AYTU 10-K & 10-Q changes, risk factors and insider trading

As of June 30, 2025,2026, we have a $13.0 million term loan and up to $16.0 million of secured revolving loans under the Eclipse Agreement, which includes the temporary Eclipse Incremental Advance of $1.5 million. As of June 30, 2025,2026, $9.1$11.1 million was outstanding under the term loan and $6.1 million was outstanding under the secured revolving loan. All obligations under our loans are secured by substantially all of our existing property and assets subject to certain exceptions. These debt financings and any future debt financings may create additional financial risk for us, particularly if our business or prevailing financial market conditions are not conducive to paying off or refinancing our outstanding debt obligations at maturity.

Failure to satisfy our current and future debt obligations under our loan agreements with the Eclipse Lender could result in an event of default and,and asif asuch result,event of default is not cured or curable, our lenders could accelerate all of the amounts due. In the event of an acceleration of amounts due under one or both of our debt agreements as a result of an event of default, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness. In addition, our lenders could seek to enforce their security interests in any collateral securing such indebtedness.

The Eclipse Agreement subjects us to financial covenants and restrictions on our ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make asset sales without the prior written consent of the lenders.lenders of which there can be no guarantee that we will receive such consent. Failure to comply with such covenants could permit the lenders to declare our obligations under the loan agreements, together with accrued interest and fees, to be immediately due and payable, plus any applicable additional amounts relating to a prepayment or termination.

We and certain of our officers and directors have been and may in the future become defendants in one or more stockholder derivative actions or other class-action lawsuits. These lawsuits can divert our management’s attention and resources from our ordinary business operations, and we would likely incur significant expenses associated with their defense (including, without limitation, substantial attorneys’ fees and other fees of professional advisorsadvisors, increases in insurance premiums, deductibles and high retention amounts and potential obligations to indemnify current and former officers and directors who are or may become parties to such actions). In connection with these lawsuits, we may be required to pay material damages, consent to injunctions on future conduct and/or suffer other penalties, remedies or sanctions, or issue additional shares upon the exercise of certain warrants, which may cause additional dilution. In addition, any such future lawsuits could adversely impact our reputation and/or ability to launch and commercialize our products, thereby harming our ability to generate net revenue. Accordingly, the ultimate resolution of these matters and any future matters could have a material adverse effect on our business, financial condition, results of operation and cash flows and, consequently, could negatively impact the trading price of our common stock.

We are heavily dependent on the commercial success of our commercial products. To date, we have not generated sufficient net revenue from the sales of these products to achieve companywidecompany-wide profitability and we may never achieve or maintain profitability.

Our ability to become profitable depends upon our ability to generate increased net revenue from sales of our prescription portfolios.products. While we have been selling pharmaceutical products for several years, we have limited commercial experience selling our current lineupsome of our pharmaceutical products, having only generated net revenue from EXXUA in fiscal 2026, the sale of our pediatric products since acquiring that portfolio in November 2019 and from our ADHD products since acquiring that portfolio in March 2021 and we are currently launching EXXUA in the United States.2021. None of our marketed prescriptionproducts have thus far generated product revenue at levels sufficient for us to consistently attain profitability. We have not generated any revenue from product sales of any other product candidates and, to date, have incurred significant operating losses. Due to the completion of our wind down and divestiture of our Consumer Health business in the first quarter of fiscal 2025, we now operate our business as a single operating and reporting segment. The accounting requirements for reporting the Consumer Health business as a discontinued operation were met when the wind down and divestiture was completed. Accordingly, our consolidated financial statements for all periods presented reflect the Consumer Health business as a discontinued operation and we will not generate revenue from the Consumer Health business in the future.

After an NDA, including a 505(b)(2) application, is approved, the covered product becomes a “listed drug” that, in turn, can be cited by potential generic competitors in support of approval of an abbreviated new drug application, or ANDA. The FDCA, implementing regulations and other applicable laws provide incentives to manufacturers to create modified, non-infringing versions of a drug to facilitate the approval of an ANDA or other application for generic substitutes. These manufacturers might only be required to conduct a relatively inexpensive study to show that their product has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use, or labeling as our product candidate and that the generic product is bioequivalent to ours, meaning it is absorbed in the body at the same rate and to the same extent as our product candidate. These generic equivalents, which must meet the same quality standards as the listed drugs, would be significantly less costly than ours to bring to market and companies that produce generic equivalents are generally able to offer their products at lower prices.

Thus, after the introduction of a generic competitor, a significant percentage of the sales of any branded product can be lost to the generic version. Accordingly, competition from generic equivalents to our products could materially adversely impact our net revenue, profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in our products. For example, on July 25, 2016, we received a paragraph IV certification from Actavis advising us that Actavis filed an ANDA with the FDA for a generic version of Adzenys. On October 17, 2017, we entered into a Settlement Agreement and a Licensing Agreement with Actavis (which is now owned by Teva Pharmaceutical Industries Limited), pursuant to which we granted Actavis the right to manufacture and market its now approved generic version of Adzenys under the ANDA beginning on September 1, 2025. On October 31, 2017, we received a paragraph IV certification from Teva advising us that Teva filed an ANDA with the FDA for a generic version of Cotempla. On December 21, 2018, we entered into a Settlement Agreement and a Licensing Agreement with Teva, pursuant to which we have granted Teva the right to manufacture and market its now approved generic version of Cotempla under the ANDA beginning on July 1, 2026, or earlier under certain circumstances.2026.

Some of our products are produced infrequently and by single-source suppliers, including but not limited to Halo Pharmaceutical, Inc.Inc, Mission Pharmacal Company, and Tris Pharma. Due to the limited production quantities, production of these products may not be prioritized by the third-party manufacturer and may not be scheduled and produced at all. We are reliant on a limited number of suppliers for resin, drugactive compounds,pharmaceutical ingredients (“APIs”), coating and other component substances of our final products. If any of these single-source suppliers were to breach or terminate itstheir supply agreement with us, or otherwise not supply us, we would need to identify an alternative source for the supply of component substances for our products. If we fail to procure supply of our products, or if the prices of the supply increasesincrease due to general economic conditions or tariffs, we could lose potential revenue and our business, financial condition, results of operation and reputation could be adversely affected.

These factors could cause a delay of commercialization of our products, cause us to incur higher costs and prevent us from commercializing them successfully. Furthermore, if our suppliers fail to deliver the required commercial quantities of components and active pharmaceutical ingredients (“APIs”) on a timely basis and at commercially reasonable prices, including if our suppliers did not receive adequate DEA quotas for the supply of certain scheduled components, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, commercialization of our ADHD products may be delayed or we could lose potential revenue and our business, financial condition, results of operation and reputation could be adversely affected.

We completed the process of outsourcing the manufacturing of our Adzenys and Cotempla products during fiscal 2024 to a third-party manufacturer based in the United States, to produce commercial quantities of these products. If the third-partythird party is not successful or does not meet our expectations (for example, timeliness of production, quantity of production, maintenance of needed documentation or regulatory compliance), we may have to find a different manufacturer and incur expenses and delays in the process. Manufacturers of our FDA regulated products must comply with good manufacturing practice (“GMP”) requirements enforced by the FDA, NMPA, EMA and other comparable foreign health authorities through facilities inspection programs. These requirements include quality control, quality assurance, and the maintenance of records and documentation. Manufacturers of our FDA regulated products may be unable to comply with these GMP requirements and with other FDA, National Medical Products Administration (“NMPA”), European Medicines Agency (“EMA”), DEA, state, and foreign regulatory requirements. A failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval. If the safety of any quantities supplied is compromised due to a manufacturer’s failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our drugs, which would seriously harm our business.

Third partyThird-party performance failures may increase our development costs, delay our ability to obtain regulatory approval, and delay or prevent the commercialization of our products. While we believe that there are numerous alternative sources to provide these services, in the event that we seek such alternative sources, we may not be able to enter into replacement arrangements without incurring delays or additional costs.

The biopharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We compete with companies that design, manufacture and market already-existing and new products. We anticipate that we will face increased competition in the future as new companies enter the market with new technologies and/or our competitors improve their current products, and companies introduce generic equivalents. One or more of our competitors may offer technology superior to ours and render our technology obsolete or uneconomical. Most of our current competitors, as well as many of our potential competitors, have greater name recognition, more substantial intellectual property portfolios, longer operating histories, significantly greater resources to invest in new technologies, more substantial experience in product marketing and new product development, greater regulatory expertise, more extensive manufacturing capabilities and the distribution channels to deliver products to customers. Our competitors may be more successful in acquiring new products than we are. If we fail to acquire new products, implementation of our business plan would be delayed, which could have a negative adverse effect on our business and prospects. If we are not able to compete successfully against our current and future competitors, our business will not grow, weand our financial condition and operations will suffer. Our ability to compete successfully will depend largely on our ability to:

We compete with companies that design, manufacture and market treatments that compete with our products. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and more experienced marketing and manufacturing organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. As a result, these companies may obtain regulatory approval more rapidly than we are able and may be more effective in selling and marketing their products as well. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing on an exclusive basis drug products or drug delivery technologies that are more effective or less costly than thatthose of our products.

While our pharmaceutical products are approved and generating net revenue in the United States, they may not receive, or continue to receive, clinician or patient acceptance, or they may not maintain adequate reimbursement from third partythird-party payors. In the future, we might possibly sell other products to target customers substantially all of whom receive reimbursement for the health care services they provide to their patients from third-party payors, such as Medicare, Medicaid, other domestic and foreign government programs, private insurance plans and managed care programs.

Obtaining coverage and reimbursement approval for a product from each government or third-party payor is a time consumingtime-consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our potential product to each government or third-party payor. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. In addition, eligibility for coverage does not imply that any product will be covered and reimbursed in all cases or reimbursed at a rate that allows our potential customers to make a profit or even cover their costs.

Our future profitability may depend, in part, on our ability to commercialize our products in foreign markets for which we intend to primarily rely on collaboration with third parties such as the agreement we entered into with Medomie in July 2023 to commercialize Adzenys and Cotempla in Israel and the Palestinian Authority and the agreement we entered into with Lupin in September 2024 to commercialize Adzenys and Cotempla in Canada. If we commercialize our products in foreign markets, we would be subject to additional risks and uncertainties, including:

We are subject to the United States Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the United States domestic bribery statute contained in 18 U.S.C. § 201, the United States Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, third-party intermediaries, joint venture partners and collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector. We may have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. In addition, we may engage third partythird-party intermediaries to obtain necessary permits, licenses, and other regulatory approvals. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize or have actual knowledge of such activities.

Adzenys and Cotempla, (collectively, our “Controlled Substance Products”), which are approved by the FDA, are regulated by the DEA as Schedule II controlled substances. Before any commercialization of any product candidate that contains a controlled substance, the DEA determines the controlled substance schedule of a drug, taking into account the recommendation of the FDA. Our Controlled Substance Products are, and our other future products may be, if approved, be regulated as “controlled substances” as defined in the Controlled Substances Act of 1970, or CSA, and the implementing regulations of the DEA, which establish registration, security, recordkeeping, reporting, storage, distribution, importation, exportation, inventory, quota and other requirements administered by the DEA. These requirements are applicable to us, to our third-party manufacturers and to distributors, prescribers, and dispensers of our products. For example, Schedule II controlled substances are subject to various restrictions, including, but not limited to, mandatory written prescriptions and the prohibition of refills. The DEA regulates the handling of controlled substances through a closed chain of distribution. This control extends to the equipment and raw materials used in their manufacture and packaging, in order to prevent loss and diversion into illicit channels of commerce. A number of states and foreign countries also independently regulate these drugs as controlled substances. State-controlled substance laws and regulations may have more extensive requirements than those determined by the DEA and FDA. Though state-controlled substances laws often mirror federal law because the states are separate jurisdictions, they may schedule products separately. While some states automatically schedule a drug when the DEA does so, other states require additional state rulemaking or legislative action, which could delay commercialization. Some state and local governments also require manufacturers to operate a drug stewardship program that collects, secures, transports, and safely disposes of unwanted drugs. The DEA regulates controlled substances as Schedule I, II, III, IV or V substances. Schedule I substances by definition have no established medicinal use, and may not be marketed or sold in the United States. A pharmaceutical product may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest risk of abuse and Schedule V substances the lowest relative risk of abuse among such substances.

Our third-party suppliers,suppliers must comply with all applicable regulatory requirements of the FDA and foreign authorities. For instance, because each of our ADHD products is a regulated drug product and subject to the DEA and state-level regulations, we have had to, and will continue to need to, secure state licenses from each required state in which we intend to sell such product allowing us to distribute a regulated drug product in such state.

The suite of composition-of-matter patentspatent for Adzenys areis scheduled to expire in 2026 and 2032. The composition-of-matter patents in the United States for Cotempla expire in 2032, and the method-of-use patent expires in 2038. There is no guarantee that we will be able to extend the life of these patents or to obtain additional patents, licenses, or other instruments that can provide us with a comparable level of exclusivity to the intellectual property underlying the expiring patents.

In addition to patent protection, because we operate in the highly technical field of development of therapies and medical devices,pharmaceuticals, we rely in part on trade secret protection in order to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We expect to enter into confidentiality and intellectual property assignment agreements with our employees, consultants, outside scientific and commercial collaborators, sponsored researchers, and other advisors. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by us during the course of the party’s relationship with us. These agreements also generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to us.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to pharmaceuticals and medical devices.pharmaceuticals. This could make it difficult for us to stop the infringement of some of our patents, if obtained, or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. In addition, some countries allow patents to be challenged by third parties in administrative proceedings, which may result in a reduction in scope or cancelation of some or all of the claims. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

We continuously evaluate opportunities for expansion and change. These initiatives may involve making acquisitions, entering into partnerships and joint ventures, divesting assets, restructuring our existing operations and assets, creating new financial structures and building new facilities—facilities, any of which could require a significant investment and subject us to new kinds of risks. We may incur additional indebtedness to finance these opportunities. If our strategies for growth and change are not successful, we could face increased financial pressure, such as increased cash flows demands, reduced liquidity and diminished access to financial markets, and the equity value of our businesses could be diluted.

In fiscal 2025,2026, the great majority of our gross revenue and gross accounts receivable were due to fourfive significant customers, the loss of which could materially and adversely affect our results of operations.

FourFive customers contributed greater than 10% of our gross revenue during the year ended June 30, 2025.2026. During the year ended June 30, 2025,2026, these fourfive customers accounted for 85%83% of our gross revenue. While all of these customers have been and continue to be consistently financially strong, the loss of one or more of our significant customers could have a material adverse effect on our business, operating results or financial condition. Any reduction, delay or cancellation of an order from these customers or the loss of any of these customers could cause our revenue to decline. If we are unable to diversify our customer base, we will continue to be susceptible to risks associated with customer concentration.

We are also subject to credit risk from our accounts receivable related to our product sales. As of June 30, 2025,2026, fourfive customers accounted for 89%90% of our gross accounts receivable. Our profitability and cash flows are dependent on receipt of timely payments from customers. Any delay in payment by our customers may have an adverse effect on our profitability, working capital and cash flows. There is no assurance that we will be able to collect all or any of our accounts receivable in a timely matter. If any of our customers face unexpected situations such as financial difficulties, we may not be able to receive full or any payment of the uncollected sums or enforce any judgment debts against such clients, and our business, results of operations and financial condition could be materially and adversely affected.

The risk that we may be sued on product liability claims is inherent in the development and commercialization of pharmaceutical, medical device, dietary supplement and personal carepharmaceutical products. Side effects of, or manufacturing defects in, products that we develop and commercializedcommercialize could result in the deterioration of a patient’s condition, injury or even death. Once a product is approved for sale and commercialized, the likelihood of product liability lawsuits increases. Claims may be brought by individuals seeking relief for themselves or by individuals or groups seeking to represent a class. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. These lawsuits may divert our management from pursuing our business strategy and may be costly to defend. In addition, if we are held liable in any of these lawsuits, we may incur substantial liabilities and may be forced to limit or forgo further commercialization of the affected products.

Our failure to meetmaintain thecompliance with Nasdaq's continued listing requirements of the Nasdaq could result in athe delisting of our common stock.stock, which could adversely affect the liquidity and market price of our common stock and our ability to raise capital.

We are and may continue to be subject to short sellingshort-selling strategies.

Our sales force and other employees, third partythird-party logistics partners, CMOs, CROs, CSOs, principal investigators, collaborators, independent contractors, consultants and other vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

EXXUA has been extensively studied in over 5,000 patients and represents a new class of therapeutics to compete in the over $22 billion United States prescription MDD market. We believe it can become a very important treatment option for the estimated 2121.0 million Americans affected by MDD. Over 340360 million antidepressant prescriptions were written in 20242025 in the United States, yet significant unmet needs remain considering the unacceptable side effects associated with current therapeutics. Importantly, we believe that EXXUA is the only antidepressant acting on serotonin receptors that does not carry a label warning about the risk of sexual dysfunction. The mechanism of the antidepressant effect of EXXUA is believed to be related to its modulation of serotonin activity and, specifically, its exclusive and strong binding affinity for 5HT1a receptors, which are key regulators of mood and emotion. EXXUA is not a SSRI and has no reuptake inhibition activity. EXXUA also exhibits no significant adverse effects on weight, blood pressure, heart rate or liver function. ItWe successfully launched EXXUA in fiscal 2026 as the centerpiece of our commercial efforts, and it is our expectation that EXXUA has the potential to serve as a major growth catalyst for us and we anticipate launching EXXUA in the fourth calendar quarter of 2025 as a centerpiece of our commercial efforts.us.

In addition, we will continue to focus on commercializing innovative prescription products that address conditionscentral frequentlynervous developedsystem or diagnosed in children,conditions, including ADHD. We are focusing our efforts on accelerating the growth of our commercial business and achieving positive operating cash flows. To achieve these goals, we indefinitely suspended active development of our clinical development programs and have wound down and divested unprofitable operations. In the first quarter of fiscal 2025 we completed the previously announced wind down and divestiture of our Consumer Health business and now operate our business as a single operating and reporting segment. The accounting requirements for reporting the Consumer Health business as a discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, our consolidated financial statements for all periods presented reflect the Consumer Health business as a discontinued operation.

Our business from continuing operations is focused on the upcoming launchgrowth of EXXUA and on our current prescription pharmaceutical products sold primarily through third partythird-party wholesalers and pharmacies and which primarily consists of two product portfolios. The first, the ADHD Portfolio, primarily consists of two products for the treatment of ADHD: Adzenys and Cotempla. The second, the Pediatric Portfolio, consists primarily consists of Karbinal, an extended-release first-generation antihistamine suspension containing carbinoxamine indicated to treat numerous allergic conditions, and Poly-Vi-Flor and Tri-Vi-Flor, two complementary prescription fluoride-based supplement product lines containing combinations of fluoride and vitamins in various formulations for infants and children with fluoride deficiency.conditions. During the fourth quarter of fiscal 2024, we successfully completed the transition of all manufacturing of our Adzenys and Cotempla products to a United States-based third-party contract manufacturer to improve the efficiency and profitability of these products.

We continue to experience inflationary pressures and economic uncertainty caused by global geopolitical factors and tariffs and our industry is currently encountering supply chain disruptions related to the sourcing of raw materials, increased costs of materials as result of tariffs, energy, logistics and labor for a number of reasons, including ongoing geopolitical events. While we do not have sales or operations in Russia or Ukraine and we do not have significant sales or operations in the Middle East, it is possible that conflicts and trade wars could adversely affect some of our markets and suppliers, economic and financial markets, costs and availability of energy and materials, or cause further supply chain disruptions. Inflationary pressures, increased costs and supply chain disruptions could be significant across the business throughout fiscal 20262027 and into fiscal 2027.2028. Understanding these risks, we have not experienced stock outages for our EXXUA or ADHD products since the launch of those products, and the pediatric product supply has remained adequate to satisfy demand for the preceding fourfive years.

In October 2024, we received the Notice Letter from Granules, stating that it intends to market a generic version of Adzenys before the expiration of all patents currently listed in the Orange Book. The Notice Letter states that Granules’ NDA for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. We timely filed a patent infringement lawsuit on December 11, 2024, against Granules to trigger a stay precluding the FDA from approving Granules’ NDA for a generic version of Adzenys for up to 30 months or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first. On January 7, 2025, Granules submitted an answer to the complaint. This litigation is ongoing, and awith trial has beenoriginally scheduled to begin on December 7, 2026.2026, now rescheduled to January 12, 2027. We plan to vigorously enforce our intellectual property rights related to Adzenys.

As part of our ongoing strategic evaluation and go-forward operating plan, we continue to prioritize growing our prescription business given the opportunity for EXXUA in the MDD market and the current market trends supporting our products’ growth such as the positive rebound of our Pediatric Portfolio in fiscal 2025. We believe focusing resources on our most profitable, growing products provides the most effective pathway to achieve companywidecompany-wide profitability and continued growth. As part of our planplan, we completed the wind down of operations and divested our Consumer Health business in the first quarter of fiscal 2025.

For fiscal 2025,2026, we recorded net revenue of $66.4$57.6 million. During the year, we focused on the commercial launch and growth of EXXUA. We were also able to continue the production of our ADHD medications, Adzenys and Cotempla, without encountering any supply chain interruptions in order to provide patients receiving stimulant prescriptions for the treatment of ADHD with alternative solutions to products that have experienced supply interruptions. AsHowever, as a result,result we recordedof our secondfocus higheston prescriptionthe levelsEXXUA forcommercialization launch, revenue in both Adzenysour ADHD Portfolio and Cotemplaour duringPediatric fiscalPortfolio 2025,declined even thoughfrom the ADHDprior marketplaceyear. sawWe arecognized decrease in supply chain interruptions and a stabilization of ADHD product supply, resulting in $57.6$45.8 million of net revenue for our ADHD Portfolio,Portfolio theand second$5.1 highestmillion achieved infor our history. We also saw Pediatric Portfolio net revenue growth to $8.8 million, a 20% increase from fiscal 2024, which reflects the positive effects from our recently implemented return-to-growth plan for this portfolio.Portfolio.

As an additional result of focusing on building our portfolio of revenue-generating products and generating profitability, in fiscal 2023 we terminated our license agreements relating to Healight and NT0502 (N-desethyloxybutynin), and we indefinitely suspended active development of our clinical development programs including AR101. In connection with this suspension, we engaged in negotiations with EnzCo and Rumpus for the repurchase of AR101. On August 5, 2025, we reached terms with Rumpus and EnzCo whereby for mutual consideration and releases, we transferred all of ours and Rumpus’ rights, title and interest in AR101 held by us and Rumpus to EnzCo, which extinguished and terminated all of our obligations and Rumpus’ obligations under the Rumpus Asset Purchase Agreement. There is no other relationship between us, EnzCo or Rumpus other than as contracting parties to terminate the Rumpus Asset Purchase Agreement, and there are no penalties or remaining obligations for us for terminating the Rumpus Asset Purchase Agreement.

In June 2025, we raised gross proceeds of $16.6 million from the issuance of (i) 2,806,6882,806,668 shares of our common stock, at a public offering price of $1.50 and 8,233,332 prefunded warrants at a public offering price of $1.4999 to purchase 8,233,332 shares of our common stock at an exercise price of $0.0001 per share. We received $14.8 million in proceeds net of underwriting commissions and offering expenses and intendare to useusing the net proceeds from the offering for working capital, general corporate purposes and tothe enablecommercialization us to exclusively commercializeof EXXUA.

Under our Eclipse Agreement, we have two loan agreements, the Eclipse Term Loan and the Eclipse Revolving Loan. The Eclipse Term Loan consists of an outstanding principal amount of $13.0 million on the closing date of the Eclipse Amendment No. 6, at an interest rate of the SOFR plus 7.0%, with a four-year term and a straight-line loan amortization period of seven years, which would provide for a loan balance at the end of the four-year term of $5.6 million to be repaid on the June 12, 2029, maturity date, as amended. In June 2024, we used the initial proceeds from the Eclipse Term Loan and a portion of the proceeds from the warrant exercises described above to repay in full a $15.0 million term loan. The Eclipse Revolving Loan has a potential maximum borrowing base of $14.5 million at an interest rate of the SOFR plus 4.5%, which was temporarily increased pursuant to the $1.5 million Eclipse Incremental Advance, with repayment and permanent reduction of the Eclipse Incremental Advance commencing on August 1, 2025, and continuing on the first day of each calendar month thereafter, in an amount equal to $125,000 per month, until the Eclipse Incremental Advance has been reduced to $0. As of June 30, 2026, the amount outstanding on the Eclipse Incremental Advance was $0.1 million, which was paid off in July 2026. In addition, we are required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of the Eclipse Revolving Loan remains subject to a borrowing base and reserve, and availability blockage requirements and the maturity date, as amended, is June 12, 2029.

The enactment of the One Big Beautiful Bill Act (the “OBBBA”) on July 4, 2025, may adversely affect our business, financial condition, results of operation and future plans. The OBBBA2025 includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (the “TCJA”), allowing for accelerated tax deductions for qualified property and research expenditures, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in calendar year 2025 and others implemented through calendar year 2027. NoneThe ofincome tax provision considers the provisions are expectedimpacts to impact the realizability of our deferred tax assets and liabilities on the consolidated balance sheet as of June 30, 2025.2026, However,including becausedeferred thetax OBBBAassets isfor ainterest, widefixed reaching law, we are currently assessing its potential impact on our business, financial condition, results of operationsassets and futuresection plans174 and we plan to provide an update in future SEC filings once this assessment is complete.capitalization.

During the year ended June 30, 2025,2026, research and development expense decreased by $1.4$1.3 million, or 52%,100.0%, compared to the year ended June 30, 2024, primarily2025, driven by the previously announced suspension of our development programs to focus on our commercial operationsoperations. resultingWe in a decrease inexpect research and development spending.expense Weto expectremain ourde researchminimis and development expenses to slightly decrease in the future as we continue to look for cost savings and focus on commercial operations while having minimum research and development expensesbe related to any required regulatory filings and maintenance of our intellectual property.

During the year ended June 30, 2025,2026, amortization of intangible assets, excluding amounts included in cost of goods sold, wasdecreased relativelyby consistent$1.2 million, or 32.4%, compared to the year ended June 30, 2024,2025, primarily due to the regularly recurring straight-line amortization expense that was consistent for both fiscal years. However, we expect amortization of intangible assets to increase in the future as our intangible asset related to EXXUA will increase over time when contingent consideration is capitalized as certain contingencies are met, partially offset by a decrease in amortization expense related to impairments of certain intangible assets recorded in fiscal 2025.2025 (Refer to Note 7 - Intangible Assets in Part II, Item 8 of this Annual Report for further information.information), partially offset by amortization of our intangible asset related to EXXUA that began in fiscal 2026. We expect amortization of intangible assets to increase in the future as our intangible asset related to EXXUA include a full year of amortization in the future, as opposed to a partial year of amortization that was recognized in the current year.

During the yearsyear ended June 30, 2025, and 2024, we recognized $2.1 million and $2.2 million, respectively, of restructuring costs, primarily related to the closure of our Grand Prairie, Texas manufacturing site. No restructuring costs were recognized for the year ended June 30, 2026. We do not anticipate any restructuring costs during fiscal 20262027 as our restructuring activities were completed during fiscal 2025. See Note 17 - Restructuring Costs in Part II, Item 8 of this Annual Report for further information.

During the year ended June 30, 2026, no impairment expense was recognized. During the year ended June 30, 2025, we recognized total impairment expense of $8.3 million, which was primarily the result of our increased focus on our commercial efforts for EXXUA and our ADHD Portfolio at the expense of our Pediatric Portfolio. See Note 7 - Intangible Assets in Part II, Item 8 of this Annual Report for further information.

Other Income (Expense) Income,, Net

During the year ended June 30, 2025,2026, other income (expense) income,, net decreasedincreased by $1.4$1.2 million, compared to the year ended June 30, 2024,2025, primarily due to $1.3 million of underwriting commissions and offering expenses from the issuance of the June 2025 Prefunded Warrants,Warrants partiallythat offsetimpacted bythe prior fiscal year results and were not present in the current fiscal year results. Other than those underwriting commissions and offering expenses recognized in the prior year, other income, netnet, remained relatively consistent with the prior year. We expect other (expense) income, net to continue to be relatively consistent during fiscal 2026.2027.

The fair value of derivative warrant liabilities, which is calculated using either the Black-Scholes option pricing model or the Monte Carlo simulation model, are revalued at each reporting period and changes are reflected through income or expense. For the year ended June 30, 2026, we recognized an unrealized loss of $4.7 million from the fair value adjustment primarily driven by an increase in our stock price, partially offset by gains from the exercise of liability classified warrants. For the year ended June 30, 2025, we recognized an unrealized loss of $1.7 million from the fair value adjustment primarily driven by an increase in the fair value of the June 2025 Prefunded Warrants from the issuance date untilthrough year end, partially offset by a decrease in the fair value of our other warrants and prefunded warrants due to an overall decrease in our stock price during fiscal 2025. For the year ended June 30, 2024, we recognized an unrealized loss of $4.0 million from the fair value adjustment primarily driven by a decrease in our stock price during fiscal 2024.

For the years ended June 30, 2025,2026, and 2024,2025, there was $0.4 million ofinsignificant income tax expense and $2.1$0.4 million of income tax expense from continuing operations, which was an effective tax rate of negative 3.2%0.1% and negative 20.6%,3.2%, respectively. This income tax expense was primarily driven by the limitations on losses as a result of Section 382 of the IRC changes in ownership coupled with existing valuation allowances.

Net Income (Loss) from Discontinued Operations, Net of Tax

Net income (loss) from discontinued operations, net of tax is related to the wind down and divestiture of our Consumer Health business that was completed in the first quarter of fiscal 2025. See Note 20 - Discontinued Operations in Part II, Item 8 of this Annual Report for further information.

Net Cash Used inFrom Operating Activities

Net cash used infrom operating activities during these periods primarily reflected our net losses, partially offset by changes in working capital and non-cash charges including impairment, stock-based compensation expense, gain or loss on derivative warrant liabilities, depreciation, amortization and accretion, adjustments from discontinued operations and other charges.

During the year ended June 30, 2025,2026, net cash used infrom operating activities totaled $1.9$3.3 million, which was primarily thedue resultto ofa angreater increasefocus inon accounts receivable and prepaid expensescollections and otherinventory currentturnover. assets,This was partially offset by positivenegative cash earnings of $2.6 million (net loss offset by non-cash itemsitems, primarily from impairment expense, depreciation, amortization and accretion, stock-based compensation expense, derivative warrant liabilities adjustment,loss, depreciation, amortization, and inventory write-down,write-down adjustmentsexpense), fromas discontinuedwell operationsas increased payments on accounts payable and other certain non-cash adjustments) and increases in inventories, accounts payable, accrued liabilities, other operating assets and liabilities, net, and changes in operating assets and liabilities fromas discontinuedwe operations.focused on reducing our outstanding liabilities.

During the year ended June 30, 2024,2025, net cash used infrom operating activities totaled $1.4$1.9 million.million, The use of cashwhich was primarily the result of the decrease in accounts payable and accrued liabilities and an increase in inventories,accounts receivable and prepaid expenses and other current assets, partially offset by positive cash earnings (net loss offset by non-cash items primarily from impairment expense, depreciation, amortization and accretion,amortization, stock-based compensation expense, derivative warrant liabilities adjustment, inventory write-down, adjustments from discontinued operations and other certain non-cash adjustments). Additionally,and these were partially offset by funds from the Employee Retention Credit program recordedincreases in other operating liabilities and a decrease in accounts receivable, net and a net decrease in variousinventories, other operating assets and liabilities.liabilities, net, and changes in operating assets and liabilities from discontinued operations.

Net Cash Used inFrom Investing Activities

Net cash used infrom investing activities is generally related to our mergermergers and acquisitions, cash payments for acquired intangible assets such as EXXUA, as well as purchases of assets to support our operations and disposal of assets related to exit and disposal costs.

Net cash used infrom investing activities was $0.3 million during the year ended June 30, 2024, which2026, was primarilydue usedto for the purchasepurchases of variousfixed property and equipment.assets.

Net Cash Provided by (Used in)From Financing Activities

Net cash provided byfrom financing activities of $15.4 million during the year ended June 30, 2025, was primarily from $14.8 million of net proceeds received from our public offering of common stock and prefunded warrants in June 2025, $6.7 million of net proceeds from our Eclipse Revolving Loan and $1.9 million of proceeds received from borrowings in June 2025 on our Eclipse Term Loan related to the Eclipse Amendment No. 6, partially offset by $6.0 million of payments for fixed payment arrangements and $1.9 million of payments made against the principal balance of our Eclipse Term Loan throughout fiscal 2025.

We have engaged in several different types of equity financings throughout our history. Most recently in June 2025, we raised gross proceeds of $16.6 million from the issuance of (i) 2,806,6882,806,668 shares of our common stock, at a public offering price of $1.50 and (ii) 8,233,332 prefunded warrants at a public offering price of $1.4999 to purchase 8,233,332 shares of our common stock at an exercise price of $0.0001 per share. We received $14.8 million in proceeds net of underwriting commissions and offering expenses and intendare to useusing the net proceeds from the offering for working capital, general corporate purposes and tothe enablecommercialization us to exclusively commercializeof EXXUA.

Under our Eclipse Agreement, we have two loan agreements, the Eclipse Term Loan and the Eclipse Revolving Loan. The Eclipse Term Loan consists of an outstanding principal amount of $13.0 million on the closing date of the Eclipse Amendment No. 6,6 (June 20, 2025), at an interest rate of the SOFR plus 7.0%, with a four-year term and a straight-line loan amortization period of seven years, which would provide for a loan balance at the end of the four-year term of $5.6 million to be repaid on the June 12, 2029, maturity date, as amended. In June 2024, we used the initial proceeds from the Eclipse Term Loan and a portion of the proceeds from the warrant exercises described above to repay in full a $15.0 million term loan. The Eclipse Revolving Loan has a potential maximum borrowing base of $14.5 million at an interest rate of the SOFR plus 4.5%, which was temporarily increased pursuant to the $1.5 million Eclipse Incremental Advance, with repayment and permanent reduction of the Eclipse Incremental Advance commencing on August 1, 2025, and continuing on the first day of each calendar month thereafter, in an amount equal to $125,000 per month, until the Eclipse Incremental Advance has been reduced to $0. As of June 30, 2026, the amount outstanding on the Eclipse Incremental Advance was $0.1 million, which was paid off in July 2026. In addition, we are required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of the Eclipse Revolving Loan remains subject to a borrowing base and reserve, and availability blockage requirements and the maturity date, as amended, is June 12, 2029.

Upon closing of the acquisition of a line of prescription pediatric products from Cerecor, Inc. in October 2019, we assumed payment obligations that require us to make fixed and product milestone payments. As of June 30, 2025, we havehad an accrued fixed payment arrangement balance related to these payment obligations of $0.2 million recorded in other current liabilities on the consolidated balance sheet.sheet, which was paid in full during fiscal 2026.

In connection with our suspension of active development of AR101, we engaged in negotiations with EnzCo and Rumpus for the repurchase of AR101. On August 5, 2025, we reached terms with Rumpus and EnzCo whereby for mutual consideration and releases, we transferred all of ours and Rumpus’ rights, title and interest in AR101 held by us and Rumpus to EnzCo, which extinguished and terminated all of our obligations and Rumpus’ obligations under the Rumpus Asset Purchase Agreement. There is no other relationship between us, EnzCo or Rumpus other than as contracting parties to terminate the Rumpus Asset Purchase Agreement, and there are no penalties or remaining obligations for us for terminating the Rumpus Asset Purchase Agreement.

We generate net revenue from continuing operations from product sales throughof EXXUA, our ADHD Portfolio and our Pediatric Portfolio and we expect that we will generate net revenue from continuing operations from EXXUA after its launch, which is currently anticipated to occur in the fourth calendar quarter of 2025.Portfolio. We evaluate our contracts with customers to determine revenue recognition using the following five-step model: (1) identify the contract with the customer; (2) identify the performance obligations and if they are distinct; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) a performance obligation is satisfied.

The purpose of the Management’s Discussion and Analysis (the “MD&A”) is to present information that management believes is relevant to an assessment and understanding of our results of operations for the three and sixnine months ended DecemberMarch 31, 2025,2026, our cash flows for the sixnine months ended DecemberMarch 31, 2025,2026, and our financial condition as of DecemberMarch 31, 2025.2026. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and notes thereto.

We have entered into two international exclusive collaboration, distribution and supply agreements to commercialize certain of our ADHD products. The first agreement is with Medomie, a privately owned pharmaceutical company, which will commercialize the ADHD products in Israel and the Palestinian Authority. The second agreement is with Lupin, a subsidiary of global pharmaceutical company Lupin Limited, which will commercialize the ADHD products in Canada. We will supply the ADHD products to Medomie and Lupin based on forecasts and provide various product commercialization, regulatory and quality assurance resources. Medomie and Lupin are responsible for seeking local regulatory approvals and marketing authorizations for the ADHD products, which is expected to occur over the next 18 to 24 months.months, however, there can be no guarantee that local regulatory approvals and marketing authorizations will be obtained on the expected timeline.

We continue to experience inflationary pressures and economic uncertainty caused by global geopolitical factors, trade wars and tariffs, and members of our industry isare currently encountering supply chain disruptions related to the sourcing of raw materials, increased costs of materials as result of tariffs, energy, logistics and labor for a number of reasons, including ongoing geopolitical events. It is possible that trade wars and economic or political policies could adversely affect some of our markets and suppliers, economic and financial markets, costs and availability of energy and materials, or cause further supply chain disruptions. Inflationary pressures, increased costs and supply chain disruptions could be significant across the business throughout fiscal 2026 and into fiscal 2027. Understanding these risks, we have not experienced stock outages for our ADHD products since the launch of those products.

The results of operations for the three and sixnine months ended DecemberMarch 31, 2025,2026, compared to the three and sixnine months ended DecemberMarch 31, 2024,2025, is as follows:

Net revenue disaggregated by product portfolios for the three and sixnine months ended DecemberMarch 31, 2025,2026, compared to the three and sixnine months ended DecemberMarch 31, 2024,2025, is as follows:

During the three months ended DecemberMarch 31, 2025,2026, net revenue decreased by $1.1$6.0 million, or 7%,33%, compared to the same period ended DecemberMarch 31, 2024,2025, primarily due to a broader deemphasis in marketing towards the ADHD Portfolio and the Pediatric Portfolio as our marketing efforts have shifted towards EXXUA, which is now the centerpiece of our commercial efforts.efforts as well as a decrease in ADHD Portfolio net revenue attributed to the launch of a generic version of one of our ADHD products late in the second quarter of fiscal 2026. The Pediatric Portfolio was negatively impacted by payer mix resulting in higher rebates and an increase in returns. These decreases were partially offset by a $0.2$2.4 million increase in net revenue related to the successful new product launch of EXXUA in the second quarter of fiscal 2026.

During the sixnine months ended DecemberMarch 31, 2025,2026, net revenue decreased by $3.7$9.8 million, or 11%,19%, compared to the same period ended DecemberMarch 31, 2024,2025, primarily due to a $3.3broader deemphasis in marketing towards the ADHD Portfolio as our marketing efforts have shifted towards EXXUA, which is now the centerpiece of our commercial efforts, and a decrease in ADHD Portfolio net revenue attributed to the launch of a generic version of one of our ADHD products late in the second quarter of fiscal 2026. The decrease in the Pediatric Portfolio was primarily due to returns experienced during the quarter. These decreases were partially offset by a $2.6 million increase in net revenue related to the successful new product launch of EXXUA in the second quarter of fiscal 2026 and $3.3 million of net revenue recorded in the first quarter of fiscal 2025 related to a decrease in estimated variable consideration as a result of successful negotiations with a vendor.

Gross profit and gross profit percentage for the three and sixnine months ended DecemberMarch 31, 2025,2026, compared to the three and sixnine months ended DecemberMarch 31, 2024,2025, is as follows:

During the three months ended DecemberMarch 31, 2025,2026, gross profit decreased by $1.2$5.2 million, or 11%,41%, compared to the same period ended DecemberMarch 31, 2024.2025. Gross profit percentage was 63%61% for the three months ended DecemberMarch 31, 2025,2026, compared to 66%69% for the same period ended DecemberMarch 31, 2024.2025. The decrease in gross profit percentage is primarily related to a $1.1$6.0 million decrease in net revenue driven by a broader deemphasis in marketing towards the ADHD Portfolio and the Pediatric Portfolio as our marketing efforts have shifted towards EXXUA and a $0.8$0.7 million inventory write-down recorded to cost of goods sold primarily resulting from a shift from our Adzenys branded products to the Adzenys generic products.

During the sixnine months ended DecemberMarch 31, 2025,2026, gross profit decreased by $4.0$9.2 million, or 17%,26%, compared to the same period ended DecemberMarch 31, 2024.2025. Gross profit percentage was 65%64% for the sixnine months ended DecemberMarch 31, 2025,2026, compared to 69% for the same period ended DecemberMarch 31, 2024.2025. This decrease in gross profit percentage is primarily related to a decrease in net revenue driven by a broader deemphasis in marketing towards the ADHD Portfolio as our marketing efforts have shifted towards EXXUA, a $3.3 million increase in net revenue in the first quarter of fiscal 2025 related to a decrease in estimated variable consideration as a result of successful negotiations with a vendor as well asand a $1.1$1.8 million inventory write-down recorded to cost of goods sold primarily resulting from a shift from our Adzenys branded products to the Adzenys generic products. These decreases were partially offset by a $2.6 million increase in net revenue related to the successful new product launch of EXXUA in the second quarter of fiscal 2026.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, selling and marketing expense increased by $0.7 million, or 14% and $0.4$1.1 million, or 4%7% compared to the same periods ended DecemberMarch 31, 2024,2025, primarily driven by increases in labor, service costs and EXXUA launch costs.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, general and administrative expense increased by $0.6$0.9 million, or 14%21% and $0.4$1.3 million, or 4%9% compared to the same periods ended DecemberMarch 31, 2024,2025, primarily driven by increases in labor, service costs and EXXUA launch costs, partially offset by improved operational efficiencies such as reduced facilities expense.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, there was no research and development expense compared to $0.5$0.2 million and $0.9$1.1 million for the same periods ended DecemberMarch 31, 2024,2025, respectively, primarily driven by our previously announced suspension of our development programs to focus on our commercial operations resulting in a decrease in research and development spending.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, amortization expense of intangible assets, excluding amounts included in cost of goods sold, decreased by $0.4$0.2 million, or 43%17% and $0.9$1.0 million, or 47%37% compared to the same periods ended DecemberMarch 31, 2024,2025, respectively, primarily due to impairments of certain intangible assets recorded in fiscal 2025, partially offset by increased amortization expense from new intangible assets placed into service upon the launch of EXXUA in the second quarter of fiscal 2026.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, we incurred zero restructuring costs compared to $1.3 millionzero and $2.1 million during the same periods ended DecemberMarch 31, 2024,2025, respectively. Restructuring costs during the first half of fiscal 2025 related to our previously announced operational realignment and related costs, which was completed during fiscal 2025.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, other income, net was relatively consistent compared to the same periods ended DecemberMarch 31, 2024.2025.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, interest expense decreased by $0.5 million, or 48%52% and $1.0$1.5 million, or 48%49% compared to the same periods ended DecemberMarch 31, 2024,2025, respectively, primarily due to the paydown of our fixed payment arrangements.

The fair value of derivative warrant liabilities is calculated using either the Black-Scholes option pricing model or the Monte Carlo simulation model and is revalued at each reporting period, and changes are reflected through income or expense. For the three and sixnine months ended DecemberMarch 31, 2025,2026, we recognized a loss of $8.2$1.3 million and $4.5$5.7 million, respectively, from the fair value adjustment primarily driven by an increase in our stock price during the three and sixnine months ended DecemberMarch 31, 2025,2026, partially offset by gains from the exercise of liability classified warrants. For the three and sixnine months ended DecemberMarch 31, 2024,2025, we recognized a gain of $3.0$2.3 million and $5.9$8.2 million, respectively, from the fair value adjustment primarily driven by a decrease in our stock price during the three and sixnine months ended DecemberMarch 31, 2024.2025.

Income Tax Benefit (Expense) Benefit

For both the three and sixnine months ended DecemberMarch 31, 2024,2026, wethere recordedwas anless than $0.1 million of income tax benefit of $0.3 millionexpense from continuing operations, which representedwas an effective tax rate of negative 74.1%0.2% and negative 0.1%. This was primarily driven by operating losses and favorable deductions from tax law changes coupled with existing valuation allowances and adjustments from our income tax return filings For the three and nine months ended March 31, 2025, we recorded an income tax expensebenefit of $0.1 million from continuing operations, which represented an effective tax rate of 6.5%,negative respectively.3.2% and an income tax expense of zero, which represented an effective tax rate of zero. These effective tax rates were primarily driven by the limitations on losses as a result of Section 382 of the Internal Revenue Code changes in ownership coupled with existing valuation allowances, the divestiture of our Consumer Health business that occurred during the first quarter of fiscal 2025 and changes to our first quarter of fiscal 2025 projections, which resulted in an income tax benefit for the secondthree quartermonths ofended fiscalMarch 2025.31, 2025, that reduced income tax expense for the nine months ended March 31, 2025, to zero.

On September 26, 2024, we filed athe shelf2024 Shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024. ThisThe shelfShelf registrationRegistration statement covers the offering, issuance and sale by us of up to an aggregate of $100.0 million of our common stock, preferred stock, debt securities, warrants, rights and units (the “2024 Shelf”).units. Through the filing date of this Annual Report, $100.0 million remains available under the 2024 Shelf. This availability is subject to the SEC’s “baby shelf” limitation as set forth in SEC Instruction I.B.6 limitation to the Form S-3.

Under our Eclipse Agreement, we have two loan agreements, the Eclipse Term Loan and the Eclipse Revolving Loan. The Eclipse Term Loan consists of an outstanding principal amount of $13.0 million on the closing date of the Eclipse Amendment No. 6, at an interest rate of the SOFR plus 7.0%, with a four-year term and a straight-line loan amortization period of seven years, which would provide for a loan balance at the end of the four-year term of $5.6 million to be repaid on the June 12, 2029, maturity date, as amended. In June 2024, we used the initial proceeds from the Eclipse Term Loan and a portion of the proceeds from the warrant exercises described above to repay in full a $15.0 million term loan. The Eclipse Revolving Loan has a potential maximum borrowing base of $14.5 million at an interest rate of the SOFR plus 4.5%, which was temporarily increased pursuant to the $1.5 million Eclipse Incremental Advance, with repayment and permanent reduction of the Eclipse Incremental Advance commencing on August 1, 2025, and continuing on the first day of each calendar month thereafter, in an amount equal to $125,000 per month, until the Eclipse Incremental Advance has been reduced to $0.zero. In addition, we are required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of the Eclipse Revolving Loan remains subject to a borrowing base and reserve, and availability blockage requirements and the maturity date, as amended, is June 12, 2029. Please refer to Note 10 - Revolving Credit Facility and Note 11 - Debt in Part I, Item 1 of this Form 10-Q for further information.

The following table shows cash flows for the sixnine months ended DecemberMarch 31, 2025,2026, and 20242025:

Net Cash ProvidedUsed byin Operating Activities

During the sixnine months ended DecemberMarch 31, 2025,2026, net cash providedused byin operating activities totaled $3.1$1.1 million, which was primarily the result of an increase in accounts payable and accrued liabilities and aaccounts decrease in inventories, partially offset by negative cash earnings (net loss of $8.6 million partially offset by non-cash derivative warrant liabilities adjustment, depreciation and amortization, stock-based compensation expense, and inventory write-down) andpayable, a decrease in prepaid expenses and other current assets.assets as well as negative cash earnings (net loss partially offset by non-cash items primarily from depreciation and amortization, stock-based compensation expense, derivative warrant liabilities adjustment, inventory write-down and other certain non-cash adjustments), partially offset by a decrease in accounts receivable, inventories and other operating assets and liabilities, net.

During the sixnine months ended DecemberMarch 31, 2024,2025, net cashused provided byin operating activities totaled $1.7$4.7 million, which was primarily the result of an increase in accounts payablereceivable, net and accrued liabilities and a decrease in inventories, partially offset by increases in accounts receivable, prepaid expenses and other current assets as well as a decrease in accounts payable and accrued liabilities, partially offset by positive cash used in operationsearnings (net income of $2.3$6.3 million partially offset primarily by non-cash depreciation, amortization and accretion, stock compensation expense and derivative warrant liabilities adjustment).

Net cash used in investing activities was nominal during the sixnine months ended DecemberMarch 31, 2025.2026. Net cash provided by investing activities for the sixnine months ended DecemberMarch 31, 2024,2025, was driven by cash received from the sale of fixed assets, partially offset by cash payments for fixed asset purchases.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities of $4.0$3.1 million during the sixnine months ended DecemberMarch 31, 2025,2026, was primarily due to $3.1 million of payments for fixed payment arrangements and $0.9$1.4 million of payments made against the principal balance of our Eclipse Term Loan, partially offset by $1.3 million of net proceeds received from our Eclipse Revolving Loan.

Net cash usedprovided inby financing activities of $1.8$2.5 million during the sixnine months ended DecemberMarch 31, 2024,2025, was primarily due to $7.6 million of net proceeds received from our Eclipse Revolving Loan, partially offset by $3.8 million of payments made to fixed payment arrangements and $1.4 million of payments made on borrowings, partially offset by net proceeds received from our Eclipse Revolving Loan.borrowings.

Upon closing of the acquisition of a line of prescription pediatric products from Cerecor, Inc. in October 2019, we assumed payment obligations that required us to make fixed and product milestone payments. As of DecemberMarch 31, 2025,2026, we had no remaining fixed payment arrangement accruals recorded in our unaudited consolidated balance sheet.