating revenues from operations that are sufficient to cover its operating expenses, and its available capital resources are not sufficient for it to continue to meet its obligations as they become due. As a result, the Company has engaged financial and legal advisors to assist it in, among other things, analyzing all available strategic alternatives to address its liquidity and capital structure. However, the Company cannot provide assurances that additional capital will be available when needed or that any

~~•In~~strategic ~~June~~alternatives ~~2019,~~or ~~the~~restructuring ~~Company~~pursued ~~received~~will abe ~~delisting~~on ~~notice from the NASDAQ due to its share price being below $1~~acceptable.00 ~~for 30 consecutive trading days.~~ The ~~notice~~accompanying ~~specified~~financial ~~that~~statements ~~the~~do ~~Company's~~not ~~share~~include ~~price~~any ~~must~~adjustments ~~trade~~that ~~above~~might ~~$1.00~~result ~~per~~from ~~share for ten consecutive trading days in order to avoid~~ the ~~Company's~~outcome ~~common stock from being delisted. Following a series~~ of ~~extensions~~this to the Company's deadline to regain compliance on May 28, 2020, the Company effectuated a one-for-ten reverse stock split (Note 2) which resulted in the Company receiving on June 18, 2020, a written notice from the NASDAQ that it had regained compliance with the Bid Price Requirementuncertainty.

•On July 28, 2020, the Company received a new notice (the “Notice”) from The Nasdaq Stock Market stating that the Company was not in compliance with Nasdaq Listing Rule 5450(b)(3)(C) relating to the minimum Market Value of Publicly Held Shares (the “MVPHS Rule”). The notice stated that the Company failed to maintain a minimum market value of publicly held shares of $15.0 million for the 30 consecutive days preceding the date of the notice. The notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock. The Company has a compliance period for the MVPHS Rule of 180 calendar days, or until January 25, 2021, in which to regain compliance. To regain compliance, the Company’s minimum market value of publicly held shares must equal $15.0 million or more for a minimum of 10 consecutive business days. If the Company does not regain compliance by January 25, 2021, then Nasdaq will notify the Company that the Company’s common stock will be delisted from the Nasdaq Global Market, unless the Company requests a hearing before a Nasdaq Hearings Panel. In the event of the Company’s shares are de-listed from Nasdaq, the Company would likely have to seek some combination of waivers from its lenders and noteholders as the Series C and Series D Convertible Note holders can require the Company to repurchase the notes on this triggering event and the Company would have to seek new capital through the sale of equity or debt securities. If the Company is unable to obtain such waivers or raise new capital to meet these obligations if they become due, it may have to seek other strategic alternatives, including seeking relief under the U.S. Bankruptcy Code or ceasing operations. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

•On November 24, 2020, the Company received a notice (the “Notice”) from The Nasdaq Stock Market stating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Filing Requirement”) as a result of the Company not having timely filed its Quarterly Report on Form 10-Q for the three months ended September 30, 2020 (“Form 10-Q”) with the Securities and Exchange Commission. The Notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock. The Company was unable to timely file the Form 10-Q due to the ongoing complex accounting analysis and evaluation of its New 2023 Notes, which were issued on September 22, 2020 during the third quarter of 2020 (as previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on September 23, 2020). The Company is working diligently to resolve these complex issues and the appropriate accounting treatment of the New 2023 Notes in order to file the Delinquent Filing as quickly as possible. The Company has 60 calendar days to submit a plan to regain compliance under the Nasdaq’s listing rules with respect to the failure to satisfy the Filing Requirement. If the plan is accepted by Nasdaq, we may be granted an exception of up to 180 calendar days, in which to regain compliance.

•On December 4, 2020, the Company received a notice (the “Notice”) from The Nasdaq Stock Market informing the Company that for the last 30 consecutive business days, the bid price of the Company’s securities had closed below $1.00 per share, which is the minimum required closing bid price for continued listing on Nasdaq pursuant to Listing Rule 5450(a)(1) (the “Bid Price Requirement”). The Notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock. The Company has 180 calendar days, or until June 2, 2021, to regain compliance. To regain compliance, the closing bid price of the Company’s securities must be at least $1.00 per share for a minimum of ten consecutive business days. If the Company does not regain compliance by June 2, 2021, the Company may be eligible for additional time to regain compliance or if the Company is otherwise not eligible, the Company may request a hearing before a Hearings Panel.

2. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary ~~for~~to apresent ~~fair~~fairly ~~presentation~~the offinancial position at March 31, 2021, and the results ~~for~~of ~~the~~operations ~~interim~~and ~~periods~~cash offlows for the ~~fiscal~~three-month ~~years~~periods ~~ending~~ended ~~December~~March 31, 2021 ~~2020~~ and ~~2019~~ 2020. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Company’s Form 10-K for the year ended December 31, ~~2019~~2020, as filed with the Securities and Exchange Commission on ~~April~~May 134, ~~2020~~2021.

Reverse Stock Split

On May 28, 2020, the ~~company~~Company effectuated a one-for-ten reverse stock split of its outstanding shares of common stock (the "Reverse Stock Split"). The Reverse Stock Split reduces the Company's shares of outstanding common stock and stock options. Fractional shares of Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole share. All share and per share data for all periods presented in the accompanying Condensed Consolidated Financial Statements and the related disclosures have been adjusted retroactively to reflect the Reverse Stock Split. The number of authorized shares of common stock and the par value per share remains unchanged.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Teligent, Inc. and its wholly owned and majority-owned subsidiaries. The Company consolidated the following entities: Igen, Inc., Teligent Pharma. Inc., Teligent Luxembourg S.à.r.l., Teligent OÜ, and Teligent Canada Inc., in addition to the following inactive entities: Microburst Energy, Inc., Blood Cells, Inc. and Flavorsome, Ltd. All inter-company accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the valuation of derivative liabilities associated with certain Notes and the Senior Credit Facility, sales returns and allowances, allowances for excess and obsolete inventories, allowances for doubtful accounts, provisions for income taxes and related valuation allowances, stock based compensation, the assessment for the impairment of long-lived assets (including property, plant and equipment), indefinite-lived assets (including, goodwill, intangibles, and In-Process research and development), and legal accruals for environmental cleanup and remediation costs. The Company bases its estimates and assumptions on historical experience, known or expected trends and various other assumptions that it believes to be reasonable. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

Related Parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

1413

Onare ~~September 8~~presented, ~~2020,~~and such other information deemed necessary to an understanding of the ~~Company~~effects ~~entered~~of ~~into~~the atransactions ~~letter~~on the financial statements; c. the dollar amounts of ~~intent~~transactions tofor ~~execute~~each aof ~~Business~~the ~~Transfer~~periods ~~Agreement~~for ~~with~~which aincome statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related ~~party~~parties ~~(Note~~as ~~15)~~of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Cash Equivalents

The Company considers all highly liquid instruments purchased with the original maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. Cash and cash equivalents include cash on hand and bank demand deposits used in the Company’s cash management program.

The Company has restricted cash, consisting of escrow accounts and letter of credits, which are included within other long-term assets on the Condensed Consolidated Balance Sheet. Pursuant to the New Credit Facilities agreement, proceeds from the 2023 Term Loan were deposited in a blocked bank account and restricted for use for the sole purpose of repurchasing the outstanding 2019 Notes. In the beginning of 2019, the Company used a total of $2.7 million of the restricted cash to repurchase a portion of the remaining 2019 Notes. The Company settled the remaining 2019 Notes upon its maturity in December 2019 (Note 87).

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheet to the total amounts in the Condensed Consolidated Statement of Cash Flows as follows:

September 30, 2020

September 30, 2019

March 31, 2021

March 31, 2020

Cash and cash equivalents

927,~~698~~454

611,~~707~~028

Restricted cash

206

Restricted cash in other assets

~~468~~650

468

Cash, cash equivalents and restricted cash in the statement of cash flows

1028,~~372~~310

711,~~381~~702

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At March 31, 2021 and March 31, 2020, the Company had $28,060,000 and $11,452,000 in excess of the FDIC insured limit, respectively.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade receivables, restricted cash, accounts payable and other accrued liabilities at ~~September~~March 3031, ~~2020~~2021 approximate their fair value for all periods presented. The Company measures fair value in accordance with ASC 820-10, “Fair Value Measurements and Disclosures”. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

As of ~~September~~March 3031, ~~2020~~2021, the fair value and the respective net carrying value of the outstanding Convertible Notes are as follows:

(in thousands)


	Fair Value	Net Carrying Value
2023 Series D Convertible Notes	126	297
Series D Preferred Stock	10,627	15,374

	Fair Value	Net Carrying Value
2023 Series C Convertible Notes	27,531	30,992
2023 Series D Convertible Notes	10,500	47,419

Income/(Loss) Per Common Share

~~Loss~~Basic ~~Per~~income/(loss) ~~Common~~per ~~Share~~share of common stock is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted income/(loss) per share of common stock is computed using the weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during the period. Potential dilutive common stock equivalents include shares issuable upon the conversion of the notes and the exercise of options and warrants. For the three months ended March 31, 2021, the potential dilutive common stock equivalents have been excluded from the computation of diluted loss per share, as their effect would have been anti-dilutive.

Basic loss per share of common stock is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted loss per share of common stock is computed using the weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during the period. Potential dilutive common stock equivalents include shares issuable upon the conversion of the notes and the exercise of options and warrants. For the three and nine months ended September 30, 2020, the potential dilutive common stock equivalents have been excluded from the computation of diluted loss per share, as their effect would have been anti-dilutive.

(in thousands except shares and per share data)

	Three months ended September 30,					Nine months ended September 30,
				Three months ended March 31,
	2020			2019		2020			2019
						2021			2020
Basic loss per share computation:
Basic income/(loss) per share computation:
Net loss - basic and diluted	$	(510)		$	(7,113)	$	(41,678)		$	(19,826)
Net income/(loss) - basic						$	2,153		$	(26,836)
Weighted average common shares - basic and diluted	6,082,517		(*)	5,385,041		5,690,164		(**)	5,383,531
Weighted average common shares - basic						58,472,427			5,387,933
Basic and diluted loss per share	$	(0.08)		$	(1.32)	$	(7.32)		$	(3.68)
Basic income/(loss) per share						$	0.04		$	(4.98)
Diluted income/(loss) per share computation:
Net income/(loss) - diluted						$	2,153		$	(26,836)
Series D conversion gain						78			—
Net income/(loss) - diluted						$	2,231		$	(26,836)
Share Computation:
Weighted average common shares - basic						58,472,427			5,387,933
Effect of convertible senior notes						184,668			—
Effect of dilutive stock options and RSU's						1,402,970			—
Effect of convertible preferred stock						17,082,285			—
Weighted average common shares outstanding - diluted						77,142,350			5,387,933
Diluted income/(loss) per share						$	0.03		$	(4.98)

(*) In accordance with ASC 260-10-45-13, the Company includes the Warrants issued to its Term Loan lenders to purchase 134,667 shares of the Company’s common stock at an exercise price of $0.01 per share, from July 20, 2020 to September 30, 2020, in the number of outstanding shares used to calculate the basic and diluted loss per share for the three months ended September 30, 2020.

(**) In accordance with ASC 260-10-45-13, the Company includes the Warrants issued to its Term Loan lenders to purchase 134,667 shares of the Company's common stock at an exercise price of $0.01 per share from July 20, 2020 to September 30, 2020 and 538,995 shares of the Company’s common stock at an exercise of $0.01 per share from May 28, 2020 to September 30, 2020, in the number of outstanding shares used to calculate the basic and diluted loss per share for the nine months ended September 30, 2020.

Concentration of Credit Risk

Major customers of the Company are defined as those constituting greater than 10% of the Company's total revenue. For the three months ended ~~September~~March 3031, ~~2020~~2021, ~~three~~one ~~customers accounted for 47%~~ of the Company’'s ~~revenue, consisting of 21%, 13%, and 13%, respectively. For the three months ended September 30, 2019, two of the Company’s~~ customers accounted for 4732.7% of the Company’s revenue~~, consisting of 35% and 12%, respectively~~. For the ~~nine~~three months ended ~~September 30~~March 31, 2020, ~~two~~one of the Company’s customers accounted for ~~34% of the Company’s revenue, consisting of 22% and 12%, respectively~~16. ~~For the nine months ended September 30, 2019, two of the Company’s customers accounted for 48~~9% of the Company’s revenue~~, consisting of 29% and 19%, respectively~~. Accounts receivable related to the Company’s major customers comprised 4661% of all accounts receivable as of ~~September~~March 3031, ~~2020~~2021 and 4712% as of ~~September~~March 3031, ~~2019~~2020, respectively. The loss of one or more of these major customers could have a significant impact on our revenues, our business, and results of operations.

For the three months ended ~~September~~March 3031, ~~2020~~2021, domestic net revenues were $128.~~7 million and foreign net revenues were $~~1.6 million. ~~For the nine months ended September 30, 2020, domestic net revenues were $27.8 million~~ and foreign net revenues were $73.65 million. As of ~~September~~March 3031, ~~2020~~2021, domestic assets were $~~147~~74.96 million and foreign assets were $4226.~~4 million~~1. For the three months ended ~~September~~March 3031, ~~2019~~2020, domestic net revenues were $135.46 million and foreign net revenues were $5.1 ~~million~~.8 ~~For the nine months ended September 30, 2019, domestic net revenues were $36.5~~ million ~~and foreign net revenues were $13~~.~~4 million.~~ As of ~~September~~March 3031, ~~2019~~2020, domestic assets were $~~142~~146.54 million and foreign assets were $5340.75 million.

Recently Adopted Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). The update provides optional guidance for a limited period to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting caused by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Company adopted this guidance in the second quarter of 2020. The adoption of this guidance had no impact on the Company's Condensed Consolidated Financial Statements or the related disclosures.

In December 2019, the FASB issued an accounting standard update to simplify the accounting for income taxes. The standard’s amendments include changes in various subtopics of accounting for income taxes including, but not limited to, accounting for “hybrid” tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, intraperiod tax allocation exception to an incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax law, and year-to-date loss limitation in interim-period tax accounting. The guidance is effective for fiscal years beginning after December 15, 2020 with early adoption permitted, including the interim periods within those years. The Company has implemented the guidance on the Company’s Condensed Consolidated Financial Statements and related disclosures in the enclosed statements.

Recently Issued Not Yet Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06 (“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.” ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. In addition, ASU 2020-06 amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The Amendments also affects the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments are effective for public entities excluding smaller reporting companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is evaluating the impact this guidance will have on its Condensed Consolidated Financial Statements and related disclosures upon adoption effective January 1, 2024.

In December 2019, the FASB issued an accounting standard update to simplify the accounting for income taxes. The standard’s amendments include changes in various subtopics of accounting for income taxes including, but not limited to, accounting for “hybrid” tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, intraperiod tax allocation exception to an incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax law, and year-to-date loss limitation in interim-period tax accounting. The guidance is effective for fiscal years beginning after December 15, 2020 with early adoption permitted, including the interim periods within those years. The Company is evaluating the impact this guidance will have on the Company’s Condensed Consolidated Financial Statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU No. 2016-13”), which requires that a financial asset (or a group of financial assets) measured at an amortized cost basis be presented at the net amount expected to be collected. This approach to estimating credit losses applies to most financial assets measured at amortized cost and certain other instruments, including but not limited to, trade and other receivables. The amendments in this update are initially effective for public business entities for fiscal years beginning after December 15, 2019. The Financial Accounting Standards Board subsequently postponed the effective date for small reporting companies to January 2023, which for the Company means January 1, 2023. Based on the current status of the evaluation, the Company believes the adoption of the guidance will not have a material impact on its Condensed Consolidated Financial Statements and related disclosures. The Company expects to continue and finalize its evaluation and assessment as required by the guidance upon adoption.

1716

3. Revenues, Recognition and Allowances

Revenue Recognition

The Company derives its revenues from three types of transactions: sales of its own pharmaceutical products (Company product sales), sales of the manufactured products for its customers (contract manufacturing sales), and research and product development services performed for third parties.

Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using the expected value method based on historical experience as well as applicable information currently available.

Company Product Sales

Revenue from Company product sales is recognized upon transfer of control of a product to a customer at a point in time, generally as the Company's products are sold on a FOB destination basis and because of the inventory risk and risk of ownership pass to the customer upon delivery.

Company product sales are recorded net of accruals for estimated chargebacks, rebates, cash discounts, other allowances, and returns.

Contract Manufacturing Sales

The Company recognizes revenue for contract manufacturing sales over-time, as milestones are achieved. Shipments are made in accordance with sales commitments and related sales orders that the Company entered into with customers either verbally or in written form.

Contract manufacturing sales are recognized net of accruals for cash discounts which are established at the time of sale and are included in Revenue, net in the Company's Condensed Consolidated Statement of Operations.

Research and Development Services and Other Income

The Company establishes agreed-upon product development agreements with its customers to perform product development services. Revenues are recognized in accordance with the agreement upon the completion of the phases of development and when the Company has no future performance obligations relating to that phase of development. Other types of revenue include royalty or licensing revenue that would be recognized over time, at a point in time, or based upon the contractual term upon completion of the earnings process. Judgments are required to evaluate contingencies such as potential variances in the schedule or costs, the impact of change orders, liability claims, contract disputes, or the achievement of contractual performance standards.

Revenues by Transaction Type

The Company operates under one reportable segment and therefore the results of the Company's operations are reported on a consolidated basis, which is consistent with internal management reporting utilized by the chief decision maker.

Net revenues for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020 are as follows:

	Three months ended September 30,				Nine months ended September 30,
			Three months ended March 31,
	2020		2019		2020		2019
					2021		2020
Company product sales	$	~~13,933~~	$	~~18,228~~	$	3410,~~097~~595	$	487,~~591~~139
Contract manufacturing sales	~~306~~		~~167~~		~~813~~818		~~1,097~~197
Research and development services and other income	~~100~~		71		$175	~~462~~	$111	~~241~~
Revenue, net	$	~~14,339~~	$	~~18,466~~	$	3511,~~372~~588	$	497,~~929~~447

1817

Disaggregated information for the Company product sales revenue has been recognized in the accompanying unaudited interim Condensed Consolidated Statements of Operations and is presented below according to product type:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Company Product Sales

~~2020~~

~~2019~~

~~2020~~2021

~~2019~~2020

Topical

~~11,982~~

~~13,271~~

267,~~138~~020

355,~~240~~380

Injectables

~~1,951~~

~~4,957~~

73,~~959~~575

131,~~351~~759

Total

~~13,933~~

~~18,228~~

3410,~~097~~595

487,~~591~~139

In the ~~nine~~three months ended ~~September~~March 3031, 2021 and March 31, 2020, the Company did not incur, and therefore did not defer, any material incremental costs to obtain contracts.

Sales Returns and Allowances

As is customary in the pharmaceutical industry, the Company’s product sales are subject to a variety of deductions, including chargebacks, rebates, cash discounts, other allowances, and returns. Product sales are recorded net of accruals for returns and allowances, which are established at the time of sale. The Company analyzes the adequacy of its accruals for returns and allowances quarterly. Amounts accrued for sales deductions are adjusted when trends or significant events indicate that an adjustment is appropriate. Accruals are also adjusted to reflect actual results. These provisions are estimates based on historical payment experience, historical relationship to revenues, estimated customer inventory levels and current contract sales terms with direct and indirect customers. The Company uses a variety of methods to assess the adequacy of its returns and allowances reserves to ensure that its financial statements are fairly stated. These include periodic reviews of customer inventory data, customer contract programs, subsequent actual payment experience, and product pricing trends to analyze and validate the return and allowances reserves.

Net revenue and accounts receivable balances in the Company’s condensed consolidated financial statements are presented net of sales returns and allowances (SRA). Accounts receivable were presented net of SRA estimates of $2831.2 million and $3028.59 million at ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively. Certain SRA balances were included in accounts payable and accrued expenses.

The allowance for doubtful accounts was $2.47 million and $2.24 million at ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively. The allowance for doubtful accounts was primarily related to one specific customer for $1.7 million.

Chargebacks are one of the Company's most significant estimates for recognition of product sales. A chargeback represents an amount payable in the future to a wholesaler for the difference between the invoice price paid to the Company by its wholesale customer for a particular product and the negotiated contract price that the wholesaler’s customer pays for that product. The Company’s chargeback provision and related reserve vary with changes in product mix, changes in customer pricing and changes to estimated wholesaler inventories. The provision for chargebacks estimates the expected wholesaler sell-through levels to indirect customers at contract prices. The Company validates the chargeback accrual quarterly through a review of the inventory reports obtained from its largest wholesale customers. This customer inventory information is used to establish the estimated liability for future chargeback claims based on historical chargeback and contract rates. These large wholesalers represent the majority of the Company’s chargeback payments. The Company continually monitors current pricing trends and wholesaler inventory levels to ensure the liability for future chargebacks is fairly stated.

Rebates are used for various discounts which can be programs or one-time events. The Company reviews the percentage of products sold through these programs by reviewing chargeback data and uses the appropriate percentages to calculate the rebate accrual. Rebates are invoiced monthly, quarterly, or annually and reviewed against the accruals. Other items that could be included in accrued rebates would be price protection fees, shelf stock adjustments (SSAs), or other various amounts that would serve as one-time discounts on specific products.

The Company's adjustments for the deductions to gross product sales are as follows:

1918

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

2020

2019

2020

2019

2021

2020

Gross product sales

~~44,264~~

~~41,814~~

~~104~~32,~~147~~848

~~108~~23,~~550~~166

Deduction to gross product sales:

Chargebacks and billbacks

~~24,585~~

~~14,573~~

5416,~~091~~980

3711,~~285~~955

Wholesaler fees for service

~~1,445~~

~~2,355~~

41,~~191~~359

61,~~303~~142

Sales discounts and other allowances

~~4,302~~

~~6,658~~

113,~~769~~914

162,~~371~~930

Total reduction to gross product sales

~~30,332~~

~~23,586~~

7022,~~051~~253

5916,~~959~~027

Company product sales, net

~~13,933~~

~~18,228~~

3410,~~097~~595

487,~~591~~139

Financing and Payment

The Company's payment terms vary by the type of the customer and the products or services offered. The term between invoicing and when payment is due is not significant. Generally, the Company does not incur incremental costs to obtain contracts. The Company does not adjust revenue for the effects of a significant financing component as the Company's customers generally pay within 100 days.

Costs to Obtain or Fulfill a Customer Contract

Costs related to shipping and handling are comprised of outbound freight and associated labor. The Company accounts for shipping and handling activities related to contracts with customers as fulfillment costs which are included in the cost of sales in the Condensed Consolidated Statements of Operations.

The Company is required to pay a 40% royalty on certain product net sales to a pharmaceutical partner. There are currently 4 products manufactured and distributed under the Company’s label in the U.S. which are subject to this agreement. Payments are made quarterly. Royalty expense of $0.3 million and $0.51 million was included in the cost of sales in the Condensed Consolidated Statements of Operations for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019, respectively. Royalty expense of $0.5 million and $1.1 million was included in the cost of sales in the Condensed Consolidated Statements of Operations for the nine months ended September 30,~~ 2020 ~~and 2019~~, respectively.

4. Inventories

Inventories are valued at the lower of cost or net realizable value and using the first-in-first-out method. Inventories as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020 consisted of:

	September 30, 2020		December 31, 2019
	March 31, 2021		December 31, 2020
Raw materials	$	1413,~~069~~275	$	1413,~~117~~487
Work in progress	~~326~~538		~~133~~386
Finished goods	1915,~~822~~835		1021,~~989~~525
Inventories reserve	(78,~~300~~712)		(212,~~208~~002)
Inventories, net	$	2620,~~917~~936	$	23,~~031~~396

5. Property, Plant and Equipment

~~Property, plant and equipment consists of the following:~~19

Property, plant and equipment consists of the following:

	September 30, 2020		December 31, 2019
	March 31, 2021		December 31, 2020
Land	$	~~401~~257	$	~~401~~257
Building and improvements	5811,~~997~~660		5811,~~959~~660
Machinery and equipment	141,~~032~~625		141,~~897~~625
Computer hardware and software	~~4,867~~301		~~4,771~~300
Furniture and fixtures	~~677~~74		~~705~~74
Construction in progress	332,~~735~~302		302,~~759~~302
	112,709		110,492
	16,219		16,218
Less accumulated depreciation and amortization	(~~16,404~~270)		(~~14,143~~87)
Property, plant and equipment, net	$	9615,~~305~~949	$	9616,~~349~~131

The Company recorded depreciation expense of $1.0.2 million and $01.90 million for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019, respectively. The Company recorded depreciation expense of $2.9 million and $2.7 million for the nine months ended September 30,~~ 2020 ~~and 2019~~, respectively.

The Company received the certificate of completion of its building in the fourth quarter of 2018. For the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020, there was $0.10 million and $0.3 million of payroll costs, respectively, capitalized as construction in progress. ~~For the nine months ended September 30, 2020 and 2019, there was $0.5 million and $0.9 million of payroll costs, respectively, capitalized as construction in progress.~~

22 6. Leases

6. Assets Held for Sale

The Company decided to shift its research and development operation being performed in its Tallinn, Estonia office to its US manufacturing site at Buena, New Jersey and subsequently to wind-down its Estonia operation. In September of 2020, the Company entered into a letter of intent, an arm's length transaction, with its former Chief Executive Officer, a related party of the Company to sell certain of Estonia's assets, primarily lab machinery, equipment and office furniture for a sales price of $125 thousand in cash. The transaction subsequently closed in the fourth quarter of 2020. In accordance with ASC 360, the Company determined the transaction meets the assets held for sale criteria that requires the assets be measured at the lower of the carrying value or fair value less costs to sell. The fair value calculation yielded a fair value of $133 thousand resulting in a write-down of $394 thousand. Assets held for sale are presented on the Condensed Consolidated Balance Sheet as of September 30, 2020 and the breakdown is as follows:

	Book Value		Fair Value		Write-Down
Machinery & Equipment, net	$	512,232	$	130,964	$	381,269
Furniture, net	$	15,148	$	2,242	$	12,906
Total	$	527,380	$	133,205	$	394,175

7. Leases

According to ASC Topic 842, Leases, the Company recognizes Right-of-Use ("ROU") assets and lease liabilities for all leases with terms greater than 12 months at the commencement date. The Company determines whether an agreement is a lease at its inception. The Company has operating and finance leases for its corporate, manufacturing, and international facilities as well as certain equipment. Its leases have remaining terms of less than 1 year to up to 9 years, including available options to extend some of its lease terms for up to 5 years. One of its lease agreements has an early termination option within one year. As the interest rates implicit in the Company's leases are typically not readily determinable, the Company has elected to utilize an incremental borrowing rate as the discount rate, determined based on the expected term of the lease, the Company’s credit risk and existing borrowings.

In May 2020, the Company modified one of its office lease agreements and obtained a deferral of 2 months rental payments amid the pandemic. According to FASB Staff Q&A on Topic 842 and 841, because the amount of the total consideration paid under the modified lease agreement is substantially the same as the original agreement, except the deferral of the lease payments which only affect the timing of the payments, the Company accounted for the concession as if no changes to the lease contract were made and continues to recognize expenses during the deferral period.

The discount rates utilized ranged from 4.86% to 8.60% and were utilized to determine the present value of the lease liabilities. The components of lease expense are as follows:

	Three months ended September 30,				Nine months ended September 30,
			Three months ended March 31,
	2020		2019		2020		2019
					2021		2020
Operating lease cost	$	~~159~~	$	~~159~~	$	~~475~~136	$	~~476~~158
Finance lease cost:
Amortization of right-of-use assets	4		5		114		114
Interest on lease liabilities	1		1		41		51
Total finance lease cost	$	5	$	6	$	155	$	165

Right-of-use assets obtained in exchange for new operating lease liabilities were zero and $1.0 million as of ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020, respectively. Cash paid for amounts included in the measurement of operating lease liabilities for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020 was $0.1 million and $0.1 million, respectively. Cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2020 and 2019 was $0.4 million and $0.4 million, respectively. Cash paid for amounts included in the measurement of finance lease liabilities for the three and nine months ended September 30, 2020 and 2019, respectively, was not material.

included in the measurement of finance lease liabilities for the three months ended March 31, 2021 and 2020, respectively, was not material.

Supplemental balance sheet information related to leases as of the periods presented are as follows:


	March 31, 2021		December 31, 2020
Operating Leases
Other assets	$	1,919	$	2,001
Capital lease obligation, current	420		422
Other long-term liabilities	1,658		1,761
Total operating lease liabilities	2,078		2,183

Finance Leases
Property, plant, and equipment	81		81
Accumulated depreciation	(32)		(25)
Property, plant, and equipment, net	49		56

Capital lease obligation, current	14		14
Other long-term liabilities	39		43
Total finance lease liabilities	$	53	$	57

	September 30, 2020		December 31, 2019
Operating Leases
Other assets	$	2,125	$	2,453
Capital lease obligation, current	463		434
Other long-term liabilities	1,844		2,199
Total operating lease liabilities	2,307		2,633
Finance Leases
Property, plant, and equipment	81		81
Accumulated depreciation	(25)		(12)
Property, plant, and equipment, net	56		69
Capital lease obligation, current	14		12
Other long-term liabilities	47		57
Total finance lease liabilities	$	61	$	69

The weighted average remaining lease terms as of March 31, 2021 for operating and financing leases were 5.6 years and 3.4 years, respectively. The weighted average discount rates for operating and finance leases as of March 31, 2021 were 8.4% and 8.0%, respectively.

~~The~~As ~~weighted average remaining lease terms as~~ of ~~September~~March 3031, ~~2020 for operating and financing leases were 5.8 years and 3.9 years~~2021, ~~respectively.~~maturities ~~The~~of ~~weighted~~lease ~~average~~liabilities ~~discount~~are ~~rates for operating and finance leases~~ as ~~of September 30, 2020 were 8.3% and 8.0%, respectively.~~ follows:

As of September 30, 2020, maturities of lease liabilities are as follows:


	Operating		Financing
Year Ending March 31,	Leases		Leases

2021 (excluding the three months ended March 31, 2021)	444		13
2022	552		18
2023	551		18
2024	238		12
2025	210		—
2026	210		—
Thereafter	432		—
Total lease payments	2,637		62
Less imputed interest	559		9
Total	$	2,078	$	53

	Operating		Financing
Year Ending December 31,	Leases		Leases
2020 (excluding the three months ended December 31, 2020)	$	163	$	5
2021	609		18
2022	548		18
2023	547		18
2024	234		12
2025	206		—
Thereafter	633		—
Total lease payments	2,940		71
Less imputed interest	633		10
Total	$	2,307	$	61

257. Redeemable, Convertible Preferred Stock

As discussed in Note 8, the lenders under the Second Lien Credit Agreement agreed to convert a portion of the outstanding term loans constituting 100% of the approximately $24.5 million in accrued PIK interest into an aggregate of approximately 85,412 shares of the Company’s newly created Series D Preferred Stock, par value $0.01 per share (the “Series D Preferred Stock”). The Series D Preferred Stock does not qualify as a liability instrument under ASC 480 – Distinguishing Liabilities from Equity, because it is not mandatorily redeemable. However, the Company classified the Series D Preferred Stock as mezzanine-equity, as the Series D Preferred Stock is contingently redeemable upon a change-in-control event that is outside of the Company’s control.

Each share of Series D Preferred Stock is non-voting and, subject to an increase in the number of shares of common stock available for issuance under the Company’s amended and restated certificate of incorporation, is convertible into 200 shares of common stock. The shares of Series D Preferred Stock issued in connection with the PIK Interest Exchange are convertible into an aggregate of 17,082,285 shares of common stock. The holders of shares of Series D Preferred Stock may not convert such shares of Series D Preferred Stock into shares of common stock to the extent such a conversion would result in a holder thereof, together with its affiliates, collectively owning more than 15% of the number of shares of common stock then outstanding. Upon the occurrence of a sale of the Company, subject to customary exceptions, the Company must redeem each share of Series D Preferred Stock by paying each holder of Series D Preferred Stock an amount equal to the amount such holder would have received in connection with such sale had such holder converted such share of Series D Preferred Stock into common stock immediately prior to such sale. The holders of Series D Preferred Stock are entitled to dividends on shares of Series D Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of common stock when, as and if such dividends (other than dividends in the form of common stock) are paid on shares of common stock.

Pursuant to the terms of the Exchange Agreement, the Company is required to seek the requisite approval of its stockholders for an amendment to its amended and restated certificate of incorporation to allow for the conversion in full of all shares of Series D Preferred Stock into shares of common stock (either by an increase in the number of authorized shares of Common Stock, the effectuation of a reverse stock split, or otherwise) (the “Stockholder Approval”). The Exchange Agreement provides that, if the Company is unable to obtain the Stockholder Approval on or before July 1, 2021, then the Company will issue to each holder of Series D Preferred Stock, on a quarterly basis, additional shares of Series D Preferred Stock equal to 2.5% of the number of shares of Series D Preferred Stock originally issued to such holder until the Stockholder Approval is obtained (with a prorated amount of Series D Preferred Stock to be issued in the event the Stockholder Approval is obtained during any such calendar quarter).

8. Debt

Convertible Notes

2019 Convertible 3.75% Senior Notes

On December 16, 2014, the Company issued $125.0 million aggregate principal amount of Convertible 3.75% Senior Notes, due 2019 (the “2019 Notes”). On December 22, 2014, the Company announced the closing of the initial purchasers’ exercise in full of their option to purchase an additional $18.75 million aggregate principal amount of 2019 Notes. The 2019 Notes bore interest at a fixed rate of 3.75% per year, payable semiannually in arrears on June 15 and December 15 of each year, began on June 15, 2015, and matured on December 15, 2019, unless earlier repurchased, redeemed or converted. The 2019 Notes were convertible into shares of the Company’s common stock, cash or a combination thereof. On May 20, 2015, the Company received shareholder approval for the increase in the number of shares of common stock authorized and available for issuance upon possible conversion of the 2019 Notes.

On April 27, 2018, the Company entered into separate exchange agreements with certain holders of the 2019 Notes that effected the exchange, in aggregate, of $75.1 million of the 2019 Notes for $75.1 million of the Convertible 4.75% Senior Notes due 2023 (the “2023 Series A Notes”).

In December 2018 the Company used $52.8 million of proceeds from the Senior Credit Facilities (see below) to repurchase a portion of the 2019 Notes and also used $0.3 million of proceeds to pay for transaction costs. The repurchase of the 2019 Notes was considered a debt extinguishment under ASC 470-50. The 2019 Notes were accounted for under cash conversion guidance ASC 470-20, which required the Company to allocate the fair value of the consideration transferred upon settlement to the extinguishment of the liability component and the reacquisition of the equity component upon derecognition. In accordance with the guidance above, the Company allocated a portion of the $52.8 million to the extinguishment of the liability component equal to the fair value of that component immediately before extinguishment and recognized a $1.7 million extinguishment loss in the Condensed Consolidated Statement of Operations to measure the difference between (i) the fair value of the liability component and (ii) the net carrying value amount of the liability component (which is already net of any unamortized debt issuance costs). In addition, the Company recorded a $2.9 million reduction of Additional Paid in Capital in connection with the extinguishment of the 2019 Notes.

In the beginning of 2019, the Company used a total of $2.7 million of proceeds from the Senior Credit Facilities to repurchase a portion of the remaining 2019 Notes. The repurchase of the 2019 Notes was considered a debt extinguishment under ASC 470-50. The 2019 Notes were accounted for under cash conversion guidance ASC 470-20, which required the Company to allocate the fair value of the consideration transferred upon settlement to the extinguishment of the liability component and the reacquisition of the equity component upon derecognition. In accordance with the guidance above, the Company allocated a portion of the $2.7 million to the extinguishment of the liability component equal to the fair value of that component immediately before extinguishment and recognized a $0.2 million extinguishment loss in the Condensed Consolidated Statement of Operations to measure the difference between (i) the fair value of the liability component and (ii) the net carrying value amount of the liability component (which was already net of any unamortized debt issuance costs). The reduction of Additional Paid in Capital in connection with this extinguishment was immaterial. The Company settled the remaining 2019 Notes of $13.0 million in principal upon its maturity in December 2019.

2023 Series A Convertible Notes

On April 27, 2018, the Company entered into separate exchange agreements with certain holders of the then outstanding Convertible 3.75% Senior Notes, due 2019 (the "2019 Notes") that effected the exchange, in aggregate, of $75.1 million of the 2019 Notes for $75.1 million of ~~the~~ Convertible 4.75% Senior Notes due 2023 (the "2023 Series A Notes"). The 2023 Series A Notes bear a fixed interest rate of 4.75% per year, payable semi-annually with the principal payable in May 2023. At the option of the holders, the 2023 Series A Notes are convertible into shares of the Company’s common stock, cash or a combination thereof. The initial conversion rate was $44.50 per share, subject to certain adjustments, related to either the Company's stock price volatility, or the Company's declaration of a stock dividend, stock distribution, share combination or share split expected dividends or other anti-dilutive activities. In addition, holders will be entitled to receive additional shares of common stock under a make-whole provision in some circumstances that could reduce the per share conversion rate to as low as $35.60 per share. The Company incurred debt issuance costs of $1.6 million upon issuance of the 2023 Notes. The 2019 Notes had been previously settled during 2019.

In accordance with accounting for convertible debt within the cash conversion guidance of ASC 470-20, the Company allocated the principal amount of the 2023 Series A Notes between its liability and equity components. The carrying amount of the liability component was determined by measuring the fair value of a similar debt instrument of similar credit quality and maturity that did not have the conversion feature. The carrying amount of the equity component, representing the embedded conversion option, was determined by deducting the fair value of the liability component from the principal amount of the 2023 Notes as a whole. The equity component was recorded to additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the 2023 Series A Notes over the carrying amount of the liability component was recorded as a debt discount of $19.0 million and is being amortized to interest expense using the effective interest method through the maturity date. The Company allocated the total amount of debt issuance costs incurred to the liability and equity components using the same proportions as the proceeds from the 2023 Notes. The debt issuance costs attributable to the liability component were recorded as a direct deduction from the liability component of the 2023 Notes and are being amortized to interest expense using the effective interest method through the maturity date. Transaction costs attributable to the equity component were netted with the equity component of the 2023 Notes in additional paid-in capital. The effective interest rate of the 2023 Notes, inclusive of the debt discount and issuance costs, was 11.90%.

The exchange of $75.1 million of the 2019 Notes for the 2023 Notes was considered a debt extinguishment under ASC 470-50. The 2019 Convertible 3.75% Senior Notes were accounted for under cash conversion guidance ASC 470-20, which required the Company to allocate the fair value of the consideration transferred upon settlement to the extinguishment of the liability component and the reacquisition of the equity component upon derecognition. In accordance with the aforementioned guidance, the Company allocated a portion of the $75.1 million to the extinguishment of the liability component equal to the fair value of that component immediately before extinguishment and recognized a $2.5 million extinguishment loss in the Condensed Consolidated Statement of Operations to measure the difference between (i) the fair value of the liability component and (ii) the net carrying amount of the liability component (which is already net of any unamortized debt issuance costs). In addition, the Company recorded a $7.6 million reduction of Additional Paid in Capital in connection with the extinguishment of $75.1 million of the 2019 Convertible 3.75% Senior Notes.

Following the issuance of the 2023 Series D Convertible Notes described below, all outstanding debt with respect to the 2023 Series A Convertible Notes had been extinguished through exchange of 2023 Series C and 2023 Series D Convertible Notes (see below).

2023 Series B Convertible Notes

On October 31, 2019, the Company closed its offering of the 2023 Series B Convertible Notes in the aggregate principal amount of $34.4 million (“2023 Series B Notes”). The 2023 Series B Notes will mature in May 2023 and are convertible at the option of the holder at any time prior to its maturity. The initial conversion price was $7.20 per share, subject to adjustment under certain circumstances.

As part of the offering, the Company entered into agreements with certain holders of its existing 2023 Series A Notes to exchange $9.0 million of the 2023 Series A Notes for $5.1 million of the 2023 Series B Notes. The gross cash proceeds of approximately $29.3 million from the financing were used to extinguish the Company’s previously existing 2019 Notes in December 2019 and intended to pay amounts owing with respect to other indebtedness and to fund general corporate and working capital requirements. The net proceeds from the financing were $26.9 million after deducting a total of $2.3 million of the initial purchasers’ discounts and professional fees associated with the transaction. The 2023 Series B Notes bear interest at a rate of 7.00% per annum if paid in cash, semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The Company also has an option, and has agreed with its senior lender, to pay-in-kind ("PIK") the interest at 8.00% per annum, to defer cash payments. The Company has elected the paid-in-kind interest option and increased the principal balance of the 2023 Series B Notes by $0.6 ~~million and $2.0 million~~ during the three months ~~and~~ended ~~nine~~March 31, ~~months~~2021 ~~ended~~and ~~September~~March 3031, 2020, respectively.

Under ASC 470-60, Troubled Debt Restructurings by Debtors, the exchange of the $9.0 million of the 2023 Series A Notes for the $5.1 million of the 2023 Series B Notes represents a troubled debt restructuring ("TDR"). The TDR did not result in a gain recognition. As a result, a new effective interest rate was established based on the $7.2 million carrying value of the original debt, net of the $2.0 million fair value of the embedded derivative liability related to the new debt issued in the TDR and $0.2 million issuance costs, getting accreted to $6.8 million representing the total amount of the future undiscounted cash flows related to the $5.1 million of the 2023 Series B Convertible Notes.23

27Under ASC 470-60, Troubled Debt Restructurings by Debtors, the exchange of the $9.0 million of the 2023 Series A Notes for the $5.1 million of the 2023 Series B Notes represents a troubled debt restructuring ("TDR"). The TDR did not result in a gain recognition. As a result, a new effective interest rate was established based on the $7.2 million carrying value of the original debt, net of the $2.0 million fair value of the embedded derivative liability related to the new debt issued in the TDR and $0.2 million issuance costs, getting accreted to $6.8 million representing the total amount of the future undiscounted cash flows related to the $5.1 million of the 2023 Series B Notes.

In accordance with ASC 815-15, Derivatives and hedging, Embedded Derivatives, the embedded conversion option should be bifurcated and separately accounted for as a derivative instrument, because the Company did not have enough authorized shares available to share-settle the conversion option. Such derivative instruments was initially and subsequently measured at fair value, with changes in fair value recognized in earnings (Note 9). The derivative liability recorded at the issuance date was $13.5 million, including the $2.0 million above accounted for in the TDR, which was subsequently remeasured to $2.8 million as of March 31, 2020, with $4.0 million recognized as a gain on change in fair value of the derivative in the Company's Condensed Consolidated Statement of Operations mainly due to a share price decline during the first quarter of 2020. On May 28, 2020, the Company effectuated a one-for-ten Reverse Stock Split on its outstanding shares of common stock (Note 2), which allows the Company to have sufficient authorized shares to share-settle the embedded convertible option. The derivative liability had a fair value of $6.3 million as of the reverse stock split date, with a $3.5 million mark-to-market loss recognized in the Condensed Consolidated Statement of Operations in the three months ended June 30, 2020. Also, on the reverse stock split date, the $6.3 million of the fair value of the derivative liability was reclassed to the stockholder's equity without further subsequent remeasurement required.

The $0.9 million of allocated issuance costs associated with the bifurcated conversion features embedded in the notes was recognized as a loss on debt restructuring in the Company’s statement of operations for the year ended December 31, 2019. In accordance with ASC 470-20, the initial carrying amount of the liability component of the 2023 Series B Notes, excluding the $5.1 million portion above is accounted for as a TDR, upon issuance is the residual amount between total proceeds from the transaction and the derivative liability net of allocated issuance costs. The $1.4 million debt issuance costs attributable to the liability component were recorded as a direct deduction from the liability component of the 2023 Series B Notes and are being amortized to interest expense using the effective interest method through the maturity date. The discount from the par amount of the 2023 Series B Notes will be accreted to par utilizing the effective-interest rate method over the term of the Notes from the issuance date through May 2023. The effective interest rate of the 2023 Series B Notes, inclusive of the debt discount and issuance costs is 27.4%.

Following the issuance of the 2023 Series D Convertible Notes described below, all outstanding debt with respect to the 2023 Series B Convertible Notes had been extinguished through exchange of 2023 Series C and 2023 Series D Convertible Notes (see below).

2023 Series C Secured Convertible Notes

On July 20, 2020, the Company completed the sale and issuance of $13.8 million aggregate principal amount of 9.5% Series C Senior Secured Convertible Notes due 2023 (the “2023 Series C Notes”) pursuant to a Note Purchase Agreement between the Company and each purchaser of 2023 Series C Notes. After taking into account an original issue discount and other fees payable to the Purchasers, the Company received net cash proceeds of approximately $10.0 million, which the Company expects to use for general corporate purposes.

The Company also issued approximately $32.3 million in aggregate principal amount of 2023 Series C Notes in exchange for approximately $35.9 million in aggregate principal amount, plus accrued but unpaid interest thereon, of the Company’s outstanding 7.0% Cash / 8.0% PIK 2023 Series B Notes, giving effect to a 10.0% discount on the principal amount of the 2023 Series B Notes so exchanged, pursuant to an exchange agreement (the "Series B Exchange Agreement") between the Company and the holders of the 2023 Series B ~~Convertible~~ Notes party thereto. In addition, the Company issued approximately $3.7 million in aggregate principal amount of 2023 Series C Notes in exchange for approximately $8.2 million in aggregate principal amount, plus accrued but unpaid interest thereon, of the Company’s outstanding 2023 Series A Notes, giving effect to a 55% discount on the principal amount of Notes so exchanged between the Company and the holders of 2023 Series A Notes party thereto.

Interest on the 2023 Series C ~~Secured Convertible~~ Notes accrues at the rate of 9.5% per annum and is payable in kind and capitalized with principal semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2020. The 2023 Series C ~~Secured Convertible~~ Notes will mature on March 30, 2023, unless earlier converted or repurchased and are subordinate to the indebtedness under the Senior Credit Facilities. The Company has elected the paid-in-kind interest option and increased the principal balance of the 2023 Series C ~~Secured Convertible~~ Notes by $0.50 million in the ~~three~~period ~~months~~ending ~~ended~~March ~~September 30~~31, ~~2020~~2021. The Company has agreed to use its commercially reasonable best efforts to obtain the approval of its stockholders that is required under applicable Nasdaq rules and regulations to permit holders of the 2023 Series C Secured Convertible Notes to beneficially own shares of common stock without being subject to the Nasdaq Change of Control Cap. In the event that the Company did not obtain such stockholder approval at an annual or special meeting of its stockholders on or before October 31, 2020, holders of a majority in aggregate principal amount of outstanding 2023 Series C Secured Convertible Notes may elect to increase the interest rate payable on the 2023 Series C

2824

~~Secured~~applicable ~~Convertible~~Nasdaq rules and regulations to permit holders of the 2023 Series C Notes to beneficially own shares of common stock without being subject to the Nasdaq Change of Control Cap. In the event that the Company did not obtain such stockholder approval at an annual or special meeting of its stockholders on or before October 31, 2020, holders of a majority in aggregate principal amount of outstanding 2023 Series C Notes may elect to increase the interest rate payable on the 2023 Series C Notes to 18.0% per annum until such stockholder approval is obtained, which will continue to be paid in kind in the form of additional principal with respect to any applicable period in which the increased interest rate remains in effect. Pursuant to a notice dated November 2, 2020, the holders of a majority in principal amount of the outstanding 2023 Series C ~~Secured Convertible~~ Notes elected to increase the interest rate payable on the 2023 Series C ~~Secured Convertible~~ Notes from 9.5% to 18.0%. The Company convened and adjourned a special meeting of stockholders on October 22, 2020, and further adjourned such special meeting on November 11, 2020 and November 25, 2020, due to a lack of quorum. The special meeting of stockholders was held on December 16, 2020, pursuant to which the stockholders of the Company approved the holders of the 2023 Series C ~~Secured Convertible~~ Notes beneficially owning shares of common stock without being subject to the Nasdaq Change of Control Cap. As a result of the approval, the interest rate payable on the 2023 Series C ~~Secured Convertible~~ Notes was decreased to 9.5%.

The 2023 Series C Notes are convertible at an initial conversion price per share of Common Stock equal to $2.78. The Series C holders are entitled to convert principal and accrued, unpaid interest on the Notes into, at the Company’s election, cash, shares of the Company’s common stock (the “Common Stock”), or a combination thereof, subject to certain limitations and adjustments under certain circumstances. The initial conversion price represents a conversion premium of 20% to the average daily volume weighted average price of the Company's common stock for the ten consecutive trading day period ended and including July 17, 2020. The 2023 Series C Notes are not redeemable by the Company, but the Company has the right to force conversion of the 2023 Series C Notes if the Company’s per-share stock price exceeds the conversion price of the 2023 Series C Notes by 100% for a period of time after January 1, 2022, by 75% or a period of time after July 1, 2022, and by 50% for a period of time after January 1, 2023.

In connection with the issuance of the 2023 Series C ~~Secured Convertible~~ Notes, the Company and certain of the Company’s material U.S. subsidiaries (the “Guaranteeing U.S. Subsidiaries”) granted a third lien security interest in substantially all of their respective assets. Teligent Canada Inc., a subsidiary of the Company organized under the laws of the Province of British Columbia (“Teligent Canada”), also granted a third lien security interest in substantially all of its assets. The security interests granted by the Company, the Guaranteeing U.S. Subsidiaries and Teligent Canada are subordinate to the security interests granted to the agents under the Senior Credit Facilities.

The 2023 Series C Notes provide for customary events of default. In the case of certain events of default, either the trustee or noteholders holding no less than 25% of the aggregate principal amount outstanding under the 2023 Series C Notes may declare all of the outstanding principal amount of the 2023 Series C Notes and accrued and unpaid interest, if any, to be immediately due and payable. Upon certain events of bankruptcy, insolvency, or reorganization of the Company or certain of its subsidiaries, the outstanding principal amount of the 2023 Series C Notes and accrued and unpaid interest, if any, will become automatically immediately due and payable.

The exchange of $35.9 million in aggregate principal amount, plus accrued but unpaid interest of the Company's outstanding 7.0% Cash / PIK 2023 Series B Notes and $8.2 million in aggregate principal amount, plus accrued but unpaid interest thereon, of the Company's outstanding 2023 Series A Notes was considered a debt extinguishment under ASC 470-50. The 2023 Series A Notes and 2023 Series B Notes were accounted for under cash conversion guidance in ASC 470-20, which requires the Company to allocate the fair value of the consideration transferred upon settlement to the extinguishment of the liability component and the reacquisition of the equity component. In accordance with the aforementioned guidance, the Company allocated $19.3 million of 2023 Series A Notes and $0.5 million of 2023 Series B Notes to the extinguishment of the liability component equal to the fair value of that component immediately before extinguishment and recognized a $11.8 million extinguishment gain in the gain on debt restructuring line on the Condensed Consolidated Statement of Operations during the three months ending September 30, 2020. The extinguishment gain was measured as the difference between (i) the fair value of the liability component immediately before derecognition and (ii) the net carrying amount of the liability component (which is already net of any unamortized debt issuance costs). The Company recorded a $16.2 million reduction of Additional Paid in Capital in connection with the extinguishment of 2023 Series A Notes and 2023 Series B Notes. In addition, the Company paid $1.8 million in lender fees and $2.2 million in third party fees of which $1.2 million are included in the gain on debt restructuring line of the Condensed Consolidated Statement of Operations during the three months ending September 30, 2020 and $1.0 million attributable to the equity component is recorded in APIC.

In accordance with accounting for convertible debt within the cash conversion guidance of ASC 470-20, the Company allocated the principal amount of the 2023 Series C Notes between its liability and equity components. The carrying amount of the liability component was determined by measuring the fair value of a similar debt instrument of similar credit quality and maturity that did not have the conversion feature. The carrying amount of the equity component, representing the embedded conversion option, was determined by deducting the fair value of the liability component from the initital proceeds ascribed to the 2023 Series C Notes as a whole. The equity component was recorded to additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of 25

29In accordance with accounting for convertible debt within the cash conversion guidance of ASC 470-20, the Company allocated the principal amount of the 2023 Series C Notes between its liability and equity components. The carrying amount of the liability component was determined by measuring the fair value of a similar debt instrument of similar credit quality and maturity that did not have the conversion feature. The carrying amount of the equity component, representing the embedded conversion option, was determined by deducting the fair value of the liability component from the initial proceeds ascribed to the 2023 Series C Notes as a whole. The equity component was recorded to additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the 2023 Series C Notes over the carrying amount of the liability component (inclusive of the put feature, see Note 9) was recorded as a debt discount of $14.6 million, and is being amortized to interest expense using the effective interest method through the maturity date.

On January 27, 2021 (the ~~principal~~"Modification ~~amount~~Date"), ofthe Company entered into a recapitalization and equitization transaction ("the ~~2023~~Debt Exchange") pursuant to the Exchange Agreement between the Company, the Series C ~~notes~~Noteholders ~~over~~and ~~the~~Ares ~~carrying~~Capital ~~amount~~Corporation, ofwhereby the ~~liability~~holders ~~component~~of ~~(inclusive~~all of the ~~put~~Company’s ~~feature,~~2023 ~~see~~Series ~~Note~~C 9)Notes ~~was~~agreed ~~recorded~~to asexchange aan ~~debt~~aggregate ~~discount~~ of approximately $1450.63 million of outstanding 2023 Series C Notes principal and accrued interest, for an aggregate of 29,862,641 shares of the Company’s common stock (the “Exchange Shares”). The Company’s common stock have been publicly traded at Nasdaq stock exchange starting from April 2016, and isas ~~being~~of ~~amortized~~the Modification Date the market price of the Company’s common stock was equal to ~~interest~~$0.90 ~~expense~~per ~~using~~share. The Series C Equitization resulted in the ~~effective~~extinguishment ~~interest~~of ~~method~~all ~~through~~of our obligations under the ~~maturity~~Indenture, ~~date~~dated July 20, 2020, between the Company and Wilmington Trust, National Association, as trustee and collateral agent.

2023 Series D Convertible Notes

On September 22, 2020, the Company completed the issuance of approximately $27.5 million aggregate principal amount of 2023 Series D Convertible Notes (the "2023 Series D Notes") in exchange for approximately $59.0 million in aggregate principal amount, plus accrued but unpaid interest, of 2023 Series A ~~Convertible~~ Notes, giving effect to a 53.4% discount on the principal amount of the 2023 Series A ~~Convertible~~ Notes exchanged. The Company also issued approximately $0.4 million aggregate principal amount of the 2023 Series D ~~Convertible~~ Notes in exchange for approximately $0.5 million in aggregate principal amount, plus accrued but unpaid interest, of the Company’s outstanding 2023 Series B ~~Convertible~~ Notes, giving effect to a 31.9% discount on the principal amount of the 2023 Series B ~~Convertible~~ Notes exchanged.

Following the issuance of the 2023 Series D ~~Convertible~~ Notes, all amounts owed with respect to the 2023 Series A ~~Convertible~~ Notes and 2023 Series B ~~Convertible~~ Notes had been paid and the related indentures and the Company’s obligations thereunder were satisfied and discharged.

Holders of the 2023 Series D ~~Convertible~~ Notes are entitled to convert principal and accrued, unpaid interest on the 2023 Series D ~~Convertible~~ Notes into, at the Company’s election, cash, shares of the Company’s common stock, or a combination thereof, subject to certain limitations, at an initial conversion price per share of common stock equal to $1.50, subject to adjustment under certain circumstances. Since the original issuance of the 2023 Series D ~~Convertible~~ Notes on September 22, 2020 and continuing through ~~December~~March 31, ~~2020~~2021, the holders thereof have converted $2427.56 million principal amount of 2023 Series D ~~Convertible~~ Notes into a total of 1618.4 million shares of common stock. The 2023 Series D ~~Convertible~~ Notes are not redeemable by the Company.

The indenture relating to the 2023 Series D ~~Convertible~~ Notes provides for customary events of default. In the case of certain events of default, either the trustee or noteholders holding more than 25% of the aggregate principal amount outstanding under the 2023 Series D ~~Convertible~~ Notes may declare all of the outstanding principal amount of the 2023 Series D ~~Convertible~~ Notes and accrued and unpaid interest, if any, to be immediately due and payable. Upon certain events of bankruptcy, insolvency, or reorganization of the Company or certain of its subsidiaries, the outstanding principal amount of the 2023 Series D ~~Convertible~~ Notes and accrued and unpaid interest, if any, will become automatically and immediately due and payable.

The exchange of the $59.0 million of the 2023 Series A Notes and $0.5 million of 2023 Series B Notes for $27.9 million of aggregate principal amount of 2023 Series D Convertible Notes represented a troubled debt restructuring ("TDR"). In accordance with ASC 470-60, as the exchange transaction involved only a modification of terms and did not involve a transfer of assets or grant of an equity interest, the Company accounted for the exchange transaction prospectively from the time of the restructuring and accordingly recorded the 2023 Series D Convertible Notes at the carrying amount of the 2023 Series A Notes and 2023 Series B Notes. Furthermore, as the maximum total undiscounted future cash payments equal or exceed the carrying amount of the 2023 Series D Convertible Notes, no gain was recognized related to the exchange transaction. The Company recorded the 2023 Series D Notes in the amount of $50.1 million which equals the sum of the Series A and Series B Notes carrying amounts as of the 2023 Series D Notes issuance date. The $0.6 million of 2023 Series D Notes issuance costs were expensed in the third quarter and reported in gain on debt restructuring in the Condensed Consolidated Statement of Operations.26

The exchange of the $59.0 million of the 2023 Series A Notes and $0.5 million of 2023 Series B Notes for $27.9 million of aggregate principal amount of 2023 Series D Notes represented a TDR. In accordance with ASC 470-60, as the exchange transaction involved only a modification of terms and did not involve a transfer of assets or grant of an equity interest, the Company accounted for the exchange transaction prospectively from the time of the restructuring and accordingly recorded the 2023 Series D Notes at the carrying amount of the 2023 Series A Notes and 2023 Series B Notes. Furthermore, as the maximum total undiscounted future cash payments equal or exceed the carrying amount of the 2023 Series D Notes, no gain was recognized related to the exchange transaction. The Company recorded the 2023 Series D Notes in the amount of $50.1 million which equals the sum of the Series A and Series B Notes carrying amounts as of the 2023 Series D Notes issuance date. The $0.6 million of 2023 Series D Notes issuance costs were expensed and reported in gain on debt restructuring in the Condensed Consolidated Statement of Operations for the quarter ended September 30, 2020.

Subsequent to issuance of the 2023 Series D Notes, the holders have started to convert the notes into common stock of the Company. As the conversion features under the 2023 Series D Notes are much more beneficial than the conversion terms of the 2023 Series A Notes and 2023 Series B Notes as discussed above, the Company deemed it appropriate to analogize to the induced conversion guidance associated with instruments subject to cash conversion guidance. In accordance with this guidance, upon each conversion of the 2023 Series D Notes, the Company will recognize an inducement loss equal to the excess of the fair value of the consideration transferred over the fair value of the consideration that would have been issuable under the original conversion terms. The Company will then determine the extinguishment gain/loss by allocating the fair value of consideration issuable under the original terms between (1) the extinguishment of the liability component and (2) the reacquisition of the original instrument’s equity component in accordance with ASC 470-20. The fair value of the liability component will be allocated to the liability component and compared with the net carrying amount of the liability component in the determination of a gain or loss upon debt extinguishment. Any remaining amount of the fair value of consideration issuable under the original terms will be allocated to the equity component. During the three months ended ~~September~~March 3031, ~~2020~~2021, $13.51 million of 2023 Series D Notes were converted into the Company’s common stock at a 666.6667 conversion rate per $1,000 principal amount of 2023 Series D Notes. As a result, the Company recognized an inducement loss of $01.79 million and an extinguishment gain of $25.74 million during the three months ended March 31, 2021. In connection with the accounting for these conversion transactions, no amount was allocated to the equity component as the fair value of the liability component exceeded the fair value of the consideration issuable under the original terms.

Senior Credit Facilities

On December 13, 2018, the Company entered into: (i) a First Lien Revolving Credit Agreement, by and among the Company, as the borrower, certain of our subsidiaries, as guarantors, the lenders from time to time party thereto, and ACF Finco I LP, as administrative agent (the “First Lien Agent”) (as amended on October 31, 2019, the “First Lien Credit Agreement”) and (ii) a Second Lien Credit Agreement, by and among us, as the borrower, certain of our subsidiaries, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation, as administrative agent (the “Second Lien Agent”) (as amended on February 8, 2019, June 29, 2019 and October 31, 2019, the “Second Lien Credit Agreement” and, together with the First Credit Agreement, the “Senior Credit Facilities”). The Senior Credit Facilities consist of a first lien asset based revolving credit facility of up to $25.0 million ("Revolver") and an aggregate of $80.0 million in original principal amount of second lien term loans consisting of a $50.0 million initial term loan and a $30.0 million delayed draw term loan A (collectively, the “Term Loans”). The Senior Credit Facilities also included a $15.0 million delayed draw term loan B commitment, which remained undrawn and expired on October 31, 2019. As of September 30, 2020, $25.0 million was drawn under the Revolver and $99.2 million of Term Loans were outstanding. The Revolver was fully drawn in 2019. The Company extended commitments related to undrawn amounts of the Delayed Draw Term Loan A from June 30, 2019 to December 13, 2019, pursuant to an amendment the Company entered with the Second Lien Agent on July 18, 2019. The extended Delayed Draw Term Loan A was subsequently drawn down by the Company in December 2019. Drawn amounts under the Delayed Draw Term Loans mature at the same time as the Initial Term Loan. The Term Loans mature on the earliest to occur of June 23, 2024 and the date of that is 181 days prior to the maturity date of each of (x) the 2023 Notes and (y) the 2023 Series B Notes. The Revolver matures on the earliest to occur of the June 23, 2024 and the date of that is 91 days prior to the maturity date of each of (x) the 2023 Notes and (y) the 2023 Series B Notes. The Company’s ability to borrow under the Revolver is subject to a borrowing base determined based upon eligible inventory, eligible equipment, eligible real estate and eligible receivables. The Senior Credit Facilities are secured by substantially all of the Company’s assets. All of the Company’s debt is subordinated to the Senior Credit Facilities. The liens securing the Term Loans are subordinate to the liens securing the Revolver. The Senior Credit Facilities had customary financial and non-financial covenants, including affirmative, negative and reporting covenants, representations and warranties, and events of default, including cross-defaults on other material indebtedness, as well as events of default triggered by a change of control and certain actions initiated by the FDA which were superseded by the amendments noted below. The financial covenants consisted of a minimum revenue test, a minimum adjusted EBITDA test and a maximum total net leverage ratio.27

On December 13, 2018, the Company entered into: (i) a First Lien Revolving Credit Agreement, by and among the Company, as the borrower, certain of our subsidiaries, as guarantors, the lenders from time to time party thereto, and ACF Finco I LP, as administrative agent (the “First Lien Agent”) (as amended on October 31, 2019, the “First Lien Credit Agreement”) and (ii) a Second Lien Credit Agreement, by and among us, as the borrower, certain of our subsidiaries, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation, as administrative agent (the “Second Lien Agent”) (as amended on February 8, 2019, June 29, 2019 and October 31, 2019, the “Second Lien Credit Agreement” and, together with the First Credit Agreement, the “Senior Credit Facilities”). The Senior Credit Facilities consist of a first lien asset based revolving credit facility of up to $25.0 million ("Revolver") and an aggregate of $80.0 million in original principal amount of second lien term loans consisting of a $50.0 million initial term loan and a $30.0 million delayed draw term loan A (collectively, the “Term Loans”). The Senior Credit Facilities also included a $15.0 million delayed draw term loan B commitment, which remained undrawn and expired on October 31, 2019. As of September 30, 2020, $25.0 million was drawn under the Revolver and $83.5 million of Term Loans were outstanding. The Revolver was fully drawn in 2019. The Company extended commitments related to undrawn amounts of the Delayed Draw Term Loan A from June 30, 2019 to December 13, 2019, pursuant to an amendment the Company entered with the Second Lien Agent on July 18, 2019. The extended Delayed Draw Term Loan A was subsequently drawn down by the Company in December 2019. Drawn amounts under the Delayed Draw Term Loans mature at the same time as the Initial Term Loan. The Term Loans mature on the earliest to occur of June 23, 2024 and the date of that is 181 days prior to the maturity date of each of (x) the 2023 Notes and (y) the 2023 Series B Notes. The Revolver matures on the earliest to occur of the June 23, 2024 and the date of that is 91 days prior to the maturity date of each of (x) the 2023 Notes and (y) the 2023 Series B Notes. The Company’s ability to borrow under the Revolver is subject to a borrowing base determined based upon eligible inventory, eligible equipment, eligible real estate and eligible receivables. The Senior Credit Facilities are secured by substantially all of the Company’s assets. All of the Company’s debt is subordinated to the Senior Credit Facilities. The liens securing the Term Loans are subordinate to the liens securing the Revolver. The Senior Credit Facilities had customary financial and non-financial covenants, including affirmative, negative and reporting covenants, representations and warranties, and events of default, including cross-defaults on other material indebtedness, as well as events of default triggered by a change of control and certain actions initiated by the FDA which were superseded by the amendments noted below. The financial covenants consisted of a minimum revenue test, a minimum adjusted EBITDA test and a maximum total net leverage ratio.

The Revolver bore interest at a fluctuating rate of interest equal to one, two, three or six-month LIBOR plus a margin of 3.75% or a rate based on the prime rate plus a margin of 2.75%. The Term Loans bore interest at a fluctuating rate of interest equal to one, two, three or six-month LIBOR plus a margin of 8.75% or a rate based on the prime rate plus a margin of 7.75%. Interest on the Senior Credit Facilities was payable in cash quarterly in arrears (or more frequently in connection with customary LIBOR interest provisions), provided, that the Company may elect (and has covenanted to the lenders under its First Lien Credit Agreement to) pay interest on the Term Loans in kind until the earlier to occur of the date upon which Company has provided financial statements demonstrating twelve-months of revenue of at least $125.0 million and (ii) December 28, 2020.

Amounts drawn under the Revolver may be prepaid at the option of the Company without premium or penalty, subject, in the case of acceleration of the Revolver or termination or reduction of the revolving credit commitments thereunder, to certain call protections which vary depending on the time at which such prepayments are made. Amounts drawn under the Revolver are subject to mandatory prepayment to the extent that aggregate extensions under the Revolver exceed the lesser of the revolving credit commitment then in effect and the borrowing base then in effect, and upon the occurrence of certain events and conditions, including non-ordinary course asset dispositions, receipt of certain insurance proceeds and condemnation awards and issuances of certain debt obligations. Amounts outstanding under the Term Loans may be prepaid at the option of the Company subject to applicable premiums, including a make-whole premium, and certain call protections which vary depending on the time at which such prepayments are made. Subject to payment of outstanding obligations under the Revolver as a result of any corresponding mandatory prepayment requirements thereunder, amounts outstanding under the Term Loans are subject to mandatory prepayment upon the occurrence of certain events and conditions, including non-ordinary course asset dispositions, receipt of certain insurance proceeds and condemnation awards, issuances of certain debt obligations and a change of control transaction.

31In connection with the Revolver, the Company incurred a debt discount of $0.5 million and debt issuance costs of $0.3 million. The debt discount is due to annual fees and lender fees paid on the initial drawdown of $15.0 million. The debt issuance costs and debt discount are recorded as an asset on the Consolidated Balance Sheet and are amortized to interest expense using the straight-line method through the estimated Revolver maturity date. The annual fees related to the Revolver and the Initial Term Loan are amortized to interest expense using the straight-line method over the annual period they relate to. In connection with the Initial Term Loan and Delayed Draw Term Loan A, the Company incurred a debt discount of $1.8 million and debt issuance issue costs of $0.8 million. The debt discount is due to lender fees paid on the

certain call protections which vary depending on the time at which such prepayments are made. Amounts drawn under the Revolver are subject to mandatory prepayment to the extent that aggregate extensions under the Revolver exceed the lesser of the revolving credit commitment then in effect and the borrowing base then in effect, and upon the occurrence of certain events and conditions, including non-ordinary course asset dispositions, receipt of certain insurance proceeds and condemnation awards and issuances of certain debt obligations. Amounts outstanding under the Term Loans may be prepaid at the option of the Company subject to applicable premiums, including a make-whole premium, and certain call protections which vary depending on the time at which such prepayments are made. Subject to payment of outstanding obligations under the Revolver as a result of any corresponding mandatory prepayment requirements thereunder, amounts outstanding under the Term Loans are subject to mandatory prepayment upon the occurrence of certain events and conditions, including non-ordinary course asset dispositions, receipt of certain insurance proceeds and condemnation awards, issuances of certain debt obligations and a change of control transaction.28

In connection with the Revolver, the Company incurred a debt discount of $0.5 million and debt issuance costs of $0.3 million. The debt discount is due to annual fees and lender fees paid on the initial drawdown of $15.0 million. The debt issuance costs and debt discount are recorded as an asset on the Consolidated Balance Sheet and are amortized to interest expense using the straight-line method through the estimated Revolver maturity date. The annual fees related to the Revolver and the Initial Term Loan are amortized to interest expense using the straight-line method over the annual period they relate to. In connection with the Initial Term Loan and Delayed Draw Term Loan A, the Company incurred a debt discount of $~~1.8 million and debt issuance issue costs of $0.8 million. The debt discount is due to lender fees paid on the Initial Term Loan of $~~50.0 million and drawdown of Delayed Draw Term Loan A of $20.0 million. The debt issuance costs and debt discount costs are amortized to interest expense using the effective interest rate method through the estimated maturity date. In addition, the Company incurred $0.5 million of debt issuance costs related to the commitment fees paid to the lenders for the undrawn amounts of the Delayed Draw Term Loans. These debt issuance costs were recorded as an asset on the balance sheet and amortized on a straight-line basis over the access period of the Delayed Draw Term Loans through June 30, 2019.

The Initial Term Loan of $50.0 million and $15.0 million of the Revolver were drawn by the Company on December 13, 2018. On December 21, 2018, the Company drew $20.0 million of the Delayed Draw Term Loan A. In January 2019, the Company drew down $5.0 million and subsequently the remaining $5.0 million under the Revolver were drawn down by the Company in April 2019. On September 18, 2019, pursuant to terms of the First Lien Credit Agreement, the Company borrowed an advance in the aggregate principal amount of $2.5 million (the “Protective Advance”). The Protective Advance is secured Obligations under the First Lien Credit Agreement and bears interest at the rate applicable to the Revolver. The Protective Advance was subsequently repaid in November 2019 along with a repayment fee of $0.1 million. The Company drew down the remaining $10.0 million under its borrowing capacity of Delayed Draw Term Loan A before its expiry in December of 2019. The $15.0 million Delayed Draw Term Loan B expired upon the issuance of the 2023 Series B Notes, prior to the Company drawing down any monies.

The Term Loans are governed by the Second Lien Credit Agreement. The Term Loans include a 24-month paid-in-kind interest option available to the Company should it choose to defer cash payments in order to maintain the liquidity needed to continue launching new products, and preparing for an FDA prior approval inspection of its new injectable manufacturing facility. The Company has elected the paid-in-kind interest option and increased the principal balance of Term Loans by $32.50 million ~~and $19.2 million for the three months and since inception~~ through the period ended ~~September~~March 3031, ~~2020~~2021, respectively.

On April 6, 2020 (the “Amendment Closing Date”), the Company entered (i) Amendment No. 2 of the Revolver and Amendment No. 4 of the Term Loans, effective as of December 31, 2019. The amendments collectively among other things, (i) increase the interest rates, (ii) reset certain prepayment premiums and modify the terms of certain mandatory prepayments and (iii) modify certain financial covenant levels inclusive of the disposition of prior covenants as of and for the period ended December 31, 2019. The additions and changes to financial covenants set forth in both Amendments are: (i) a new minimum net revenue covenant is added that is tested on the last day of each fiscal quarter from March 31, 2020 until the quarter ending December 31, 2020, (ii) resets a minimum consolidated adjusted EBITDA covenant that is tested on the last day of each fiscal quarter ending during the period from March 31, 2021 to maturity, (iii) eliminates a total net leverage covenant and (iv) adds a minimum liquidity covenant tested at all times during the term of the Senior Credit Facilities.

The associated increase in interest rates are effective as of the Amendment Closing Date. The Revolver bears interest at a fluctuating rate of interest equal to the one, two, three or six-month LIBOR plus a margin of 5.5% or a rate based on the prime rate plus a margin of 4.5%, with a LIBOR floor of 1.5%. The Term Loans bear interest at a fluctuating rate of interest equal to the one, two, three or six-month LIBOR plus a margin of 13.0% or a rate based on the prime rate plus a margin of 12.0%, with a LIBOR floor of 1.5%. Interest on the Senior Credit Facilities is payable in cash quarterly in arrears (or more frequently in connection with customary LIBOR interest provisions), provided, that the Company may elect (and has covenanted to the lenders under its Senior Credit Facilities and subsequent amendments thereto) to pay interest on the Term Loans in kind through December 13, 2021 but only if the following occurs: (1) the Company receives a “warning letter close-out letter” from the Federal Drug Administration in response to corrective actions taken by the Company since receipt of the warning letter in November 2019 and (2) the Company receives a written recommendation from the Federal Drug Administration setting forth its approval decision in respect of the pre-approval inspection for commercial production on the newly installed injectable line at the Company’s New Jersey facility. If only one of those items occurs by December 13, 2020, then the Company may still elect to pay interest in kind during 2021, but only from the time the second condition has been satisfied until December 13, 2021. Thereafter, a portion of interest on the loans accruing at a rate of 4.25% per annum may continue to be paid in kind.

32Both amendments provide that in the event of receipt of net proceeds from a disposition triggering a mandatory prepayment, net proceeds of such disposition will be applied as follows: (i) first, to be retained by the Company or applied to amounts outstanding under the First Lien Credit Agreement until such time as liquidity of the Company and its subsidiaries equals $10.0 million, (ii) next to amounts outstanding under the Revolver (without a permanent reduction in the revolving loan commitments of the lenders) until such amounts are paid in full (with the first lien administrative agent having the right to waive such prepayment, in which event, such net proceeds are applied to amounts outstanding under the Second Lien Credit Agreement), and (iii) finally, to amounts outstanding under the Term Loans. In addition, pursuant

interest equal to the one, two, three or six-month LIBOR plus a margin of 13.0% or a rate based on the prime rate plus a margin of 12.0%, with a LIBOR floor of 1.5%. Interest on the Senior Credit Facilities is payable in cash quarterly in arrears (or more frequently in connection with customary LIBOR interest provisions), provided, that the Company may elect (and has covenanted to the lenders under its Senior Credit Facilities and subsequent amendments thereto) to pay interest on the Term Loans in kind through December 13, 2021 but only if the following occurs: (1) the Company receives a “warning letter close-out letter” from the Federal Drug Administration in response to corrective actions taken by the Company since receipt of the warning letter in November 2019 and (2) the Company receives a written recommendation from the Federal Drug Administration setting forth its approval decision in respect of the pre-approval inspection for commercial production on the newly installed injectable line at the Company’s New Jersey facility. If only one of those items occurs by December 13, 2020, then the Company may still elect to pay interest in kind during 2021, but only from the time the second condition has been satisfied until December 13, 2021. Thereafter, a portion of interest on the loans accruing at a rate of 4.25% per annum may continue to be paid in kind.29

~~Both amendments provide that in the event of receipt of net proceeds from a disposition triggering a mandatory prepayment, net proceeds of such disposition will be applied as follows: (i) first,~~ to ~~be retained by~~ the Company or applied to amounts outstanding under the First Lien Credit Agreement until such time as liquidity of the Company and its subsidiaries equals $10.0 million, (ii) next to amounts outstanding under the Revolver ~~(without a permanent reduction in the revolving loan commitments of the lenders) until such amounts are paid in full (with the first lien administrative agent having the right to waive such prepayment~~, ~~in which event, such net proceeds are applied to amounts outstanding under~~ the ~~Second Lien Credit Agreement), and (iii) finally, to amounts outstanding under the Term Loans. In addition, pursuant to the Revolver, the~~ Company has agreed at all times to maintain book cash of the Company and its subsidiaries not in excess of $10.0 million with any excess being required to prepay the outstanding obligations under the Revolver.

The Company was in compliance with its financial covenants as of ~~September~~March 3031, ~~2020~~2021. If the Company fails to comply with its trailing twelve months revenue covenant, an event of default under the Credit Agreement would be triggered and its obligations under the Senior Credit Facilities or other agreements (including as a result of cross-default provisions) may be accelerated. As such, as of June 30, 2020, the Company recorded a $5.6 million derivative liability associated with certain mandatory prepayment penalties and the recognition of future interest payments in the anticipation of a potential future default on its Senior Credit Facilities. The Company reversed the event of default liability in the third quarter of 2020 based on the 2023 Series C ~~Senior~~ Notes offering which terminates the previous revenue covenant under the Senior Credit Facilities, according to which the Company recognized a $5.6 million gain in change in the fair value of the derivative liability line on the Condensed Consolidated Statement of Operations for ~~three~~the ~~and~~year ~~nine months~~ ended ~~September~~December 3031, 2020 ~~(Note 9)~~.

After the modification, the effective interest rates, inclusive of the debt discounts and issuance costs for the Initial Term Loan and Delayed Draw Term Loan A were between 16.6% and 17.7% and for the various borrowing tranches of the Revolver, were between 9.6% and 10.9%.

In connection with the Term Loan Amendments dated April 6, 2020, the Company issued to the Term Loan lenders certain Warrants to purchase up to, in the aggregate, 538,995 of post reverse stock split shares of the Company’s common stock at an exercise price of $0.01 per share. The Warrants initially were recorded at fair value upon issuance and classified as a liability as the Company did not have sufficient authorized unissued shares for the Warrants’ exercise. The Warrants were remeasured to fair value up to the reverse stock split date, with any fair value adjustments recognized in the condensed consolidated statements of operations. The Warrants were reclassified as equity at their fair value upon the reverse stock split date and will not be remeasured subsequently. The estimated fair value of the Warrants on the date of issuance of $1.4 million was recorded as a debt discount. The Warrants had a fair value of $2.2 million as of the reverse stock split date which was reclassified to equity. The Warrants are exercisable at any time after the reverse stock split which occurred on May 28, 2020 and will remain exercisable, in whole or in part, for a period of 5 years from the issuance date. As of ~~September~~March 3031, ~~2020~~2021, all 538,995 Warrants remain outstanding (Note 9).

The number of shares issuable upon the exercise of the Warrants is subject to customary adjustments upon the occurrence of certain events, including (i) payment of a dividend or distribution to holders of shares of the Company’s common stock payable in shares of the Company’s common stock, (ii) a subdivision, capital reorganization or reclassification of the Company’s common stock or (iii) a merger, sale or other change of control transaction.

On July 20, 2020, the Company entered into (i) a Consent and Amendment No. 3 to First Lien Revolving Credit Agreement (the “First Lien Amendment”), and (ii) a Consent and Amendment No. 5 to Second Lien Credit Agreement (the “Second Lien Amendment”). The First Lien Amendment amends the First Lien Credit Agreement to, among other things, (i) permit the issuance of the 2023 Series C Notes and the other transactions contemplated by the Indenture, (ii) modify the terms of certain mandatory prepayments, (iii) modify certain negative covenants and (iv) modify certain financial covenants. The Second Lien Amendment amends the Second Lien Credit Agreement to, among other things, (i) permit the issuance of the 2023 Series C Notes and the other transactions contemplated by the Indenture, (ii) modify the terms of certain mandatory prepayments, (iii) modify certain negative covenants, (iv) modify certain financial covenants and (v) extend the time period in which the Company may elect to pay interest in kind.

33In connection with the transactions contemplated by the Second Lien Amendment, on July 20, 2020, the Company issued to the lenders party to the Second Lien Credit Agreement certain Warrants to purchase shares of the Company’s common stock. The Warrants are exercisable for up to, in the aggregate, 134,667 shares of the Company’s common stock at an exercise price of $0.01 per share of common stock. The Warrants are immediately exercisable upon issuance and will remain exercisable, in whole or in part, for a period of five years from the original issuance date. The number of shares issuable upon the exercise of the Warrants is subject to customary adjustments upon the occurrence of certain events, including (i) payment of a dividend or distribution to holders of shares of the Company’s common stock payable in shares of the Company’s common stock, (ii) a subdivision, capital reorganization or reclassification of the Company’s common stock or (iii) a merger, sale or other change of control transaction. Fair Value of the Warrants of $0.3 million was recorded as a debt discount with credit to additional paid in capital. As the Warrants are classified in equity, they are not subject to subsequent remeasurement. As of March 31, 2021, all 134,667 Warrants remain outstanding (Note 9).

things, (i) permit the issuance of the 2023 Series C Notes and the other transactions contemplated by the Indenture, (ii) modify the terms of certain mandatory prepayments, (iii) modify certain negative covenants and (iv) modify certain financial covenants. The Second Lien Amendment amends the Second Lien Credit Agreement to, among other things, (i) permit the issuance of the 2023 Series C Notes and the other transactions contemplated by the Indenture, (ii) modify the terms of certain mandatory prepayments, (iii) modify certain negative covenants, (iv) modify certain financial covenants and (v) extend the time period in which the Company may elect to pay interest in kind.

In connection with the transactions contemplated by the Second Lien Amendment, on July 20, 2020, the Company issued to the lenders party to the Second Lien Credit Agreement certain Warrants to purchase shares of the Company’s common stock. The Warrants are exercisable for up to, in the aggregate, 134,667 shares of the Company’s common stock at an exercise price of $0.01 per share of common stock. The Warrants are immediately exercisable upon issuance and will remain exercisable, in whole or in part, for a period of five years from the original issuance date. The number of shares issuable upon the exercise of the Warrants is subject to customary adjustments upon the occurrence of certain events, including (i) payment of a dividend or distribution to holders of shares of the Company’s common stock payable in shares of the Company’s common stock, (ii) a subdivision, capital reorganization or reclassification of the Company’s common stock or (iii) a merger, sale or other change of control transaction. Fair Value of the Warrants of $0.3 million was recorded as a debt discount with credit to additional paid in capital. As the Warrants are classified in equity, they are not subject to subsequent remeasurement. As of September 30, 2020, all 134,667 Warrants remain outstanding (Note 9).

The terms and assumptions used to determine the fair value of the Warrants were as follows:


Measurement Date	July 20, 2020
Stock Price	$2.45
Expected Life in Years	5.00
Annualized Volatility	79.5	%
Discount Rate - Bond Equivalent Yield	0.3	%

AtOn ~~September~~January 27, 2021 (the "Amendment Date"), in connection with the Exchange Agreement between the Company, the Series C Secured Convertible Noteholders, and Ares, the Company entered into a recapitalization and equitization transaction, whereby all of the PIK interest accrued as of the Amendment Date in the amount of $24.5 30million under the Second Lien Credit Agreement was converted into 85,412 ~~2020~~shares of the Company's newly created Series D preferred stock (see Note 7), which are convertible into 17,082,285 shares of the Company's common stock. Additionally, in connection with the Debt Exchange, the Company entered into Amendment No. 4 of the Revolver (the “FCL Amendment”) and ~~December~~Amendment No. 6 of the Term Loans (the “SCL Amendment” together with the FCL Amendment, the “Amendment”). Pursuant to the SCL Amendment, certain mandatory prepayment provisions, financial and negative covenants were modified, the Debt Exchange transaction was permitted, and a new Second Lien Delayed Draw Term Loan C Facility (the “Delayed Draw Term Loan C”) in the aggregate principal amount of up to $4.6 million was provided for, which will be made available to the Company until December 31, ~~2019~~2021, subject to satisfaction of certain conditions. Pursuant to the ~~net~~FCL Amendment, certain mandatory prepayment provisions, financial and negative covenants were modified, and the Company was permitted borrowing under the Revolver, subject to availability, provided that such borrowings are only available until the commitments of the lenders under the Delayed Draw Term Loan C Facility have been reduced to zero. Prior to the Amendment Date, certain events of default occurred under the FCL agreement and SCL agreement. Pursuant to the Amendment, all defaults identified as of the Amendment Date were waived. The Debt Exchange, in the aggregate, represented a TDR, and the TDR did not result in a gain recognition. As a result, a new effective interest rate was established based on the carrying value of the original debt, ~~and~~net of the ~~remaining~~fair ~~unamortized~~value ~~debt~~of ~~discount~~the redeemable convertible Series D preferred stock issued in the TDR and the related issuance costs, ~~are~~getting asaccreted ~~follows:~~to the new carrying amount representing the total amount of the future undiscounted cash flows.

	September 30, 2020		December 31, 2019
Face amount of the 2023 Series A Notes (due May 2023)	$	—	$	66,090
Face amount of the 2023 Series B Notes (due May 2023)	—		34,405
Face amount of the 2023 Series C Notes (due March 2023)	50,323		—
Face amount of the 2023 Series D Notes (due May 2023)	26,396		—
Face amount of the Revolver Credit Facility (due December 2022)	25,000		25,000
Face amount of the 2023 Loan (due February 2023)	99,209		88,464
Total carrying value	200,928		213,959
Less unamortized discounts and debt issuance costs	(23,133)		(27,589)
Deferred gain of the 2023 Series D Notes (due May 2023)	$	21,023	$	—
Total net carrying value	$	198,818	$	186,370

At March 31, 2021 and December 31, 2020, the net carrying value of the debt and the remaining unamortized debt discount and issuance costs are as follows:



	March 31, 2021		December 31, 2020


Face amount of the 2023 Series C Notes (due March 2023)	$	—	$	50,323
Face amount of the 2023 Series D Notes (due May 2023)	277		3,352
Face amount of the Revolver Credit Facility (due December 2022)	25,000		25,000
Face amount of the 2023 Loan (due February 2023)	83,515		102,905
Total carrying value	108,792		181,580
Less unamortized discounts and debt issuance costs	(2,957)		(21,778)
Deferred gain on the 2023 Term Loan (due February 2023)	8,312		—
Deferred gain of the 2023 Series D Notes (due May 2023)	20		2,444
Total net carrying value	$	114,167	$	162,246

9. Derivatives

The Company accounts for its derivative instruments in accordance with ASC 815-10, “Derivatives and Hedging”. ASC 815-10 establishes accounting and reporting standards requiring that derivative instruments, including derivative instruments embedded in other contracts, be recorded on the balance sheet as either an asset or liability measured at its fair value. ASC 815-10 also requires that changes in the fair value of derivative instruments be recognized currently in results of operations unless specific hedge accounting criteria are met.

The Company has not entered into hedging activities to date. The Company's derivative liability associated with certain mandatory prepayment penalties and the recognition of future interest payments in the anticipation of a potential future default on its Senior Credit Facilities was remeasured from a $5.3 million at March 31, 2020 to $52.6 million at June 30, 2020. The Company reversed the event of default liability of in the third quarter of 2020 based on the 2023 Series C Senior Notes offering which terminates the previous revenue covenant under the Senior Credit Facilities.

The Company accounted for the put features associated with the Company's 2023 Series C Notes as a derivative under ASC 815, which was valued at $5.5 million initially and subsequently remeasured at $6.7 million as of September 30, 2020 with a change of $1.2 million loss recorded in the fair value of the derivative liability line on the Condensed Consolidated Statement of Operations during the quarter ended September 30, 2020. 31

~~The Company's derivative liability at March 31,~~ 2020 ~~included the embedded convertible option of its 2023 Series B Notes issued on October 31, 2019~~. The ~~derivative~~Company ~~liability~~reversed ~~recorded at~~ the ~~issuance~~event ~~date was $13.5 million, including the $2.0 million accounted for in the TDR, which was subsequently remeasured to $2.8 million as~~ of ~~March~~default ~~31,~~liability ~~2020, with a $4.0 million recognized as a gain on the change in fair value~~ of ~~the derivative~~ in the ~~Company's~~third ~~statement of operations mainly due to a share price decline during the first~~ quarter of 2020 ~~(Note~~based ~~8).~~on ~~On May 28, 2020,~~ the ~~Company~~2023 ~~effectuated~~Series aC ~~one-for-ten~~Senior ~~Reverse~~Notes ~~Stock~~offering ~~Split on its outstanding shares of common stock (Note 2),~~ which ~~allows~~terminates the ~~Company~~previous torevenue ~~have~~covenant ~~sufficient~~under ~~authorized shares to share-settle~~ the ~~embedded~~Senior ~~convertible~~Credit ~~option~~Facilities. The derivative liability had a fair value of $6.3 million as of the reverse stock split date, with a $3.5 million mark-to-market loss recognized on the Condensed Consolidated Statement of Operations during the nine months ended September 30, 2020. On the reverse stock split date, the $6.3 million of the fair value of the derivative liability was reclassed to stockholder's equity without subsequent remeasurement required.

The Company accounted for the put features associated with the Company's 2023 Series C Notes as a derivative under ASC 815, which was valued at $5.5 million at September 30, 2020 and subsequently remeasured at $7.5 million as of December 31, 2020 and $10.7 million as of January 27, 2021. On January 27, 2021, the Company entered into a recapitalization and equitization transaction and the fair value of the derivative liability was reclassed to gain on debt restructuring on the Condensed Consolidated Statement of Operations.

The Company's derivative liability included the embedded convertible option of its 2023 Series B Notes issued on October 31, 2019. The derivative liability recorded at the issuance date was $13.5 million, including the $2.0 million accounted for in the TDR, which was subsequently remeasured to $2.8 million as of March 31, 2020, with a $4.0 million recognized as a gain on the change in fair value of the derivative in the Company's statement of operations mainly due to a share price decline during the first quarter of 2020 (Note 7). On May 28, 2020, the Company effectuated a one-for-ten Reverse Stock Split on its outstanding shares of common stock (Note 2), which allows the Company to have sufficient authorized shares to share-settle the embedded convertible option. The derivative liability had a fair value of $6.3 million as of the reverse stock split date, with a $3.5 million mark-to-market loss recognized on the Condensed Consolidated Statement of Operations during the nine months ended September 30, 2020. On the reverse stock split date, the $6.3 million of the fair value of the derivative liability was reclassed to stockholder's equity without subsequent remeasurement required.

The terms and assumptions used in connection with the valuation of the convertible option of the 2023 Series B Notes were as follows:


	12/31/2019			3/31/2020			5/28/2020
Issuance date	10/31/2019			10/31/2019			10/31/2019
Maturity date	5/1/2023			5/1/2023			5/1/2023
Term (years)	3.33			3.08			2.92
Principal	$	34,405		$	34,405		$	34,405

Seniority	Senior unsecured			Senior unsecured			Senior unsecured
Conversion price	$	7.20		$	7.20		$	7.20

Stock price	$	4.30		$	2.80		$	4.03
Risk free rate	1.6		%	0.3		%	0.2		%

Volatility	47.3		%	55.0		%	62.5		%

In connection with the Term Loan Amendments dated April 6, 2020, the Company issued to the Term Loan lenders certain Warrants to purchase up to, in the aggregate, 538,995 post reverse stock split shares of the Company’s common stock at an exercise price of $0.01 per share. The Warrants initially were recorded at fair value upon issuance and classified as a liability as the Company did not have sufficient authorized unissued shares for the Warrants’ exercise. The Warrants were then remeasured to fair value of $2.2 million up to the reverse stock split date and reclassified as equity with no further remeasurement required. The estimated fair value of the Warrants on the date of issuance of $1.4 million was recorded as a debt discount. As of March 31, 2021, all 538,995 Warrants remain outstanding (Note 8).

issuance and classified as a liability as the Company did not have sufficient authorized unissued shares for the Warrants’ exercise. The Warrants were then remeasured to fair value of $2.2 million up to the reverse stock split date and reclassified as equity with no further remeasurement required. The estimated fair value of the Warrants on the date of issuance of $1.4 million was recorded as a debt discount. As of September 30, 2020, all 538,995 Warrants remain outstanding (Note 8).

The terms and assumptions used to determine the fair value of the Warrants were as follows:


Measurement Date	4/6/2020			5/28/2020
Stock Price	$	2.70		$	4.03
Expected Life in Years	5.00			4.86
Annualized Volatility	77.6		%	79.0		%
Discount Rate- Bond Equivalent Yield	0.4		%	0.3		%

The following table sets forth the Company’s derivative liabilities as presented on the Condensed Consolidated Balance Sheet that were measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2019 and September 30, 2020, respectively. 32

	Quoted Prices in Active markets for Identical Assets and Liabilities	Significant Other Observable Inputs	SignificantUnobservable Inputs		Balance as of		Quoted Prices in Active markets for Identical Assets and Liabilities	Significant Other Observable Inputs		Significant Unobservable Inputs		Balance as of
Descriptions	(Level 1)	(Level 2)	(Level 3)		December 31, 2019		(Level 1)	(Level 2)		(Level 3)		September 30, 2020
Derivative liability related to Series B Convertible Notes	—	—	$	6,776	$	6,776	—	$	—	$	—	$	—
Derivative liabilities related to the Series C Convertible Notes	—	—	—		—		—	—		6,726		6,726
Derivative liabilities related to Warrants	—	—	$	—	$	—	—	$	—	$	—	$	—
Derivative liabilities	—	—	$	6,776	$	6,776	—	$	—	$	6,726	$	6,726

The following table set forth a summary of changes in the fair value of the Company’s Level 3 liabilities for the nine months ended September 30, 2020. Any unrealized gains or losses on the derivative liabilities were recorded in the change in derivative liability line on the Company's Condensed Consolidated Statement of Operations.


	Quoted Prices in Active markets for Identical Assets and Liabilities	Significant Other Observable Inputs	Significant Unobservable Inputs		Balance as of		Quoted Prices in Active markets for Identical Assets and Liabilities	Significant Other Observable Inputs	Significant Unobservable Inputs	Balance as of
Descriptions	(Level 1)	(Level 2)	(Level 3)		December 31, 2020		(Level 1)	(Level 2)	(Level 3)	March 31, 2021

Derivative liabilities related to the Series C Convertible Notes	—	—	7,507		7,507		—	—	—	—

Derivative liabilities	—	—	$	7,507	$	7,507	—	—	—	—

Descriptions	Balance as of 12/31/2019		(Gain) or loss recognized in earnings from Change in Fair Value		Balance as of 3/31/2020		Initial Measurement		(Gain) or loss recognized in earnings from Change in Fair Value		Reclassification to stockholder's equity		Balance as of 6/30/2020		Initial Measurement		(Gain) or loss recognized in earnings from Change in Fair Value		Balance as of 9/30/2020
Fair value of convertible feature of Series B Convertible Notes	$	6,776	$	(3,995)	$	2,781	$	—	$	3,513	$	(6,294)	$	—	$	—	$	—	$	—
Fair value of the derivative liabilities related to the Senior Credit Facilities	—		5,253		5,253		—		318		—		5,571		—		(5,571)		—
Fair value of convertible feature of Series C Convertible Notes	—		—		—		—		—		—		—		5,481		1,245		6,726
Derivative liabilities related to Warrants	—		—		—		1,406		760		(2,166)		—						—
Change in the fair value of derivative liabilities	$	6,776	$	1,258	$	8,034	$	1,406	$	4,591	$	(8,460)	$	5,571	$	5,481	$	(4,326)	$	6,726

The following table set forth a summary of changes in the fair value of the Company’s Level 3 liabilities for the three months ended March 31, 2021. Any unrealized gains or losses on the derivative liabilities were recorded in the change in derivative liability line on the Company's Condensed Consolidated Statement of Operations.


Descriptions	Balance as of 12/31/2020		(Gain) or loss recognized in earnings from Change in Fair Value		(Gain) or loss recognized on debt restructuring		Balance as of 3/31/2021


Fair value of convertible feature of Series C Convertible Notes	7,507		3,186		(10,693)		—

Change in the fair value of derivative liabilities	$	7,507	$	3,186	$	(10,693)	$	—

10. Goodwill and Intangible Assets

Goodwill

The Company assesses the recoverability of the carrying value of goodwill on a reporting unit basis on October 1 of each year, whenever events occur or changes in circumstances indicate the carrying value of goodwill may not be recoverable. There have been no events or changes in circumstances that would indicate the carrying value of goodwill may not be recoverable through ~~September~~March 3031, ~~2020~~2021.

Changes in goodwill during the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 and the year ended December 31, ~~2019~~2020 were as follows:

	Goodwill
Goodwill balance at December 31, 2018	$	470
Foreign currency translation	21
Goodwill balance at December 31, 2019	$	491
Foreign currency translation	~~(12)~~10
Goodwill balance at September 30, 2020	$	479
Goodwill balance at December 31, 2020	$	501
Foreign currency translation	7
Goodwill balance at March 31, 2021	$	508

Intangible Assets

The following sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020.

	September 30, 2020
	Gross CarryingAmount		AccumulatedAmortization		Net CarryingAmount		Weighted AverageRemaining AmortizationPeriod (Years)
Trademarks and Technology	$	34,026	$	(10,630)	$	23,396	10.0
Product acquisition costs	9,708		—		9,708		N/A- See description below
In process research and development ("IPR&D")	388		—		388		N/A- See description below
Customer relationships	3,604		(1,767)		1,837		5.1
Total	$	47,726	$	(12,397)	$	35,329


	March 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Amortization Period (Years)
Trademarks and Technology	$	26,308	$	(8,666)	$	17,642	9.2
Product acquisition costs	25		—		25		N/A- See description below
In process research and development ("IPR&D")	47		—		47		N/A- See description below
Customer relationships	3,713		(1,954)		1,759		4.6
Total	$	30,093	$	(10,620)	$	19,473

December 31, 2019

December 31, 2020

Gross CarryingAmount

AccumulatedAmortization

Net CarryingAmount

Weighted AverageRemaining AmortizationPeriod (Years)

Trademarks and Technology

3928,~~943~~893

(108,~~885~~172)

2920,~~058~~721

109.85

Product acquisition costs

~~13,103~~76

—

~~13,103~~76

N/A- See description below

In-process research and development ("IPR&D")

~~327~~337

—

~~327~~337

N/A- See description below

Customer relationships

3,~~658~~689

(1,~~501~~859)

21,~~157~~830

54.9

Total

5732,~~031~~995

(1210,~~386~~031)

4422,~~645~~964

Changes in intangibles during the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2020~~2021 were as follows (in thousands):

	Trademarks and Technology		Product Acquisition costs		IPR&D		Customer Relationships
Balance at June 30, 2020	$	23,111	$	9,372	$	297	$	1,886
Balance at December 31, 2020	$	20,721	$	76	$	337	$	1,830
Amortization	(~~574~~494)		—		—		(9094)
IPR&D placed in service	—		—		—		—
Loss on impairment	—		—		—		—
Foreign currency translation	~~859~~(2,585)		~~336~~(51)		91(290)		4123
Balance at September 30, 2020	$	23,396	$	9,708	$	388	$	1,837
Balance at March 31, 2021	$	17,642	$	25	$	47	$	1,759
	Trademarks and Technology		Product Acquisition costs		IPR&D		Customer Relationships
Balance at December 31, 2019	$	29,058	$	13,103	$	327	$	2,157
Amortization	(1,766)		—		—		(266)
IPR&D placed in service	—		—		—		—
Loss on impairment	(4,861)		(3,512)		—		—
Foreign currency translation	965		117		61		(54)
Balance at September 30, 2020	$	23,396	$	9,708	$	388	$	1,837

Under the provisions of ASC 360-10-55, the Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company recorded impairment charges of $8.4 million in the first quarter of 2020 related to trademarks and technology of $4.9 million and product acquisition costs of $3.5 million. The Company presented the $8.4 million in the impairment charges line on its Condensed Consolidated Statements of Operations for the three months ended March 31, 2020, accordingly. There were no changes to the assumptions made at the first quarter of this year that would suggest further impairment. The Company did not have impairment triggers during the ~~third~~first quarter of ~~2020~~2021 related to its long-lived assets.

The useful lives of the Company’s intangibles are as follows:


Intangibles Category			Amortizable Life
Product Acquisition Costs			10 years
Trademarks and Technology			15 years
Customer Relationships			10 years

IPR&D and Product Acquisition costs will be amortized over their estimated useful lives once products are commercialized.

11. Stock-Based Compensation

Stock Options

The Company recognized $0.1 million and $0.24 million of compensation expense related to stock options during the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020, respectively, ~~and $0.7 million during the nine months ended September 30, 2020 and 2019, respectively.~~

On May 25, 2016, the Board of Directors approved the Company’s 2016 Equity Incentive Plan (the “2016 Plan”). On May 21, 2018, the Board of Directors adopted, and the Company’s stockholders subsequently approved, an amendment and restatement of the 2016 Plan that increased the number of shares of Common Stock available for grant under such plan to 4,000,000 shares by adding 2,000,000 shares of Common Stock (the "Amended 2016 Plan"). The 4,000,000 shares of Common Stock available for issuance pursuant to the Amended 2016 Plan was reduced to 400,000 shares when the one-for-ten Reverse Stock Split effectuated on May 28, 2020. On July 15, 2020, the Board of Directors adopted and the Company’s stockholders approved an amendment of its existing 2016 Equity Incentive Plan (the "July 2020 Amendment"). The July 2020 Amendment increases the number of shares available to be granted under the 2016 Plan from 400,000 shares to 4,400,000 shares, plus any shares of its common stock that are represented by awards granted under its 1999 Director Plan and 2009 Equity Incentive Plan that are forfeited, expire or are cancelled without delivery of shares of common stock or which result in the forfeiture of shares of common stock back to the Company on or after May 25, 2016. Generally, shares of common stock reserved for awards under the 2016 Plan that lapse or are canceled will be added back to the share reserve available for future awards. However, shares of common stock tendered in payment for an award or shares of common stock withheld for taxes will not be available again for grant. The 2016 Plan provides that no participant may receive awards for more than 1,000,000 shares of common stock in any fiscal year.

As of ~~September~~March 3031, ~~2020~~2021, there were 1,~~362~~379,465 RSUs outstanding, 18,~~561~~742 shares of common stock outstanding and ~~331~~1,~~803~~977,938 stock options under the 2016 Plan. As of December 31, ~~2019~~2020, there were ~~6,268~~181 RSUs outstanding, 1318,~~655~~561 shares of common stock outstanding and ~~283~~249,~~559~~486 stock options outstanding under the 2016 Plan. As of ~~September~~March 3031, ~~2020~~2021, there were a total of 41,~~341~~329,~~349~~630 options available under the 2016 plan after the July 2020 Amendment as discussed above and there were ~~233~~4,~~416~~430,447 options available under the Plan as of December 31, ~~2019~~2020.

In the interest of maintaining consistency with the Company's 2016 Equity Incentive Plan, on March 13, 2017, the Company entered into (i) an amendment to the option agreements governing each option grant currently outstanding under the Company's 2009 Equity Incentive Plan, and (ii) an amendment to the RSU, agreements governing each RSU grant currently outstanding under the 2009 Plan. The amendments provide for the automatic vesting upon a change of control of the Company of each option grant and RSU grant, as applicable, outstanding under the 2009 Plan. The amendments had a de minimis value to the holders as of ~~September~~March 3031, ~~2020~~2021, and therefore no additional stock compensation expense was recognized related to the amendments.

During the three months ended March 31, 2021, a total of 1,754,120 stock-options were granted to officers, other employees and directors under the 2016 Plan. The stock options are eligible to vest on the third anniversary of the grant date based on the continued employment of the recipient and if certain performance requirements have been achieved. No compensation expense was recognized during the quarter ended March 31, 2021 for these performance-based stock options since it is not probable that the performance conditions or criteria will be met.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing formula that uses assumptions noted in the following table. Expected volatilities and risk-free interest rates are based upon the expected life of the grant.

	Nine Months Ended September 30,
Assumptions	2020	2019
Expected dividends	—	—
Risk-free rate	0.20% - 1.60%	1.38%-2.47%
Expected volatility	78.56% - 158.21%	64.3% - 75.2%
Expected term (in years)	3.2 - 3.3 years	3.2 - 3.3 years


	Three Months Ended March 31,
Assumptions	2021	2020
Expected dividends	—	—
Risk-free rate	0.19% - 0.22%	0.85%-1.60%
Expected volatility	165.43% - 166.02%	78.56% - 79.58%
Expected term (in years)	3.2 - 3.3 years	3.2 - 3.3 years

Expected volatility was calculated using the historical volatility of the Company's stock over the expected life of the options. The expected life of the options was estimated based on the Company's historical data. The risk free interest rate is based on U.S. Treasury yields for securities with terms approximating the terms of the grants. Forfeitures are recognized in the period they occur. The assumptions used in the Black-Scholes options valuation model are highly subjective, and can materially affect the resulting valuation.

A summary of option activity under the 1999 Director Stock Option Plan, 2009 Equity Incentive Plan, and the 2016 Equity Incentive Plan as of ~~September~~March 3031, ~~2020~~2021 and changes during the period are presented below:


	Number of Options	Weighted Average Exercise Price
Outstanding as of January 1, 2021	507,295	$	18.31
Issued	1,754,120	0.82
Exercised	—	—
Forfeited	(2,932)	13.41
Expired	(29,836)	28.41
Outstanding as of March 31, 2021	2,228,647	$	4.42

Exercisable as of March 31, 2021	239,453	$	31.05

	Number ofOptions	Weighted AverageExercise Price
Outstanding as of January 1, 2020	516,820	$	33.40
Issued	348,612	3.87
Exercised	—	—
Forfeited	(40,911)	10.19
Expired	(229,309)	33.23
Outstanding as of September 30, 2020	595,212	$	17.76
Exercisable as of September 30, 2020	201,851	$	40.54

The following tables summarize information regarding options outstanding and exercisable at March 31, 2021:

Outstanding:

The following tables summarize information regarding options outstanding and exercisable at September 30, 2020:


	Stock Options	Weighted Average		Weighted Average Remaining
Range of Exercise Prices	Outstanding	Exercise Price		Contractual Life
$0.00 - $7.80	2,052,118	$	1.22	9.69
$7.81 - $15.0	49,974	10.27		6.25
$15.1 - $55.0	60,950	26.47		6.83
$55.1 - $106.7	65,605	79.29		4.78
Total	2,228,647	$	4.42	9.39

Exercisable:

Outstanding:


Range of Exercise Prices	Stock Options Exercisable	Weighted Average Exercise Price
$0.00 - $7.80	76,652	$	4.40
$7.81 - $15.0	46,852	10.36
$15.1 - $55.0	50,344	28.01
$55.1 - $106.7	65,605	79.29
Total	239,453	$	31.05

	StockOptions	WeightedAverage		WeightedAverageRemaining
Range of Exercise Prices	Outstanding	Exercise Price		Contractual Life
$0.00 - $7.80	343,796	$	3.96	9.23
$7.81 - $15.0	59,528	10.30		6.71
$15.1 - $55.0	118,450	24.03		7.19
$55.1 - $106.7	73,438	78.31		5.35
Total	595,212	$	17.76	8.09

~~Exercisable:~~As of March 31, 2021, the intrinsic value of the options outstanding was none. As of March 31, 2021, there was $1.7 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the Plan. The costs will be recognized through July 2023.

Range of Exercise Prices	Stock Options Exercisable	Weighted Average Exercise Price
$0.00 - $7.80	10,951	$	6.52
$7.81 - $15.0	49,318	10.59
$15.1 - $55.0	68,368	27.11
$55.1 - $106.7	73,214	78.35
Total	201,851	$	40.54

As of September 30, 2020, the intrinsic value of the options outstanding was none. As of September 30, 2020, there was $0.6 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the Plan. The costs will be recognized through July 2023.

Restricted Stock and RSUs

The Company periodically grants restricted stock and RSU awards to certain officers and other employees that typically vest one to ~~three~~four years from their grant date. The Company recognized $1417.17 thousand and $57.1 thousand of compensation expense during the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019, respectively and $89.8 thousand and $190.6 thousand of compensation expense during the nine months ended September 30,~~ 2020 ~~and 2019~~, respectively, related to restricted stock and RSU awards. Stock compensation expense is recognized over the vesting period of the restricted stock and RSUs. At ~~September~~March 3031, ~~2020~~2021, the Company had approximately $661.52 ~~thousand~~million of total unrecognized compensation cost related to RSUs, all of which will be recognized through ~~June~~March ~~2023~~2025. The following table summarizes the number of unvested RSUs and their weighted average exercise price for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021.


	Number of RSUs	Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2021	23,686	$	2.59
Changes during the period:
Shares granted	1,379,465	0.82
Shares vested	(181)	35.30
Shares forfeited	—	—
Non-vested balance at March 31, 2021	1,402,970	$	0.85

	Number of RSUs		Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2020	6,268		$	40.69
Changes during the period:
Shares granted	23,505	*	2.34
Shares vested	(4,908)		43.58
Shares forfeited	—		—
Non-vested balance at September 30, 2020	24,865		$	3.87

•Represents shares granted not accounted for under the 2016 plan.

12. Income Taxes

The Company's income tax expense was $~~18.0~~30 thousand and $~~(5.0)~~52 thousand for the three months ended ~~September 30~~ March 31, ~~2020~~2021 and ~~2019~~2020, ~~with effective tax rates of (3.66)% and 0.07%,~~ respectively~~. The Company’s income tax expense was $49.0 thousand and $76.0 thousand for the nine months ended September 30~~, ~~2020 and 2019,~~ with effective tax rates of (01.~~12)~~38% and (0.~~38)~~19%), respectively.

The Company excludes from the calculation of the effective tax rate any entities that are projected to operate at a loss, have no tax benefit that can reasonably be expected, and those entities which operate in a zero tax rate jurisdiction. Due to continuing operating losses in the United States, the tax provision is based on minimum U.S. state income taxes and the operations of certain foreign affiliates that are subject to taxes in their respective countries.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES) providing nearly $2 trillion in economic relief to eligible businesses impacted by the coronavirus outbreak. The Company is currently studying its options under the CARES Act. Tax implications of the CARES Act include expansion of the business interest expense deduction from 30% to 50% for the years 2019 and 2020 and the suspension of the 80% limitation on usage of Net Operating Losses incurred in the years 2018 through 2020.

The Company’s net interest expense is subject to limitation under Section 163(j). The limitation serves to reduce the net operating loss and create an additional attribute for the disallowed net interest expense. Therefore, there is no effect on earnings.

The foreign entities of the Company are projected to generate an additional operating loss for the year ~~2020~~2021. Therefore, the Company has not made any adjustments related to potential GILTI tax in its financial statements.

The Company evaluates the recoverability of its net deferred tax assets based on its history of operating results, its expectations for the future and expiration dates of its attributes including operating losses. The Company has concluded that it is more likely than not it will be unable to realize the net deferred tax assets in the immediate future and has established a valuation allowance for all U.S. and foreign net deferred tax assets.

At December 31, ~~2019~~2020, the Company’s U.S. federal net operating loss carryforwards totaled $4810.57 million. The Company’s ability to use net operating loss carry forwards is subject to limitation in future periods under certain provisions of Section 382 of the Internal Revenue Code of 1986, as amended, which limit the utilization of net operating losses upon a more than 50% change in ownership of the Company’s stock. The Company examined the application of Section 382 with respect to an ownership change that took place during 2010, as well as the limitation on the application of net operating loss carry forwards. The Company believes that net operating losses subsequent to the change date in 2010 are not subject to Section 382 limitations. The Company’s net loss carryforwards may be further limited in the future if additional ownership changes occur.

The Company is subject to the provisions of ASC 740-10-25, “Income Taxes” (ASC 740) which prescribes a more likely-than-not threshold for the financial statement recognition of uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. On a quarterly basis, the Company undergoes a process to evaluate whether income tax accruals are in accordance with ASC 740 guidance on uncertain tax positions. For federal purposes, post 1998 tax years remain open to examination as a result of net operating loss carryforwards. The Company is currently open to audit by the appropriate state income taxing authorities for tax years 2015 to 2018. The Company has not recorded any liability for uncertain tax positions.37

losses upon a more than 50% change in ownership of the Company’s stock. The Company examined the application of Section 382 with respect to an ownership change that took place during 2010, as well as the limitation on the application of net operating loss carry forwards. The Company has determined that additional ownership changes occurred on August 19, 2020, October 31, 2020 and December 31, 2020. The Company has determined that the lowest limitation related to the dates of change limits the Company’s usage of net operating losses, other carry forwards and credits as of the change in ownership date to an annual amount of $28 thousand. The Company’s net loss carryforwards may be further limited in the future if additional ownership changes occur.

The Company is subject to the provisions of ASC 740-10-25, “Income Taxes” (ASC 740) which prescribes a more likely-than-not threshold for the financial statement recognition of uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. On a quarterly basis, the Company undergoes a process to evaluate whether income tax accruals are in accordance with ASC 740 guidance on uncertain tax positions. For federal purposes, post 1998 tax years remain open to examination as a result of net operating loss carryforwards. The Company is currently open to audit by the appropriate state income taxing authorities for tax years 2016 to2020. At December 31, 2020, the Company recorded an unrecognized tax benefit aggregating $2.3 million including penalty and interest of $0.5 million. The Company records penalties and interest as a component of selling, general and administrative expenses in the Consolidated Statement of Operations.

13. Accrued Expenses

Accrued expenses represent various obligations of the Company including certain operating expenses and taxes payable.

As of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, the largest components of accrued expenses were:


	March 31, 2021		December 31, 2020
Payroll	$	1,651	$	2,872
Professional Fees	1,602		1,363
Medicaid and Medicare Rebates	1,485		1,616
Inventory and Supplies	1,333		3,055
Rebates	1,074		1,412
Wholesaler Fees	474		477
Royalties	258		302
Interest Expense	208		2,898



Other	678		718
	$	8,763	14,713

	September 30, 2020		December 31, 2019
Payroll	2,194		1,789
Professional Fees	1,616		1,881
Medicaid and Medicare Rebates	1,599		987
Interest Expense	1,123		1,539
Rebates	970		774
Wholesaler Fees	416		747
Clinical Studies	334		334
Royalties	326		377
Inventory and Supplies	150		250
Capital Expenditures	17		23
Other	491		584
	$	9,236	$	9,285

14. Legal and U.S. Regulatory Proceedings

To date, thirteen putative class action antitrust lawsuits have been filed against the Company along with co-defendants, including Taro Pharmaceuticals U.S.A., Inc. and Perrigo New York Inc., regarding the pricing of generic pharmaceuticals, including econazole nitrate. The class plaintiffs seek to represent nationwide or state classes consisting of persons who directly purchased, indirectly purchased, paid and/or reimbursed patients for the purchase of generic pharmaceuticals from as early as July 1, 2009 until the time the defendants’ allegedly unlawful conduct ceased or will cease. The class plaintiffs seek treble damages for alleged overcharges during the alleged period of conspiracy, and certain of the class plaintiffs also seek injunctive relief against the defendants. The actions have been consolidated by the Judicial Panel on Multidistrict Litigation to the U.S. District Court, Eastern District of Pennsylvania for pre-trial proceedings as part of the In re Generic Pharmaceuticals Pricing Antitrust Litigation matter. On October 16, 2018 the court dismissed the class plaintiffs’ claims against the Company with leave to replead. On December 21, 2018 the class plaintiffs filed amended complaints, which the Company moved to dismiss on February 21, 2019. On December 19, 2019 certain class plaintiffs filed a further complaint that included additional claims against the Company based on the Company’s sales of fluocinolone acetonide. On October 16, 2020 and October 21, 2020, class plaintiffs amended or moved to amend their complaints to add additional allegations, mooting the motion to dismiss.

“Opt-out” antitrust lawsuits have additionally been filed against the Company by various plaintiffs, including Humana Inc.; The Kroger Co. et al.; United HealthCare Services, Inc.; Molina Healthcare, Inc.; MSP Recovery Claims, Series LLC; Health Care Service Corp.; Harris County, Texas; Rite Aid Corporation; JM Smith Corporation; and Suffolk County, New York. These complaints have been consolidated into the In re Generic Pharmaceuticals Pricing Antitrust Litigation matter in the U.S. District Court, Eastern District of Pennsylvania by the Judicial Panel on Multidistrict Litigation. Each of the opt-out complaints names several dozen defendants (including the Company) and involves allegations regarding the pricing of econazole (and in some cases fluocinolone acetonide) along with up to 180 other drug products, most of which were not manufactured or sold by the Company during the period at issue. The opt-out plaintiffs seek treble damages for alleged overcharges for the drug products identified in the complaint during the alleged period of conspiracy, and some also seek injunctive relief. A motion to dismiss the Humana Inc. and The Kroger Co., et al. opt-out complaints was filed on February 21, 2019 and remains pending. 38

“Opt-out” antitrust lawsuits have additionally been filed against the Company by various plaintiffs, including Humana Inc.; The Kroger Co. et al.; United HealthCare Services, Inc.; Molina Healthcare, Inc.; MSP Recovery Claims, Series LLC; Health Care Service Corp.; Harris County, Texas; Rite Aid Corporation; JM Smith Corporation; Suffolk County, New York; Cigna Corp.; Walgreen Corporation; Winn-Dixie Stores, Inc. et al.; CVS Pharmacy, Inc.; and County of Albany, New York, et al. These complaints have been consolidated into the In re Generic Pharmaceuticals Pricing Antitrust Litigation matter in the U.S. District Court, Eastern District of Pennsylvania by the Judicial Panel on Multidistrict Litigation. Each of the opt-out complaints names several dozen defendants (including the Company) and involves allegations regarding the pricing of econazole (and in some cases fluocinolone acetonide) along with approximately 400 other generic drug products, most of which were not manufactured or sold by the Company during the period at issue. The opt-out plaintiffs seek treble damages for alleged overcharges for the drug products identified in the complaint during the alleged period of conspiracy, and some also seek injunctive relief. A motion to dismiss the Humana Inc. and The Kroger Co., et al. opt-out complaints was filed on February 21, 2019 and remains pending.

A complaint has also been filed by state Attorneys General based on pricing of topical drugs, and naming the Company as a defendant with respect to econazole nitrate. The Attorney General plaintiffs seek treble damages for alleged overcharges during the alleged period of conspiracy. This action has been consolidated by the Judicial Panel on Multidistrict Litigation to the U.S. District Court, Eastern District of Pennsylvania for pre-trial proceedings as part of the In re Generic Pharmaceuticals Pricing Antitrust Litigation matter.

In addition, on June 3, 2020, a putative class action lawsuit was filed in the Federal Court of Canada against the Company and its Canadian subsidiary, Teligent Canada, along with over fifty other pharmaceutical defendant companies. The Canadian lawsuit alleges that the generic drug manufacturer defendants conspired to allocate the Canadian market and customers, fix prices and maintain the supply of generic drugs in Canada to artificially maintain market share and higher generic drug prices in violation of Canada’s Competition Act. In terms of the Company and Teligent Canada, without limiting the general allegation of a general conspiracy over the generic drug market, the lawsuit specifically asserts allegations in relation to econzaole dating back to September 2013 and continuing to the present. The representative individual plaintiff seeks to represent a class comprised of all persons and entities in Canada who, from January 1, 2012 to the present, purchased generic drugs in the private sector (i.e. purchases made by individuals out-of-pocket and by individuals and businesses through private drug plans). The plaintiff is alleging aggregate damages of CDN$2.75 billion for harm caused to class members being charged increased prices as a result of the alleged conspiracy. The Canadian lawsuit is at a very early stage and the Company is unable to form a judgment at this time as to whether an unfavorable outcome is probable or remote or to provide an estimate of the amount or range of potential loss. The Company believes this lawsuit is without merit and it intends to vigorously defend against the claim.

Due to the early stage of these cases, the Company is unable to form a judgment at this time as to whether an unfavorable outcome is either probable or remote or to provide an estimate of the amount or range of potential loss. The Company believes these cases are without merit and it intends to vigorously defend against these claims.

On October 20, 2017, a Demand for Arbitration was filed with the American Arbitration Association by Stayma Consulting Services, Inc. (“Stayma”) against the Company regarding the Company’s development and manufacture for Stayma of two generic drug products, one a lotion and one a cream, containing 0.05% of the active pharmaceutical ingredient flurandrenolide. The Company developed the two products and Stayma purchased commercial quantities of each; however, Stayma alleges that the Company breached agreements between the parties by developing an additional and different generic drug product, an ointment, containing flurandrenolide, and failing to meet certain contractual requirements. Stayma seeks monetary damages. The arbitrator has issued an interim award finding that the Company is not liable to Stayma on two of Stayma’s three claims against the Company. The third claim has proceeded to a damages phase, which the arbitrator has stayed pending a decision by the United States District Court for the District of New Jersey on the Company’s request to enjoin two of Stayma’s clients, Cintex Services LLC and Artesa Labs LLC, from arbitrating against the Company. The Company has argued that Stayma did not suffer any damages related to this claim and will vigorously pursue complete dismissal of the third claim. In addition, the arbitrator will determine money damages owed by Stayma to the Company relating to Stayma’s failure to pay several past due invoices of approximately $1.7 million.

46On April 15, 2019 a federal class action was filed the Oklahoma Police Pension Fund and Retirement System against the Company and certain individual defendants in the U.S. District Court, Southern District of New York. The lawsuit was brought on behalf of persons or entities who purchased or otherwise acquired publicly-traded Teligent, Inc. securities from March 7, 2017 through November 6, 2017. The complaint alleges that defendants made false or misleading statements regarding the Company’s business, operational, and compliance policies in violation of U.S. securities laws. The plaintiff seeks to recover compensable damages. On June 17, 2020, the court, deeming pre-motion letters as a motion

commercial quantities of each; however, Stayma alleges that the Company breached agreements between the parties by developing an additional and different generic drug product, an ointment, containing flurandrenolide, and failing to meet certain contractual requirements. Stayma seeks monetary damages. The arbitrator has issued an interim award finding that the Company is not liable to Stayma on two of Stayma’s three claims against the Company. The third claim will proceed to a damages phase. The Company has argued that Stayma did not suffer any damages related to this claim and will vigorously pursue complete dismissal of the third claim. In addition, the arbitrator will determine money damages owed by Stayma to the Company relating to Stayma’s failure to pay several past due invoices of approximately $1.7 million.39

Onto ~~December 13~~dismiss, ~~2018,~~granted ~~Valdepharm SA filed a lawsuit~~ in ~~the~~part U.S. District Court, District of New Jersey in the U.S. District Court, District of New Jersey alleging that the Company breached contracts regarding two drug products that the Company had sought to have Valdepharm manufacture. On February 12, 2019 the Company answered the complaint and ~~counterclaimed,~~denied ~~alleging that Valdepharm breached the contracts by failing to perform its work~~ in ~~compliance~~part ~~with FDA regulations and current Good Manufacturing Practices. Each party seeks damages associated with~~ the ~~alleged breach and related claims. On April 23, 2020 the court largely denied Valdepharm~~Company’s motion to dismiss ~~Teligent’s counterclaims~~. ~~Following~~On ~~two~~Wednesday, ~~court~~May ~~sanctioned~~5, ~~mediations~~2021, in the ~~interest~~parties ofreached ~~avoiding the costs and uncertainty of further protracted litigation, we have agreed to~~ a ~~structured~~ settlement ~~with~~in ~~Valdepharm~~principal ~~pursuant~~ to ~~which~~resolve wethis ~~will~~dispute ~~pay~~and ~~them~~no ~~approximately~~additional ~~$0.3 million~~accrual ~~during~~was ~~the~~required ~~fourth~~to ~~quarter~~be ofrecognized, ~~2020~~as ~~in exchange for a dismissal of~~ the ~~action~~company ~~with~~had ~~prejudice~~satisfied ~~and~~its ~~the~~self-insurance ~~exchange of mutual releases~~retention.

On April 15, 2019 a federal class action was filed the Oklahoma Police Pension Fund and Retirement System against the Company and certain individual defendants in the U.S. District Court, Southern District of New York. The lawsuit was brought on behalf of persons or entities who purchased or otherwise acquired publicly-traded Teligent, Inc. securities from March 7, 2017 through November 6, 2017. The complaint alleges that defendants made false or misleading statements regarding the Company’s business, operational, and compliance policies in violation of U.S. securities laws. The plaintiff seeks to recover compensable damages. On June 17, 2020, the court, deeming pre-motion letters as a motion to dismiss, granted in part and denied in part the Company’s motion to dismiss.

On July 15, 2020, a derivative complaint was filed by George Gonzalez, purportedly a shareholder of the Company, against certain past and current officers and directors of the Company in the U.S. District Court, Southern District of New York, naming the Company as nominal Defendant. The lawsuit asserts a breach of fiduciary duty claim against the board members and a contribution claim against a former officer for allegedly participating in the alleged misstatements underlying the securities litigation discussed above.

~~Due~~On toJune ~~the~~18, ~~early~~2020, ~~stage~~the State of ~~these~~New ~~shareholder~~Mexico ~~cases,~~filed a lawsuit in the ~~Company~~1st isJudicial ~~unable~~District toCourt, ~~form~~County aof ~~judgment~~Santa atFe, ~~this~~State ~~time~~of asNew toMexico ~~whether~~against anvarious ~~unfavorable~~brand ~~outcome~~drug ismanufacturers, ~~either~~generic ~~probable~~drug manufacturers, and stores that manufactured, designed, distributed, supplied, marketed, promoted, advertised, and/or ~~remote~~sold ranitidine and/or Zantac® to ~~provide~~New anMexico ~~estimate~~residents. The lawsuit alleged that these products contain unsafe levels on N-Nitrosodimethylamine (NDMA), a known carcinogen. It further alleged that Defendants withheld the known dangers of the ~~amount~~products from the U.S. Food and Drug Administration (“FDA”) and knew or ~~range~~should have known of ~~potential~~various ~~loss~~studies demonstrating that Zantac®/ranitidine products contained and/or produced levels of NDMA well above FDA’s daily acceptable limit of 90ng. ~~The~~On ~~Company~~April ~~believes~~16, ~~these~~2021, ~~cases~~the ~~are~~State ~~without~~of ~~merit~~New ~~and~~Mexico itfiled ~~intends~~its toFirst ~~vigorously~~Amended ~~defend~~Complaint ~~against~~and ~~these~~abandoned all claims against the Company.

On ~~June~~November 1812, 2020, the ~~State~~Mayor ofand ~~New~~City ~~Mexico~~Council of Baltimore filed a lawsuit in the ~~1st~~Circuit ~~Judicial District~~ Court, ~~County~~ of ~~Santa~~Maryland ~~Fe,~~for ~~State~~Baltimore ofCity ~~New Mexico~~ against various brand drug manufacturers, generic drug manufacturers, and stores that manufactured, designed, distributed, supplied, marketed, promoted, advertised, and/or sold ranitidine and/or Zantac® to ~~New~~Baltimore, ~~Mexico~~MD residents. The lawsuit was transferred to MDL No. 2924, In Re Zantac (Ranitidine) Products Liability Litigation in the United States of Florida on February 1, 2021. On April 1, 2021, the lawsuit was remanded back the Circuit Court of Maryland. The lawsuit alleges that these products contain unsafe levels on N-Nitrosodimethylamine (NDMA), a known carcinogen. It further alleges that Defendants withheld the known dangers of the products ~~from the U.S. Food~~ and/or ~~Drug Administration (“FDA”) and~~ knew or should have known of various studies demonstrating that Zantac®/ranitidine products ~~contained~~posed ~~and/or~~serious ~~produced~~health ~~levels of NDMA well above FDA’s daily acceptable limit of 90ng~~risks. As to the Company specifically, ~~New~~the ~~Mexico~~Mayor ~~states~~and City Council of Baltimore state that the Company maintains an active pharmacy wholesaler license in ~~New~~Maryland ~~Mexico~~ and manufactures injectable prescription Zantac which iswas sold ~~into~~by ~~New~~retailers ~~Mexico~~and ~~through~~supplied ~~its~~by ~~aforementioned~~distributors ~~license~~with Baltimore locations during the relevant period. It asserts that the Company created a public nuisance and was also negligent in its sale of this product. As to the common law public nuisance claim, ~~New~~the ~~Mexico~~Mayor ~~seeks~~and City Council of Baltimore seek unspecified funding for a ~~statewide~~citywide medical monitoring program. As to the common law negligence claim, ~~New~~the ~~Mexico~~Mayor ~~seeks~~and City Council of Baltimore seek unspecified monetary damages. Due to the early stage of this case ~~and because the Company has not yet been served~~, the Company is unable to form a judgment at this time as to whether an unfavorable outcome is either probable or remote or to provide an estimate of the amount or range of potential loss, if any. The Company believes this case to be without merit and it intends to vigorously defend against these claims ~~once it is served~~.

On November 12, 2020, the Mayor and City Council of Baltimore filed a lawsuit in the Circuit Court of Maryland for Baltimore City against various brand drug manufacturers, generic drug manufacturers, and stores that manufactured, designed, distributed, supplied, marketed, promoted, advertised, and/or sold ranitidine and/or Zantac® to Baltimore, MD residents. The lawsuit alleges that these products contain unsafe levels on N-40

Nitrosodimethylamine (NDMA), a known carcinogen. It further alleges that Defendants withheld the known dangers of the products and/or knew or should have known of various studies demonstrating that Zantac®/ranitidine products posed serious health risks. As to the Company specifically, the Mayor and City Council of Baltimore state that the Company maintains an active pharmacy wholesaler license in Maryland and manufactures injectable prescription Zantac which was sold by retailers and supplied by distributors with Baltimore locations during the relevant period. It asserts that the Company created a public nuisance and was also negligent in its sale of this product. As to the common law public nuisance claim, the Mayor and City Council of Baltimore seek unspecified funding for a citywide medical monitoring program. As to the common law negligence claim, the Mayor and City Council of Baltimore seek unspecified monetary damages. Due to the early stage of this case, the Company is unable to form a judgment at this time as to whether an unfavorable outcome is either probable or remote or to provide an estimate of the amount or range of potential loss, if any. The Company believes this case to be without merit and it intends to vigorously defend against these claims once it is served.

15. Subsequent Events

On September 8, 2020, the Company entered into a letter of intent to execute a Business Transfer Agreement with The J. Molner Company OU, a corporation organized and existing under the laws of Estonia, which the former President and Chief Executive Officer Jason Grenfell Gardner has ownership in to sell certain assets held in the company’s Estonia entity. The transaction closed on October 23, 2020 for the purchase price of $125,000 less a credit of $5,675 for transition services to complete all local audits as required by Estonia laws before the agreement date.

On November 24, 2020, the Company received a notice (the “Notice”) from The Nasdaq Stock Market stating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Filing Requirement”) as a result of the Company not having timely filed its Quarterly Report on Form 10-Q for the three months ended September 30, 2020 (“Form 10-Q”) with the Securities and Exchange Commission. The Notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock.

On December 4, 2020, the Company received a notice (the “Notice”) from The Nasdaq Stock Market informing the Company that for the last 30 consecutive business days, the bid price of the Company’s securities had closed below $1.00 per share, which is the minimum required closing bid price for continued listing on Nasdaq pursuant to Listing Rule 5450(a)(1) (the “Bid Price Requirement”). The Notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock. The Company has 180 calendar days, or until June 2, 2021, to regain compliance. To regain compliance, the closing bid price of the Company’s securities must be at least $1.00 per share for a minimum of ten consecutive business days. If the Company does not regain compliance by June 2, 2021, the Company may be eligible for additional time to regain compliance or if the Company is otherwise not eligible, the Company may request a hearing before a Hearings Panel.

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

This "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and other sections of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, that are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates and on management's beliefs and assumptions. In addition, other written or oral statements, which constitute forward-looking statements, may be made by or on behalf of the Company. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on current expectations of management and are not guarantees of future performance, and involve certain risks, uncertainties, and assumptions, which are difficult to predict. These risks and uncertainties include, without limitation:

•our capital resources are not currently sufficient for us to meet our obligations as they become due, and there is substantial doubt about our ability to continue as a going concern;

•our substantial indebtedness coupled with our significant losses and negative cash flows makes it unlikely that we will be able to generate cash sufficient to repay our indebtedness;

•if we fail to comply with the financial covenants contained in our Senior Credit Facilities, our senior lenders could accelerate all amounts owing thereunder which, in turn, could result in the acceleration of all amounts owing under our 2023 Series ~~C Secured Convertible Notes and the 2023 Series~~ D Convertible Notes;

•if we fail to maintain compliance with the continued listing standards of Nasdaq, it may result in the delisting of our common stock from the Nasdaq Global Select Market and in the acceleration of amounts owing under our 2023 Series ~~C Secured Convertible Notes, our 2023 Series~~ D Convertible Notes and our Senior Credit Facilities;

•in the event we pursue an in-court bankruptcy restructuring, we will be subject to the risks and uncertainties associated with bankruptcy proceedings, including the potential delisting of our common stock from trading on the Nasdaq Global Select Market and all notes becoming due and payable; and

•issues identified by the FDA in its warning letter and additional product quality issues identified by the Company will have a negative impact on the Company’s business, financial position and results of operations, and cash flows

In addition, these risks and uncertainties include competitive factors, outsourcing trends in the pharmaceutical industry, the general economic conditions in the markets in which the Company operates, levels of industry research and development spending, the Company’s ability to continue to attract and retain qualified personnel, the fixed price nature of product development agreements or the loss of customers and other factors described in the Company’s filings with the Securities and Exchange Commission, including the “Risk Factors” section as set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2019, as updated below in this Quarterly Report on Form 10-Q~~2020. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The forward-looking statements set forth herein speak only as of the date of this report. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. The Company operates its business under one reportable segment.

Company Overview

Strategic Overview

Teligent, Inc. ~~and its subsidiaries~~ (~~collectively~~ the “Company”) is a ~~specialty~~ generic pharmaceutical company. All references to "Teligent," the "Company," "we," "us," and "our" refer to Teligent, Inc. and its subsidiaries. Our mission is to become a leader in ~~the~~high-barrier ~~specialty~~to entry generic ~~pharmaceutical market~~pharmaceuticals. Our platform for growth is centered around the development, manufacturing and marketing of a portfolio of generic pharmaceutical products inunder our own label and private labeled for other pharmaceutical companies in topical, injectable, ~~complex~~ and ~~ophthalmic~~other high-barrier dosage forms. We believe that expanding our development and commercial base beyond topical generics, historically the cornerstone of our expertise, to include injectable generics, ~~complex generics~~ and ~~ophthalmic~~other ~~generics~~high-barrier ~~(what we call our "TICO" strategy")~~generics, will leverage our existing expertise and capabilities, and broaden our platform for more diversified strategic growth.

5041

We currently market and sell generic topical and generic and branded generic injectable pharmaceutical products in the United States and Canada. In the United States, we ~~currently~~ market ~~thirty-eight~~37 generic topical pharmaceutical products and ~~four~~2 branded injectable pharmaceutical products. We have received FDA approvals for ~~thirty-six~~36 topical generic products from our internally developed pipeline and we have ~~seventeen~~7 Abbreviated New Drug Applications, ("ANDAs") on topical products and 3 New Drug Application ("NDA") Prior Approval Supplements ("PASs") for sterile injectable products submitted to the FDA that are awaiting approval. InWe ~~Canada,~~market we25 ~~sell~~generic ~~thirty-six~~injectable, 3 generic topical, and ~~branded~~3 generic ~~injectable~~ophthalmic products. ~~and~~We ~~medical~~have ~~devices~~1 Abbreviated New Drug Submission (“ANDS”) pending at Health Canada. In ~~addition,~~the weUnited ~~have~~States, 45approved ~~product~~ANDA ~~candidates~~generic atdrugs ~~various~~are ~~stages~~usually ofinterchangeable ~~our~~with ~~development~~the ~~pipeline~~innovator drug. ~~Generic~~This ~~pharmaceutical~~means ~~products~~that ~~are~~the ~~bioequivalent~~generic toversion ~~their~~may ~~brand~~generally ~~name~~be ~~counterparts~~substituted for the branded product by either a physician or pharmacist when dispensing a prescription. We also provide contract development and manufacturing services to the ~~pharmaceutical,~~prescription and over-the-counter ("OTC"), pharmaceutical and cosmetic markets. We operate our business under one operating segment. Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TLGT.” Our principal executive office, laboratories and manufacturing facilities are located at 105 Lincoln Avenue, Buena, New Jersey. We have additional offices located in Iselin, New Jersey, ~~Mississauga, Canada,~~ and ~~Tallinn~~Mississauga, ~~Estonia~~Canada. AsIn oflate ~~September 30,~~ 2020, we decided to reposition the research and development operation mainly performed at our Tallinn, Estonia office to our US manufacturing site at Buena, New Jersey and consequently towe ~~dissolve~~have divested our limited assets in Estonia ~~operation.~~and are in the process of formally dissolving our Estonia operations.

The manufacturing and commercialization of generic ~~specialty~~ pharmaceutical ~~markets~~products is competitive, and there are established manufacturers, suppliers and distributors actively engaged in all phases of our business. We currently manufacture and sell topical, injectable and ophthalmic generic pharmaceutical products under our own label in both the US and Canada.

~~The~~In the United States, the three large wholesale drug distributors are AmerisourceBergen Corporation ("ABC"); Cardinal Health, Inc. ("Cardinal"); and McKesson Drug Company, ("McKesson"). ABC, Cardinal and McKesson are key distributors of our products, as well as a broad range of health care products for many other companies. None of these distributors is an end user of our products. Generally, if sales to any one of these distributors were to diminish or cease, we believe that the end users of our products would likely find little difficulty obtaining our products either directly from us or from another distributor. However, the loss of one or more of these distributors, together with a delay or inability to secure an alternative distribution source for end users, could have a material negative impact on our revenue, business, financial condition and results of operations. There are generally three major negotiating entities in the US market. Walgreens ~~Boot~~Boots Alliance, ~~Inc.~~Development (WBAD) consists of Walgreens, ~~Amerisource~~and ~~Bergen~~AmerisourceBergen's PRxO Generics program~~, and Econdisc members~~. Red Oak Sourcing consists of CVS and Cardinal’s source ~~program~~programs. Finally, ClarusOne consists of Walmart, RiteAid and McKesson’s OneStop program. A loss of any of these major entities could result in a significant reduction in revenue.

We consider our business relationships with ABC, Cardinal and McKesson to be in good standing and we have fee for services contracts with each of them. However, a change in purchasing patterns, a decrease in inventory levels, an increase in returns of our products, delays in purchasing products and delays in payment for products by one or more of these distributors could have a material negative impact on our revenue, business, financial condition and results of operations. We continue to ~~analyze the market for other specialty generic drug products through internal research and development. In addition, we continue to~~ explore business development opportunities to add additional products and/or capabilities to our existing portfolio and to expand our private label and contract manufacturing service opportunities.

For the three months ended ~~September~~March 3031, ~~2020~~2021, ~~three~~we ~~customers~~had ~~accounted~~sales ~~for~~to ~~47%~~one ofcustomer, ~~the~~which ~~Company’s~~individually ~~revenue~~accounted ~~consisting~~for ~~of 21~~10%, ~~13%~~or ~~and~~more ~~13%,~~of ~~respectively.~~our ~~For~~total ~~the~~revenue. Total ~~three~~sales ~~months~~to ~~ended~~this ~~September~~customer ~~30,~~represented ~~2019, two of the Company’s customers accounted for 47~~33% of ~~the~~total ~~Company’s revenue, consisting of 35% and 12%, respectively~~revenues. For the ~~nine~~three months ended ~~September~~March 3031, 2020, ~~two~~we ofhad ~~the~~sales ~~Company’s~~to ~~customers~~one customer, which individually accounted for 3410% ofor ~~the~~more ~~Company’s revenue, consisting~~ of ~~22%~~our ~~and~~total ~~12%, respectively~~revenue. Total ~~For~~sales ~~the~~to ~~nine~~this ~~months~~customer ~~ended~~represented ~~September 30, 2019, two of the Company’s customers accounted for 48~~16.9% of ~~the~~total ~~Company’s revenue, consisting of 29% and 19%, respectively~~revenues. Accounts receivable related to the Company’s major customers comprised 46% of all accounts receivable as of ~~September~~March 3031, ~~2020~~2021 and 4712% as of ~~September~~March 3031, ~~2019~~2020, respectively. The loss of one or more of these major customers could have a significant impact on our revenues and harm our business and results of operations.

Our customers in the contract manufacturing business generally consist of pharmaceutical companies, as well as cosmetic and OTC product marketers, who require product development/manufacturing support. For the three months ended ~~September~~March 3031, ~~2020~~2021, approximately 5586% of our contract manufacturing revenue was derived from pharmaceutical projects, as compared to 039% of total contract manufacturing revenue for the three months ended ~~September~~March 3031, ~~2019. For the nine months ended September 30,~~ 2020, approximately 42% of our contract manufacturing revenue was derived from pharmaceutical projects, as compared to 53% of total contract manufacturing revenue for the nine months ended September 30, 2019. None of our contract manufacturing services customers represented greater than 10% of total revenue for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020, respectively.

FDA Warning Letter and Quality Issues

51As part of our efforts to remediate the issues identified in the FDA’s warning letter issued in November 2019 (the “FDA Warning Letter”) and to strengthen our quality systems, we undertook a comprehensive review of all of our products. This

The Company received a warning letter from the FDA in November 2019 relating to the Company’s Buena, NJ manufacturing facility resulting from an inspection at such facility from April 2, 2019 to May 20, 2019. The warning letter cited issues regarding out-of-specification test results, the Company’s stability program, its complaint handling, and drug product validation issues. The Company investigated the issues with the assistance of a consultant, responded to the FDA in December 2019 and March 2020, and submitted a final closeout letter on April 12, 2020. On August 13, 2020, the Company received an additional comment letter from the FDA in which the FDA indicated that it had reviewed the Company’s responses and deemed them to be inadequate as the Company failed to address and/or provide supporting documentation to several of the concerns raised in the warning letter. The Company has since submitted response letters to the FDA outlining certain changes in its practices, submitting additional documentation to support previous and ongoing independent assessments, and providing additional detail on ongoing remediation projects (including comprehensive product quality assessments) to ensure all of the Company’s products are safe, effective and compliant.42

Asreview ~~part~~was ofcompleted ~~the Company’s efforts to remediate the issues identified~~ in ~~the~~December ~~FDA’s warning letter and to strengthen its quality systems, the Company has undertaken a comprehensive review of all of its products that it anticipates being complete during the fourth quarter of~~ 2020. While the review did not identify material issues with many of ~~the~~our ~~Company’s~~ products, it ~~did~~identified ~~identify~~certain issues of non-conformance with respect to certain products ~~that~~which ~~the~~have ~~Company~~resulted isin ~~actively~~recalls ~~reviewing~~ and ~~remediating. The~~halting ~~Company~~the ~~believes~~production ~~there~~of ~~will~~certain beproducts, ~~supply~~that ~~disruptions~~we orare ~~process~~actively ~~changes~~reviewing ~~with~~and ~~respect~~remediating. We have experienced and may continue to ~~these~~experience, ~~products~~among ~~including~~other matters, product recalls, long-term production pauses, short-term clear path to market production pauses, and continued production with minor process corrections. ~~The~~ ~~Company~~We ~~believes~~believe the foregoing disruptions with respect to certain of ~~its~~our products and the diversion of resources to remediate the product quality issues will have a negative impact on ~~the~~our ~~Company’s~~ business, financial position, ~~operating~~ results of operations and cash flows during ~~the fourth quarter of 2020 and during~~ 2021, including reducing ~~its~~our revenue, negatively impacting operating/(loss), and possibly resulting in impairment and other charges. Further, ~~the~~we ~~Company~~anticipate ~~anticipates~~ that the FDA’s issuance of the warning letter and review of ~~the~~our ~~Company’s~~ processes will continue to delay the FDA’s pre-approval inspection for commercial production on the newly installed injectable line at the Buena, NJ facility. The continued failure to address the issues identified by the FDA in its warning letter and those subsequently identified by ~~the~~us ~~Company~~ in ~~its~~our comprehensive product quality review as well as the continued delay in obtaining the FDA’s pre-approval inspection for commercial production on the newly installed injectable line at the Buena, NJ facility will have a negative impact on ~~the~~our ~~Company’s~~ business, financial position, ~~operating~~ results of operations and cash flows.

COVID-19 Pandemic Update:

~~The~~As ~~current~~a ~~financial~~pharmaceutical ~~results~~manufacturing ~~and~~facility, ~~anticipated~~we ~~future~~are ~~results~~considered “essential” under applicable directives from the state of New Jersey. During the ~~Company~~COVID-19 Public Health Emergency and State of Emergency we maintained our manufacturing operations and monitored conditions in order to maintain a safe workplace for our employees. Among other preventative measures, we have ~~been~~directed ~~negatively~~all ~~impacted~~employees ~~due~~that could perform their function remotely to ~~COVID~~work from home in accordance with applicable guidelines, implemented social distancing measures on-19site at our manufacturing facility, provided daily personal protective equipment to our onsite employees upon their arrival to the site and implemented temperature monitoring services at our newly established single point of entrance. We have also implemented a more frequent sanitization process of the facility. As the Public Health Emergency, State of Emergency and restrictions have abated, we are in the process of implementing a phased ‘return to office’ protocol under which we will maintain social distanced workspace and continue to sanitize our facilities.

In ~~March~~order ~~2020,~~to ~~the~~preserve ~~World~~cash ~~Health~~and ~~Organization~~align ~~declared~~manufacturing-related ~~the~~resources ~~outbreak~~with ofdownward ~~novel~~adjustments ~~coronavirus~~made ~~disease~~to ~~(“COVID-19”)~~our asproduction ~~a pandemic~~schedule, ~~and~~we ~~the~~initiated ~~Company~~a ~~expects~~reduction ~~its operations~~ in ~~all~~force ~~locations~~at toour beBuena, ~~affected~~NJ asmanufacturing ~~the~~facility ~~virus~~effective ~~continues~~June to19, ~~proliferate~~2020. In ~~alignment~~connection with the ~~directives in the state of New Jersey~~reduction, aswe aterminated ~~Pharmaceutical~~53 ~~manufacturing facility~~employees, ~~Teligent~~furloughed isanother ~~considered~~15 ~~"essential"~~employees and eliminated the ~~Company~~2nd ~~has~~shift ~~remained~~packaging ~~open for its business~~operation. ~~The~~Many ~~Company~~of ~~will~~the ~~stay~~furloughed ~~open~~employees ashave ~~long~~now asbeen ~~permitted~~recalled. Our ~~and~~employee ~~conditions~~base ~~remain~~is ~~safe~~currently ~~for~~146 ~~its~~versus ~~employees~~153 toon ~~continue~~December to31, ~~supply~~2020, ~~its~~down ~~products to the patients that need them~~4. 6%.

~~Teligent’s~~In ~~first~~addition, ~~priority~~we isdecided ~~the health and safety of its employees while positioning its business~~ to ~~manage~~shift ~~throughout~~our ~~this~~research ~~pandemic. The outbreak~~ and ~~any~~development ~~preventative~~operation orbeing ~~protective~~performed ~~actions~~in ~~that~~our ~~Teligent~~Tallinn, ~~its~~Estonia ~~customers,~~office ~~suppliers~~to orour ~~other~~US ~~third~~manufacturing ~~parties~~site ~~with~~at ~~which it has business relationships~~Buena, orNew ~~governments~~Jersey ~~may~~and ~~take~~subsequently into ~~respect of the COVID~~wind-19down ~~outbreak~~our ~~could~~Estonia ~~disrupt its business and the business of its customers~~operation. ~~Global~~On ~~health~~September ~~concerns~~30, ~~such as COVID-19~~2020, ~~could~~we ~~also~~sold ~~result~~certain in social, economic, and labor instability in the countries in which the Company or the third parties with whom it engages operate. In addition, the COVID-19 outbreak could result in a severe economic downturn and has already significantly affected the financial markets of ~~many~~our ~~countries. A~~assets ~~severe~~located ~~or prolonged economic downturn or political disruption could result~~ in ~~a variety of risks to its business~~Estonia, ~~including~~primarily ~~its~~lab ~~ability to raise capital when needed on acceptable terms~~machinery, ifequipment atand ~~all.~~office Afurniture ~~weak~~and orare ~~declining economy or political disruption could also strain its suppliers or third party CMOs, possibly resulting~~ in ~~supply disruption, or cause its customers to delay purchases or payments for its products. The COVID-19 pandemic may also create delays in~~ the ~~review~~process ~~and approval~~ of ~~its~~completing ~~regulatory submissions as well as its pending reinspection related to~~ the ~~Company's warning letter and pre~~wind-~~approval~~down inspection for commercial production on the newly installed injectable line at the Company’s New Jersey facility by the FDA. Given these uncertainties, the Company is unable to predict the overall impact that the COVID-19 pandemic will have on its business as of ~~the~~our ~~date~~Estonia ~~of this filing~~operations.

~~The~~Product ~~Company~~Approvals has taken preventative measures to help ensure business continuity while maintaining safe and stable operations. It has directed all non-production employees to work from home in accordance with state and local guidelines and has implemented social distancing measures on-site at its manufacturing facility to protect employees and its products. Its employees are provided daily personal protective equipment upon their arrival to the facility and the Company has implemented

52There were no significant approvals announced in 2021 to date.

temperature monitoring services at its newly established single point of entrance. The Company has also implemented a routine sanitization process of the facility. It has adjusted its production schedule to concentrate on high demand or low stock product to help reduce employee concentrations while continuing to focus on production levels necessary to meet our customer demand.

The Company's first quarter financial results and anticipated future results had been negatively impacted due to COVID-19. Under the provisions of ASC 360-10-55, the Company continues to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company performs the analysis by comparing the expected future cash flows of the assets to the carrying value of the related long-lived assets. The Company recorded impairment charges of $8.4 million in the first quarter of 2020 related to trademarks and technology of $4.9 million and product acquisition costs of $3.5 million (Note 10). There were no changes to the assumptions made at the first quarter of this year that would suggest further impairment. The Company did not have impairment triggers related to the long-lived assets after the first quarter of this year.

The Company's financial performance has been adversely impacted by the unprecedented COVID-19 pandemic. In the first quarter of 2020, the Company initiated a company-wide cost reduction initiative targeted at eliminating discretionary spending and ensuring that remaining expenditures are reduced in line with the lower demand for its products in light of COVID-19 impact to the business. Effective on May 4, 2020, the Company's Executive Leadership Team and all employees with annual salaries exceeding $100,000 accepted a 20% and 15% eight-week reduction in pay, respectively. Over the same eight-week period, the Company furloughed a portion of employees at its Buena, NJ manufacturing facility. Effective on June 19, 2020, the Company initiated a reduction-in-force, terminating 53 employees and furloughing an additional 15 employees thus reducing the employee base at its Buena, NJ facility. Terminated employees were offered a severance package and the Company will pay both the employee and employer portion of health benefits for the employees that were furloughed.

On May 15, 2020, the Company received $3.4 million of proceeds from the U.S. Small Business Administration Paycheck Protection Program ( the "Government Grant Advance") and has been utilizing the advance to balance its employee-related actions previously taken with the business needs to ensure a significant portion of the loan will be forgiven. The Advance matures in 2 years with accrued interest at an annual rate of 1.00%, being deferred for payments until the date of forgiveness or 24 weeks from the date when the fund was received by the Company. According to ASC 450-30, Gain Contingencies, the Company recorded the $3.4 million of proceeds in the Government Grant Advance line on its Condensed Consolidated Balance Sheet as of September 30, 2020. The Company will record the related earnings impact on its Condensed Consolidated Statement of Operations in the period when the associated conditions attached to the Advance are reasonably assured to be met.

In May 2020, the Company modified one of its office lease agreements and obtained a deferral of 2 months rental payments amid the Pandemic. According to FASB Staff Q&A on Topic 842 and 841, because the amount of the total consideration paid under the modified lease agreement is substantially the same as the original agreement, except the deferral of the lease payments which only affect the timing of the payments, the Company accounted for the concession as if no changes to the lease contract were made and continues to recognize expenses during the deferral period.

In order to preserve cash and align manufacturing-related resources with downward adjustments made to its production schedule, the Company initiated a reduction in force at its Buena, NJ manufacturing facility effective June 19, 2020. In connection with the reduction, the Company terminated 53 employees and furloughed another 15 employees. The Company’s employee base after these actions and a company-wide effort to reduce recruitment is down 31% from the start of the year. The associated one-time employee severance costs totaled $0.3 million and are reflected in primarily cost of revenues and the product development and research expenses in the Company’s Condensed Consolidated Statement of Operations in the nine months ended September 30, 2020. In addition, the company decided to shift its research and development operation being performed in its Tallinn, Estonia office to its US manufacturing site at Buena, New Jersey and subsequently to wind-down its Estonia operation. In September of 2020, the Company entered into a letter of intent with its former Chief Executive Officer to sell certain of Estonia's assets, primarily lab machinery, equipment and office furniture for a sales price of $125 thousand in cash.

The Company markets a portfolio of FDA-approved medicines, including several generic alternatives in the United States. These products include both injectable and topical prescription medicines. From late March to the end of April 2020, several data sources suggested that patient visits to the dermatologist in the United States were down more than 50% in comparison to the typical number of dermatologist visits realized prior to shelter-in-place guidelines. As a consequence of COVID-19, dermatology visits are still down vs. pre-pandemic levels. But, as shelter-in-place guidelines across the country were relaxed, several data sources reflected an increase in dermatology visits to approximately 80% of normal visits pre COVID-19 and thus patient demand for topical pharmaceutical products. Since June, there have been positive signs that the market for dermatology pharmaceutical products is rebounding driven by increased 90-day prescription refills approved by the Pharmacy Benefit

Managers and the emergence of stronger telehealth networks. In fact, since mid-June data sources have shown the category return to 85% of pre-pandemic levels. Teligent sales have mostly mirrored these increases, although percentages vary by product. The Company remains cautiously optimistic given the consequences of COVID-19 in some locations have proven to change rapidly. Due to the level of uncertainty and potential consequences of less stringent guidelines, it is still extremely challenging to predict the pace of the anticipated increase and whether or not there might be a second wave of decline.

Product and Pipeline Approvals

There were no significant approvals announced in 2020 to date.

Results of Operations

Three months ended ~~September~~March 3031, ~~2020~~2021 compared to ~~September~~March 3031, ~~2019~~2020

We had net ~~loss~~income of $02.52 million, or $0.0804 per share, for the three months ended ~~September~~March 3031, ~~2020~~2021 (the "Current Period"), compared to a net loss of $726.18 million, or $14.3298 per share, for the three months ended ~~September~~March 3031, ~~2019~~2020 (the "Prior Period"). Product Sales, net, include Company Product Sales and Contract Manufacturing Sales.

~~Revenues:~~43

Revenues:

	Three Months Ended September 30,				Increase/(Decrease)
	Three Months Ended March 31,				Increase/(Decrease)
Components of Revenue:	~~2020~~2021		~~2019~~2020		$		%
Product sales, net	$	1411,~~239~~413	$	187,~~395~~336	$	(4,~~156)~~077	~~(23)~~56	%
Research and development services and other income	~~100~~175		71111		2964		4158	%
Total Revenues	$	1411,~~339~~588	$	187,~~466~~447	$	(4,~~127)~~141	~~(22)~~56	%

Total revenues ~~decreased~~increased by ~~22%~~$4.1 million to $1411.36 million in the ~~Current~~first ~~Period~~quarter ~~from~~of ~~the~~2021 versus $187.54 million ~~recorded~~ in ~~the~~ Prior Period. The increase ~~$4.1 million decrease in comparison to the Prior Period~~ was driven primarily by atiming ~~net reduction~~ of ~~$0.8~~orders ~~million~~from inprivate ~~our~~label UScustomers, ~~Sales~~wholesale ~~due~~restocking ~~to lost contract volume~~ and ~~incremental~~fewer ~~price erosion amid pandemic and a $3.4 million decrease in~~ Canadian ~~revenues~~supply ~~due~~constraints tothat ~~supply~~were ~~constraints.~~present

Research and development services and other revenues will not be consistent and will vary, from period to period, depending on the required timeline of each development project and/or agreement.

Costs and Expenses:

	Three Months Ended September 30,				Increase/(Decrease)
	Three Months Ended March 31,				Increase/(Decrease)
	2020		2019		$		%
	2021		2020		$		%
Cost of revenues	$	1412,~~225~~799	$	118,~~186~~610	$	34,~~039~~189	2749	%
Selling, general and administrative expenses	6,~~543~~272		56,~~007~~717		~~1,536~~(445)		31(7)	%
Product development and research expenses	2,370		2,064		306		15	%
Impairment charge	24		8,373		(8,349)		(100)	%
Totals costs and expenditures	$	23,138	$	18,257	$	4,881	27	%
Product development and research expenses	1,463		1,800		(337)		(19)	%
Totals costs and expenditures	$	20,558	$	25,500	$	(4,942)	(19)	%

Cost of revenues increased by ~~27%~~$4.2 million to $1412.28 million in the Current Period inversus ~~comparison to the~~ $118.26 million ~~reported in~~ the Prior Period. The ~~deteriorated~~change in gross profit in the Current Period was mainly attributable to ~~build~~higher insales, cost of inventory reserves, ~~and~~ongoing ~~increased~~cost ~~absorption~~of ~~allocations~~remediation ~~due to lower contract volume~~ and ~~price~~period ~~erosion~~expenses indue ~~light~~to oflower ~~COVID-19~~absorption.

Selling, general and administrative expenses in the Current Period ~~increased~~decreased by $10.54 million to $6.53 million as compared to a $56.07 million in the Prior Period. The ~~increase~~decrease was primarily due to i)lower aprofessional ~~$0.9 million increase in bad debt expenses, ii) a $0.8 million increase in consulting~~ fees, ~~partially~~versus ~~offset~~the byfirst ~~iii)~~Quarter aof $02020.~~2 million decline in personnel costs.~~

~~Product~~An ~~development~~impairment ~~and~~charge ~~research~~was ~~expenses~~recorded ~~were $2.4 million~~ in the Current Period ~~and~~of $~~2.1~~24 ~~million~~thousand inrelated ~~the~~to ~~Prior Period~~property, ~~The~~ ~~change~~plant ~~was~~and ~~primarily~~equipment. ~~due~~An toimpairment acharge ~~$0.9~~was ~~million~~recorded ~~increase~~ in ~~write~~the ~~off~~Prior Period of ~~material costs associated with research and development activities and a~~ $08.14 million ~~increase~~related ~~in occupancy due~~ to ~~the~~trademark ~~write~~and ~~down~~technology of ~~the~~$4.9 ~~Estonia~~million ~~fixed~~and ~~assets~~product asacquisition ~~part~~costs of ~~the~~$3.5 ~~Business~~ million.

54Product development and research expenses were $1.5 million in the Current Period and $1.8 million in the Prior Period. The change was primarily due to a decrease in personnel costs, outside testing and pilot batch expenses partially offset by an increase of API expenses and increase in clinical studies.

~~Transfer~~Other ~~Agreement~~Income (~~Note 15~~Expense), ~~partially offset by declined personnel costs of $0.5 million and reduced outside testing of $0.2 million.~~net:

Other (Expense) Income, net:


	Three Months Ended March 31,				(Increase)/Decrease
	2021		2020		$		%
Interest and other expense, net	$	(4,119)	$	(5,876)	$	1,757	30	%
Foreign currency exchange loss	(2,092)		(1,597)		(495)		31	%
Gain on debt restructuring	22,439		—		22,439		(100)	%
Inducement loss	(1,889)		—		(1,889)		(100)	%
Change in the fair value of derivative liabilities	(3,186)		(1,258)		(1,928)		(100)	%

Other income/(expense), net	$	11,153	$	(8,731)	$	19,884	228	%

	Three Months Ended September 30,				(Increase)/Decrease
	2020		2019		$		%
Interest and other expense, net	$	(8,056)	$	(5,160)	$	(2,896)	(56)	%
Foreign currency exchange gain/(loss)	1,856		(2,167)		4,023		(186)	%
Gain on debt restructuring	10,882		—		10,882		(100)	%
Inducement loss	(701)		—		(701)		(100)	%
Change in the fair value of derivative liabilities	4,326		—		4,326		(100)	%
Other (expense) income, net	$	8,307	$	(7,327)	$	15,634	213	%

The net decrease in interest and other expense in the Current Period of $1.8 million is related to the reduction in total debt from the January 2021 Debt Exchange Transactions.

~~The net increase in interest and other expense in the Current Period of $2.9 million is related to the increase in total debt and a higher cost of capital.~~44

Foreign exchange ~~gain~~loss of $12.91 million in the Current Period was mainly related to the foreign currency translation of our intercompany loans denominated in U.S. dollars to our foreign subsidiaries to be repaid in November 2022. Depending on the changes in foreign currency exchange rates, we will continue to record a non-cash gain or loss on translation for the remaining term of these loans.

The gain on debt restructuring and inducement loss of $1020.26 million in the Current Period is due to the ~~exchange~~extinguishment of Series ~~A and Series B Convertible Notes for Series~~ C ~~and Series D~~ Convertible ~~Notes~~ in the amount of $817.25 million as well as the conversion of Series D Convertible Notes in the amount of $23.05 million offset by the issuance costs related to the January 2021 Debt Exchange Transactions.

The change in the fair value of derivatives of $4.3.2 million was related to ~~a $5.6 million gain on~~ the Senior ~~Credit~~C ~~Facilities~~Notes ~~offset~~up byto athe ~~$1.3~~January ~~million~~2021 ~~loss~~Debt onExchange ~~the Senior C Notes~~Transactions.

Net income/(loss) attributable to common stockholders (in thousands, except per share numbers):

	Three Months Ended September 30,				Increase/(Decrease)
	Three Months Ended March 31,				Increase/(Decrease)
	2020		2019		$		%
	2021		2020		$		%
Net loss attributable to common stockholders	$	(510)	$	(7,113)	$	(6,603)	(93)	%
Net income/(loss) attributable to common stockholders	$	2,153	$	(26,836)	$	(28,989)	(108)	%
Basic loss per share	$	(0.08)	$	(1.32)	$	(1.24)	94	%
Basic income/(loss) per share	$	0.04	$	(4.98)	$	(5.02)	101	%
Diluted income/(loss) per share	$	0.03	$	(4.98)	$	(5.01)	101	%

Net ~~loss~~income for the Current Period was $02.52 million as compared to a net loss of $726.18 million of the Prior Period. The ~~decrease~~increase was primarily due to aan ~~decrease~~increase in revenues of $4.1 million, anand ~~increase~~a ingain ~~interest~~on ~~expense~~debt ofrestructuring ~~$2.9~~and ~~million,~~inducement aloss of $420.96 million ~~increase in cost and expenses~~, offset by the ~~gain~~a onchange ~~debt~~in ~~restructuring~~costs and ~~inducement~~expenses ~~loss~~ of $104.29 million, change in the fair value of derivative liabilities of $41.39 million and a $4.0.5 million increase on foreign currency exchange gain, as discussed above.

Nine months ended September 30, 2020 compared to September 30, 2019

We had a net loss of $41.7 million, or $7.32 per share, for the nine months ended September 30, 2020 (the "Current Year"), compared to a net loss of $19.8 million, or $3.68 per share, for the nine months ended September 30, 2019 (the "Prior Year"). Product Sales, net, include Company Product Sales and Contract Manufacturing Sales.

Revenues:

	Nine months ended September 30,				Increase/(Decrease)
Components of Revenue:	2020		2019		$		%
Product sales, net	$	34,910	$	49,688	$	(14,778)	(30)	%
Research and development services and other income	462		241		221		92	%
Total Revenues	$	35,372	$	49,929	$	(14,557)	(29)	%

Total revenues decreased by 29% to $35.4 million of the Current Year from the $49.9 million reported in the Prior Year. The decrease of $14.6 million was driven primarily by a net reduction of $8.7 million in US sales due to lost contract volume and incremental price erosion and a decrease of $5.9 million in Canadian revenues due to supply constraints.

Research and development services and other revenues may not be consistent and will vary, from period to period, depending on the required timeline of each development project and/or agreement.

Costs and Expenses:

	Nine months ended September 30,				Increase/(Decrease)
	2020		2019		$		%
Cost of revenues	$	33,919	$	28,346	$	5,573	20	%
Selling, general and administrative expenses	18,249		15,707		2,542		16	%
Impairment charges	8,373		—		8,373		100	%
Product development and research expenses	6,050		7,721		(1,671)		(22)	%
Totals costs and expenditures	$	66,591	$	51,774	$	14,817	29	%

Cost of revenues increased by 20% to $33.9 million of the Current Year from a $28.3 million of the Prior Year. The deteriorated gross margin resulted from continued inventory management/build and decreased volume lowering fixed cost absorption and product mix changes in light of COVID-19 this year.

Selling, general and administrative expenses in the Current Year increased by $2.5 million to $18.2 million as compared to $15.7 million reported in the Prior Year. The increase was primarily due to i) increased bad debt expenses of $1.2 million, ii) increased personnel costs of $0.9 million, iii) increased consulting services of $0.8 million and iv) increased legal fees and other of $0.5 million, partially offset by v) reduced ANDA filing fees of $ 0.5 million, vi) decrease in audit fees of $0.2 million and vii) reduced travel expenses of $0.2 million.

An intangible assets impairment charge was recorded in the Current Year of $8.4 million related to trademark and technology of $4.9 million and product acquisition costs of $3.5 million. There were no impairment charges in the Prior Year.

Product development and research expenses decreased by $1.7 million to $6.0 million as compared to $7.7 million reported in the Prior Year. The decrease in product development and research expenses was primarily due to i) a $ 1.3 million of reduced personnel costs, ii) a $0.7 million of reduced outside testings, iii) reduced ANDA filings, lab supplies, occupancy and business insurance expenses aggregated to $0.5 million, partially offset by iv) a $0.9 million increase in write off of material costs associated with research and development activities.

Other (Expense) Income, net:

	Nine months ended September 30,				(Increase)/Decrease
	2020		2019		$		%
Interest and other expense, net	$	(21,452)	$	(15,262)	$	(6,190)	41	%
Foreign currency exchange gain/(loss)	2,384		(2,458)		4,842		(197)	%
Gain on debt restructuring	10,882		—		10,882		100	%
Inducement loss	(701)		—		(701)		100	%
Change in the fair value of derivative liabilities	(1,523)		—		(1,523)		100	%
Debt partial extinguishment of 2019 Notes	—		(185)		185		(100)	%
Other (expense) income, net	$	(10,410)	$	(17,905)	$	7,495	(42)	%

Interest and other expense, net increased in the Current Year primarily due to the increase in interest expense of $6.2 million related to our current debt structure.

Foreign exchange gain of $2.4 million in the Current Year was related to the foreign currency translation of our intercompany loans denominated in U.S. dollars to our foreign subsidiaries to be repaid in November 2022. Depending on the changes in foreign currency exchange rates, we will continue to record a non-cash gain or loss on translation for the remaining term of these loans.

The gain on debt restructuring and inducement loss of $10.2 million in the Current Period is due to the exchange of Series A and Series B Convertible Notes for Series C and Series D Convertible Notes in the amount of $8.2 million as well as the conversion of Series D Convertible Notes in the amount of $2.0 million.

The change in the fair value of derivatives of $1.5 million included a $1.2 million loss on the derivative liability pertaining to the Series C Notes, a $0.8 million loss on the Warrants, partially offset by a $0.5 million gain on the 2023 Series B Notes in the Current Year (Note 9).

Debt partial extinguishment of the 2019 Notes was zero in the Current Year compared to $0.2 million in the Prior Year.

Net loss attributable to common stockholders (in thousands, except per share numbers):

	Nine months ended September 30,				Increase/(Decrease)
	2020		2019		$		%
Net loss attributable to common stockholders	$	(41,678)	$	(19,826)	$	21,852	110	%
Basic loss per share	$	(7.32)	$	(3.68)	$	3.64	99	%

Net loss for the Current Year was $41.7 million as compared to a net loss of $19.8 million reported in the Prior Year. The decline was due primarily to a decrease in revenues of $14.6 million, an increase in cost and expenses of $14.8 million, an increase in interest expense of $6.2 million, the derivative liability increase of $1.5 million offset by the gain on debt restructuring and inducement loss of $10.2 million and a $4.8 million increase of foreign exchange gain, as stated above.

Liquidity and Capital Resources

57The Company has incurred significant losses and generated negative cash flows from operations in recent years and expects to continue to incur losses and generate negative cash flow for the foreseeable future. As a result, we had an accumulated deficit of $241.1 million, total principal amount of outstanding borrowings of $108.8 million, and limited capital resources to fund ongoing operations at March 31, 2021. These capital resources were comprised of cash and equivalents of $28.3 million at March 31, 2021 and the generation of cash inflows from working capital. The Company is not currently generating revenues from operations that are sufficient to cover its operating expenses, and its available capital resources are not sufficient for it to continue to meet its obligations as they become due. As a result, the Company has engaged financial and legal advisors to assist it in, among other things, analyzing all available strategic alternatives to address its liquidity and capital structure. However, the Company cannot provide assurances that additional capital will be available when needed or that any strategic alternatives or restructuring pursued will be on acceptable terms.

The Company’s ~~has~~liquidity ~~incurred~~needs ~~significant~~have ~~losses~~typically ~~and~~arisen ~~generated~~from ~~negative~~the ~~cash~~funding ~~flows~~of ~~from~~its ~~operations~~new inmanufacturing ~~recent~~facility, ~~years~~product ~~and~~manufacturing ~~expects~~costs, toresearch ~~continue~~and todevelopment ~~incur~~programs, ~~losses~~ and ~~generate~~the ~~negative~~launch ~~cash~~of ~~flow~~new ~~for~~products. In the ~~foreseeable~~past, ~~future.~~the AsCompany ahas ~~result,~~met wethese ~~had~~cash anrequirements ~~accumulated~~through ~~deficit~~cash ofinflows ~~$163.2~~from ~~million~~operations, ~~total~~working ~~principal~~capital ~~amount~~management, ofand ~~outstanding~~proceeds from borrowings. Although ofthe ~~$198.8~~construction ~~million,~~of ~~and~~the ~~limited~~Company’s ~~capital~~new ~~resources~~manufacturing tofacility ~~fund~~was ~~ongoing~~substantially ~~operations~~completed atin ~~September~~October 302018, ~~2020.~~additional ~~These~~investment ~~capital~~was ~~resources~~made ~~were~~in ~~comprised~~order ofto ~~cash~~prepare the facility and ~~equivalents~~the ofCompany’s ~~$10.4~~employees ~~million~~for ata ~~September~~prior ~~30,~~approval ~~2020~~inspection ~~and~~from the ~~generation~~FDA offor ~~cash~~the ~~inflows~~new ~~from~~injectable ~~working capital~~line. The Company’s isliquidity ~~not~~was ~~currently~~negatively ~~generating~~impacted ~~revenues~~in ~~from~~2020 ~~operations~~as ~~that~~a ~~are~~result ~~sufficient~~of tothe ~~cover~~COVID-19 ~~its operating expenses~~pandemic, and ~~its~~the ~~available~~Company ~~capital~~believes ~~resources~~its ~~are~~liquidity ~~not~~will ~~sufficient~~be ~~for~~negatively itimpacted toduring ~~continue~~2021 toby ~~meet~~disruptions ~~its~~with ~~obligations~~respect asto ~~they~~certain ~~become~~of ~~due.~~its Asproducts aand ~~result,~~ the ~~Company~~diversion ~~has~~of ~~engaged~~resources ~~financial~~to ~~and~~remediate ~~legal~~the ~~advisors~~product toquality ~~assist~~issues itidentified in, ~~among~~connection ~~other~~with ~~things,~~the ~~analyzing~~Company’s ~~all~~response ~~available strategic alternatives~~ to ~~address~~the ~~its~~FDA’s ~~liquidity~~warning ~~and~~letter. ~~capital~~In ~~structure including~~addition, ~~but~~the ~~not~~Company ~~limited~~expects to, ~~making~~continue ~~significant changes~~ to ~~its~~incur ~~operating~~significant ~~plan,~~expenditures ~~pursuing~~for athe ~~merger~~development ~~or other transaction involving a change~~ of ~~control,~~new orproducts ~~restructuring~~in its ~~outstanding debt via out of court or in court methods~~pipeline, ~~including~~and the ~~pursuit~~manufacturing, ofsales aand ~~plan~~marketing of ~~reorganization~~its ~~which~~existing ~~would~~products. beAs ~~filed~~described ~~under~~above, ~~Chapter~~notwithstanding ~~11 of~~ the ~~U.S.~~Company’s ~~Bankruptcy~~significant ~~Code~~current ~~and/or~~liquidity ~~ceasing its operations. However~~needs, the Company cannot provide assurances that additional capital will be available ~~when~~on ~~needed~~acceptable orterms ~~that any strategic alternatives~~ or ~~restructuring~~at ~~pursued will be on acceptable terms~~all.

~~The~~Series ~~Company’s~~A liquidity needs have typically arisen from the funding of its new manufacturing facility, product manufacturing costs, research and development programs, and the launch of new products. In the past, the Company has met these cash requirements through cash inflows from operations, working capital management, and proceeds from borrowings discussed in Note 8. Although the construction of the Company’s new manufacturing facility was substantially completed in October 2018, additional investment was made in order to prepare the facility and the Company’s employees for a prior approval inspection from the FDA for the new injectable line. The Company’s liquidity has been negatively impacted in 2020 as a result of the COVID-19 pandemic, and the Company believes its liquidity will be negatively impacted during the fourth quarter of 2020 and during 2021 by disruptions with respect to certain of its products and the diversion of resources to remediate the product quality issues identified in connection with the Company’s response to the FDA’s warning letter. In addition, the Company expects to continue to incur significant expenditures for the development of new products in its pipeline, and the manufacturing, sales and marketing of its existing products. As described above, notwithstanding the Company’s significant current liquidity needs, the Company cannot provide assurances that additional capital will be available on acceptable terms or at all.Notes

~~The~~In ~~$5.8 million~~the ~~decrease~~beginning inof ~~our~~2019, ~~cash during~~ the ~~nine~~Company ~~months~~used ~~ended~~a ~~September~~total ~~30,~~of ~~2020~~$2.7 ~~was~~million ~~mainly~~of toproceeds ~~support~~from ~~our~~the ~~operational~~Senior ~~activities,~~Credit ~~which~~Facilities ~~included~~to ~~continued~~repurchase ~~inventory~~a ~~management/build~~portion toof ~~help~~the ~~avoid~~remaining ~~failure-to-supply~~2019 ~~fees~~Convertible ~~and~~3.75% ~~normal~~Senior ~~timing~~Notes ~~differences~~(the in“2019 ~~working~~Notes”). ~~capital~~The ~~balances.~~repurchase Inof ~~addition,~~the we2019 ~~had~~Notes anwas ~~accumulated~~considered ~~deficit~~a ofdebt ~~$163.2 million~~extinguishment asunder ofASC ~~September~~470-50. ~~30,~~The ~~2020,~~2019 ~~inclusive~~Notes ofwere aaccounted ~~$41.7 million~~for ~~net~~under ~~loss~~cash inconversion ~~this~~guidance ~~year.~~ASC

~~2023 Series A Convertible Notes~~45

In the beginning of 2019, the Company used a total of $2.7 million of proceeds from the Senior Credit Facilities to repurchase a portion of the remaining 2019 Convertible 3.75% Senior Notes. The repurchase of the 2019 Convertible 3.75% Senior Notes was considered a debt extinguishment under ASC 470-~~50. The 2019 Convertible 3.75% Senior Notes were accounted for under cash conversion guidance ASC 470-~~20, which required the Company to allocate the fair value of the consideration transferred upon settlement to the extinguishment of the liability component and the reacquisition of the equity component upon derecognition. In accordance with the guidance above, the Company allocated a portion of the $2.7 million to the extinguishment of the liability component equal to the fair value of that component immediately before extinguishment and recognized a $0.2 million extinguishment loss in the Condensed Consolidated Statement of Operations to measure the difference between (i) the fair value of the liability component and (ii) the net carrying value amount of the liability component (which was already net of any unamortized debt issuance costs). The reduction of Additional Paid in Capital in connection with this extinguishment was immaterial. The Company settled the remaining 2019 ~~Convertible 3.75% Senior~~ Notes of $13.0 million in principal upon its maturity in December 2019.

Following the issuance of the ~~2023~~ Series D ~~Convertible~~ Notes described below, all amounts owing with respect to the ~~2023~~ Series A ~~Convertible~~ Notes ~~had~~were ~~been~~ extinguished through exchange of ~~2023~~ Series C Notes and ~~2023~~ Series D ~~Convertible~~ Notes (see below).

~~2023~~ Series B ~~Convertible~~ Notes

On October 31, 2019, the Company closed its offering of the ~~2023~~ Series B ~~Convertible~~ Notes. The ~~2023~~ Series B ~~Convertible~~ Notes were scheduled to mature in May 2023 and were convertible at the option of the holder at any time prior to their maturity. The initial conversion price was $7.20 per share, subject to adjustment under certain circumstances.

As part of the offering, the Company entered into agreements with certain holders of its existing ~~2023~~ Series A ~~Convertible~~ Notes to exchange $9.0 million of the ~~2023~~ Series A ~~Convertible~~ Notes for $5.1 million of the ~~2023~~ Series B ~~Convertible~~ Notes.

58The gross cash proceeds of approximately $29.3 million on from the financing were used to extinguish the Company’s existing 2019 Notes in December 2019 and intended to pay amounts owing with respect to other indebtedness and to fund general corporate and working capital requirements. The net proceeds from the financing were $26.9 million after deducting a total of $2.3 million of the initial purchasers’ discounts and professional fees associated with the transaction. The Series B Notes bore interest at a rate of 7.00% per annum if paid in cash, semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The Company also had an option, and agreed with its senior lender, to PIK the interest at 8.00% per annum, to defer cash payments. The Company elected the paid-in-kind interest option and increased the principal balance of the Series B Notes by $2.0 million for the year ended December 31, 2020.

~~The~~Following ~~gross~~the ~~cash~~issuance ~~proceeds~~ of ~~approximately $29.3 million from~~ the ~~financing~~Series ~~were~~D ~~used to extinguish the Company’s existing 2019 Convertible 3.75% Senior~~ Notes indescribed ~~December~~below, ~~2019~~all ~~and~~outstanding ~~intended~~debt ~~to pay amounts owing~~ with respect to ~~other indebtedness and to fund general corporate and working capital requirements. The net proceeds from~~ the ~~financing were $26.9 million after deducting a total of $2.3 million of the initial purchasers’ discounts and professional fees associated with the transaction. The 2023~~ Series B ~~Convertible~~ Notes ~~bore~~had ~~interest~~been atextinguished athrough ~~rate~~exchange of ~~7.00%~~Series ~~per~~C ~~annum if paid in cash, semiannually in arrears on May 1~~ and November 1 of each year, beginning on May 1, 2020. The Company also had an option, and agreed with its senior lender, to PIK the interest at 8.00% per annum, to defer cash payments. The Company elected the paid-in-kind interest option and increased the principal balance of the 2023 Series BD ~~Convertible~~ Notes by(see $0below).~~6 million and $2.0 million during the three months and nine months ended September 30, 2020.~~

~~Following the issuance of the 2023~~ Series ~~D Convertible Notes described below, all outstanding debt with respect to the 2023 Series B Convertible Notes had been extinguished through exchange of 2023 Series~~ C ~~and 2023 Series D Convertible~~ Notes ~~(see below).~~

~~2023~~On July 20, 2020, the Company completed the sale and issuance of $13.8 million aggregate principal amount of Series C ~~Secured~~Notes. ~~Convertible~~After ~~Notes~~taking into account an original issue discount and other fees payable to the Purchasers, the Company received net cash proceeds of approximately $10.0 million, which the Company is using for general corporate purposes.

OnThe ~~July~~Company ~~20,~~also ~~2020,~~issued ~~the~~approximately ~~Company~~$32.3 ~~completed~~million ~~the~~in ~~sale~~aggregate ~~and~~principal ~~issuance~~amount of Series C Notes in exchange for approximately $1335.89 million in aggregate principal amount, ofplus ~~2023~~accrued ~~Series~~but Cunpaid ~~Secured~~interest ~~Convertible~~thereon, ~~Notes.~~of ~~After~~the ~~taking~~Company’s ~~into~~outstanding ~~account~~Series anB ~~original~~Notes, ~~issue~~giving effect to a 10% discount ~~and~~on ~~other~~the ~~fees~~principal ~~payable~~amount toof the ~~Purchasers~~Series B Notes exchanged. In addition, the Company ~~received~~issued ~~net~~approximately ~~cash~~$3.7 ~~proceeds~~million in aggregate principal amount of Series C Notes in exchange for approximately $108.02 million in aggregate principal amount, ~~which~~plus accrued but unpaid interest thereon, of the Company’s isoutstanding ~~using~~Series ~~for~~A ~~general~~Notes, ~~corporate~~giving ~~purposes~~effect to a 55% discount on the principal amount of the Series A Notes exchanged.

~~The~~Interest ~~Company~~on ~~also~~the ~~issued~~Series ~~approximately~~C ~~$32~~Notes accrues at the rate of 9.35% ~~million~~per annum and is payable in ~~aggregate~~kind and capitalized with principal ~~amount~~semiannually in arrears on March 1 and September 1 of ~~2023~~each year, beginning on September 1, 2020. The Series C ~~Secured~~Notes ~~Convertible~~will ~~Notes~~mature on March 30, 2023, unless earlier converted or repurchased and are subordinate to the indebtedness under the Senior Credit Facilities. The Company has elected the paid-in-kind ~~exchange~~interest ~~for~~option ~~approximately~~and increased the principal balance of the Series C Notes by $350.95 million in ~~aggregate~~the ~~principal~~year ~~amount~~ended December 31, ~~plus~~2020. ~~accrued~~The ~~but~~Company ~~unpaid~~has ~~interest~~agreed ~~thereon,~~to ofuse its commercially reasonable best efforts to obtain the ~~Company’s~~approval ~~outstanding~~of ~~2023~~its ~~Series~~stockholders Bthat ~~Convertible~~is ~~Notes,~~required ~~giving~~under ~~effect~~applicable toNasdaq arules ~~10%~~and ~~discount~~regulations onto permit holders of the ~~principal~~Series ~~amount~~C Notes to beneficially own shares of ~~the~~common ~~2023~~stock ~~Series~~without Bbeing ~~Convertible~~subject ~~Notes~~to ~~exchanged~~the Nasdaq Change of Control Cap. In ~~addition,~~the event that the Company ~~issued~~did ~~approximately~~not ~~$3.7~~obtain ~~million~~such stockholder approval at an annual or special meeting of its stockholders on or before October 31, 2020, holders of a majority in aggregate principal amount of ~~2023~~outstanding Series C Secured Convertible Notes inmay ~~exchange~~elect ~~for~~to ~~approximately~~increase $8the interest rate payable on the 2023 Series C Secured Convertible Notes to 18.20% ~~million~~per inannum ~~aggregate~~until ~~principal~~such ~~amount~~stockholder approval is obtained, ~~plus~~which ~~accrued~~will ~~but~~continue ~~unpaid~~to ~~interest~~be ~~thereon,~~paid ofin kind in the ~~Company’s~~form ~~outstanding~~of ~~2023~~additional ~~Series~~principal Awith ~~Convertible~~respect ~~Notes,~~to ~~giving~~any applicable period in which the increased interest rate remains in effect. Pursuant to a ~~55%~~notice ~~discount~~dated onNovember 2, 2020, the holders of a majority in principal amount of the outstanding 2023 Series AC Secured Convertible Notes ~~exchanged.~~elected to increase the

Interest on the 2023 Series C Secured Convertible Notes accrues at the rate of 9.5% per annum and is payable in kind and capitalized with principal semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2020. The 2023 Series C Secured Convertible Notes will mature on March 30, 2023, unless earlier converted or repurchased and are subordinate to the indebtedness under the Senior Credit Facilities. The Company has elected the paid-in-kind interest option and increased the principal balance of the 2023 Series C Secured Convertible Notes by $0.5 million in the three months ended September 30, 2020. The Company has agreed to use its commercially reasonable best efforts to obtain the approval of its stockholders that is required under applicable Nasdaq rules and regulations to permit holders of the 2023 Series C Secured Convertible Notes to beneficially own shares of common stock without being subject to the Nasdaq Change of Control Cap. In the event that the Company did not obtain such stockholder approval at an annual or special meeting of its stockholders on or before October 31, 2020, holders of a majority in aggregate principal amount of outstanding 2023 Series C Secured Convertible Notes may elect to increase the interest rate payable on the 2023 Series C Secured Convertible Notes to 18.0% per annum until such stockholder approval is obtained, which will continue to be paid in kind in the form of additional principal with respect to any applicable period in which the increased interest rate remains in effect. Pursuant to a notice dated November 2, 2020, the holders of a majority in principal amount of the outstanding 2023 Series C Secured Convertible Notes elected to increase the interest rate payable on the 2023 Series C Secured Convertible Notes from 9.5% to 18.0%. The Company convened and adjourned a special meeting of stockholders on October 22, 2020, and further adjourned such special meeting on November 11, 2020 and November 25, 2020 due to a lack of quorum. The special meeting of stockholders is currently rescheduled for December 16, 2020, pursuant to which the stockholders of the Company are being asked to approve the holders of the 2023 Series C Secured Convertible Notes beneficially owning shares of common stock without being subject to the Nasdaq Change of Control Cap. If the holders of the Company’s common stock approve the proposal, the interest rate payable on the 2023 Series C Secured Convertible Notes will be decreased to 9.5% on such date.46

interest rate payable on the 2023 Series DC Secured Convertible Notes from 9.5% to 18.0%. The Company convened and adjourned a special meeting of stockholders on October 22, 2020, and further adjourned such special meeting on November 11, 2020 and November 25, 2020 due to a lack of quorum. The special meeting of stockholders was held on December 16, 2020, pursuant to which the stockholders of the Company approved the holders of the 2023 Series C Secured Convertible Notes beneficially owning shares of common stock without being subject to the Nasdaq Change of Control Cap. As a result of the approval, the interest rate payable on the 2023 Series C Secured Convertible Notes was decreased to 9.5%.

OnIn ~~September~~January 222021, ~~2020,~~ the Company ~~completed~~issued ~~the~~29,862,641Common ~~issuance~~Shares ~~of approximately $27.5 million aggregate principal amount of 2023 Series D Convertible Notes~~ in exchange for ~~approximately $59.0 million in aggregate principal amount, plus accrued but unpaid interest, of 2023~~ Series AC ~~Convertible~~ Notes~~, giving effect to a 53~~.4% ~~discount~~See on the principal amount of the 2023 Series A Convertible Notes exchanged. The Company also issued approximately $0.4 million aggregate principal amount of the 2023 Series D Convertible Notes in exchange for approximately $0.note(5 ~~million in aggregate principal amount, plus accrued but~~ ).

59Series D Notes

On September 22, 2020, the Company completed the issuance of approximately $27.5 million aggregate principal amount of Series D Notes in exchange for approximately $59.0 million in aggregate principal amount, plus accrued but unpaid interest, of Series A Notes, giving effect to a 53.4% discount on the principal amount of the Series A Notes exchanged. The Company also issued approximately $0.4 million aggregate principal amount of the Series D Notes in exchange for approximately $0.5 million in aggregate principal amount, plus accrued but unpaid interest, of the Company’s outstanding ~~2023~~ Series B ~~Convertible~~ Notes, giving effect to a 31.9% discount on the principal amount of the ~~2023~~ Series B ~~Convertible~~ Notes exchanged.

Following the issuance of the ~~2023~~ Series D ~~Convertible~~ Notes, all amounts owing with respect to the ~~2023~~ Series A ~~Convertible~~ Notes and ~~2023~~ Series B ~~Convertible~~ Notes had been paid and the related indentures and the Company’s obligations thereunder were satisfied and discharged.

Senior Credit Facilities

On November 12, 2018, the Company secured a credit agreement for $120.0 million. The facility includes three tranches of funding, an asset based revolving credit facility of $25.0 million due November 2022 (“Revolver”), a term loan of $80.0 million due February 2023 (“2023 Term Loan”), and a delayed draw term loan of $15.0 million also due in February 2023 (“2023 Delayed Draw Term Loan”). The interest rate under the Revolver was calculated, at the option of the Company, at either the one, two, three or six-month LIBOR plus 3.75% or the base rate plus 2.75%. The interest rate on the 2023 Term Loan and the 2023 Delayed Draw Term Loan bore interest, at the option of the Company, at either the one, two, three or six-month LIBOR plus 8.75% or the base rate plus 7.75%, with a 24-month paid-in-kind interest option available to the Company should it choose to defer cash payments in order to maintain the liquidity needed to continue launching new products, build inventory, and prepare for the FDA prior approval inspection.

The Initial Term Loan of $50.0 million and $15.0 million of the Revolver were drawn by the Company on December 13, 2018. On December 21, 2018, the Company drew $20.0 million of the Delayed Draw Term Loan A. In January 2019, the Company drew $5.0 million and subsequently the remaining $5.0 million under the Revolver were drawn down by the Company in April 2019. On September 18, 2019, pursuant to terms of the First Lien Credit Agreement, the Company borrowed an advance in the aggregate principal amount of $2.5 million (the "Protective Advance"). The Protective Advance is a secured Obligation under the First Lien Credit Agreement and bears interest at the rate applicable to the Revolver. The Protective Advance was subsequently repaid in November 2019 along with a repayment fee of $0.1 million. The Company drew down the remaining $10.0 million under its borrowing capacity of Delayed Draw Term Loan A before its expiry in December of 2019. The $15.0 million Delayed Draw Term Loan B expired upon the issuance of the Series B Notes, prior to the Company drawing down any monies.

The Term Loans are governed by the Second Lien Credit Agreement. The Term Loans include a 24-month paid-in-kind interest option available to the Company should it choose to defer cash payments in order to maintain the liquidity needed to continue launching new products, and preparing for an FDA prior approval inspection of its new injectable manufacturing facility. The Company has elected the paid-in-kind interest option ~~and increased the principal balance of Term Loans by $3~~.5 ~~million and $19.2 million for the three months and since inception through the period ended September 30, 2020, respectively.~~

On April 6, 2020, the Company entered (i) Amendment No. 2 of the Revolver and Amendment No. 4 of the Term Loans (the "Amendment 4"), effective as of December 31, 2019 (together, the “April 2020 Amendments”). The April 2020 Amendments together, among other things, (i) increase the interest rates, (ii) reset certain prepayment premiums and modify the terms of certain mandatory prepayments and (iii) modify certain financial covenant levels inclusive of the disposition of prior covenants as of and for the period ended December 31, 2019. The additions and changes to financial covenants set forth in the April 2020 Amendments: (i) add a new minimum net revenue covenant that is tested on the last day of each fiscal quarter from March 31, 2020 until the quarter ending December 31, 2020, (ii) reset a minimum consolidated adjusted EBITDA covenant that is tested on the last day of each fiscal quarter ending during the period from March 31, 2021 to maturity, (iii) eliminate a total net leverage covenant and (iv) add a minimum liquidity covenant tested at all times during the term of the Senior Credit Facilities.

The associated increases in interest rates were effective as of April 6, 2020. The Revolver bears interest at a fluctuating rate of interest equal to the one, two, three or six-month LIBOR plus a margin of 5.5% or a rate based on the prime rate plus a margin of 4.5%, with a LIBOR floor of 1.5%. The Term Loans bear interest at a fluctuating rate of interest equal to the one, two, three or six-month LIBOR plus a margin of 13.0% or a rate based on the prime rate plus a margin of 12.0%, with a LIBOR floor of 1.5%. Interest on the Senior Credit Facilities is payable in cash quarterly in arrears (or more frequently in connection with customary LIBOR interest provisions), provided, that the Company may elect (and has covenanted to the lenders under its Senior Credit Facilities and subsequent amendments thereto) to pay interest on the Term Loans in kind through December 13, 2021 but only if the following occurs: (1) the Company receives a “warning letter close-out letter” from the Federal Drug Administration in response to corrective actions taken by the Company since receipt of the warning letter in November 2019 and (2) the Company receives a written recommendation from the Federal Drug Administration setting forth its approval decision in respect of the pre-approval inspection for commercial production on the newly installed injectable line at the Company’s New Jersey facility. If only one of those items occurs by December 13, 2020, then the Company may still elect to 47

60The associated increases in interest rates were effective as of April 6, 2020. The Revolver bears interest at a fluctuating rate of interest equal to the one, two, three or six-month LIBOR plus a margin of 5.5% or a rate based on the prime rate plus a margin of 4.5%, with a LIBOR floor of 1.5%. The Term Loans bear interest at a fluctuating rate of interest equal to the one, two, three or six-month LIBOR plus a margin of 13.0% or a rate based on the prime rate plus a margin of 12.0%, with a LIBOR floor of 1.5%. Interest on the Senior Credit Facilities is payable in cash quarterly in arrears (or more frequently in connection with customary LIBOR interest provisions), provided, that the Company may elect (and has covenanted to the lenders under its Senior Credit Facilities and subsequent amendments thereto) to pay interest on the Term Loans in kind through December 13, 2021 but only if the following occurs: (1) the Company receives a “warning letter close-out letter” from the Federal Drug Administration in response to corrective actions taken by the Company since receipt of the warning letter in November 2019 and (2) the Company receives a written recommendation from the Federal Drug Administration setting forth its approval decision in respect of the pre-approval inspection for commercial production on the newly installed injectable line at the Company’s New Jersey facility. If only one of those items occurs by December 13, 2020, then the Company may still elect to pay interest in kind during 2021, but only from the time the second condition has been satisfied until December 13, 2021. Thereafter, a portion of interest on the loans accruing at a rate of 4.25% per annum may continue to be paid in kind.

pay interest in kind during 2021, but only from the time the second condition has been satisfied until December 13, 2021. Thereafter, a portion of interest on the loans accruing at a rate of 4.25% per annum may continue to be paid in kind.

Both April 2020 Amendments provide that in the event of receipt of net proceeds from a disposition triggering a mandatory prepayment, net proceeds of such disposition will be applied as follows: (i) first, to be retained by the Company or applied to amounts outstanding under the First Lien Credit Agreement until such time as liquidity of the Company and its subsidiaries equals $10.0 million, (ii) next to amounts outstanding under the Revolver (without a permanent reduction in the revolving loan commitments of the lenders) until such amounts are paid in full (with the first lien administrative agent having the right to waive such prepayment, in which event, such net proceeds are applied to amounts outstanding under the Second Lien Credit Agreement), and (iii) finally, to amounts outstanding under the Term Loans. In addition, pursuant to the Revolver, the Company has agreed at all times to maintain book cash of the Company and its subsidiaries not in excess of $10.0 million with any excess being required to prepay the outstanding obligations under the Revolver.

After giving effect to the April Amendments, the effective interest rates, inclusive of the debt discounts and issuance costs for the Initial Term Loan and Delayed Draw Term Loan A were between 16.6% and 17.7% and for the various borrowing tranches of the Revolver, were between 9.6% and 10.9%.

On July 20, 2020, the Company entered into (i) a Consent and Amendment No. 3 to First Lien Revolving Credit Agreement (the “First Lien Amendment”), and (ii) a Consent and Amendment No. 5 to Second Lien Credit Agreement (the “Second Lien Amendment”). The First Lien Amendment amended the First Lien Credit Agreement to, among other things, (i) permit the issuance of the ~~New~~Series ~~2023~~C Notes and the other transactions contemplated by the indenture related thereto, (ii) modify the terms of certain mandatory prepayments, (iii) modify certain negative covenants and (iv) modify certain financial covenants. The July 2020 Second Lien Amendment amended the Second Lien Credit Agreement to, among other things, (i) permit the issuance of the ~~New~~Series ~~2023~~C Notes and the other transactions contemplated by the indenture related thereto, (ii) modify the terms of certain mandatory prepayments, (iii) modify certain negative covenants, (iv) modify certain financial covenants and (v) extend the time period in which the Company may elect to pay interest in kind.

In connection with the transactions contemplated by the July 2020 Second Lien Amendment, the Company issued to the lenders party to the Second Lien Credit Agreement certain Warrants to purchase shares of the Company’s common stock. The Warrants are exercisable for up to, in the aggregate, 134,667 shares of the Company’s common stock at an exercise price of $0.01 per share of common stock. The Warrants are immediately exercisable upon issuance and will remain exercisable, in whole or in part, for a period of five years from the original issuance date. The number of shares issuable upon the exercise of the Warrants is subject to customary adjustments upon the occurrence of certain events, including (i) payment of a dividend or distribution to holders of shares of the Company’s common stock payable in shares of the Company’s common stock, (ii) a subdivision, capital reorganization or reclassification of the Company’s common stock or (iii) a merger, sale or other change of control transaction. As of September 30, 2020, all 134,667 Warrants remain outstanding.48

~~The~~In connection with the transactions contemplated by the July 2020 Second Lien Amendment, the Company ~~was~~issued into ~~compliance~~the ~~with~~lenders ~~its~~party ~~financial~~to ~~covenants~~the asSecond Lien Credit Agreement certain Warrants to purchase shares of ~~September~~the ~~30,~~Company’s ~~2020~~common stock. ~~However~~The Warrants are exercisable for up to, in the aggregate, 134,667 shares of the Company’s iscommon stock at ~~risk~~an exercise price of ~~failing~~$0.01 ~~the~~per ~~trailing~~share ~~twelve~~of ~~month~~common ~~Adjusted~~stock. ~~EBITDA~~The ~~covenant~~Warrants are immediately exercisable upon issuance and will remain exercisable, in whole or in part, for a period of five years from the ~~second~~original ~~quarter~~issuance date. The number of ~~2021.~~shares Ifissuable upon the ~~Company~~exercise ~~fails~~of the Warrants is subject to ~~comply~~customary ~~with~~adjustments ~~its~~upon ~~trailing~~the ~~twelve~~occurrence ~~months~~of ~~revenue~~certain ~~covenant~~events, ~~events~~including (i) payment of ~~default~~a ~~under~~dividend or distribution to holders of shares of the ~~First~~Company’s ~~Lien~~common ~~Credit~~stock ~~Agreement~~payable ~~and~~in shares of the ~~Second~~Company’s ~~Lien~~common ~~Credit~~stock, ~~Agreement~~(ii) ~~would~~a besubdivision, ~~triggered~~capital ~~and~~reorganization ~~its~~or ~~obligations~~reclassification ~~under~~of the ~~Senior~~Company’s ~~Credit~~common ~~Facilities~~stock or (iii) a merger, sale or other ~~agreements~~change ~~(including~~of ascontrol atransaction. As of March 31, 2021, all 134,667 Warrants remain outstanding.

61The Company was in compliance with its financial covenants as of March 31, 2021. However, the Company is at risk of failing the trailing twelve month Adjusted EBITDA covenant for the first quarter of 2022. If the Company fails to comply with its trailing twelve months revenue covenant, events of default under the First Lien Credit Agreement and the Second Lien Credit Agreement would be triggered and its obligations under the Senior Credit Facilities or other agreements (including as a result of cross-default provisions of the indentures relating to the Series C Notes and Series D Notes) may be accelerated. As such, the Company recorded a $5.6 million derivative liability associated with certain mandatory prepayment penalties and the recognition of future interest payments in the anticipation of a potential future default on its Senior Credit Facilities. The Company reversed the event of default liability of in the third quarter of 2020 based on the Series C Notes offering which terminates the previous revenue covenant under the Senior Credit Facilities, according to which the Company recognized a $5.6 million gain in change in the fair value of the derivative liability line on the Condensed Consolidated Statement of Operations for the three months ended March 31, 2021 (Note 8).

result of cross-default provisions of the indentures relating to the 2023 Series C Secured Convertible Notes and 2023 Series D Convertible Notes) may be accelerated. As such, the Company recorded a $5.6 million derivative liability associated with certain mandatory prepayment penalties and the recognition of future interest payments in the anticipation of a potential future default on its Senior Credit Facilities. The Company reversed the event of default liability of in the third quarter of 2020 based on the 2023 Series C Secured Senior Notes offering which terminates the previous revenue covenant under the Senior Credit Facilities, according to which the Company recognized a $1.3 million loss in change in the fair value of the derivative liability line on the Condensed Consolidated Statement of Operations for nine months ended September 30, 2020 (Note 9).

Government Grant Advance

On May 15, 2020, the Company received $3.4 million of proceeds from the U.S. Small Business Administration (the "SBA") Paycheck Protection Program ( the "Government Grant Advance") and ~~has~~utilized ~~been utilizing~~ the advance to balance its employee-related actions previously taken with the business needs to ensure a significant portion of the loan will be forgiven. The Government Grant Advance matures in 2 years with accrued interest at an annual rate of 1.00%, being deferred for payments ~~until~~on amounts not forgiven at the ~~date~~later of ~~forgiveness~~(a) or10 24months ~~weeks~~following ~~from~~ the ~~date~~borrower's covered period, or (b) when the ~~fund~~SBA ~~was~~remits ~~received~~any byamounts forgiven to the ~~Company~~lender. According to ~~ASC~~IAS ~~450-30~~20, ~~Gain~~Accounting ~~Contingencies,~~for ~~the~~Government ~~Company~~Grants ~~expects~~and ~~the~~Disclosure ~~full~~of ~~balance~~Government ofAssistance, the ~~Advance~~Company torecorded ~~meet~~$3.4 million in other income on the ~~forgivable~~Consolidated ~~criteria,~~Statements ~~resulting~~of inOperations nofor ~~gain~~the oryear ~~loss~~ended toDecember be31, ~~recognized~~2020.

Nasdaq Delisting Notice

InOn ~~June~~April ~~2019~~9, 2021, the Company received a ~~delisting~~ notice (the “Notice”) from ~~the~~The Nasdaq ~~due~~Stock toMarket ~~its~~informing ~~share~~the ~~price~~Company ~~being~~that ~~below~~for ~~$1.00~~the ~~for~~last 30 consecutive ~~trading~~business days., ~~The~~the ~~notice~~bid ~~specified~~price ~~that~~of the Company'’s ~~share~~securities ~~price~~had ~~must~~closed ~~trade~~below ~~above~~ $1.00 per share, ~~for~~which ~~ten~~is ~~consecutive~~the ~~trading~~minimum ~~days~~required ~~prior~~closing tobid ~~December~~price 2,for ~~2019~~continued inlisting ~~order~~on Nasdaq pursuant to ~~prevent~~Listing ~~its~~Rule ~~common~~5450(a)(1) ~~stock~~(the ~~from~~“Bid ~~being~~Price ~~delisted~~Requirement”). ~~For~~ ~~the~~The ~~180~~Notice ~~days~~has ~~preceding~~no ~~December~~immediate 2,effect ~~2019,~~on the Company'’s ~~share price remained below $1.00. The Company requested a second 180-day extension.~~ Nasdaq ~~denied~~listing ~~its~~or ~~request~~trading ~~and~~of the Company’s ~~chose~~common ~~to file for an appeal~~stock. The Company ~~was~~has ~~granted~~180 acalendar ~~hearing~~days, ~~date~~or ~~for~~until ~~the~~October ~~end of January 2020. Subsequent to the appeal hearing~~6, ~~Nasdaq set a deadline of April 17~~2021, ~~2020 for the Company~~ to regain compliance ~~with Nasdaq’s continuing listing requirements~~. In ~~early~~To ~~March~~regain ~~2020~~compliance, the ~~COVID-19~~closing ~~global~~bid ~~pandemic~~price ~~triggered a significant decline in global capital markets, including Nasdaq. In light~~ of ~~this significant decline,~~ the Company ~~requested Nasdaq to reconsider the April 17, 2020 deadline. Nasdaq agreed to the Company~~’s ~~request~~securities ~~and~~must ~~set~~be aat ~~new~~least ~~deadline to regain compliance by June~~ $1~~, 2020~~.00 Inper ~~response~~share tofor ~~the~~a ~~COVID-19~~minimum ~~pandemic and related extraordinary market conditions, Nasdaq provided additional temporary relief ("Relief") from the continued listing bid price and market value~~ of ~~publicly~~ten ~~held~~consecutive ~~shares~~business ~~listing requirements through August 17, 2020~~days. ~~Under~~If the ~~Relief,~~Company ~~the~~does ~~company~~not ~~had additional time to~~ regain compliance ~~with~~by ~~the~~October ~~Nasdaq through August 17~~6, ~~2020. In January 2020~~2021, the Company’s ~~Board~~may ofbe ~~Directors~~eligible ~~and~~for ~~shareholders~~additional ~~approved~~time ~~a reverse stock split in the range of any whole number between five (5) and ten (10)~~ to ~~one~~regain ~~(1).~~compliance Onor ~~May~~if ~~28, 2020,~~ the Company ~~effectuated~~is aotherwise ~~one-for-ten~~not ~~reverse stock split (Note 2). On June 18~~eligible, ~~2020,~~ the Company ~~received~~may request a ~~written~~hearing ~~notice~~before ~~from~~a ~~the~~Hearings ~~Nasdaq that it had regained compliance with the Bid Price Requirement~~Panel.

~~On July 28, 2020, the Company received a notice (the “Notice”) from~~ The ~~Nasdaq~~negative ~~Stock~~financial ~~Market~~conditions ~~stating~~described ~~that~~above ~~the~~raise ~~Company~~substantial ~~was~~doubt ~~not~~about inour ~~compliance~~ability ~~with Nasdaq Listing Rule 5450(b)(3)(C) relating~~ to ~~the~~continue ~~minimum~~as ~~Market Value of Publicly Held Shares (the “MVPHS Rule”). The notice stated that the Company failed to maintain~~ a ~~minimum~~going ~~market~~concern ~~value~~as of ~~publicly~~March 31, ~~held shares of $15~~2021.0 ~~million~~To ~~for~~that ~~the~~end, 30and ~~consecutive~~as ~~days~~described ~~preceding~~above, the ~~date~~Company ofis ~~the~~not ~~notice.~~currently ~~The~~generating ~~notice~~revenues ~~has~~from nooperations ~~immediate~~that ~~effect~~are onsufficient ~~the~~to ~~Company’s~~cover ~~Nasdaq~~its ~~listing~~operating orexpenses, ~~trading~~and ofits ~~the~~available ~~Company’s~~capital ~~common~~resources ~~stock.~~are ~~The~~not ~~Company~~sufficient ~~has a compliance period~~ for ~~the~~it ~~MVPHS~~to ~~Rule~~continue ofto ~~180~~meet ~~calendar~~its ~~days,~~obligations oras ~~until~~they ~~January~~become ~~25, 2021, in which to regain compliance~~due. ToAs ~~regain~~a ~~compliance~~result, the Company’s ~~minimum~~has ~~market~~engaged ~~value~~financial ofand ~~publicly~~legal ~~held~~advisors ~~shares~~to ~~must~~assist ~~equal~~it ~~$15.0~~in, ~~million~~among orother ~~more for a minimum of 10 consecutive business days~~things, ~~Nasdaq~~analyzing ~~will~~all ~~notify~~available ~~the~~strategic ~~Company~~alternatives ~~that~~to itaddress ~~has~~its ~~achieved~~liquidity ~~compliance~~and ~~with~~capital ~~the Rule~~structure. IfHowever, the Company ~~does~~cannot ~~not~~provide ~~regain~~assurances ~~compliance by January 25, 2021, then Nasdaq will notify the Company~~ that ~~the~~additional ~~Company’s~~capital ~~common stock~~ will be ~~delisted~~available ~~from~~when ~~the~~needed ~~Nasdaq~~or ~~Global~~that ~~Market,~~any ~~unless~~strategic ~~the~~alternatives ~~Company~~or ~~requests~~restructuring apursued ~~hearing~~will ~~before~~be aon ~~Nasdaq Hearings Panel~~acceptable. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

closing bid price of the Company’s securities must be at least $1.00 per share for a minimum of ten consecutive business days. If the Company does not regain compliance by June 2, 2021, the Company may be eligible for additional time to regain compliance or if the Company is otherwise not eligible, the Company may request a hearing before a Hearings Panel.

The negative financial conditions described above raise substantial doubt about our ability to continue as a going concern as of September 30, 2020. To that end, and as described above, the Company is not currently generating revenues from operations that are sufficient to cover its operating expenses, and its available capital resources are not sufficient for it to continue to meet its obligations as they become due. As a result, the Company has engaged financial and legal advisors to assist it in, among other things, analyzing all available strategic alternatives to address its liquidity and capital structure including, but not limited to, making significant changes to its operating plan, pursuing a merger or other transaction involving a change of control, or restructuring its outstanding debt via out of court or in-court methods, including the pursuit of a plan of reorganization which would be filed under Chapter 11 of the U.S. Bankruptcy Code and or ceasing its operations. However, the Company cannot provide assurances that additional capital will be available when needed or that any strategic alternatives or restructuring pursued will be on acceptable. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our cash flows from operating, investing and financing activities, as reflected in the condensed Consolidated Statements of Cash Flows, are summarized in the following table:

	Nine months ended September 30,
	Three months ended March 31,
	2020		2019
	2021		2020
Net cash provided by (used in)
Operating Activities	$	(1510,~~607~~874)	$	(82,~~661~~946)
Investing Activities	$	(~~3,164~~47)	$	(~~6,082~~880)
Financing Activities	$	1232,~~592~~415	$	~~9,536~~(3)

Operating Activities

Our operating activities used $1510.69 million of cash and cash equivalents in the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 mainly to support our operational activities, which included continued inventory management/build to help avoid failure-to-supply fees and normal timing differences in working capital balances.

Investing Activities

Our investing activities used $~~3.2~~47 ~~million~~thousand of cash and equivalents during the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021, compared to $60.19 million used during the same period last year, which was used for the continued facility expansion in Buena, NJ.

Financing Activities

During the ~~nine~~three months ended ~~September 30~~March 31, ~~2020~~2021, our financing activities provided $1232.64 million of cash and cash equivalents, which included $1238.07 million of proceeds from the ~~Series C Convertible Notes~~ATM.

Our capital resources were comprised of cash and cash equivalents of $927.75 million and $~~15.~~5.9 million as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020 respectively. We had working capital of $3247.42 million and $4521.02 million at ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively.

In order to continue normal business operations and execution of the Company’s growth strategy, the Company may exercise its ability to significantly defer or reduce planned discretionary investments in research and development and capital projects or seek other financing alternatives. Other financing alternatives may include raising additional capital through the sale of its equity, a strategic alliance with a third party or securing debt. If additional acquisition and growth opportunities arise, external financing will be required.

OnJanuary ~~November~~2021 ~~12,~~Debt ~~2018,~~Exchange the Company secured a credit agreement for $120.0 million. The facility includes three tranches of funding, an asset based revolving credit facility of $25.0 million due November 2022 (“Revolver”), a term loan of $80.0 million due February 2023 (“2023 Term Loan”), and a delayed draw term loan of $15.0 million also due in February 2023 (“2023 Delayed Draw Term Loan”). The interest rate under the Revolver was calculated, at the option of the Company, at either the one, two, three or six-month LIBOR plus 3.75% or the base rate plus 2.75%. The interest rate on the 2023 Term Loan and the 2023 Delayed Draw Term Loan bore interest, at the option of the Company, at either the one, two, three or six-month LIBOR Transactions

63On January 27, 2021, we completed a recapitalization and equitization transaction pursuant to an Exchange Agreement, dated January 27, 2021, among the Company, the Series C Noteholders (as defined below) and Ares (as defined below) (the “Exchange Agreement”). Under the Exchange Agreement, the holders (the “Series C Noteholders”) of all of our 9.5% Series C Senior Secured Convertible Notes due 2023 (the “Series C Notes”) exchanged an aggregate of approximately $50.3 million of outstanding principal under the Series C Notes, representing 100% of the outstanding principal under the Series C Notes, together with accrued interest thereon, for an aggregate of 29,862,641 shares (the “Series C Exchange Shares”) of our common stock (the “Series C Equitization”). The Series C Equitization resulted in the extinguishment of all of our obligations under the Indenture, dated as of July 20, 2020, between us and Wilmington Trust, National Association, as trustee and collateral agent (the “Series C Indenture”).

~~plus~~Additionally, ~~8.75%~~under or the ~~base~~Exchange ~~rate~~Agreement, ~~plus~~certain ~~7.75%~~credit funds and accounts managed by affiliates of Ares Management Corporation (such funds and accounts, collectively, “Ares” and, together with athe ~~24-month~~Series ~~paid-in-kind~~C ~~interest~~Noteholders, ~~option~~the ~~available~~“Participating toParties”) that are lenders under our Second Lien Credit Agreement, dated December 13, 2018, by and among the Company, ~~should~~certain itof ~~choose~~its subsidiaries, the lenders from time to ~~defer~~time ~~cash~~party ~~payments~~thereto, and Ares Capital Corporation as Administrative Agent (as amended, including by the Second Lien Amendment (as defined below), the “Second Lien Credit Agreement”) converted a portion of the outstanding term loans under the Second Lien Credit Agreement constituting 100% of the approximately $24.5 million in ~~order~~accrued toPIK ~~maintain~~interest under the ~~liquidity~~Second ~~needed~~Lien toCredit ~~continue~~Agreement ~~launching~~into ~~new~~an ~~products~~aggregate of approximately 85,412 ~~build~~shares ~~inventory~~of our newly created Series D Preferred Stock, par value $0.01 per share (the “Series D Preferred Stock”, and ~~prepare~~such ~~for~~transaction, the ~~FDA~~“PIK ~~prior~~Interest ~~approval~~Exchange” ~~inspection~~and, together with the Series C Equitization, the “January 2021 Debt Exchange Transactions”). Each

On April 6, 2020, the Company entered (i) Amendment No. 2 of the Revolver and Amendment No. 4 of the Term Loans, effective as of December 31, 2019 (together, the “April 2020 Amendments”). The April 2020 Amendments together, among other things, (i) increase the interest rates, (ii) reset certain prepayment premiums and modify the terms of certain mandatory prepayments and (iii) modify certain financial covenant levels inclusive of the disposition of prior covenants as of and for the period ended December 31, 2019. The additions and changes to financial covenants set forth in the April 2020 Amendments: (i) add a new minimum net revenue covenant that is tested on the last day of each fiscal quarter from March 31, 2020 until the quarter ending December 31, 2020, (ii) reset a minimum consolidated adjusted EBITDA covenant that is tested on the last day of each fiscal quarter ending during the period from March 31, 2021 to maturity, (iii) eliminate a total net leverage covenant and (iv) add a minimum liquidity covenant tested at all times during the term of the Senior Credit Facilities. 50

~~The~~share ~~associated~~of ~~increases~~Series inD ~~interest~~Preferred ~~rates~~Stock ~~were~~is ~~effective~~non-voting ~~as of April 6~~and, ~~2020.~~subject ~~The~~to ~~Revolver~~an ~~bears~~increase ~~interest~~in ~~at a fluctuating rate of interest equal to~~ the ~~one,~~number ~~two, three or six-month LIBOR plus a margin~~ of ~~5.5%~~shares ~~or a rate based on the prime rate plus a margin~~ of ~~4.5%,~~our ~~with~~common astock ~~LIBOR~~available ~~floor~~for ofissuance ~~1.5%.~~under ~~The~~our ~~Term~~amended ~~Loans~~and ~~bear~~restated ~~interest~~certificate ~~at a fluctuating rate~~ of ~~interest equal to the one~~incorporation, ~~two,~~is ~~three~~convertible orinto ~~six-month~~200 ~~LIBOR~~shares ~~plus a margin~~ of ~~13.0%~~our orcommon ~~a rate based on the prime rate plus a margin of 12~~stock.~~0%,~~ ~~with~~The ashares ~~LIBOR floor~~ of ~~1.5%. Interest~~Series onD ~~the~~Preferred ~~Senior~~Stock ~~Credit~~issued ~~Facilities is payable~~ in ~~cash quarterly in arrears (or more frequently in~~ connection with ~~customary LIBOR interest provisions), provided, that~~ the ~~Company~~PIK ~~may~~Interest ~~elect~~Exchange ~~(and~~are ~~has~~currently ~~covenanted~~convertible tointo ~~the~~an ~~lenders~~aggregate ~~under~~of ~~its Senior Credit Facilities and subsequent amendments thereto) to pay interest on the Term Loans in kind through December 13~~17,082,285 ~~2021~~shares ~~but~~of ~~only~~our ifcommon ~~the~~stock. ~~following~~The ~~occurs:~~holders ~~(1)~~of ~~the~~shares ~~Company receives a “warning letter close-out letter” from the Federal Drug Administration in response to corrective actions taken by the Company since receipt~~ of ~~the~~Series ~~warning~~D ~~letter~~Preferred inStock ~~November~~may ~~2019~~not ~~and~~convert ~~(2)~~such ~~the~~shares ~~Company receives a written recommendation from the Federal Drug Administration setting forth its approval decision in respect~~ of ~~the~~Series ~~pre-approval~~D ~~inspection~~Preferred ~~for~~Stock ~~commercial~~into ~~production~~shares ~~on the newly installed injectable line at the Company’s New Jersey facility. If only one~~ of ~~those~~our ~~items~~common ~~occurs~~stock byto ~~December 13, 2020, then~~ the ~~Company~~extent ~~may~~such ~~still~~a ~~elect~~conversion towould ~~pay~~result ~~interest~~ in ~~kind~~a ~~during~~holder ~~2021~~thereof, ~~but~~together ~~only~~with ~~from~~its ~~the time the second condition has been satisfied until December 13~~affiliates, ~~2021.~~collectively ~~Thereafter,~~owning amore ~~portion~~than 15% of ~~interest on~~ the ~~loans~~number ~~accruing at a rate~~ of ~~4.25%~~shares ~~per annum may continue to be paid in kind. The Company has elected the paid-in-kind interest option and increased the principal balance~~ of ~~Term~~our ~~Loans~~common bystock ~~$3.5~~then ~~million and $19~~outstanding.~~2 million for the three months and since inception through the period ended September 30, 2020, respectively.~~

InThe ~~connection~~January ~~with~~2021 ~~the~~Debt ~~Term~~Exchange ~~Loan~~Transactions ~~Amendments~~reduced ~~dated April 6, 2020,~~ the ~~Company~~amount ~~issued~~of toindebtedness ~~the~~on ~~Term~~our ~~Loan~~balance ~~lenders~~sheet ~~certain~~from ~~Warrants~~approximately to$186.3 ~~purchase~~million up to, inapproximately ~~the aggregate, 538,995 of post-reverse stock split shares of the Company’s common stock at an exercise price of~~ $0109.017 ~~per share~~million. ~~The~~After ~~Warrants~~giving ~~initially~~effect ~~were recorded at fair value upon issuance and classified as a liability as the Company did not have sufficient authorized unissued shares for the Warrants’ exercise. The Warrants were remeasured~~ to ~~fair value up to~~ the ~~reverse~~January ~~stock~~2021 ~~split~~Debt ~~date,~~Exchange ~~with~~Transactions ~~any~~and ~~fair~~prior ~~value~~exchange ~~adjustments~~transactions ~~recognized~~ in ~~the~~which ~~Condensed~~we ~~Consolidated~~extinguished ~~Statements~~all ofoutstanding ~~Operations~~4.75% ~~The~~Convertible ~~Warrants~~Senior ~~were~~Notes ~~reclassified~~due asMay ~~equity~~2023 ~~at their fair value upon~~ (the ~~reverse~~"Series ~~stock~~A ~~split~~Notes") ~~date~~ and ~~will~~all ~~not~~outstanding ~~be remeasured subsequently~~7.0% ~~The~~Cash ~~estimated~~/ ~~fair value of the Warrants on the date of issuance of $1~~8.40% ~~million~~PIK ~~was~~Series ~~recorded~~B asSenior aUnsecured ~~debt~~Convertible ~~discount.~~Notes ~~The~~due ~~Warrants~~2023 ~~had a fair value of $2.2 million as of~~ (the ~~reverse~~"Series ~~stock~~B ~~split date which was reclassified to equity. The Warrants are exercisable at any time after the reverse stock split which occurred on May 28~~Notes"), ~~2020~~our ~~and~~remaining ~~will remain exercisable, in whole or in part, for a period of 5 years from the issuance date~~indebtedness. Asas of ~~September~~January 3027, ~~2020~~2021, ~~all~~consisted ~~538,995 Warrants remain outstanding (Note 9).~~of:

~~The~~•$105.0 ~~number~~million of shares issuable upon the exercise of the Warrants is subject to customary adjustments upon the occurrence of certain events, including (i) payment of a dividend or distribution to holders of shares of the Company’s common stock payable in ~~shares~~outstanding ofborrowings ~~the~~under ~~Company’s common stock, (ii) a subdivision, capital reorganization or reclassification of~~ the ~~Company’s~~Senior ~~common~~Credit ~~stock~~Agreements; ~~or (iii) a merger, sale or other change of control transaction.~~and

~~On July 20, 2020, the Company entered into (i) a Consent and Amendment No~~•$1. 3 tomillion ~~First~~outstanding ~~Lien~~principal ~~Revolving~~amount Credit Agreement (the “July 2020 First Lien Amendment”), and (ii) a Consent and Amendment No. 5 to Second Lien Credit Agreement (the “July 2020 Second Lien Amendment”). The July 2020 First Lien Amendment amended the First Lien Credit Agreement to, among other things, (i) permit the issuance of ~~the~~our ~~2023~~Zero ~~Series~~Coupon ~~C Secured~~ Convertible Senior Notes ~~and~~due ~~the~~2023 ~~other transactions contemplated by the indenture related thereto,~~ (~~ii) modify~~ the terms of certain mandatory prepayments, (iii) modify certain negative covenants and (iv) modify certain financial covenants. The July 202 Second Lien Amendment amended the Second Lien Credit Agreement to, among other things, (i) permit the issuance of the 2023 “Series CD ~~Secured Convertible~~ Notes ~~and the other transactions contemplated by the indenture related thereto, (ii~~”) ~~modify the terms of certain mandatory prepayments,~~ (~~iii)~~described ~~modify~~further ~~certain negative covenants, (iv~~below) ~~modify certain financial covenants and (v) extend the time period in which the Company may elect to pay interest in kind~~.

64Our current amended and restated certificate of incorporation authorizes 100,000,000 shares of common stock for issuance. As of the date of this Form 10-Q filing, we have 92,817,493 shares of common stock issued and outstanding. In addition, after giving effect to the January 2021 Debt Exchange Transactions, there are approximately 85,412 shares of Series D Preferred Stock outstanding, which are convertible into, in the aggregate, 17,082,285 shares of our common stock as of the date of this 10-K filing. As a result, there are presently an insufficient number of shares authorized and available for issuance under our amended and restated certificate of incorporation to effect the conversion of all outstanding shares of Series D Preferred Stock into common stock pursuant to the terms of such Series D Preferred Stock. Pursuant to the terms of the Exchange Agreement, we are required to seek the requisite approval of our stockholders to an amendment to our amended and restated certificate of incorporation to allow for the conversion in full of all shares of Series D Preferred Stock into shares of our common stock (either by an increase in the number of authorized shares of our common stock, the effectuation of a reverse stock split, or otherwise) (the “Stockholder Approval”). The Exchange Agreement provides that, if we are unable to obtain the Stockholder Approval on or before July 1, 2021, we will issue to each holder of Series D Preferred Stock, on a quarterly basis, additional shares of Series D Preferred Stock equal to 2.5% of the number of shares of Series D Preferred Stock originally issued to such holder until the Stockholder Approval is obtained (with a prorated amount of Series D Preferred Stock to be issued in the event the Stockholder Approval is obtained during any such calendar quarter). We intend to seek Stockholder Approval at our Annual Meeting of Stockholders scheduled to be held on June 18, 2021.

InAs ~~connection~~a condition to entering into the Exchange Agreement, we entered into a Stockholders’ Agreement with the ~~transactions~~Participating ~~contemplated~~Parties byand B. Riley Securities (the ~~July~~“Stockholders’ ~~2020~~Agreement”), ~~Second~~pursuant ~~Lien~~to ~~Amendment~~which, among other matters, the Company ~~issued~~granted to(i) the ~~lenders~~Participating ~~party~~Parties toregistration ~~the~~rights ~~Second~~for ~~Lien~~the ~~Credit~~shares ~~Agreement~~of ~~certain~~our ~~Warrants~~common tostock ~~purchase~~issuable ~~shares~~upon conversion of the ~~Company’s~~Series ~~common~~D ~~stock~~Preferred Stock and for the Series C Exchange Shares, and (ii) B. ~~The~~Riley ~~Warrants~~Securities ~~are~~registration ~~exercisable~~rights for upthe shares of common stock issued to, B. Riley Securities as a commitment fee in connection with an At Market Issuance Sales Agreement (the ~~aggregate~~“ATM Sales Agreement”), ~~134~~dated January 27,~~667~~ ~~shares~~2021, ofwith ~~the~~B. ~~Company’s~~Riley ~~common~~Securities, ~~stock~~pursuant atto which we conducted an ~~exercise~~at-the-market ~~price~~equity ofoffering $0(the “ATM Offering”).01 ~~per~~In ~~share~~addition to the voting restrictions discussed further below, the Stockholders’ Agreement also contains terms restricting the transfer of shares of our common stock. ~~The~~and ~~Warrants~~Series ~~are~~D ~~immediately~~Preferred ~~exercisable~~Stock ~~upon~~held ~~issuance~~by ~~and~~the ~~will~~Participating ~~remain~~Parties, ~~exercisable~~including, insubject ~~whole~~to certain exceptions, a restriction on all sales or other transfers or dispositions of such shares (i) in ~~part~~respect of our recently completed at-the-market common stock offering, ~~for~~(ii) ain any period during which we are conducting a follow-on public offering of ~~five~~our ~~years~~common ~~from~~stock ~~the~~within ~~original~~11 ~~issuance~~months ~~date.~~after ~~The~~the ~~number~~ATM ofOffering ~~shares~~and ~~issuable~~ending ~~upon~~on the ~~exercise~~earlier of ~~the~~60 ~~Warrants~~days isafter ~~subject~~commencement toof ~~customary~~such ~~adjustments~~offering ~~upon~~or ~~the~~five ~~occurrence~~trading days following its completion, (iii) in violation of certain ~~events,~~volume restrictions set forth in the Stockholders’ Agreement (including the Rule 144 Volume Limitation (ias defined in the Stockholders’ Agreement)) ~~payment~~at ofany atime ~~dividend~~when orsuch ~~distribution~~Participating toParty ~~holders~~holds ofat ~~shares~~least 9.9% of the ~~Company’s~~outstanding shares of our common stock ~~payable~~(including in shares issuable upon conversion of the ~~Company’s~~Series ~~common~~D ~~stock,~~Preferred Stock) and (iiiv) to any person or entity that is required to file a ~~subdivision,~~statement ~~capital~~on ~~reorganization~~Schedule 13D or ~~reclassification~~Schedule 13G with respect to our securities. The Stockholders’ Agreement also (x) subjects each Participating Party to certain standstill provisions for a period of 18 months following the ~~Company’s~~date ~~common~~of ~~stock~~the orStockholders’ Agreement, (~~iii~~y) arequires ~~merger~~each Participating Party to include, ~~sale~~in any Schedule 13D or ~~other~~Schedule ~~change~~13G that such Participating Party may be required to file in respect of our securities, an acknowledgment that such Participating Party has no intent to directly or indirectly control ~~transaction.~~us Asor to take any actions contemplated by Section 5 of ~~September~~the 30Stockholders’ Agreement and (z) provides that the rights of each of Nantahala Capital Management, ~~2020~~LLC (“Nantahala”) and Silverback Asset Management, ~~all~~LLC, ~~134~~two of our Series C Noteholders,~~667~~ ~~Warrants~~to ~~remain~~appoint ~~outstanding~~a non-voting observer to our board of directors terminated upon the consummation of the Series C Exchange.

On October 31, 2019, the Company closed its offering of the 2023 Series B Notes in the aggregate principal amount of $34.4 million (“2023 Series B Convertible Notes”). The 2023 Series B Convertible Notes will mature in May 2023 and are convertible at the option of the holder at any time prior to its maturity. The initial conversion price was $7.20 per share, subject to adjustment under certain circumstances. consider to remove the previous disclosure. The 2023 Series B Convertible Notes bear interest at a rate of 7.00% per annum if paid in cash, semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The Company also has an option, and has agreed with its senior lender, to PIK the interest at 8.00% per annum, to defer cash payments. The Company has elected the paid-in-kind interest option and increased the principal balance of the 2023 Series B Convertible by $2.0 million as of September 30, 2020. Following the issuance of the 2023 Series D Convertible Notes described below, all amounts owing with respect to the 2023 Series B Convertible Notes had been repaid and the related indenture and the Company’s obligations thereunder were satisfied and discharged.51

OnThe ~~July~~Stockholders’ 20Agreement also contains certain voting restrictions as follows: (a) each Series C Noteholder and each of such Series C Noteholder’s affiliates will not vote any shares of our common stock held by such Series C Noteholder or such affiliates to the extent such vote would result in such Series C Noteholder and such affiliates, ~~2020~~collectively, voting in excess of 4.9% of the ~~Company~~outstanding ~~completed~~shares of our common stock as of the ~~sale~~record date for such vote, and ~~issuance~~(b) Ares will not vote any shares of ~~$13~~our common stock held by it to the extent such vote would result in Ares and its affiliates, collectively, voting in excess of 15% of the outstanding shares of our common stock as of the record date for such vote.8 ~~million~~In ~~aggregate~~addition, ~~principal~~pursuant ~~amount~~to Voting Trust Agreements among Wilmington Savings Fund Society, FSB (“WSFS Bank”), us and each of ~~2023~~Nantahala and Silverback (the “Voting Trust Agreements”), we and each of Nantahala and Silverback established voting trusts with WSFS Bank to hold all Series C ~~Secured~~Exchange ~~Convertible~~Shares ~~Notes~~issued to Nantahala or Silverback, respectively, in excess of 4.9% ~~After~~of ~~taking~~the ~~into~~outstanding ~~account~~shares anof ~~original~~our ~~issue~~common ~~discount~~stock, and ~~other~~WSFS ~~fees~~Bank ~~payable~~has agreed to vote all such Series C Exchange Shares on all matters presented to the ~~Purchasers,~~vote of our stockholders in the ~~Company~~same ~~received~~proportions ~~net~~as ~~cash~~all ~~proceeds~~shares of ~~approximately~~our ~~$10.0~~common ~~million,~~stock ~~which~~other than (x) the ~~Company~~Series isC ~~using~~Exchange ~~for~~Shares ~~general~~held ~~corporate~~in ~~purposes.~~trust by WSFS Bank; (y) any other shares of our common stock held by Nantahala or Silverback, as applicable and (z) other shares of our common stock held by the other Participating Parties.

~~The~~Amendments Company also issued approximately $32.3 million in aggregate principal amount of 2023 Series C Secured Convertible Notes in exchange for approximately $35.9 million in aggregate principal amount, plus accrued but unpaid interest thereon, of the Company’s outstanding 2023 Series B Convertible Notes, giving effect to aFirst ~~10%~~Lien ~~discount~~Credit onAgreement ~~the~~and ~~principal~~Second ~~amount~~Lien ofCredit the 2023 Series B Convertible Notes exchanged. In addition, the Company issued approximately $3.7 million in aggregate principal amount of 2023 Series C Secured Convertible in exchange for approximately $8.2 million in aggregate principal amount, plus accrued but unpaid interest thereon, of the Company’s outstanding 2023 Series A Convertible Notes, giving effect to a 55% discount on the principal amount of the 2023 Series A Convertible Notes exchanged. Agreement

~~Interest~~Also ~~on the 2023 Series C Secured Convertible Notes accrues at the rate of 9.5% per annum and is payable~~ in ~~kind~~connection ~~and capitalized~~ with ~~principal~~the ~~semiannually~~January in2021 ~~arrears~~Debt onExchange ~~March 1 and September 1 of each year~~Transactions, ~~beginning~~we onentered ~~September~~into 1,(i) ~~2020~~Amendment No. ~~The~~4 ~~2023 Series C Secured Convertible Notes will mature on March 30, 2023, unless earlier converted or repurchased and are subordinate~~ to ~~the~~First ~~indebtedness~~Lien ~~under~~Revolving ~~the Senior~~ Credit ~~Facilities.~~Agreement ~~The Company has elected~~ (the ~~paid-in-kind~~“First ~~interest~~Lien ~~option~~Amendment”), ~~and~~amending ~~increased~~ the ~~principal~~First ~~balance~~Lien ofCredit ~~the~~Agreement, ~~2023~~dated ~~Series~~December C13, ~~Secured~~2018, ~~Convertible Notes~~ by ~~$0.5~~and ~~million~~among in the ~~three months ended September 30~~Company, ~~2020.~~certain ~~The Company has agreed to use its commercially reasonable best efforts to obtain the approval~~ of its ~~stockholders~~subsidiaries, ~~that is required under applicable Nasdaq rules and regulations to permit holders of~~ the ~~2023~~lenders ~~Series~~from Ctime ~~Secured Convertible Notes~~ to ~~beneficially~~time ~~own~~party ~~shares~~thereto, ofand ~~common~~ACF ~~stock~~Finco ~~without~~I ~~being~~LP ~~subject~~as toAdministrative ~~the~~Agent ~~Nasdaq~~(as ~~Change~~amended ofby ~~Control Cap. In~~ the ~~event~~First ~~that~~Lien ~~the Company did not obtain such stockholder approval at an annual or special meeting of its stockholders on or before October 31~~Amendment, ~~2020, holders of a majority in aggregate principal amount of outstanding 2023 Series C Secured Convertible Notes may elect to increase~~ the ~~interest~~“First ~~rate~~Lien ~~payable~~Credit onAgreement”), ~~the~~and ~~2023~~(ii) ~~Series~~Amendment ~~C Secured Convertible Notes to 18~~No.0% ~~per~~6 ~~annum until such stockholder approval is obtained, which will continue~~ to beSecond ~~paid~~Lien inCredit ~~kind~~Agreement in (the ~~form~~“Second ofLien ~~additional~~Amendment”), ~~principal~~pursuant ~~with respect~~ to ~~any applicable period in~~ which ~~the~~all ~~increased~~identified ~~interest~~defaults ~~rate~~and ~~remains~~events ~~in effect. Pursuant to a notice dated November 2, 2020, the holders~~ of adefault ~~majority~~thereunder inwere ~~principal~~waived ~~amount~~and ofcertain ~~the~~amendments ~~outstanding~~were ~~2023~~made ~~Series C Secured Convertible Notes elected~~ to ~~increase~~ the ~~interest~~First ~~rate~~Lien ~~payable~~Credit onAgreement ~~the 2023 Series C Secured Convertible Notes from 9.5% to 18.0%. The Company convened~~ and ~~adjourned~~Second aLien ~~special~~Credit ~~meeting of stockholders on October 22~~Agreement, ~~2020~~respectively, ~~and~~including ~~further~~those ~~adjourned~~described ~~such~~below. ~~special~~The ~~meeting~~First onLien ~~November~~Credit ~~11,~~Agreement ~~2020~~ and ~~November~~Second ~~25,~~Lien ~~2020~~Credit ~~due~~Agreement toare areferred ~~lack~~to ofherein ~~quorum.~~as ~~The~~the ~~special~~“Senior ~~meeting~~Credit ~~of stockholders was held on December 16~~Agreements, ~~2020~~”, ~~pursuant~~and tosuch ~~which~~indebtedness ~~the~~outstanding ~~stockholders~~under of the ~~Company~~Senior ~~approved~~Credit ~~the~~Agreements ~~holders~~is ofreferred ~~the 2023 Series C Secured Convertible Notes beneficially owning shares of common stock without being subject~~ to ~~the~~herein ~~Nasdaq~~as ~~Change of Control Cap. The holders of~~ the ~~Company’s~~“Senior ~~common~~Credit ~~stock approved the proposal and the interest rate payable on the 2023 Series C Secured Convertible Notes was decreased to 9~~Facilities”.~~5% on such date.~~

65The First Lien Amendment amended the First Lien Credit Agreement to, among other things, (i) permit borrowings under the revolving credit facility under the First Lien Credit Agreement, subject to availability (which is $0 as of the date of this Form 10-K filing) and the other terms and conditions of the First Lien Credit Agreement, provided, that such borrowings are only available until the commitments of the lenders under the Second Lien Credit Agreement under the Second Lien Delayed Draw Term Loan C Facility (as defined below) have been reduced to $0, (ii) reduce from $10.0 million to $3.0 million (from and after the first draw of the Second Lien Delayed Drawn Term Loan C Facility described below) the maximum amount of cash that we and our subsidiaries that are credit parties under the First Lien Credit Agreement are permitted to maintain prior to triggering a mandatory prepayment of the revolving credit facility (without a permanent reduction of the revolving credit commitments), which $3.0 million threshold automatically increased by the net proceeds received from the January 28, 2021 ATM Offering and any other equity offering, (iii) reduce from $3.0 million to $1.0 million the minimum liquidity (as defined in the First Lien Credit Agreement) required to be maintained by us and our subsidiaries that are credit parties under the First Lien Credit Agreement on a consolidated basis until the earlier of (a) the date on which the net proceeds from the January 28, 2021 offering exceed $15.0 million in the aggregate and (b) February 15, 2021, at which time the liquidity covenant increases to $3.0 million on a consolidated basis, (iv) from and after March 31, 2022, further increase the minimum liquidity covenant from $3.0 million to $4.0 million on a consolidated basis and (v) suspend testing of the minimum consolidated adjusted EBITDA covenant until March 31, 2022, at which time such minimum consolidated adjusted EBITDA covenant levels will resume to the levels in effect prior to the closing of the First Lien Amendment.

OnThe ~~September~~Second 22Lien Amendment amended the Second Lien Credit Agreement to (i) permit, ~~2020~~among other things, the ~~Company~~January ~~completed~~2021 Debt Exchange Transactions, (ii) provide for a new multiple-draw delayed draw term loan facility in the ~~issuance~~aggregate principal amount of ~~approximately~~up to $274.56 million ~~aggregate~~(the ~~principal~~“Second ~~amount~~Lien ofDelayed ~~2023~~Draw ~~Series~~Term DLoan ~~Convertible~~C ~~Notes~~Facility”) inwhich ~~exchange~~will ~~for~~be ~~approximately~~made ~~$59.0~~available ~~million~~to inus ~~aggregate~~until ~~principal~~December ~~amount~~31, ~~plus~~2021, ~~accrued~~subject ~~but~~to ~~unpaid~~satisfaction ~~interest~~of the conditions to borrowing, including, following the launch of ~~2023~~this ~~Series~~offering, a Apro ~~Convertible~~forma ~~Notes~~maximum liquidity test of $4.0 million, ~~giving~~the ~~effect~~proceeds of which may be used to pay expenses specified in a ~~53.4%~~budget ~~discount~~approved onby the ~~principal~~administrative ~~amount~~agent ofunder the ~~2023~~Second ~~Series~~Lien ACredit ~~Convertible~~Agreement, ~~Notes~~(iii) ~~exchanged.~~and ~~The~~after ~~Company~~March ~~also~~31, ~~issued~~2022, ~~approximately~~increase from $3.0 million to $1.40 million ~~aggregate~~the ~~principal~~minimum ~~amount~~liquidity (as defined in the Second Lien Credit Agreement) required to be maintained by us and our subsidiaries that are credit parties under the Second Lien Credit Agreement on a consolidated basis until the earlier of (a) the ~~2023~~date ~~Series~~on Dwhich ~~Convertible~~the ~~Notes~~net inproceeds ~~exchange~~from ~~for~~the ~~approximately~~January 28, 2021 offering exceed $015.50 million in the aggregate ~~principal~~and ~~amount,~~(b) ~~plus~~February ~~accrued~~15, ~~but~~2021, ~~unpaid~~at ~~interest,~~which oftime the ~~Company’s~~minimum ~~outstanding~~liquidity ~~2023~~covenant ~~Series~~increases Bto ~~Convertible~~$3.0 ~~Notes~~million on a consolidated basis, ~~giving~~(iv) ~~effect~~from toand aafter March 31, 2022, further increase the minimum liquidity covenant to $4.9%0 ~~discount~~million on ~~the~~a ~~principal~~consolidated ~~amount~~basis, (v) suspend testing of the ~~2023~~minimum ~~Series~~consolidated Badjusted ~~Convertible~~EBITDA ~~Notes~~covenant ~~exchanged.~~until March 31, 2022, at which time such minimum consolidated adjusted EBITDA covenant levels will resume to the levels in effect prior to the closing of the Second Lien

Following the issuance of the 2023 Series D Convertible Notes, all amounts owing with respect to the 2023 Series A Convertible Notes and 2023 Series B Convertible Notes had been paid and the related indentures and the Company’s obligations thereunder were satisfied and discharged.52

OnAmendment ~~May~~and ~~15, 2020, the Company received $3.4 million of proceeds from the U.S. Small Business Administration Paycheck Protection Program~~ ( ~~the 'Government Grant Advance"~~vi) ~~and~~extend ~~has been utilizing~~ the ~~advance~~date toon ~~balance~~which ~~its~~we ~~employee-related~~may ~~actions~~elect ~~previously taken with the business needs~~ to ~~ensure~~pay ainterest ~~significant portion of the loan will be forgiven. The Advance matures~~ in ~~2 years with accrued interest at an annual rate of 1~~kind.~~00%,~~ ~~being~~Loans ~~deferred~~made ~~for~~under ~~payments until~~ the ~~date~~Second ofLien ~~forgiveness~~Delayed orDraw 24Term ~~weeks~~Loan ~~from~~C ~~the~~Facility ~~date~~will ~~when~~be ~~the~~pari ~~fund~~passu ~~was received by the Company. According to ASC 450-30~~with, ~~Gain~~and ~~Contingencies,~~have the ~~Company~~same ~~recorded~~interest ~~the~~and ~~$3.4~~payment ~~million~~terms of(including ~~proceeds~~maturity) ~~in the Government Grant Advance line on its Condensed Consolidated Balance Sheet~~ as ofthose ~~September~~applicable 30to, ~~2020. The Company will record~~ the ~~related~~existing ~~earnings~~loans ~~impact~~under ~~on its Condensed Consolidated Statement of Operations in~~ the ~~period~~Second ~~when~~Lien ~~the~~Credit ~~associated conditions attached to the Advance are reasonably assured to be met~~Agreement.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our shareholders.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from these estimates.

Please refer to our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 for a complete list of all Critical Accounting Policies and Estimates. See also Item 1 for our Condensed Consolidated Financial Statements.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

As of ~~September 30~~March 31, ~~2020~~2021, our principal debt obligations consisted of our Series ~~C Notes, Series~~ D Notes, our Senior Credit Facilities, and our ~~Government~~new ~~Grant~~ARES ~~Advance.~~Deferred Draw Term Loan (DDTL).

On ~~April~~October 2728, ~~2018~~2019, we ~~entered~~completed ~~into~~the ~~separate~~sale ~~exchange~~of ~~agreements~~$29.3 ~~with~~million ~~certain~~aggregate ~~holders~~principal amount of our ~~then~~Series ~~outstanding~~B ~~2019~~ Notes. ~~The~~for ~~agreements~~cash ~~gave~~and ~~the~~we ~~holders~~issued ~~the right to exchange~~ an ~~aggregate~~additional of $755.1 million ofaggregate ~~the~~principal ~~2019~~amount ~~Notes for $75.1 million~~ of ~~2023~~the ~~Notes.~~Series ~~The~~B ~~2023~~ Notes ~~bear a fixed interest rate of 4.75% per year, payable semi-annually~~ in ~~cash~~exchange ~~with~~for ~~the~~an aggregate principal ~~payable~~amount inof ~~May 2023~~$9.0 Atmillion ~~the option~~ of the ~~holders,~~Series ~~the~~A ~~2023~~ Notes. ~~are~~Following ~~convertible~~the ~~into~~issuance ~~shares~~ of the ~~Company’s~~Series ~~common~~D ~~stock~~Notes, ~~cash~~all oroutstanding adebt ~~combination~~with ~~thereof~~respect ~~at an initial conversion price per share of $4.45, subject~~ to ~~adjustment~~the inSeries ~~certain~~B ~~circumstances.~~Notes Inhad ~~addition,~~been ~~holders~~extinguished ~~will~~through beexchange ~~entitled to receive additional shares~~ of ~~common~~Series ~~stock~~C ~~for~~Notes aand ~~potential~~Series ~~increase~~D ~~in the conversion rate under a make-whole provision in some circumstances~~Notes. As ~~the~~a ~~interest rate under the 2023 Notes is fixed~~result, we have no market risk related ~~thereto~~to the Series B Notes.

On ~~October~~December 3113, ~~2019~~2018, we ~~completed~~entered into the ~~sale~~Senior Credit Facilities, consisting of ~~$29~~the Revolver and Term Loans.3 The ~~million~~Senior ~~aggregate~~Credit ~~principal~~Facilities ~~amount~~also ofincluded ~~our~~a ~~2023~~$15.0 ~~Series~~delayed Bdraw ~~Notes~~term ~~for~~loan ~~cash~~commitment, which remained undrawn and weexpired ~~issued~~on anOctober ~~additional~~31, 2019. As of March 31, 2020, $525.10 million ~~aggregate~~was ~~principal~~drawn ~~amount~~under the Revolver and $88.5 million of ~~the~~Term ~~2023~~Loans ~~Series~~were Boutstanding. ~~Notes~~The Revolver was fully drawn in ~~exchange~~2019. ~~for~~On anApril ~~aggregate~~6, ~~principal~~2020, ~~amount~~the ofCompany $9entered (i) Amendment No.0 ~~million~~2 of the ~~2023~~Revolver ~~Notes~~and Amendment No. ~~Interest~~ on4 of the ~~outstanding~~Term ~~principal~~Loans, effective as of December 31, 2019 (together, the ~~2023~~“April ~~Series~~2020 BAmendments”). The ~~Notes~~April ~~accrues~~2020 atAmendments ~~either~~together, among other things, (xi) increased the interest rates, (ii) reset certain prepayment premiums and modified the terms of certain mandatory prepayments and (iii) modified certain financial covenant levels inclusive of the disposition of prior covenants as of and for the period ended December 31, 2019. The Revolver bears interest at a ~~fixed~~fluctuating rate of 7interest equal to the one, two, three or six-month LIBOR plus a margin of 5.5% ifor a rate based on the ~~Company~~prime ~~elects~~rate toplus ~~pay~~a margin of 4.5%, with a LIBOR floor of 1.5%. The Term Loans bear interest at a fluctuating rate of interest equal to the one, two, three or six-month LIBOR plus a margin of 13.0% or a rate based on the prime rate plus a margin of 12.0%, with a LIBOR floor of 1.5%. Interest on the Senior Credit Facilities is payable in cash orquarterly in arrears (yor more frequently in connection with customary LIBOR interest provisions), 8%provided, ifthat the Company ~~elects~~may elect (and has covenanted to the lenders under its Senior Credit Facilities and subsequent amendments thereto) to pay interest on the Term Loans in kind~~. In~~ ~~any~~through ~~case~~December 13, ~~interest~~2021 isbut ~~due~~only ~~and~~if ~~payable~~the following occurs: (~~either~~1) inthe ~~cash~~Company orreceives a “warning letter close-out letter” from the Federal Drug Administration in ~~kind,~~response asto ~~elected~~corrective actions taken by the Company) ~~semi-annually~~since ~~every~~receipt ~~May~~of 1the ~~and~~warning letter in November 12019 and (~~commencing~~2) the Company receives a written recommendation from the Federal Drug Administration setting forth its approval decision in respect of the pre-approval inspection for commercial production on ~~May~~the 1newly installed injectable line at the Company’s New Jersey facility. If only one of those items occurs by December 13, 2020), ~~until~~then the ~~2023~~Company ~~Series~~may Bstill ~~Notes~~elect ~~mature~~to onpay ~~May~~interest 1in kind during 2021, ~~2023~~but only from the time the second condition has been satisfied until December 13, 2021. ~~Holders~~ Thereafter, a portion of interest on the ~~2023~~loans ~~Series~~accruing Bat ~~Notes~~a ~~are~~rate ~~entitled~~of 4.25% per annum may continue to ~~convert~~be paid in kind. The Company has elected the paid-in-kind interest option and increased the principal balance of Term Loans by $14.4 million and ~~accrued,~~$22.9 ~~unpaid~~million ~~interest~~for onthe three months and since inception through the ~~2023~~period ~~Series~~ended BMarch ~~Notes~~31, ~~into~~2021, atrespectively. As the ~~Company’s~~interest rates applicable to the Senior Facilities are fluctuating, we do have market risk related thereto.

6653

~~election~~On July 20, ~~cash~~2020, ~~shares~~the Company completed the sale and issuance of ~~Common~~$13.8 ~~Stock,~~million oraggregate aprincipal ~~combination~~amount ~~thereof,~~of atits anSeries ~~initial~~C ~~conversion~~Notes. ~~price~~The ~~per~~Company ~~share~~also issued approximately $32.3 million in aggregate principal amount of ~~Common~~Series ~~Stock~~C ~~equal~~Notes toin exchange for approximately $735.29 million in aggregate principal amount, ~~subject~~plus toaccrued ~~adjustment~~but ~~under~~unpaid ~~certain~~interest ~~circumstances.~~thereon, ~~The~~of the Company’s ~~has~~outstanding ~~covenanted~~Series B Notes, giving effect to ~~its~~a ~~lenders~~10% ~~under~~discount on the ~~Senior~~principal ~~Credit~~amount ~~Facilities~~of tothe ~~not~~Series ~~elect~~B toNotes ~~pay~~exchanged. ~~interest~~In addition, the Company issued approximately $3.7 million in ~~cash~~aggregate ~~for~~principal soamount ~~long~~of asSeries itC ~~has~~Notes ~~the~~in ~~option~~exchange tofor doapproximately so$8. As2 ~~the~~million in aggregate principal amount, plus accrued but unpaid interest ~~rate~~thereon, ~~under~~of ~~2023~~the Company’s outstanding Series BA Notes, isgiving ~~fixed,~~effect weto ~~have~~a no55% ~~market~~discount ~~risk~~on ~~related~~the ~~thereto~~principal amount of the Series A Notes exchanged.

OnInterest ~~December~~on ~~13,~~the ~~2018,~~2023 weSeries ~~entered~~C ~~into~~Secured ~~the~~Convertible ~~Senior~~Notes ~~Credit~~accrues ~~Facilities,~~at ~~consisting~~the rate of ~~the~~9.5% ~~Revolver~~per annum and ~~Term~~is ~~Loans. The~~payable ~~Senior~~in ~~Credit~~kind ~~Facilities~~and ~~also~~capitalized ~~included~~with aprincipal ~~$15.0~~semiannually ~~delayed~~in ~~draw~~arrears ~~term~~on ~~loan~~March ~~commitment,~~1 ~~which~~and ~~remained~~September ~~undrawn~~1 ~~and~~of ~~expired~~each year, beginning on ~~October~~September 311, ~~2019~~2020. AsThe of2023 Series C Secured Convertible Notes will mature on March 3130, ~~2020~~2023, ~~$25.0~~unless ~~million~~earlier ~~was~~converted ~~drawn~~or ~~under~~repurchased ~~the~~and ~~Revolver~~are ~~and~~subordinate ~~$88.5~~to ~~million~~the ofindebtedness ~~Term~~under ~~Loans~~the ~~were~~Senior ~~outstanding~~Credit Facilities. The ~~Revolver~~Company ~~was~~has ~~fully~~elected ~~drawn~~the paid-in-kind ~~2019.~~interest Onoption ~~April~~and 6,increased ~~2020,~~ the ~~Company~~principal ~~entered~~balance ~~(i)~~of ~~Amendment~~the ~~No.~~2023 2Series ofC ~~the~~Secured ~~Revolver~~Convertible ~~and~~Notes ~~Amendment~~by No$0.5 4million ofin the ~~Term~~twelve ~~Loans,~~months ~~effective~~ended ~~as of~~ December 31, ~~2019 (together, the “April~~ 2020 ~~Amendments”)~~. The ~~April~~Company ~~2020~~has ~~Amendments~~agreed ~~together,~~to ~~among~~use ~~other~~its ~~things,~~commercially ~~(i)~~reasonable ~~increase~~best ~~the~~efforts ~~interest~~to ~~rates,~~obtain ~~(ii)~~the ~~reset~~approval ~~certain~~of ~~prepayment~~its ~~premiums~~stockholders ~~and~~that ~~modify~~is ~~the~~required ~~terms~~under ofapplicable ~~certain~~Nasdaq ~~mandatory~~rules ~~prepayments~~ and ~~(iii)~~regulations ~~modify~~to ~~certain~~permit ~~financial~~holders ~~covenant levels inclusive~~ of the ~~disposition~~2023 ofSeries ~~prior~~C ~~covenants~~Secured asConvertible ofNotes ~~and~~to ~~for~~beneficially ~~the~~own ~~period~~shares ~~ended~~of ~~December~~common ~~31,~~stock ~~2019. The~~without ~~Revolver~~being ~~bears~~subject ~~interest~~to atthe aNasdaq ~~fluctuating~~Change ~~rate~~ of ~~interest~~Control ~~equal~~Cap. toIn the ~~one,~~event ~~two,~~that ~~three~~the orCompany ~~six-month~~did ~~LIBOR~~not ~~plus~~obtain asuch ~~margin~~stockholder ofapproval ~~5.5%~~at oran aannual ~~rate~~or ~~based~~special onmeeting ~~the~~of ~~prime~~its ~~rate~~stockholders ~~plus~~on aor ~~margin~~before ofOctober ~~4.5%~~31, ~~with~~2020, aholders ~~LIBOR floor~~ of ~~1.5%.~~a ~~The~~majority ~~Term~~in ~~Loans~~aggregate ~~bear~~principal ~~interest~~amount ~~at a fluctuating rate~~ of ~~interest~~outstanding ~~equal~~2023 toSeries ~~the~~C ~~one,~~Secured ~~two,~~Convertible ~~three~~Notes ormay ~~six-month~~elect ~~LIBOR~~to ~~plus~~increase athe ~~margin~~interest ~~of 13.0% or a~~ rate ~~based~~payable on the ~~prime~~2023 ~~rate~~Series ~~plus~~C aSecured ~~margin~~Convertible ofNotes 12to 18.0%, ~~with~~per aannum ~~LIBOR~~until ~~floor~~such ofstockholder ~~1.5%. Interest~~approval onis ~~the~~obtained, ~~Senior~~which ~~Credit~~will ~~Facilities~~continue isto ~~payable~~be inpaid ~~cash quarterly~~ in ~~arrears~~kind ~~(or more frequently~~ in ~~connection with customary LIBOR interest provisions), provided, that~~ the ~~Company~~form ~~may~~of ~~elect~~additional ~~(and~~principal ~~has~~with ~~covenanted~~respect to ~~the~~any ~~lenders~~applicable ~~under~~period ~~its~~in ~~Senior~~which ~~Credit~~the ~~Facilities~~increased ~~and subsequent amendments thereto) to pay~~ interest onrate ~~the~~remains ~~Term Loans~~ in ~~kind~~effect. ~~through~~Pursuant ~~December~~to ~~13,~~a ~~2021~~notice ~~but~~dated ~~only~~November if2, ~~the~~2020, ~~following occurs: (1)~~ the ~~Company~~holders ~~receives~~of a ~~“warning~~majority ~~letter~~in ~~close-out~~principal ~~letter”~~amount ~~from~~of the ~~Federal~~outstanding ~~Drug~~2023 ~~Administration~~Series inC ~~response~~Secured toConvertible ~~corrective~~Notes ~~actions~~elected ~~taken~~to byincrease the ~~Company~~interest ~~since~~rate ~~receipt~~payable ofon the ~~warning~~2023 ~~letter~~Series inC ~~November~~Secured ~~2019~~Convertible ~~and~~Notes ~~(2)~~from ~~the~~9.5% ~~Company~~to ~~receives~~18.0%. The aCompany ~~written~~convened ~~recommendation~~and ~~from~~adjourned ~~the~~a ~~Federal~~special ~~Drug~~meeting ~~Administration~~of ~~setting~~stockholders ~~forth~~on ~~its~~October ~~approval~~22, ~~decision~~2020, inand ~~respect~~further ofadjourned ~~the~~such ~~pre-approval~~special ~~inspection~~meeting ~~for~~on ~~commercial~~November ~~production~~11, on2020 ~~the~~and ~~newly~~November ~~installed~~25, ~~injectable~~2020 ~~line~~due atto ~~the~~a ~~Company’s~~lack ~~New~~of ~~Jersey facility~~quorum. IfThe ~~only~~special ~~one~~meeting of ~~those~~stockholders ~~items~~was ~~occurs~~held byon December 1316, 2020, ~~then~~pursuant ~~the Company may still elect~~ to ~~pay~~which ~~interest~~the instockholders ~~kind~~of ~~during~~the ~~2021,~~Company ~~but~~approved ~~only from~~ the ~~time~~holders of the ~~second~~2023 ~~condition~~Series ~~has~~C ~~been~~Secured ~~satisfied~~Convertible ~~until~~Notes ~~December~~beneficially ~~13,~~owning ~~2021.~~shares ~~Thereafter, a portion~~ of ~~interest~~common onstock ~~the~~without ~~loans~~being ~~accruing~~subject atto athe ~~rate~~Nasdaq Change of 4Control Cap.~~25%~~ ~~per~~As ~~annum~~a ~~may~~result ~~continue~~of tothe beapproval, ~~paid~~the ininterest ~~kind.~~rate ~~The~~payable ~~Company~~on ~~has elected~~ the ~~paid-in-kind~~2023 ~~interest~~Series ~~option~~C ~~and~~Secured ~~increased~~Convertible ~~the~~Notes ~~principal~~was ~~balance~~decreased ofto ~~Term Loans by $3~~9.5%. ~~million~~As ~~and~~of ~~$19.2~~March ~~million~~31, ~~for~~2021, the ~~three~~Series ~~months~~C ~~and~~Secured ~~since~~Convertible ~~inception~~Notes ~~through~~have ~~the~~been ~~period~~extinguished ~~ended~~and ~~September~~exchanged ~~30,~~for ~~2020,~~common ~~respectively.~~shares Asper the ~~interest~~agreement ~~rates~~dated ~~applicable~~January ~~to the Senior Facilities are fluctuating~~27, ~~we do have market risk related thereto~~2021.

On ~~July~~September 2022, 2020, the Company completed the ~~sale and~~ issuance of ~~$13.8 million aggregate principal amount of 2023 Series C Secured Convertible Notes. The Company also issued~~ approximately $3227.35 million in aggregate principal amount of ~~2023~~its Series CD ~~Secured Convertible~~ Notes in exchange for approximately $3559.90 million in aggregate principal amount, plus accrued but unpaid interest ~~thereon~~, of ~~the Company’s outstanding 2023~~ Series BA ~~Convertible~~ Notes, giving effect to a 1053.4% discount on the principal amount of the ~~2023~~ Series BA ~~Convertible~~ Notes exchanged. InThe ~~addition, the~~ Company also issued approximately $30.74 million in aggregate principal amount of ~~2023~~the Series CD ~~Secured Convertible~~ Notes in exchange for approximately $80.25 million in aggregate principal amount, plus accrued but unpaid interest ~~thereon~~, of the Company’s outstanding ~~2023~~ Series AB ~~Convertible~~ Notes, giving effect to a 5531.9% discount on the principal amount of the ~~2023~~ Series AB ~~Convertible~~ Notes exchanged. As the interest rate on the Series D Notes is fixed, we have no market risk related thereto.

~~Interest~~Our onfinancial ~~the~~instruments ~~2023~~include ~~Series~~cash ~~C Secured Convertible Notes accrues at the rate of 9.5% per annum~~ and iscash ~~payable in kind and capitalized with principal semiannually in arrears on March 1 and September 1 of each year~~equivalents, ~~beginning~~accounts ~~on September 1~~receivable, ~~2020.~~accounts ~~The~~payable ~~2023 Series C Secured Convertible Notes will mature on March 30, 2023, unless earlier converted or repurchased~~ and ~~are subordinate to the indebtedness under the Senior Credit Facilities~~Notes. The ~~Company~~fair ~~has~~values ~~elected~~of ~~the~~cash ~~paid-in-kind interest option~~ and ~~increased~~cash ~~the principal balance of the 2023 Series C Secured Convertible Notes by $0.5 million in the three months ended September 30~~equivalents, ~~2020.~~accounts ~~The~~receivable ~~Company has agreed to use its commercially reasonable best efforts to obtain the approval of its stockholders that is required under applicable Nasdaq rules~~ and ~~regulations~~accounts topayable ~~permit~~approximate ~~holders~~book ofvalue ~~the~~because ~~2023 Series C Secured Convertible Notes to beneficially own shares~~ of ~~common stock without being subject to~~ the ~~Nasdaq~~short ~~Change~~maturity of ~~Control~~these ~~Cap~~instruments. InAs ~~the event that the Company did not obtain such stockholder approval at an annual or special meeting~~ of ~~its stockholders on or before October~~ March 31, ~~2020~~2021, ~~holders~~based ~~of a majority in aggregate principal amount of outstanding 2023 Series C Secured Convertible Notes may elect to increase the interest rate payable~~ on ~~the~~level 2023 Series C Secured Convertible Notes to 18.0% per annum until such stockholder approval is obtained, which will continue to be paid in kind in the form of additional principal with respect to any applicable period in which the increased interest rate remains in effect. Pursuant to a notice dated November 2, ~~2020~~inputs, the ~~holders~~fair ofvalue ~~a majority in principal amount~~ of ~~the~~our ~~outstanding 2023~~ Series CD ~~Secured Convertible~~ Notes ~~elected~~was toapproximately ~~increase the interest rate payable on the 2023 Series C Secured Convertible Notes from 9.5% to 18.~~$0%. ~~The~~1 million ~~Company~~compared ~~convened~~to ~~and~~their ~~adjourned~~carrying avalue ~~special meeting~~ of ~~stockholders~~$0.3 ~~on October 22, 2020, and further adjourned such special meeting on November 11, 2020 and November 25, 2020 due to a lack of quorum~~million. ~~The special meeting of stockholders is currently rescheduled for December 16, 2020, pursuant to which the stockholders of the Company are being asked to approve the holders of the 2023~~

Series C Secured Convertible Notes beneficially owning shares of common stock without being subject to the Nasdaq Change of Control Cap. If the holders of the Company’s common stock approve the proposal, the interest rate payable on the 2023 Series C Secured Convertible Notes will be decreased to 9.5% on such date. As the interest rate on the 2023 Series C Secured Convertible Notes has increased from 9.5% to 18.0%, we do have market risk related thereto.

On September 22, 2020, the Company completed the issuance of approximately $27.5 million aggregate principal amount of 2023 Series D Convertible Notes in exchange for approximately $59.0 million in aggregate principal amount, plus accrued but unpaid interest, of 2023 Series A Convertible Notes, giving effect to a 53.4% discount on the principal amount of the 2023 Series A Convertible Notes exchanged. The Company also issued approximately $0.4 million aggregate principal amount of the 2023 Series D Convertible Notes in exchange for approximately $0.5 million in aggregate principal amount, plus accrued but unpaid interest, of the Company’s outstanding 2023 Series B Convertible Notes, giving effect to a 31.9% discount on the principal amount of the 2023 Series B Convertible Notes exchanged. As the interest rate on the 2023 Series D Convertible Notes is fixed, we have no market risk related thereto.

Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable and Notes. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate book value because of the short maturity of these instruments.

On May 15, 2020, we received $3.4 million of proceeds from the U.S. Small Business Administration Paycheck Protection Program (the "Government Grant Advance") and has been utilizing the fund to balance its employee-related actions previously taken with the business needs to ensure a significant portion of the advance will be forgiven. The Government Grant Advance matures in 2 years with accrued interest at an annual rate of 1.00%, being deferred for payments until the date of forgiveness or 24 weeks from the date when we received the fund. As the interest rate under the Advance is fixed, we have no market risk related thereto.

For a description of the fair value hierarchy and the Company's fair value methodologies, see Note 2 "Summary of Significant Accounting Policies."

As of ~~September 30~~March 31, ~~2020~~2021, the majority of our cash and cash equivalents was invested in overnight instruments, the interest rates of which may change daily. Accordingly, these overnight investments are subject to market risk.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the filing of this Form 10-Q for the quarter ended ~~September~~March 3031, ~~2020~~2021, our Chief Executive Officer ("CEO") and our ~~Principal~~Chief ~~Accounting~~Financial Officer ("~~PAO~~CFO") conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)). As a result of this evaluation, our CEO and PAO concluded that those material weaknesses previously identified in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2019 were still present as of September 30, 2020 (“the Evaluation Date”). Based on those material weaknesses, and the evaluation of our disclosure controls and procedures, our CEO and PAO concluded that our disclosure controls and procedures were not effective as of the Evaluation Date.

(“Exchange Act”)). As a result of this evaluation, our CEO and CFO concluded that those material weaknesses previously identified in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2020 were still present as of March 31, 2021 (“the Evaluation Date”). Based on those material weaknesses, and the evaluation of our disclosure controls and procedures, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of the Evaluation Date.

Changes in Internal Control over Financial Reporting

There were no changes during the quarter ended ~~September~~March 3031, ~~2020~~2021 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Remediation Plan and Status

Our remediation efforts previously identified in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 are ongoing and we continue our initiatives to implement and document policies, procedures, and internal controls. Remediation of the identified material weaknesses and strengthening our internal control environment will require a substantial effort throughout ~~2020~~2021 and beyond, as necessary. We will test the operating effectiveness of certain new and existing controls in connection with our annual evaluation of the effectiveness of internal control over financial reporting; however, the material weaknesses cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. While we believe the steps taken to date and those planned for implementation will improve the effectiveness of our internal control over financial reporting, we have not completed all remediation efforts. Accordingly, as we continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weaknesses, we have and will continue to perform additional procedures prescribed by management, including the use of manual mitigating control procedures and employing any additional tools and resources deemed necessary, to ensure that our consolidated financial statements are fairly stated in all material respects. The planned remediation activities described in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2020 highlight our commitment to remediating our identified material weaknesses and remain largely unchanged through the date of filing this Quarterly Report on Form 10-Q.

effectively. While we believe the steps taken to date and those planned for implementation will improve the effectiveness of our internal control over financial reporting, we have not completed all remediation efforts. Accordingly, as we continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weaknesses, we have and will continue to perform additional procedures prescribed by management, including the use of manual mitigating control procedures and employing any additional tools and resources deemed necessary, to ensure that our consolidated financial statements are fairly stated in all material respects. The planned remediation activities described in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2019 highlight our commitment to remediating our identified material weaknesses and remain largely unchanged through the date of filing this Quarterly Report on Form 10-Q.

PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings

Information about the legal proceedings is included in Item 1, Notes to unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

ITEM 1A. Risk Factors

~~In addition to the risk factors set forth below and the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed under~~ Part I, Item 1A, “Risk Factors,” inof our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2019.~~2020 ~~These~~includes ~~factors~~a ~~could~~detailed ~~materially~~discussion ~~and adversely affect our business, financial condition, liquidity, results~~ of ~~operations~~risks and ~~capital~~uncertainties ~~position,~~which ~~and~~ could ~~cause~~adversely ~~our~~affect ~~actual results to differ materially from~~ our ~~historical~~future results ~~or the results contemplated by the forward-looking statements contained in this report~~. ~~Other~~ ~~than~~The ~~as described below, the~~ risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 have not materially changed.

The Company’s available capital resources are not currently sufficient for it to meet its obligations as they become due, and there is substantial doubt about the Company’s ability to continue as a going concern.

The Company has incurred significant losses and generated negative cash flows from operations in recent years and expects to continue to incur losses and generate negative cash flow for the foreseeable future. As a result, at September 30, 2020, the Company had an accumulated deficit of $163.2 million, total outstanding indebtedness of $198.8 million, and limited capital resources to fund ongoing operations. These capital resources were comprised of cash and equivalents of $10.4 million at September 30, 2020 and the generation of cash inflows from working capital. The Company is not currently generating revenues from operations that are sufficient to cover its operating expenses, and its available capital resources are not sufficient for it to continue to meet its obligations as they become due. As a result, the Company has engaged financial and legal advisors to assist it in, among other things, analyzing all available strategic to address its liquidity and capital structure including, but not limited to, making significant changes to its operating plan, pursuing a merger or other transaction involving a change of control, or restructuring its outstanding debt via out of court or in-court methods, including the pursuit of a plan of reorganization which would be filed under Chapter 11 of the U.S. Bankruptcy Code and or ceasing its operations. However, the Company cannot provide assurances that additional capital will be available when needed or that any strategic alternatives or restructuring pursued will be on acceptable terms. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company’s substantial indebtedness coupled with its significant losses and negative cash flows makes it unlikely that it will be able to generate cash sufficient to repay such indebtedness.

As of September 30, 2020, the Company’s total indebtedness was $198.8 million. The Company’s substantial level of indebtedness coupled with its significant losses and negative cash flows makes it unlikely that it will be able to generate cash sufficient to pay, when due, the principal of, interest on, or other amounts due in respect of its indebtedness. The Company’s substantial indebtedness, combined with its other financial obligations and contractual commitments, will have a material adverse impact on it. For example, the Company’s substantial indebtedness will:

•make it difficult for the Company to satisfy its obligations with respect to its outstanding and other future debt obligations;

•increase its vulnerability to general adverse economic conditions or a downturn in the industries in which it operates;

•impair its ability to obtain additional financing in the future for working capital, investments, acquisitions and other general corporate purposes;

•require the Company to dedicate a substantial portion of its cash flows to the payment to its financing indebtedness, thereby reducing the availability of its cash flows to fund working capital, investments, acquisitions and other general corporate purposes; and

•place the Company at a disadvantage compared to its competitors.

Servicing the Company’s substantial indebtedness will require a significant amount of cash and, if the Company is unable to obtain additional sources of capital, the Company will have to delay expenditures, reduce the scope of its manufacturing operations, reduce or eliminate one or more of its development programs, make significant changes to its operating plan, pursue a merger or other transaction involving a change of control, restructure its outstanding debt, seek relief under the Chapter 11, or cease its operations.

If we fail to comply with the financial covenants contained in our Senior Credit Facilities, our senior lenders could accelerate all amounts owing thereunder which, in turn, could result in the acceleration of all amounts owing under our 2023 Series C Secured Convertible Notes and the 2023 Series D Convertible Notes.

We are subject to certain financial covenants as set forth in our Senior Credit Facilities. These financial covenants include a TTM Minimum Adjusted EBITDA that is required to be met each quarterly period from June 30, 2021 through maturity, and a minimum liquidity covenant tested of $3.0 million at all times through the term of the agreement. In the event that we are unable to comply with these covenants, or obtain a waiver from our lenders, the lenders would have the right, but not the obligation, to permanently reduce the commitments under the Senior Credit Facilities in whole or in part or to declare all or any portion of the outstanding balances thereunder due and payable. Furthermore, in the event that outstanding balances under the Senior Credit Facilities are accelerated, the holders of the 2023 Series C Secured Convertible Notes and the 2023 Series D Convertible Notes would have the right, but not the obligation, to accelerate all amounts owing thereunder. We do not currently have available liquidity to repay these outstanding borrowings in the event of a default and acceleration. If we are unable to raise additional capital to meet these obligations, we may have to delay expenditures, reduce the scope of our manufacturing operations, reduce or eliminate one or more of our development programs, make significant changes to our operating plan, pursue a merger or other transaction involving a change of control, restructure our outstanding debt, seek relief under Chapter 11, or cease our operations.

If we fail to maintain compliance with the continued listing standards of Nasdaq, it may result in the delisting of our common stock from the Nasdaq Global Select Market and in the acceleration of amounts owing under our 2023 Series C Secured Convertible Notes, our 2023 Series D Convertible Notes and our Senior Credit Facilities.

On July 28, 2020, the Company received a notice (the “Notice”) from The Nasdaq Stock Market stating that the Company was not in compliance with Nasdaq Listing Rule 5450(b)(3)(C) relating to the minimum Market Value of Publicly Held Shares (the “MVPHS Rule”). The notice stated that the Company failed to maintain a minimum market value of publicly held shares of $15.0 million for the 30 consecutive days preceding the date of the notice. The notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock. The Company has a compliance period for the MVPHS Rule of 180 calendar days, or until January 25, 2021, in which to regain compliance. To regain compliance, the Company’s minimum market value of publicly held shares must equal $15.0 million or more for a minimum of 10 consecutive business days. If the Company does not regain compliance by January 25, 2021, then Nasdaq will notify the Company that the Company’s common stock will be delisted from the Nasdaq Global Select Market, unless the Company requests a hearing before a Nasdaq Hearings Panel.

On November 24, 2020, the Company received a notice (the “Notice”) from The Nasdaq Stock Market (“Nasdaq”) stating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Filing Requirement”) as a result of the Company not having timely filed its Quarterly Report on Form 10-Q for the three months ended September 30, 2020 (“Form 10-Q”) with the Securities and Exchange Commission (the “SEC”). The Notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock. To regain compliance, the Company’s must file its Form 10-Q by January 25, 2021. If the Company does not regain compliance by January 25, 2021, then Nasdaq will notify the Company that the Company’s common stock will be delisted from the Nasdaq Global Select Market, unless the Company requests a hearing before a Nasdaq Hearings Panel.

On December 4, 2020, Teligent, Inc. (the “Company”) received a notice (the “Notice”) from The Nasdaq Stock Market (“Nasdaq”) informing the Company that for the last 30 consecutive business days, the bid price of the Company’s securities had closed below $1.00 per share, which is the minimum required closing bid price for continued listing on Nasdaq pursuant to Listing Rule 5450(a)(1) (the “Bid Price Requirement”). The Notice has no immediate effect on the Company’s Nasdaq listing or trading of the Company’s common stock. The Company has 180 calendar days, or until June 2, 2021, to regain compliance. To regain compliance, the closing bid price of the Company’s securities must be at least $1.00 per share for a minimum of ten consecutive business days. If the Company does not regain compliance by June 2, 2021, the Company may be eligible for additional time to regain compliance or if the Company is otherwise not eligible, the Company may request a hearing before a Hearings Panel.

A delisting from the Nasdaq would be a “Fundamental Change” under the Company’s 2023 Series C Secured Convertible Notes and the 2023 Series D Convertible Notes which would trigger a right by the holders to require the Company repurchase the 2023 Series C Secured Convertible Notes and the 2023 Series D Convertible Notes. In such an event, the Company would need to seek financing to repurchase the 2023 Series C Secured Convertible Notes and the 2023 Series D Convertible Notes, and there is no guarantee that such financing would be available or on terms acceptable to the Company. If noteholders demanded a repurchase of such notes and the Company could not finance the repurchase, it would be in default under the indentures governing the 2023 Series C Secured Convertible Notes and the 2023 Series D Convertible Notes, and in such event the lenders under the Senior Credit Facilities would have the right, but not the obligation, to declare all of the outstanding amounts owing thereunder due and payable as well. As a result, in the event of the Company’s shares are delisted from the Nasdaq, the Company would likely have to seek some combination of waivers from its lenders and noteholders and seek new capital through the sale of equity or debt securities on terms that may be onerous or highly dilutive. If the Company is unable to obtain such waivers or raise new capital to meet these obligations if they become due, it may have to delay expenditures, reduce the scope of its manufacturing operations, reduce or eliminate one or more of its development programs, make significant changes to its operating plan, pursue a merger or other transaction involving a change of control, restructure its outstanding debt, seek relief under the Chapter 11, or cease its operations.

In the event we pursue an in-court bankruptcy restructuring, we will be subject to the risks and uncertainties associated with bankruptcy proceedings, including the potential delisting of our common stock from trading on the Nasdaq Global Select Market.

As we consider the range of alternatives to address our liquidity issues, there is substantial risk that it will be necessary for us to commence in-court reorganization proceedings. In the event we pursue such a restructuring, our operations, our ability to develop and execute our business plan and our continuation as a going concern will be subject to the risks and uncertainties associated with bankruptcy proceedings, including, among others: the high costs of bankruptcy proceedings and related fees; our ability to maintain the listing of our common stock on the Nasdaq Global Select Market; our ability to obtain sufficient financing to allow us to emerge from bankruptcy and execute our business plan post-emergence, and our ability to comply with terms and conditions of that financing; our ability to maintain our relationships with our lenders, counterparties, vendors, suppliers, employees and other third parties; our ability to maintain contracts that are critical to our operations on reasonably acceptable terms and conditions; the ability of third parties to use certain limited safe harbor provisions of the Bankruptcy Code to terminate contracts without first seeking bankruptcy court approval; and the actions and decisions of our existing noteholders and other third parties who have claims and/or interests in our bankruptcy proceedings that may be inconsistent with our operational and strategic plans.

In addition, if we commence bankruptcy proceedings, our shares of common stock will potentially be delisted from trading on Nasdaq. Nasdaq rules provide that securities of a company that trades on Nasdaq may be delisted in the event that such company seeks bankruptcy protection. In response to a Chapter 11 filing, Nasdaq would potentially issue a delisting letter immediately following such a filing. If Nasdaq issued such a letter, we would have the opportunity to appeal the determination during which time the delisting would be stayed, but if we did not appeal or otherwise were not successful in our appeal, our common stock would soon thereafter be delisted and our common stock could be traded in the over-the-counter markets. Such a delisting would be a “Fundamental Change” under the Company’s 2023 Series C Secured Convertible Notes and the 2023 Series D Convertible Notes which would trigger a right by the holders to require the Company repurchase the 2023 Series C Secured Convertible Notes and the 2023 Series D Convertible Notes.

Issues identified by the FDA in its warning letter and additional product quality issues identified by the Company will have a negative impact on the Company’s business, financial position, operating results and cash flows.

As part of the Company’s efforts to remediate the issues identified in the FDA’s warning letter and to strengthen its quality systems, the Company has undertaken a comprehensive review of all of its products that it anticipates being complete during the fourth quarter of 2020. While the review did not identify material issues with many of the Company’s products, it did identify issues of non-conformance with respect to certain products that the Company is actively reviewing and remediating. The Company believes there will be supply disruptions or process changes with respect to these products including product recalls, long-term production pauses, short-term clear path to market production pauses, and continued production with minor process corrections. The Company believes disruptions with respect to certain of its products and the diversion of resources to remediate the product quality issues will have a negative impact on the Company’s business, financial position, operating results and cash flows during the fourth quarter of 2020 and during 2021, including reducing its revenue, negatively impacting operating/(loss), and possibly resulting in impairment and other charges. Further, the Company anticipates that the FDA’s issuance of the warning letter and review of the Company’s processes will continue to delay the FDA’s pre-approval inspection for commercial production on the newly installed injectable line at the Buena, NJ facility. The continued failure to address the issues identified by the FDA in its warning letter and those subsequently identified by the Company in its comprehensive product quality review as well as the continued delay in obtaining the FDA’s pre-approval inspection for commercial production on the newly installed injectable line at the Buena, NJ facility will have a negative impact on the Company’s business, financial position, operating results and cash flows.

The ongoing COVID-19 pandemic and actions taken in response to it may result in additional disruptions to the Company’s business operations, which could have a material adverse effect on its business, financial position, operating results and cash flows.

The Company’s business and its operations, including but not limited to ongoing or planned research and development activities, have been adversely affected by the ongoing COVID-19 pandemic, which has also caused significant disruption in the operations of third parties upon which the Company relies. The COVID-19 pandemic and actions taken by governments, businesses, and individuals in response to it (including executive orders, shelter-in-place orders and work-from-home policies) have had effects that have and may continue to negatively impact productivity and disrupt the Company’s business. For example, in response to public health directives and orders, the Company has implemented work-from-home policies for all non-production employees and adjusted its production schedule to concentrate on high demand or low stock product. Additionally, the Company initiated a reduction in force at its Buena, NJ manufacturing facility and shifted its research and development operation being performed in its Tallinn, Estonia office to its manufacturing facility in Buena, NJ. These and similar, and perhaps more severe, disruptions in the Company’s operations could negatively impact its business, financial position, operating results and cash flows.

If COVID-19 continues to spread in the United States and elsewhere, the Company may experience additional disruptions that could severely impact its business and development activities, including, but not limited to:

•delays in necessary interactions with and approvals from the FDA and other regulatory authorities;

•strain on the Company’s suppliers or other third parties, possibly resulting in supply disruption, or customer delays in purchases or payments for its products;

•delays in manufacturing of the Company’s pharmaceutical products;

•decrease in dermatology visits and thus patient demand for topical pharmaceutical products; and

•the ability to raise capital when needed on acceptable terms, if at all.

Future financings may dilute the interests of holders of the Company’s common stock.

The Company’s recent 2023 Series C Secured Convertible Note and 2023 Series D Convertible Note financings have resulted in significant dilution to the interests of holders of the Company’s common stock and 21,754,223 shares of common stock are outstanding at December 24, 2020. Additional shares of common stock are reserved for issuance upon the conversion of the outstanding Series C Secured Convertible Notes and the remaining outstanding Series D Convertible Notes.. The Company may need to continue to engage in additional financings in the future in order to cover its operating expenses and to otherwise meet its obligations as they come due. While there can be no assurances that any such future financings will ever be completed, they would likely involve significant additional dilution of the interests of the Company’s stockholders upon the issuance of convertible debt instruments, common stock or other securities. Attaining such additional financing may not be possible, or if additional capital may be otherwise available, the terms on which such capital may be available may not be commercially feasible or advantageous to investors participating in such offering.

The Company’s goodwill or other intangible assets have been subject to impairment charges and may continue to be subject to impairment in the future.

Under U.S. GAAP, goodwill is required to be reviewed for impairment at least annually, or more frequently if potential interim indicators exist. Impairment may result from various factors, including adverse changes in assumptions used for valuation purposes, such as actual or projected revenue growth rates, profitability, or discount rates. If the testing indicates that an impairment has occurred, the Company is required to record a non-cash impairment charge for the difference between the carrying value of the goodwill and the fair value of the goodwill. Events and conditions that could result in impairment include a prolonged period of global economic weakness, a decline in economic conditions, or a slow economic recovery, adverse changes in the market share of the Company’s products, or other factors which could result in reductions in the Company’s sales or profitability over an extended period. The Company cannot predict the amount and timing of any future impairments, if any. The Company has experienced impairment charges with respect to trademarks and technology, and product acquisition costs in the past, and it may experience such charges in the future, particularly if the Company’s business performance continues to decline or expected growth is not realized. It is possible that material changes in the Company’s business, market conditions, or assumptions about its market share or position could occur over time. Any future impairment of the Company’s goodwill or other intangible assets could have a material adverse effect on its financial condition and results of operations, as well as the trading price of its securities.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

None.

ITEM 5. Other Information

None.

None.

ITEM 6. Exhibits


Exhibit Number						Description

31.1*						Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*						Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley of 2002.

32.2*						Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



101*						The following financial information from this Quarterly Report on Form 10-Q for the period ended March 31, 2021, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Statement of Comprehensive Income(Loss); (v) the Condensed Consolidated Statement of Equity; and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

March 31, 2021

Exhibit Number						Description
31.1*						Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of the Principal Accounting Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*						Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley of 2002.
32.2*						Certification of the Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*						The following financial information from this Quarterly Report on Form 10-Q for the period ended September 30, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Statement of Comprehensive Income(Loss); (v) the Condensed Consolidated Statement of Equity; and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

* Filed herewith.

7456

SIGNATURES

Pursuant to the requirements 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.

	Teligent, Inc.
Date: December 31, 2020	By:	/s/ Timothy B. Sawyer
Date:May 24, 2021	By:	/s/ Timothy B. Sawyer
		Timothy B. Sawyer
		President and Chief Executive Officer
Date: December 31, 2020	By:	/s/ Keith James
Date: May 24, 2021	By:	/s/ Ernest De Paolantonio
		Keith James
		Ernest De Paolantonio
		Principal Accounting Officer
		Chief Financial Officer

7557

Filing Compare · Teligent, Inc.