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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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 December 31, 2024

 

or

 

☐ 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: 001-38247

 

aytu20231231_10qimg001.jpg

 

AYTU BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

47-0883144

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

7900 East Union Avenue, Suite 920, Denver, Colorado 80237

 (720) 437-6580
(Address of principal executive offices and zip code) (Registrant’s telephone number, including area code)

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

AYTU

 

The Nasdaq Capital 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 ☒ 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 such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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

  ☐

 

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 ☒

 

As of February 1, 2025, the registrant had 6,169,848 of common stock outstanding.

 

 
Table of Contents

 

 
 

AYTU BIOPHARMA, INC.

FORM 10-Q

 

TABLE OF CONTENTS

 

   

Page
Cautionary Information Regarding Forward-Looking Statements 3
     
PART I - FINANCIAL INFORMATION 4
Item 1.

Financial Statements

 4
 

Unaudited Consolidated Balance Sheets

4
 

Unaudited Consolidated Statements of Operations

5
 

Unaudited Consolidated Statements of Stockholders’ Equity

6
 

Unaudited Consolidated Statements of Cash Flows

7
 

Notes to the Unaudited Consolidated Financial Statements

8
Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

33
Item 3.

Quantitative and Qualitative Disclosures About Market Risk

40
Item 4.

Controls and Procedures

40
     
PART II - OTHER INFORMATION 41
Item 1.

Legal Proceedings

41
Item 1A.

Risk Factors

42
Item 5. Other Information 43
Item 6.

Exhibits

44
     
SIGNATURES

45

 

2
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CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

 

This Report on Form 10‑Q (“Form 10-Q” or “this report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements other than statements of historical facts contained in this report, including statements regarding our anticipated future clinical and regulatory events, future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. Forward looking statements are generally written in the future tense and/or are preceded by words such as “may,” “will,” “should,” “forecast,” “could,” “expect,” “suggest,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “potential,” “plan,” or similar words, or the negatives of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, without limitation: our anticipated future cash position; the planned expanded commercialization of our products and the potential future commercialization of our product candidates; our anticipated future growth rates; anticipated sales increases; anticipated net revenue increases; amounts of certain future expenses and cost of sales; our plans to acquire additional assets or dispose of assets, anticipated increases or decreases to operating expenses, and selling, general, and administrative expenses; and future events under our current and potential future collaborations.

 

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including without limitation the risks described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10‑K for the year ended June 30, 2024 (“2024 Form 10-K”), and in the reports we file with the United States Securities and Exchange Commission (“SEC”). These risks are not exhaustive. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements should not be relied upon as predictions of future events. We can provide no assurance that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. We assume no obligation to update or supplement forward-looking statements, except as may be required under applicable law.

 

This Form 10-Q may refer to registered trademarks that we currently own or license, such as Aytu, Aytu BioPharma, Aytu RxConnect, Neos Therapeutics, Adzenys, Adzenys ER, Adzenys XR-ODT, Cotempla, Cotempla XR-ODT, Karbinal, Poly-Vi-Flor and Tri-Vi-Flor, which are protected under applicable intellectual property laws and are our property or the property of our subsidiaries. This Form 10-Q also contains trademarks, service marks, copyrights and trade names of other companies, which are the property of their respective owners. Solely for convenience, our trademarks and tradenames referred to in this Form 10-Q may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradename.

 

3
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PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AYTU BIOPHARMA, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $20,398  $20,006 

Accounts receivable, net

  25,403   23,526 

Inventories

  11,085   12,141 

Prepaid expenses and other current assets

  6,167   5,097 

Current assets of discontinued operations

  —   1,121 

Total current assets

  63,053   61,891 

Non-current assets:

        

Property and equipment, net

  516   693 

Operating lease right-of-use assets

  1,178   829 

Intangible assets, net

  49,958   52,453 

Other non-current assets

  1,522   2,185 

Non-current assets of discontinued operations

  —   44 

Total non-current assets

  53,174   56,204 

Total assets

 $116,227  $118,095 
         

LIABILITIES AND STOCKHOLDERS’ EQUITY

        

Current liabilities:

        

Accounts payable

 $11,699  $10,314 

Accrued liabilities

  39,372   38,143 

Revolving credit facility

  4,012   2,395 

Current portion of debt

  1,857   1,857 

Other current liabilities

  7,108   8,962 

Current liabilities of discontinued operations

  —   557 

Total current liabilities

  64,048   62,228 

Non-current liabilities:

        

Debt, net of current portion

  9,983   10,877 

Derivative warrant liabilities

  6,386   12,745 

Other non-current liabilities

  5,045   4,529 

Total non-current liabilities

  21,414   28,151 
         

Commitments and contingencies (note 13)

          
         

Stockholders’ equity:

        

Preferred stock, par value $.0001; 50,000,000 shares authorized; no shares issued or outstanding

  —   — 

Common stock, par value $.0001; 200,000,000 shares authorized; 6,169,681 and 5,972,638 shares issued and outstanding, respectively

  1   1 

Additional paid-in capital

  348,475   347,688 

Accumulated deficit

  (317,711)  (319,973)

Total stockholders’ equity

  30,765   27,716 

Total liabilities and stockholders’ equity

 $116,227  $118,095 

 

The accompanying notes to the unaudited consolidated financial statements are an integral part of this statement.

 

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AYTU BIOPHARMA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 

Net revenue

 $16,221  $18,748  $32,795  $36,565 

Cost of sales

  5,435   4,145   10,024   8,924 

Gross profit

  10,786   14,603   22,771   27,641 
                 

Operating expenses:

                

Selling and marketing

  5,272   5,218   10,931   11,309 

General and administrative

  4,449   4,800   9,574   11,095 

Research and development

  522   521   948   1,116 

Amortization of intangible assets

  921   918   1,842   1,842 

Restructuring costs

  1,317   —   2,101   — 

Total operating expenses

  12,481   11,457   25,396   25,362 

(Loss) income from operations

  (1,695)  3,146   (2,625)  2,279 

Other income, net

  140   96   682   680 

Interest expense

  (1,079)  (1,266)  (2,073)  (2,549)

Derivative warrant liabilities gain (loss)

  3,016   (577)  5,896   (6,484)

Income (loss) from continuing operations before income tax expense

  382   1,399   1,880   (6,074)

Income tax benefit (expense)

  283   (780)  (122)  (780)

Net income (loss) from continuing operations

  665   619   1,758   (6,854)

Net income (loss) from discontinued operations, net of tax

  123   (839)  504   (1,486)

Net income (loss)

 $788  $(220) $2,262  $(8,340)
                 

Basic weighted-average common shares outstanding (note 17)

  6,132,060   5,517,670   6,100,204   5,499,951 

Diluted weighted-average common shares outstanding (note 17)

  8,485,112   5,517,670   8,782,794   5,499,951 
                 

Net income (loss) per share (note 17):

                

Basic - continuing operations

 $0.11  $0.11  $0.29  $(1.25)

Diluted - continuing operations

 $(0.28) $0.11  $(0.47) $(1.25)

Basic - discontinued operations, net of tax

 $0.02  $(0.15) $0.08  $(0.27)

Diluted - discontinued operations, net of tax

 $0.01  $(0.15) $0.06  $(0.27)

Basic - net income (loss)

 $0.13  $(0.04) $0.37  $(1.52)

Diluted - net loss

 $(0.26) $(0.04) $(0.41) $(1.52)

 

The accompanying notes to the unaudited consolidated financial statements are an integral part of this statement.

 

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AYTU BIOPHARMA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

 

          

Additional

      

Total

 
  

Common Stock

  

Paid-in

  

Accumulated

  

Stockholders’

 
  

Shares

  

Amount

  

Capital

  

Deficit

  

Equity

 

Balances, June 30, 2024

  5,972,638  $1  $347,688  $(319,973) $27,716 

Stock-based compensation expense

  564   —   173   —   173 

Issuance of common stock from exercise of warrants

  176,000   —   463   —   463 

Net income

  —   —   —   1,474   1,474 

Balances, September 30, 2024

  6,149,202   1   348,324   (318,499)  29,826 

Stock-based compensation expense

  20,479   —   151   —   151 

Net income

  —   —   —   788   788 

Balances, December 31, 2024

  6,169,681  $1  $348,475  $(317,711) $30,765 

 

 

          

Additional

      

Total

 
  

Common Stock

  

Paid-in

  

Accumulated

  

Stockholders’

 
  

Shares

  

Amount

  

Capital

  

Deficit

  

Equity

 

Balances, June 30, 2023

  5,517,174  $1  $343,485  $(304,129) $39,357 

Stock-based compensation expense

  13,061   —   930   —   930 

Net loss

  —   —   —   (8,120)  (8,120)

Balances, September 30, 2023

  5,530,235   1   344,415   (312,249)  32,167 

Stock-based compensation expense

  108   —   820   —   820 

Issuance of common stock from exercise of warrants

  37,004   —   86   —   86 

Net loss

  —   —   —   (220)  (220)

Balances, December 31, 2023

  5,567,347  $1  $345,321  $(312,469) $32,853 

 

The accompanying notes to the unaudited consolidated financial statements are an integral part of this statement.

 

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AYTU BIOPHARMA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

  

Six Months Ended

 
  

December 31,

 
  

2024

  

2023

 

Cash flows from operating activities:

        

Net income (loss)

 $2,262  $(8,340)

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

        

Depreciation, amortization and accretion

  2,766   3,634 

Stock-based compensation expense

  324   1,432 

Derivative warrant liabilities (gain) loss

  (5,896)  6,484 

Amortization of debt discount and issuance costs

  55   302 

Inventory write-down

  95   51 

Other non-cash adjustments

  (529)  (50)

Non-cash adjustments from discontinued operations

  254   1,176 

Changes in operating assets and liabilities:

        

Accounts receivable, net

  (1,794)  (1,566)

Inventories

  961   (1,805)

Prepaid expenses and other current assets

  (679)  (830)

Accounts payable

  1,329   (3,062)

Accrued liabilities

  2,341   (3,554)

Other operating assets and liabilities, net

  306   3,805 

Changes in operating assets and liabilities from discontinued operations

  (80)  1,977 

Net cash provided by (used in) operating activities

  1,715   (346)
         

Cash flows from investing activities:

        

Cash received from sales of fixed assets

  668   — 

Cash payments for fixed asset purchases

  (142)  — 

Other investing activities

  —   (250)

Net cash provided by (used in) investing activities

  526   (250)
         

Cash flows from financing activities:

        

Proceeds from issuance of stock and warrants

  —   86 

Net proceeds received from (payments made on) revolving credit facility

  1,617   (537)

Payment made to fixed payment arrangements

  (2,537)  (2,204)

Payment of stock issuance costs

  —   (160)

Payments made to borrowings

  (929)  (45)

Net cash used in financing activities

  (1,849)  (2,860)
         

Net change in cash and cash equivalents

  392   (3,456)

Cash and cash equivalents at beginning of period

  20,006   22,985 

Cash and cash equivalents at end of period

 $20,398  $19,529 
         

Supplemental disclosure of cash flow information:

        

Cash paid for interest

 $752  $2,170 

Cash paid for income taxes

 $1,419  $432 

Non-cash investing and financing activities:

        

Other non-cash investing and financing activities

 $483  $— 

 

The accompanying notes to the unaudited consolidated financial statements are an integral part of this statement.

 

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AYTU BIOPHARMA, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 - Nature of Business

 

Aytu BioPharma, Inc. (“Aytu,” the “Company,” “we,” “us,” or “our”), is a pharmaceutical company focused on commercializing novel therapeutics. The Company was originally incorporated as Rosewind Corporation on August 9, 2002, in the state of Colorado and was re-incorporated as Aytu BioScience, Inc. in the state of Delaware on June 8, 2015. Following the acquisition of Neos Therapeutics, Inc. (“Neos”) in March 2021 (the “Neos Acquisition”), the Company changed its name to Aytu BioPharma, Inc.

 

The Company’s strategy is to become a leading pharmaceutical company that improves the lives of patients. The Company uses a focused approach of in-licensing, acquiring, developing, and commercializing novel prescription therapeutics in order to continue building its portfolio of revenue-generating products and leveraging its commercial team’s expertise to build leading brands within large therapeutic markets. The Company’s primary focus is on commercializing innovative prescription products that address conditions frequently developed or diagnosed in childhood.

 

The Company’s business from continuing operations is focused on its prescription pharmaceutical products sold primarily through third party wholesalers and pharmacies and which primarily consists of two product portfolios. The first consists of two products for the treatment of attention deficit hyperactivity disorder (“ADHD”): Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets (“Adzenys”) and Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets (“Cotempla” and Adzenys together with Cotempla the “ADHD Portfolio”). The second consists primarily of Karbinal® ER (carbinoxamine maleate extended-release oral suspension) (“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 (the “Pediatric Portfolio”).

 

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”). After the previously announced successful wind down and divestiture of the Consumer Health business that occurred during the first quarter of fiscal 2025, the Company determined that its continuing operations now operate in a single operating and reportable segment. The Company’s CODM is its Chief Executive Officer who manages operations and regularly reviews the financial information of the Company’s continuing operations as a single operating segment for the purposes of allocating resources and evaluating its financial performance, and for which discrete financial information is available. The results of the Consumer Health business have been reported as discontinued operations (see Note 20 – Discontinued Operations).

 

In July 2023, the Company entered into an exclusive collaboration, distribution and supply agreement with Medomie Pharma Ltd (“Medomie”), a privately owned pharmaceutical company, for Medomie to sell Adzenys and Cotempla in Israel and the Palestinian Authority. In September 2024, the Company entered into an exclusive collaboration, distribution and supply agreement with Lupin Pharma Canada Ltd (“Lupin”), a subsidiary of global pharmaceutical company Lupin Limited, for Lupin to sell Adzenys and Cotempla in Canada. The Company will supply Adzenys and Cotempla to Medomie and Lupin based on forecasts and provide various product commercialization resources. Medomie and Lupin are responsible for seeking local regulatory approvals and marketing authorizations for both Adzenys and Cotempla, which is expected to occur over the next 18 to 24 months. The agreement with Medomie and the agreement with Lupin represent the Company’s first and second international commercial agreements for Adzenys and Cotempla, respectively.
 

 

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Note 2 - Summary of Significant Accounting Policies

 

Principals of Consolidation

 

The Company’s unaudited consolidated financial statements and notes thereto include the accounts of its wholly owned subsidiaries Aytu Therapeutics, LLC and Neos Therapeutics, Inc. and their respective wholly owned subsidiaries, as well as Innovus Pharmaceuticals, Inc. (“Innovus”) and its wholly owned subsidiaries prior to the divestiture of Innovus on July 31, 2024. All significant inter-company balances and transactions have been eliminated in consolidation.

 

Basis of Presentation

 

The unaudited consolidated financial statements and notes thereto contained in this Form 10-Q represent the financial statements of the Company and its wholly owned subsidiaries and have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and disclosures normally included in the complete financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2024 Form 10-K, which included all disclosures required by U.S. GAAP. In the opinion of management, these unaudited consolidated financial statements and notes thereto contain all adjustments necessary for the fair statement of the financial position of the Company and the results of operations and cash flows for the interim periods presented. The consolidated balance sheet as of  June 30, 2024, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The results of operations for the period ended December 31, 2024, are not necessarily indicative of expected operating results for the full year or any future period.

 

Use of Estimates

 

The preparation of financial statements and footnotes requires the use of management estimates, judgments and assumptions. Actual results may differ from estimates. In the accompanying unaudited consolidated financial statements and notes thereto, estimates are used for, but not limited to, stock-based compensation; revenue recognition, determination of variable consideration for accruals of chargebacks, administrative fees and rebates, government rebates, returns and other allowances; allowance for credit losses; inventory impairment; determination of right-of-use (“ROU”) assets and lease liabilities; valuation of financial instruments, warrants and derivative warrant liabilities, intangible assets, and long-lived assets; purchase price allocations and the depreciable lives of long-lived assets; accruals for contingent liabilities; and determination of the income tax provision, deferred taxes and valuation allowance. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. The Company periodically evaluates estimates used in the preparation of the financial statements for reasonableness.

 

Prior Period Reclassification

 

Certain prior year amounts in the Company’s unaudited consolidated financial statements and the notes thereto have been reclassified to conform to the current year presentation. These reclassifications did not impact operating results for the three and six months ended December 31, 2024, and 2023, or cash flows for the six months ended December 31, 2024, and 2023, or the Company’s financial position as of December 31, 2024, or June 30, 2024.

 

Warrants

 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Liability and equity classified warrants are valued using a Black-Scholes option pricing model or Monte Carlo simulation model at issuance and for each reporting period when applicable.

 

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Income Taxes

 

The Company calculates its quarterly income tax provision based on estimated annual effective tax rates applied to ordinary income (or loss) and other known items computed and recognized when they occur. There have been no changes in tax law affecting the tax provision during the three and six months ended December 31, 2024.

 

The Company recorded for income (loss) from continuing operations an income tax benefit of $0.3 million, which represented an effective tax rate of negative 74.1% and income tax expense of $0.8 million, which represented an effective tax rate of 55.8%, for the three months ended December 31, 2024, and 2023, respectively. The Company recorded for income (loss) from continuing operations an income tax expense of $0.1 million, which represented an effective tax rate of 6.5% and income tax expense of $0.8 million, which represented an effective tax rate of negative 12.8% for the six months ended December 31, 2024, and 2023, respectively. 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 the Company’s Consumer Health business that occurred during the first quarter of fiscal 2025 and changes to the Company’s first quarter of fiscal 2025 projections, which resulted in an income tax benefit for the current quarter.

 

An ownership change has limited the Company’s ability to offset, post-change, United States federal taxable income. Section 382 of the Internal Revenue Code imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change net operating loss carryforwards and certain recognized built-in losses. Previous acquisitions, financing transactions, and equity ownership changes in the past five years have caused a significant limitation on the Company’s ability to use the change in control net operating loss carryovers. The ownership changes result in increased future tax liability and are a driver of the change from a zero percent effective tax rate.

 

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date. A valuation allowance is recorded to reduce the net deferred tax asset when it is more likely than not that some portion or all of its deferred tax asset will not be utilized.

 

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained upon an examination. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the unaudited consolidated statements of operations.

 

Employee Retention Credit

 

On March 27, 2020, the United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”), which allows for employers to claim a refundable payroll tax credit against the employer share of Social Security tax equal to 70% of the qualified wages paid to employees after December 31, 2020, through September 30, 2021. The ERC was designed to encourage businesses to keep employees on the payroll during the COVID-19 pandemic.

 

As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company accounted for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”). In accordance with IAS 20, the Company recorded a $3.8 million ERC accrual in other non-current liabilities, which represents the proceeds the Company received from the ERC program during the first quarter of fiscal 2024. Further in accordance with IAS 20, when management determines it has reasonable assurance that the Company has substantially met all eligibility requirements of the ERC and following any adjustments from its regulatory audit or upon further clarifications from the Internal Revenue Code of 1986, as amended (the “IRC”), the ERC accrual shall be recognized as a benefit in other income in the unaudited consolidated statement of operations. The associated vendor fee of $0.4 million was expensed as incurred in the first quarter of fiscal 2024.

 

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Recently Adopted Accounting Pronouncements

 

Debt - Debt with Conversion and Other Option

 

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 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, which simplifies the accounting for convertible instruments by removing major separation models currently required. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The amendments in this update are effective for public entities that are smaller reporting companies, as defined by the SEC, for the fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted through a modified retrospective or full retrospective method. The Company adopted the guidance on July 1, 2024, and the adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

 

Recent Accounting Pronouncements Not Yet Adopted

 

Segment Reporting - Improvements to Reportable Segment Disclosures

 

In  November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 was issued to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance should be applied retrospectively unless it is impracticable to do so. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted, including in an interim period. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.

 

Disaggregation of Income Statement Expenses

 

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 require public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.

 

For a complete set of the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s 2024 Form 10-K. There have been no significant changes to the Company’s significant accounting policies and there is no other accounting guidance that has been issued and not yet adopted that is applicable to the Company and that would have a material effect on the Company’s unaudited consolidated financial statements and related disclosures as of December 31, 2024, and through the filing of this Form 10-Q.
 

 

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Note 3 - Revenue

 

Net revenue from continuing operations consists of sales of prescription pharmaceutical products from the Company’s ADHD Portfolio and Pediatric Portfolio, principally to a limited number of wholesale distributors and pharmacies in the United States. Net revenue is recognized at the point in time that control of the product transfers to the customer, which typically aligns with shipping terms (i.e., upon delivery), generally “free-on-board” destination when shipped domestically within the United States, consistent with contractual terms.

 

Savings offers, rebates, and wholesaler chargebacks reflect the terms of underlying agreements, which may vary. Accordingly, actual amounts will depend on the mix of sales by product and contracting entity. Future returns may not follow historical trends. The Company’s periodic adjustments of its estimates are subject to time delays between the initial product sale, and the ultimate reporting and settlement of deductions. The Company entered into negotiations with a vendor related to certain variable interest accruals that reduce revenue for the Company’s ADHD Portfolio. As a result of these negotiations, the Company and the vendor agreed to a reduction to the liability purportedly owed by the Company of $3.3 million, which resulted in a decrease in the estimated variable consideration accrual, and a related increase in net revenue of $3.3 million in the first quarter of fiscal 2025.

 

Revenue by Product Portfolio

 

Net revenue disaggregated by significant product portfolio for the three and six months ended December 31, 2024, and 2023, were as follows:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands)

 

ADHD Portfolio

 $13,816  $16,572  $29,080  $31,700 

Pediatric Portfolio

  2,400   2,145   3,693   4,710 

Other

  5   31   22   155 

Total net revenue

 $16,221  $18,748  $32,795  $36,565 

 

Other includes net revenue from various discontinued or deprioritized products. The Consumer Health business was divested in the first quarter of fiscal 2025 and is reported within discontinued operations (see Note 20 – Discontinued Operations).

 

Revenue by Geographic Location

 

The Company’s net revenue is predominately within the United States, with insignificant international sales.
 

Note 4 - Inventories

 

Inventories consist of raw materials, work in process and finished goods, and are recorded at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company periodically reviews the composition of its inventories to identify obsolete, slow-moving or otherwise unsaleable items. In the event that such items are identified and there are no alternate uses for the inventory, the Company will record a charge to reduce the value of the inventory to net realizable value in the period first recognized. The Company incurred inventory write-downs of less than $0.1 million and $0.1 million for the three months ended December 31, 2024, and 2023, respectively, and $0.1 million for both the six months ended December 31, 2024, and 2023, respectively.

 

Inventories consist of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Raw materials

 $494  $266 

Work in process

  3,103   5,725 

Finished goods

  7,488   6,150 

Inventories

 $11,085  $12,141 

 

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Note 5 - Property and Equipment

 

Property and equipment are recorded at cost and depreciated on a straight-line basis over the assets’ estimated economic life. Leasehold improvements are amortized over the shorter of the estimated economic life or remaining lease term. Depreciation and amortization expense from property and equipment was less than $0.1 million and $0.3 million for the three months ended December 31, 2024, and 2023, respectively, and $0.1 and $0.6 million for the six months ended December 31, 2024, and 2023, respectively.

 

Property and equipment, net, consist of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Manufacturing and lab equipment

 $721  $1,838 

Office equipment, furniture and other

  282   945 

Leasehold improvements

  164   35 

Property and equipment, gross

  1,167   2,818 

Less: accumulated depreciation and amortization

  (651)  (2,125)

Property and equipment, net

 $516  $693 

 
 

Note 6 - Leases

 

The Company has entered into various operating lease agreements for certain of its offices, manufacturing facilities and equipment, and finance lease agreements for certain equipment. These leases have original lease periods expiring between calendar year 2024 and calendar year 2030. Most leases include one or more options to renew, and the exercise of a lease renewal option typically occurs at the discretion of both parties. Certain non-real estate leases also include options to purchase the leased property. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. The Company had no remaining finance leases recorded as of June 30, 2024.

 

In June 2024, the Company entered into a forward-starting operating lease agreement to lease office space in Berwyn, Pennsylvania from the owner of the office space that the Company is currently renting under a sublease arrangement. The Company determined that it is an operating lease, and that lease commencement occurred in July 2024. The initial lease termination date is July 31, 2030, and under the lease agreement the Company has one five-year renewal option to extend the lease through July 2035. Undiscounted minimum monthly rent payments average approximately $13,000 over the initial term of the lease. The Company has elected to utilize the practical expedient to not separate lease and non-lease components upon recognition and variable lease payments will be expensed as incurred. The Company recorded an operating lease ROU asset of $0.5 million and a lease liability of $0.5 million at lease commencement in July 2024. The ROU asset and lease liability will be recorded at present value using an incremental borrowing rate of 12.3%.

 

The components of lease costs are as follows:

 

  

Three Months Ended

  

Six Months Ended

  
  

December 31,

  

December 31,

  
  

2024

  

2023

  

2024

  

2023

 

Statement of Operations Classification

  

(in thousands)

  

Lease cost:

                 

Operating lease cost

 $143  $381  $265  $741 

Operating expenses

Short-term lease cost

  86   21   177   44 

Operating expenses

Finance lease cost:

                 

Amortization of leased assets

  —   15   —   29 

Cost of sales

Interest on lease liabilities

  —   1   —   2 

Interest expense

Total lease cost

 $229  $418  $442  $816  

 

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Supplemental balance sheet information related to leases is as follows:

 

  

December 31,

  

June 30,

  
  2024  2024 

Balance Sheet Classification

  

(in thousands)

  

Assets:

         

Non-current: operating leases

 $1,178  $829 

Operating lease right-of-use assets

          

Liabilities:

         

Current: operating leases

 $182  $712 

Other current liabilities

Non-current: operating leases

  1,106   577 

Other non-current liabilities

Total lease liabilities

 $1,288  $1,289  

 

The remaining weighted-average lease term and discount rate used are as follows:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 

Weighted-average remaining lease term (years):

        

Operating lease right-of-use assets

  5.6   2.7 

Weighted-average discount rate:

        

Operating lease right-of-use assets

  12.1%  10.0%

 

Supplemental cash flow information related to leases is as follows:

 

  

Six Months Ended

 
  

December 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Cash flow classification of lease payments:

        

Operating cash flows from operating leases

 $606  $697 

Operating cash flows from finance leases

 $—  $2 

Financing cash flows from finance leases

 $—  $46 

 

As of June 30, 2024, the Company did not have any remaining finance leases. As of December 31, 2024, the Company’s future minimum lease payments were as follows:

 

  

Operating

 
  

(in thousands)

 

2025 (remaining 6 months)

 $123 

2026

  399 

2027

  377 

2028

  386 

2029

  358 

2030

  230 

Thereafter

  19 

Total lease payments

  1,892 

Less: imputed interest

  (479)

Less: tenant improvement allowance

  (125)

Lease liabilities

 $1,288 

 

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Note 7 - Intangible Assets

 

A summary of the Company’s definite-lived intangible assets as of December 31, 2024, and June 30, 2024, respectively, is as follows:

 

  

December 31, 2024

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

  

Weighted-Average Remaining Life

 
  

(in thousands)

  

(in years)

 

Acquired product technology rights

 $41,268  $(14,791) $26,477   10.3 

Acquired technology rights

  30,200   (6,719)  23,481   13.2 

Total intangible assets

 $71,468  $(21,510) $49,958   11.7 

 

  

June 30, 2024

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

  

Weighted-Average Remaining Life

 
  

(in thousands)

  

(in years)

 

Acquired product technology rights

 $41,268  $(13,184) $28,084   10.7 

Acquired technology rights

  30,200   (5,831)  24,369   13.8 

Total intangible assets

 $71,468  $(19,015) $52,453   12.0 

 

Carrying amounts are net of any impairment charges from prior periods. An intangible asset with zero net carrying amount at the end of a reporting period is not presented in the table of a future reporting period. Certain of the Company’s amortizable intangible assets include renewal options, extending the expected life of the asset. The renewal periods range between approximately 1 to 20 years depending on the license, patent or other agreement. Renewals are accounted for when they are reasonably assured. Intangible assets are amortized using the straight-line method over the estimated useful lives. Amortization expense of intangible assets was $1.2 million for both of the three months ended December 31, 2024, and 2023, and $2.5 million for both of the six months ended December 31, 2024, and 2023.

 

The following table summarizes the estimated future amortization expense to be recognized over the next five fiscal years and periods thereafter:

 

  

Estimated Future Amortization Expense

 
  

(in thousands)

 

2025 (remaining 6 months)

 $2,495 

2026

  4,989 

2027

  4,989 

2028

  4,989 

2029

  4,989 

2030

  2,847 

Thereafter

  24,660 

Total future amortization expense

 $49,958 

 

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Acquired Product Technology Rights

 

The acquired product technology rights are related to the rights to production, supply and distribution agreements of various products pursuant to the acquisitions of the Pediatric Portfolio in November 2019 and the Neos Acquisition in March 2021.

 

ADHD Portfolio

 

As part of the Neos Acquisition, the Company acquired developed product technology for the production and sale of Adzenys and Cotempla. The formulations for the ADHD products are protected by patented technology. The estimated remaining economic life of these proprietary technologies is 14 years.

 

Karbinal

 

The Company acquired and assumed all rights and obligations pursuant to the supply and distribution agreement, as amended, with Tris Pharma, Inc. (“Tris”) for the exclusive rights to commercialize Karbinal in the United States (the “Tris Karbinal Agreement”). The Tris Karbinal Agreement’s initial term terminates in August of 2033, with an optional initial 20-year extension.

 

Poly-Vi-Flor and Tri-Vi-Flor

 

The Company acquired and assumed all rights and obligations pursuant to a supply and license agreement and various assignment and release agreements, including a previously agreed to settlement and license agreements (the “Poly-Tri Agreements”) for the exclusive rights to commercialize Poly-Vi-Flor and Tri-Vi-Flor in the United States.

 

Acquired Technology Rights

 

TRRP Technology

 

As part of the Neos Acquisition, the Company acquired time release resin particle (“TRRP”) proprietary technology, which is a proprietary drug delivery technology protected by the Company as a trade secret that allows the Company to modify the drug release characteristics of each of its respective products. The TRRP technology underlines each of the ADHD Portfolio core products and can potentially be used in future product development initiatives as well.
 

Note 8 - Accrued Liabilities

 

Accrued liabilities consist of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Accrued savings offers

 $14,507  $11,054 

Accrued program liabilities

  7,021   9,964 

Accrued customer and product related fees

  5,735   5,395 

Return reserve

  5,111   4,832 

Accrued employee compensation

  3,971   4,603 

Other accrued liabilities

  3,027   2,295 

Total accrued liabilities

 $39,372  $38,143 

 

Accrued savings offers represent programs for the Company’s patients covered under commercial payor plans in which the cost of a prescription to such patients is discounted. Accrued program liabilities include government and commercial rebates. Accrued customer and product related fees include accrued expenses and deductions for rebates, wholesaler chargebacks and fees, and other product-related fees and deductions such as royalties for Pediatric Portfolio products, accrued distributor fees, and Medicaid liabilities. The return reserve represents the Company’s accrual for estimated product returns. Accrued employee compensation includes sales commissions, paid time off earned, accrued payroll and accrued bonus. Other accrued liabilities consist of various other accruals, none of which individually or in the aggregate represent greater than five percent of total liabilities.

 

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Note 9 - Other Liabilities

 

Other liabilities consist of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Fixed payment arrangements

 $6,926  $8,337 

Employee retention credit

  3,759   3,759 

Operating lease liabilities

  1,288   1,289 

Other

  180   106 

Total other liabilities

  12,153   13,491 

Less: current portion of other liabilities

  (7,108)  (8,962)

Total non-current portion of other liabilities

 $5,045  $4,529 

 

Fixed Payment Arrangements

 

Fixed payment arrangements represent obligations to a licensor assumed as part of the acquisition of products from Cerecor, Inc. in 2019, including fixed and variable payments.

 

In May 2022, the Company entered into an agreement with Tris to terminate the license, development, manufacturing and supply agreement dated November 2, 2018, related to Tuzistra XR (the “Tuzistra License Agreement”). Pursuant to such termination, as of December 31, 2024, the Company has accrued a settlement liability of $5.8 million in other current liabilities on the consolidated balance sheet payable to Tris, with a provision that allows the Company to pay interest on any principal amounts due but remaining unpaid past July 2024.

 

The Tris Karbinal Agreement grants the Company the exclusive right to distribute and sell Karbinal in the United States. The initial term of the agreement was 20 years. The Company pays Tris a royalty equal to 23.5% of net revenue from the product. The Tris Karbinal Agreement also contains minimum unit sales commitments, which is based on a commercial year that spans from August 1 through July 31, of 70,000 units annually through 2025. The Company is required to pay Tris a royalty make-whole payment of $30 for each unit under the 70,000-unit annual minimum sales commitment through 2025. The Tris Karbinal Agreement make-whole payment is capped at $2.1 million each year. The final annual make-whole payment is due in August 2025. The Tris Karbinal Agreement also has multiple commercial milestone obligations that aggregate up to $3.0 million based on cumulative net revenue from the product, the first of which is triggered at $40.0 million. As of December 31, 2024, the Tris Karbinal Agreement accrued fixed payment arrangement balance was $1.2 million recorded in other current liabilities on the consolidated balance sheet.

 

Employee Retention Credit 

 

The $3.8 million ERC accrual in other non-current liabilities as of December 31, 2024, represents the proceeds the Company received from the ERC program during the first quarter of fiscal 2024. Please see Note 2 – Significant Accounting Policies for further detail.

 

Operating Lease Liabilities 

 

The Company has entered into various operating lease agreements for certain of its offices, manufacturing facilities and equipment. Please see Note 6 - Leases for further detail.

 

Other

 

Other consists of taxes payable, deferred cost related to the Company’s technology transfer, and various other accruals, none of which individually or in the aggregate represent greater than five percent of total liabilities.

 

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Note 10 - Revolving Credit Facility

 

On June 12, 2024, the Company and certain of its subsidiaries entered into consent, joinder and amendment No. 5 (the “Eclipse Amendment No. 5”) to the loan and security agreement dated October 2, 2019, as amended by amendment No. 1, dated March 19, 2021, amendment No. 2, dated January 26, 2022, amendment No. 3, dated June 1, 2022, amendment No. 4 dated March 24, 2023, and the Eclipse Amendment No. 5 (together the “Eclipse Agreement”) with Eclipse Business Capital LLC (“Eclipse”), as agent, and the lenders party thereto (agent and such lenders, collectively, the “Eclipse Lender”). Under the Eclipse Amendment No. 5, which provided for among other things, two loan agreements, a term loan (the “Eclipse Term Loan”) and a revolving credit facility (the “Eclipse Revolving Loan”). The Eclipse Term Loan is described further in Note 11 - Long-Term Debt. The Eclipse Revolving Loan provides for a maximum amount available under the revolving credit facility provided under the Eclipse Agreement of $14.5 million at an interest rate of the secured overnight financing rate as administered by the SOFR Administrator (“SOFR”) plus 4.5%. In addition, the Company is 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 revolving loans under the Eclipse Agreement remains subject to a borrowing base and reserve, and availability blockage requirements. The Eclipse Revolving Loan maturity date, as amended, is June 12, 2028, and the effective interest rate was 9.2% as of December 31, 2024.

 

In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i) 2.0% of the Eclipse Revolving Loan commitment if such event occurs on or before June 12, 2025, (ii) 1.0% of the Eclipse Revolving Loan commitment if such event occurs after June 12, 2025, but on or before June 12, 2026, and (iii) 0.5% of the Eclipse Revolving Loan commitment if such event occurs after June 12, 2026, but on or before June 12, 2028. The Company may also be required to pay an early termination fee related to the Eclipse Term Loan as further described in Note 11 - Long-Term Debt. The Company may permanently terminate the Eclipse Agreement upon written notice to Eclipse.

 

The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants, and restrict the Company’s 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 Eclipse. A failure to comply with these covenants could permit Eclipse to declare the Company’s obligations under the Eclipse Agreement, together with accrued interest and fees, to be immediately due and payable, plus any additional applicable amounts relating to a prepayment or termination, as described above. As of December 31, 2024, the Company was in compliance with the covenants under the Eclipse Agreement. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as defined further in the Eclipse Agreement.

 

Total interest expense on the Eclipse Revolving Loan, including amortization of deferred financing costs, was less than $0.1 million for both of the three months ended December 31, 2024, and 2023, and was $0.1 million for both of the six months ended December 31, 2024, and 2023. The amounts drawn on the Eclipse Revolving Loan were $4.0 million and $2.4 million as of  December 31, 2024, and June 30, 2024, respectively. The unused revolving credit facility amount as of December 31, 2024, was $7.9 million.
 

Note 11 - Long-Term Debt

 

Avenue Capital Loan

 

On January 26, 2022 (“Closing Date”), the Company entered into a loan and security agreement (the “Avenue Capital Agreement”) with Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund II, L.P. as lenders (the “Avenue Capital Lenders”), and Avenue Capital Management II, L.P. as administrative agent (the “Avenue Capital Agent”), collectively (“Avenue Capital”), pursuant to which the Avenue Capital Lenders provided the Company and certain of its subsidiaries with a secured $15.0 million loan. The interest rate on the loan was the greater of the prime rate or 3.25%, plus 7.4%, payable monthly in arrears. The maturity date of the loan was January 26, 2025. The proceeds from the Avenue Capital Agreement were used towards the repayment of the term loans.

 

Pursuant to the Avenue Capital Agreement, the Company was required to make interest only payments for the first 18 months following the Closing Date (the “Interest-only Period”). The Interest-only Period could be extended automatically without any action by any party for six months provided as of the last day of the Interest-only Period then in effect, the Company received, prior to June 15, 2023, a specified amount of net proceeds from the sale and issuance of its equity securities (“Interest-only Milestone 1”). The Interest-only Period was able to be further extended automatically without any action by any party for an additional six months provided, the Company had achieved, prior to December 31, 2023, (i) Interest-only Milestone 1 and (ii) a specified amount of trailing 12 months revenue as of the date of determination.

 

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On January 26, 2022 (“Issuance Date”), as consideration for entering into the Avenue Capital Agreement, the Company issued warrants to the Avenue Capital Lenders to purchase shares of common stock at an exercise price equal to $24.20 per share (the “Avenue Capital Warrants”). The Avenue Capital Warrants provided that in the event the Company were to engage in an equity offering at a price lower than $24.20 prior to June 30, 2022, the exercise price would be adjusted to the effective price of such equity offering and the number of shares of common stock to be issued under the Avenue Capital Warrants would be adjusted as set forth in the agreement. The Avenue Capital Warrants were immediately exercisable and expire on January 31, 2027. At inception, the Company accounted for the Avenue Capital Warrants as a derivative warrant liability as the number of warrants was not fixed at the Issuance Date. The fair value of the Avenue Capital Warrants at issuance was approximately $0.6 million.

 

On March 7, 2022, the Company closed on an equity offering of shares of common stock and warrants at an offering price of $25.00 per share. As this offering precluded the Company from pursuing any equity financing prior to July 7, 2022, and the effective price of the March 7, 2022, offering was more than the exercise price of the Avenue Capital Warrants, the shares of common stock issuable upon exercise of the Avenue Capital Warrants were set at an exercise price of $24.20.

 

On October 25, 2022, the Company entered into an agreement with Avenue Venture Opportunities Fund, L.P (“Avenue”) to extend the interest-only period of its existing senior secure loan facility held with Avenue. The amendment to the original loan agreement, which was executed in January 2022, extended the interest-only period to January 2024. In exchange for this extension of the interest-only period, the Company and Avenue agreed to reset the exercise price of the warrants issued in conjunction with the original loan agreement to $8.60, corresponding to the warrant exercise price associated with the Company’s August 2022 equity financing.

 

On June 13, 2023, in conjunction with the Securities Purchase Agreement described in Note 16 - Warrants, the interest-only period of the Avenue Capital Agreement was extended further upon the achievement of both the revenue-based milestone and equity raise-based milestone stipulated in the Avenue Capital Agreement. As a result, the interest-only period was extended to January 26, 2025.

 

In addition to the debt discount discussed above, the Company also incurred $0.4 million loan origination, legal and other fees. The debt discount and issuance costs were being amortized over the term of the loan, using the effective interest method resulting in an effective rate of 16.6%. Total interest expense on the Avenue Capital loan, including debt discount amortization, was $0.7 million and $1.5 million for the three and six months ended December 31, 2023, respectively.

 

On June 12, 2024, the Company used proceeds from the Eclipse Term Loan and a portion of the proceeds from the exercise of warrants to repay the Avenue Capital loan in full. Upon early repayment of the Avenue Capital loan, the Company was required to pay Avenue Capital a fee equal to 1.0% of the loan or $0.2 million. In addition, upon the payment in full of the obligations, the Company was required to pay Avenue Capital a fee in the amount of $0.6 million (“Final Payment”). At inception, the Company accounted for the Final Payment as additional obligations on the debt, with the corresponding charge being recorded as debt discount. At retirement, the early termination fee, the Final Payment fee, and the write-off of all remaining related debt discount and deferred financing costs were included in the calculation of loss on extinguishment of debt. The Company recorded a loss on extinguishment of debt of $0.6 million related to the retirement of the Avenue Capital loan in the fourth quarter of fiscal 2024.

 

Eclipse Term Loan

 

On June 12, 2024, the Company and certain of its subsidiaries entered into Eclipse Amendment No. 5, which provided for among other things, the Eclipse Term Loan and the Eclipse Revolving Loan described further in Note 10 - Revolving Credit Facility. The Eclipse Term Loan consists of a principal amount of $13.0 million, at an interest rate of SOFR plus 7.0%, with a four-year term maturing on June 12, 2028, 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 June 12, 2028, the maturity date. The Company used the proceeds of the Eclipse Term Loan and a portion of the proceeds from warrant exercises described below to repay in full the Avenue Capital loan. The effective interest rate on the Eclipse Term Loan was 11.7% as of December 31, 2024.

 

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In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i) 3.0% of the Eclipse Term Loan if such event occurs on or before June 12, 2025, (ii) 2.0% of the Eclipse Term Loan if such event occurs after June 12, 2025, but on or before June 12, 2026, (iii) 1.0% of the Eclipse Term Loan if such event occurs after June 12, 2026, but on or before June 12, 2027, and (iv) 0.5% of the Eclipse Term Loan if such event occurs after June 12, 2026, but on or before June 12, 2028. The Company may also be required to pay an early termination fee related to the Eclipse Revolving Loan as further described in Note 10 - Revolving Credit Facility. The Company may permanently terminate the Eclipse Agreement upon written notice to Eclipse. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as further defined in the Eclipse Agreement.

 

The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants, and restricts the Company’s ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make certain asset sales without the prior written consent of the Eclipse Lender. A failure to comply with these covenants could permit the Eclipse Lender to declare the Company’s obligations under the agreement, together with accrued interest and fees, to be immediately due and payable, plus any additional applicable amounts relating to a prepayment or termination, as described above. As of December 31, 2024, the Company was in compliance with the covenants under the Eclipse Agreement. The Company incurred interest expense on the Eclipse Term Loan, including debt discount and issuance costs amortization, of $0.4 million and $0.8 million for the three and six months ended  December 31, 2024, respectively.

 

Long-term debt consists of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Term loan principal amount

 $12,071  $13,000 

Unamortized debt discount and issuance costs

  (231)  (266)

Total debt

  11,840   12,734 

Less: current portion of debt

  (1,857)  (1,857)

Total debt, net of current portion

 $9,983  $10,877 

 

Future principal payments of the Eclipse Term Loan are as follows:

 

  

Future Principal Payments

 
  

(in thousands)

 

2025 (remaining 6 months)

 $928 

2026

  1,857 

2027

  1,857 

2028

  7,429 

Total future principal payments

  12,071 

Less: unamortized debt discount and issuance costs

  (231)

Less: current portion of debt

  (1,857)

Total debt, net of current portion

 $9,983 
 

 

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Note 12 - Fair Value Considerations

 

The Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to determine fair value as follows:

 

 

●

Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to Aytu for identical assets or liabilities;

 

 

●

Level 2: Inputs that include quoted prices for similar assets and liabilities in active or inactive markets or that are observable for the asset or liability either directly or indirectly; and

 

 

●

Level 3: Unobservable inputs that are supported by little or no market activity.

 

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative warrant liabilities, contingent consideration liabilities, fixed payment arrangements, and current and non-current debt. The carrying amounts of certain short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. Current and non-current debt are reported at their amortized costs on the Company’s consolidated balance sheets. The remaining financial instruments are reported on the Company’s consolidated balance sheets at amounts that approximate current fair values. The Company’s carrying value of its consolidated amounts of cash and cash equivalents approximate their fair value as of  December 31, 2024, and June 30, 2024, and are categorized within level 1 of the U.S. GAAP fair value hierarchy. The Company’s policy is to recognize transfers in and/or out of fair value hierarchy as of the date in which the event or change in circumstances caused the transfer. There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.

 

Recurring Fair Value Measurements

 

The Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of  December 31, 2024, and June 30, 2024, by level within the fair value hierarchy as follows:

 

  Fair Value at December 31,  Fair Value Measurements at December 31, 2024 
  

2024

  

(Level 1)

  

(Level 2)

  

(Level 3)

 
  

(in thousands)

 

Liabilities:

                

Derivative warrant liabilities

 $6,386  $—  $—  $6,386 

Total

 $6,386  $—  $—  $6,386 

 

   Fair Value at June 30,  Fair Value Measurements at June 30, 2024 
  

2024

  

(Level 1)

  

(Level 2)

  

(Level 3)

 
  

(in thousands)

 

Liabilities:

                

Derivative warrant liabilities

 $12,745  $—  $—  $12,745 

Total

 $12,745  $—  $—  $12,745 

 

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Summary of Level 3 Input Changes

 

A summary of changes to those fair value measures using Level 3 inputs is as follows:

 

  

Derivative

 
  

Warrant Liabilities

 
  

(in thousands)

 

Balance as of June 30, 2024

 $12,745 

Settlements (1)

  (463)

Included in earnings

  (5,896)

Balance as of December 31, 2024

 $6,386 

(1) 

Relates to the exercise of 176,000 of the Tranche B Pre-Funded Warrants during the first quarter of fiscal 2025, which were liability classified and exercised at a price of $0.0001 per share.

 

Significant Assumptions

 

The valuation methodologies and key assumptions used for the mark to market fair value measurements of derivative warrant liabilities as of December 31, 2024, are as follows:

 

  

June 2023 Warrants

  

Warrants

 
  

Tranche A

  

Other (1)

 
  

Monte Carlo &

    
  

Black-Scholes

  

Black-Scholes

 

Aytu closing stock price

 

$ 1.70

  

$ 1.70

 

Equivalent term (years)

 3.4  2.1-2.7 

Expected volatility

 

80.8%

  

74.7%-80.5%

 

Risk-free rate

 

4.3%

  

4.3%

 

Dividend yield

 

0.0%

  

0.0%

 

(1) 

Includes August 2022 Warrants, March 2022 Warrants, Avenue Capital Warrants and Tranche B Pre-Funded Warrants. See Note 16 - Warrants for definitions of these terms and further information.

 
 

Note 13 - Commitments and Contingencies

 

Pediatric Portfolio Fixed Payments and Product Milestone

 

The Tris Karbinal Agreement grants the Company the exclusive right to distribute and sell Karbinal in the United States. The initial term of the agreement was 20 years. The Company pays Tris a royalty equal to 23.5% of net revenue from the product.

 

The Tris Karbinal Agreement also contains minimum unit sales commitments, which is based on a commercial year that spans from August 1 through July 31, of 70,000 units annually through 2025. The Company is required to pay Tris a royalty make-whole payment of $30 for each unit under the 70,000‑unit annual minimum sales commitment through 2025. The Tris Karbinal Agreement make-whole payment is capped at $2.1 million each year. The final annual make-whole payment is due in August 2025. The Tris Karbinal Agreement also has multiple commercial milestone obligations that aggregate up to $3.0 million based on cumulative net revenue from the product, the first of which is triggered at $40.0 million.

 

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Legal Matters

 

Witmer Class-Action Securities Litigation

 

A stockholder derivative suit was filed on September 12, 2022, in the Delaware Chancery Court by Paul Witmer, derivatively and on behalf of all Aytu stockholders, against Armistice Capital, LLC, Armistice Capital Master Fund, Ltd., Steve Boyd (Armistice’s Chief Investment Officer and Managing Partner, and a former director of Aytu), and certain other current and former directors of Aytu, Joshua R. Disbrow, Gary Cantrell, John Donofrio, Jr., Michael Macaluso, Carl Dockery and Ketan B. Mehta. Plaintiff amended the complaint on April 5, 2023. The Amended Complaint dropped Mr. Macaluso as a defendant and alleges that (i) Armistice facilitated the sale of assets of Cerecor in 2019 and Innovus in 2020 to Aytu in exchange for convertible securities which it subsequently converted and sold at a profit on the open market; (ii) the Armistice defendants breached their fiduciary duties, were unjustly enriched and wasted corporate assets in connection with these acquisitions; (iii) the Armistice defendants breached their fiduciary duties by engaging in insider trading; and (iv) the other directors breached their fiduciary duties, and aided and abetted the Armistice defendants’ breaches of fiduciary duties, in connection with these acquisitions. The Amended Complaint sought unspecified damages, equitable relief, restitution, disgorgement of profits, enhanced governance and internal procedures, and attorneys’ fees. While the Company believes that this lawsuit is without merit and have vigorously defended against it, the Company agreed to settle the matter for various corporate governance modifications and the payment of plaintiff’s attorneys’ fees. On January 13, 2025, the court approved the settlement.

 

Granules PIV

 

On October 31, 2024, the Company received a Paragraph IV Certification Notice Letter (“Notice Letter”) from Granules Pharmaceuticals, Inc. (“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’ New Drug Application (“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. On December 11, 2024, the Company filed a patent infringement lawsuit against Granules which triggered a stay precluding the United States Food and Drug Administration (“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 a trial has been scheduled for to being on December 7, 2026. The Company plans to vigorously enforce its intellectual property rights related to Adzenys.

 

Revive Investing

 

The Company had been named as a nominal plaintiff in a lawsuit by two shareholders against Armistice Capital Master Fund, Ltd, entitled Revive Investing, LLC. et al v. Armistice Master Fund, Ltd. et al, Case 1:20-cv-02849-CMA-TPO, in the United States District Court for the District of Colorado, contending that Armistice was liable for short swing trading profits in violation of Section 16(b) of the Exchange Act for certain trades it made in Company stock in 2019 and 2020 and must disgorge those profits to the Company. That matter proceeded to trial before a jury, which on January 29, 2025, returned a verdict finding no liability.

 

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Note 14 - Stockholders’ Equity

 

The Company has 200 million shares of common stock authorized with a par value of $0.0001 per share and 50 million shares of preferred stock authorized with a par value of $0.0001 per share. As of December 31, 2024, included in common stock outstanding are 36,256 shares of unvested restricted stock issued to executives, directors and employees.

 

On September 28, 2021, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 7, 2021. This shelf registration statement covered the offering, issuance and sale by the Company of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants, rights and units (the “2021 Shelf”). The 2021 Shelf expired in October 2024.

 

On August 11, 2022, the Company closed on an underwritten public offering (the “August 2022 Offering”) utilizing the 2021 Shelf, pursuant to which it sold an aggregate of (i) 1,075,290 shares of its common stock; (ii) in lieu of common stock to certain investors that so chose, pre-funded warrants to purchase 87,500 shares of its common stock; and (iii) accompanying warrants to purchase 1,265,547 shares of its common stock. The shares of common stock and the pre-funded warrants were each sold in combination with corresponding common warrants, with one common warrant to purchase one share of common stock for each share of common stock or each pre-funded warrant sold. The combined public offering price for each share of common stock and accompanying common warrant was $8.60, and the combined offering price for each pre-funded warrant and accompanying common warrant was $8.58, which equated to the public offering price per share of the common stock and accompanying common warrant, less the $0.02 per share exercise price of each pre-funded warrant. The pre-funded warrants were exercised in full in August 2022. The common warrants have an exercise price of $8.60 per share of common stock and are exercisable for a period of five years from issuance. The Company raised $10.0 million in gross proceeds through the August 2022 Offering before underwriting fees and other expenses of $0.9 million. The pre-funded and common warrants had a combined fair value of approximately $6.0 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements (see Note 16 - Warrants).

 

On June 8, 2023, using a placement agent, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional investors, pursuant to which the Company issued and sold an aggregate of (i) 1,743,695 shares of the Company’s common stock; (ii) pre-funded warrants in lieu of shares to purchase 430,217 shares of common stock (the “June 2023 Pre-Funded Warrants”); (iii) accompanying tranche A warrants to purchase 2,173,912 shares of common stock (the “Tranche A Warrants”); and (iv) accompanying tranche B warrants to purchase 2,173,912 shares of common stock in a best-efforts offering (the “Tranche B Warrants” and the Tranche A Warrants together with the Tranche B Warrants, the “Common Warrants”). The Common Warrants may be exercised for either shares of common stock or pre-funded warrants to purchase common stock at a future exercise price of $0.0001 per share in the same form as the June 2023 Pre-Funded Warrants (the “Exchange Warrants”). Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.0001 per share. The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full. The Common Warrants are immediately exercisable at a price of $1.59 per share (or $1.5899 per Exchange Warrant). The Tranche A Warrants will expire upon the earlier of (i) five years after the date of issuance or (ii) 30 days following the closing price of the Company’s common stock equaling 200% of the exercise price ($3.18 per share) for at least 40 consecutive trading days. The Tranche B Warrants were exercised in June 2024 as further described below. The Company raised $4.0 million in gross proceeds and net proceeds were $3.4 million after deducting offering expenses. The June 2023 Pre-Funded Warrants do not have an expiration date. The warrants had a combined fair value of approximately $5.0 million at issuance and are classified as derivative warrant liabilities. The resulting offset is recorded in derivative warrant liabilities (loss) gain along with the issuance costs of $0.6 million in the unaudited consolidated financial statement of operations (see Note 16 - Warrants).

 

On June 14, 2024, the Tranche B Warrants were exercised, generating proceeds of $3.5 million. The Tranche B Warrants were converted into 367,478 shares of common stock and 1,806,434 pre-funded warrants to purchase shares of common stock with an exercise price of $0.0001 per share (the “Tranche B Pre-Funded Warrants”). The Tranche B Pre-Funded Warrants had a fair value of approximately $5.1 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements. The Company used a portion of the proceeds from the Tranche B Warrants exercise as part of the Avenue Capital loan repayment described further in Note 11 - Long-Term Debt.

 

On September 26, 2024, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024. This shelf registration statement covers the offering, issuance and sale by the Company of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants, rights and units (the “2024 Shelf”). Through the filing date of this Form 10-Q, $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.

 

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Note 15 - Equity Incentive Plans

 

2023 Equity Incentive Plan

 

On May 18, 2023, the Company’s stockholders approved the Aytu BioPharma, Inc. 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”). Prior to the Company’s adoption of the 2023 Equity Incentive Plan, the Company awarded equity incentive grants to its directors and employees under the Aytu BioScience, Inc. 2015 Stock Option and Incentive Plan (the “Aytu 2015 Plan”) and the Neos Therapeutics, Inc. 2015 Stock Options and Incentive Plan (the “Neos 2015 Plan”, and collectively with the Aytu 2015 Plan, the “2015 Plans”). For the 2023 Equity Incentive Plan, the stockholders approved (i) 200,000 new shares; (ii) 87,129 shares available for grant under the 2015 Plans be “rolled over” to the 2023 Equity Incentive Plan; and (iii) any shares that are returned to the Company under the 2015 Plans be added to the 2023 Equity Incentive Plan. With the approval of the 2023 Equity Incentive Plan, no additional awards will be granted under the 2015 Plans. All outstanding awards previously granted under previous stock incentive plans will remain outstanding and subject to the terms of the plans. Stock options granted under the 2023 Equity Incentive Plan have contractual terms of 10 years or less from the grant date and a vesting period ranging from 3 to 4 years. The restricted stock awards and restricted stock units have a vesting period of 3 to 4 years. As of December 31, 2024, the Company had 87,636 shares that are available for grant under the 2023 Equity Incentive Plan.

 

Aytu 2015 Plan

 

On June 1, 2015, the Company’s stockholders approved the Aytu 2015 Plan, which, as amended in July 2017, provides for the award of stock options, stock appreciation rights, restricted stock, and other equity awards. On February 13, 2020, the Company’s stockholders approved an increase to 250,000 total shares of common stock in the Aytu 2015 Plan. The shares of common stock underlying any awards that are forfeited, canceled, reacquired by Aytu prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) under the Aytu 2015 Plan will be added back to the shares of common stock available for issuance under the 2023 Equity Incentive Plan. Stock options granted under this plan have contractual terms of 10 years from the grant date and a vesting period ranging from 3 to 4 years. The restricted stock awards have a vesting period ranging from 4 to 10 years, and the restricted stock units have a vesting period of 4 years.

 

Neos 2015 Plan

 

Pursuant to the Neos Acquisition, the Company assumed 3,486 stock options and 1,786 restricted stock units previously granted under the Neos 2015 Plan. Accordingly, on April 19, 2021, the Company registered 5,272 shares of its common stock under the Neos 2015 Plan with the SEC. The terms and conditions of the assumed equity securities remained the same as they were previously under the Neos 2015 Plan. The Company allocated costs of the replacement awards attributable to pre-combination and post-combination service periods. The pre-combination service costs were included in the consideration transferred. The remaining costs attributable to the post-combination service period are being recognized as stock-based compensation expense over the remaining terms of the replacement awards. Stock options granted under this plan have contractual terms of 10 years from the grant date and a vesting period ranging from 1 to 4 years.

 

Stock Options

 

Stock option activity is as follows:

 

          

Weighted

 
          

Average

 
      

Weighted

  

Remaining

 
  

Number of

  

Average

  

Contractual

 
  

Options

  

Exercise Price

  

Life in Years

 

Outstanding at June 30, 2024

  146,539  $6.18   8.8 

Granted

  83,000  $1.84   2.3 

Forfeited/cancelled

  (8,147) $5.73   — 

Outstanding at December 31, 2024

  221,392  $4.57   8.3 
             

Exercisable at December 31, 2024

  81,399  $9.02   6.6 

 

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During the six months ended  December 31, 2024, the Company granted 83,000 stock options with a weighted average exercise price per option of $1.84. As of December 31, 2024, there was $0.2 million total unrecognized compensation costs related to non-vested stock options granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.3 years.

 

Restricted Stock

 

Restricted stock activity is as follows:

 

      

Weighted

 
      

Average Grant

 
  

Number of

  

Date Fair

 
  

Shares

  

Value

 

Unvested at June 30, 2024

  24,105  $100.34 

Granted

  20,000  $1.79 

Vested

  (7,853) $15.33 

Unvested at December 31, 2024

  36,252  $64.38 

 

During the six months ended  December 31, 2024, the Company granted 20,000 shares of restricted stock under the Company’s 2023 Equity Incentive Plan with a weighted average grant date fair value of $1.79 per share. As of December 31, 2024, there was $0.9 million total unrecognized compensation costs related to non-vested restricted stock granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.3 years.

 

During the six months ended  December 31, 2024, no restricted stock was granted outside of the Company’s equity incentive plan. As of December 31, 2024, there was $0.2 million total unrecognized compensation costs related to non-vested restricted stock issued outside of the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.5 years. As of December 31, 2024, 4 shares of restricted stock remain unvested that were granted outside of the Company’s equity incentive plan.

 

Restricted Stock Units

 

Restricted stock units (“RSU” or “RSUs”) activity is as follows:

 

      

Weighted

 
      

Average Grant

 
  

Number of

  

Date Fair

 
  

Shares

  

Value

 

Unvested at June 30, 2024

  1,775  $24.14 

Vested

  (1,043) $24.13 

Forfeited

  (167) $26.20 

Unvested at December 31, 2024

  565  $23.55 

 

During the six months ended  December 31, 2024, no RSUs were granted. As of December 31, 2024, there was less than $0.1 million of unrecognized compensation costs related to non-vested RSUs granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 0.2 years.

 

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Stock-based compensation expense related to the fair value of stock options, restricted stock, and RSUs was included in the consolidated statements of operations as set forth in the below table:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands)

 

Cost of sales

 $—  $1  $1  $1 

Research and development

  1   2   3   3 

Selling and marketing

  14   —   46   — 

General and administrative

  136   704   274   1,428 

Net income (loss) from discontinued operations, net of tax

  —   113   —   318 

Total stock-based compensation expense

 $151  $820  $324  $1,750 

 
 

Note 16 - Warrants

 

Liability Classified Warrants

 

The Company accounts for liability classified warrants by recording the fair value of each instrument in its entirety and recording the fair value of the warrant derivative liability. The fair value of liability classified derivative financial instruments was calculated using either the Black-Scholes option pricing model or the Monte Carlo simulation model and is revalued every quarter. Changes in the fair value of liability classified derivative financial instruments in subsequent periods are recorded as unrealized derivative gain or loss in the consolidated statements of operations (see Note 12 – Fair Value Considerations).

 

On June 8, 2023, using a placement agent, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional investors, pursuant to which the Company issued and sold an aggregate of (i) 1,743,695 shares of the Company’s common stock; (ii) June 2023 Pre-Funded Warrants in lieu of shares to purchase 430,217 shares of common stock; (iii) accompanying Tranche A Warrants to purchase 2,173,912 shares of common stock; and (iv) accompanying Tranche B Warrants to purchase 2,173,912 shares of common stock in a best-efforts offering (the Tranche A Warrants together with the Tranche B Warrants, the “Common Warrants”). The Common Warrants may be exercised for either shares of common stock or pre-funded warrants to purchase common stock at a future exercise price of $0.0001 per share in the same form as the June 2023 Pre-Funded Warrants (the “Exchange Warrants”). Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.0001 per share. The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full. The Common Warrants are immediately exercisable at a price of $1.59 per share (or $1.5899 per Exchange Warrant). The Tranche A Warrants will expire upon the earlier of (i) five years after the date of issuance or (ii) 30 days following the closing price of the Company’s common stock equaling 200% of the exercise price ($3.18 per share) for at least 40 consecutive trading days. The Tranche B Warrants were exercised in June 2024 as further described below. The Company raised $4.0 million in gross proceeds and net proceeds were $3.4 million after deducting offering expenses. The June 2023 Pre-Funded Warrants do not have an expiration date. The warrants had a combined fair value of approximately $5.0 million at issuance and are classified as derivative warrant liabilities. The resulting offset is recorded in derivative warrant liabilities gain (loss) along with the issuance costs of $0.6 million in the unaudited consolidated financial statement of operations (see Note 14 - Stockholders’ Equity).

 

On June 14, 2024, the Tranche B Warrants were exercised, generating proceeds of $3.5 million. The Tranche B Warrants were converted into 367,478 shares of common stock and 1,806,434 Tranche B Pre-Funded Warrants to purchase shares of common stock with an exercise price of $0.0001 per share. The Tranche B Pre-Funded Warrants, which do not have an expiration date, had a fair value of approximately $5.1 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements. The Company used a portion of the proceeds from the Tranche B Warrants exercise as part of the Avenue Capital loan repayment described further in Note 11 - Long-Term Debt.

 

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On August 11, 2022, the Company closed an offering (the “August 2022 Offering”), pursuant to which, the Company issued pre-funded warrants to purchase 87,500 shares of its common stock and common warrants to purchase 1,265,547 shares of its common stock. The shares of common stock and the pre-funded warrants were each sold in combination with corresponding common warrants, which one common warrant to purchase one share of common stock for each share of common stock or each pre-funded warrant was sold. The pre-funded warrants had an exercise price of $0.02 per share of common stock and were exercised in full in August 2022. The common warrants have an exercise price of $8.60 per share of common stock and are exercisable for a period of five years from issuance. The common warrants provide that if there occurs any stock split, stock dividend stock recapitalization, or similar event (a “Stock Combination Event”), then the warrant exercise price will be adjusted to the greater of the quotient determined by dividing the sum of the VWAP of the common stock for each of the five lowest trading days during the 20 consecutive trading day period ending immediately preceding the 16th trading day after such Stock Combination Event, divided by five; or $2.32, and the number of shares of common stock to be issued would be adjusted proportionately as set forth in the agreement limited to a maximum of 2,325,581 shares. The common warrants also provide that in the event the Company were to engage in an equity offering at a common stock price lower than the warrant exercise price prior to the second anniversary of a Stock Combination Event, the exercise price would be adjusted to the greater of the effective price of such equity offering or $2.32 (see Note 14 – Capital Structure).

 

In November 2022 and throughout the quarter ended December 31, 2022, the Company sold shares through its ATM Sales Agreement. Per the warrant agreement in the August 2022 Offering, these sales qualified as an equity offering, and the sales price was less than the current exercise price of $8.60. As a result, the common warrants exercise price was adjusted to $3.30. On January 6, 2023, the Company consummated a 20 to 1 reverse stock split. Pursuant to the warrant agreement described above, the Company triggered a Stock Combination Event, and the warrant exercise price and number to be issued was adjusted based on the average of each of the lowest five trading days during the twenty-day consecutive trading day period beginning on December 30, 2022. Subsequently, as a result of the Securities Purchase Agreement in June 2023, the common warrants from the August 2022 Offering had an adjusted exercise price of $2.32.

 

A summary of warrants is as follows:

 

          

Weighted

 
          

Average

 
      

Weighted

  

Remaining

 
  

Number of

  

Average

  

Contractual

 
  

Warrants

  

Exercise Price

  

Life in Years (4)

 

Outstanding June 30, 2024 (1)

  6,075,880  $3.71   3.6 

Warrants exercised (2)

  (176,000) $0.0001   — 

Outstanding December 31, 2024 (3)

  5,899,880  $3.22   2.0 

(1) 

The number of warrants outstanding as of June 30, 2024, is comprised of 3,821,115 liability classified warrants, 430,217 liability classified June 2023 Pre-Funded Warrants, 1,806,434 liability classified Tranche B Pre-Funded Warrants and 18,114 equity classified warrants.

(2) 

Warrants exercised during the first quarter of fiscal 2025 were 176,000 of the Tranche B Warrants, which were exercised at a price of $0.0001 per share.

(3) 

The number of warrants outstanding as of December 31, 2024, is comprised of 3,821,115 liability classified warrants, 430,217 liability classified June 2023 Pre-Funded Warrants, 1,630,424 liability classified Tranche B Pre-Funded Warrants and 18,114 equity classified warrants.

(4) 

As pre-funded warrants do not have an expiration date, they have been excluded from the calculation of the weighted average remaining contractual life in years.

 

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Note 17 - Earnings Per Share

 

Basic net income or loss per common share is calculated by dividing net income or loss available to common stockholders by the basic weighted-average number of common shares outstanding for the respective period. Diluted net income or loss per common share is calculated by dividing adjusted net income or loss by the diluted weighted-average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist of warrants to purchase common stock that are either liability classified or equity classified (see Note 16 – Warrants); employee stock options (see Note 15 – Equity Incentive Plans); employee unvested restricted stock (see Note 15 – Equity Incentive Plans); and employee unvested restricted stock units (see Note 15 – Equity Incentive Plans). For the three and six months ended December 31, 2024, and 2023, if the Company incurred a net loss from continuing operations; a net loss from discontinued operations, net of tax; or a net loss then the Company did not include common equivalent shares in the computation of diluted net loss from continuing operations per share; diluted net loss from discontinued operations, net of tax; or diluted net loss per share because the effect would have been anti-dilutive.

 

The following is a reconciliation of the numerator and the denominator used in the basic per share calculations:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands, except share and per share data)

 

BASIC

                

Numerators:

                

Net income (loss) from continuing operations

 $665  $619  $1,758  $(6,854)

Net income (loss) from discontinued operations, net of tax

  123   (839)  504   (1,486)

Net income (loss)

 $788  $(220) $2,262  $(8,340)

Denominator:

                

Basic weighted-average common shares outstanding

  6,132,060   5,517,670   6,100,204   5,499,951 

Per share calculations:

                

Net income (loss) per share from continuing operations

 $0.11  $0.11  $0.29  $(1.25)

Net income (loss) per share from discontinued operations, net of tax

 $0.02  $(0.15) $0.08  $(0.27)

Net income (loss) per share

 $0.13  $(0.04) $0.37  $(1.52)

 

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The following is a reconciliation of the numerator and the denominator used in the diluted per share calculations:

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  
   

(in thousands, except share and per share data)

  

DILUTED: CONTINUING OPERATIONS

                                

Numerator:

                                

Net income (loss) from continuing operations

   $ 665     $ 619     $ 1,758     $ (6,854 )

Adjustment for change in fair value of warrant liabilities

     (3,016 )     —       (5,896 )     —  

Adjusted numerator - net (loss) income from continuing operations

   $ (2,351 )   $ 619     $ (4,138 )   $ (6,854 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net (loss) income per share from continuing operations

   $ (0.28 )   $ 0.11     $ (0.47 )   $ (1.25 )
                                 

DILUTED: DISCONTINUED OPERATIONS

                                

Numerator:

                                

Net income (loss) from discontinued operations, net of tax

   $ 123     $ (839 )   $ 504     $ (1,486 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net income (loss) per share from discontinued operations, net of tax

   $ 0.01     $ (0.15 )   $ 0.06     $ (0.27 )
                                 

DILUTED: NET INCOME (LOSS)

                                

Numerator:

                                

Net income (loss)

   $ 788     $ (220 )   $ 2,262     $ (8,340 )

Adjustment for change in fair value of warrant liabilities

     (3,016 )     —       (5,896 )     —  

Adjusted numerator - net loss

   $ (2,228 )   $ (220 )   $ (3,634 )   $ (8,340 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net loss per share

   $ (0.26 )   $ (0.04 )   $ (0.41 )   $ (1.52 )

 

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The following table sets forth securities that could be considered anti-dilutive, and therefore are excluded from the calculation of diluted weighted-average common shares outstanding and related per share calculations:

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  

Warrants to purchase common stock - liability classified (note 16)

     3,539,679       6,498,980       3,212,550       6,498,980  

Warrants to purchase common stock - equity classified (note 16)

     18,114       39,072       18,114       39,072  

Employee unvested restricted stock (note 15)

     25,291       40,017       22,882       40,017  

Employee unvested restricted stock units (note 15)

     512       2,898       565       2,898  

Employee stock options (note 15)

     221,392       149,087       221,392       149,087  

Total anti-dilutive securities

     3,804,988       6,730,054       3,475,503       6,730,054  

 
 

Note 18 - License Agreements

 

Actavis

 

On October 17, 2017, the Company entered into an agreement granting Actavis Laboratories FL, Inc. (“Actavis”) (acquired by Teva Pharmaceutical Industries) a non-exclusive license to certain patents owned by the Company by which Actavis has the right to manufacture and market its generic version of Adzenys under its ANDA beginning on September 1, 2025, or earlier under certain circumstances. The ANDA was approved by the FDA on June 22, 2023.

 

Teva

 

On December 21, 2018, the Company and Teva Pharmaceuticals USA, Inc. (“Teva”) entered into an agreement granting Teva a non-exclusive license to certain patents owned by Neos by which Teva has the right to manufacture and market its generic version of Cotempla under an abbreviated new drug application (“ANDA”) filed by Teva beginning on July 1, 2026, or earlier under certain circumstances. The ANDA was approved by the FDA on June 19, 2020.
 

Note 19 - Restructuring Costs

 

As part of the Company’s previously announced restructuring activities related to the wind down and divestiture of the Consumer Health business and the closure of the Grand Prairie, Texas manufacturing site, the Company has incurred expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee benefit costs as well as other direct separation benefit costs, right of use asset impairment charges, fixed asset and other asset impairment charges, accelerated depreciation of fixed assets, contract termination costs, and inventory write-downs. Severance and employee benefit costs primarily relate to cash severance. Restructuring costs associated with the Consumer Health business are recorded within the net income (loss) from discontinued operations, net of tax in the unaudited consolidated financial statement of operations (see Note 20 - Discontinued Operations).

 

The expense associated with the closure of the Grand Prairie, Texas manufacturing site such as severance and employee benefits and exit and disposal activities are included in restructuring costs in the consolidated statements of operations. There have been no inventory write-downs associated with this closure. During the three and six months ended December 31, 2024, the Company incurred $1.3 million and $2.1 million, respectively, of costs associated with exit and disposal activities related to its previously announced operational realignment and related costs. The Company does not expect to incur additional significant restructuring costs.

 

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Note 20 - Discontinued Operations

 

On July 31, 2024, after the wind down of operations, the Company entered into a definitive agreement to divest its Consumer Health business to a private, e-commerce focused company. The divested business encompasses the established e-commerce platform, certain inventory and associated consumer brands, intellectual property, external workforce and contracts, and provides for the Company to receive contingent consideration payments on certain future sales of former Consumer Health business products.

 

The accounting requirements for reporting the Consumer Health business as discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, the accompanying unaudited consolidated financial statements for all periods presented reflect this business as a discontinued operation and certain assets and liabilities of discontinued operations have been reclassified to the current assets of discontinued operations; non-current assets of discontinued operations; and current liabilities of discontinued operations financial statement line items on the accompanying unaudited consolidated balance sheet as of June 30, 2024. The Company elected to record the contingent consideration portion of the arrangement when the consideration is determined to be realizable and, therefore, the Company did not record a contingent consideration asset at the transaction date and any subsequent proceeds will not be recognized until the contingent consideration asset is realizable, at which point the Company recognizes it to income (loss) from discontinued operations.

 

The key components of net income (loss) from discontinued operations, net of tax for the three and six months ended December 31, 2024, and 2023, were as follows:

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  
   

(in thousands)

  

Net revenue

   $ —     $ 4,186     $ 717     $ 8,468  

Cost of sales

     —       (2,586 )     (359 )     (5,122 )

Selling and marketing

     —       (1,358 )     (155 )     (2,689 )

General and administrative

     —       (642 )     (2 )     (1,312 )

Amortization of intangible assets

     —       (382 )     —       (764 )

Non-operating other expense, net

     —       (9 )     (4 )     (19 )

Recognized contingent consideration

     175       —       587       —  

Loss on divestiture

     —       —       (254 )     —  

Income (loss) from discontinued operations before income taxes

     175       (791 )     530       (1,438 )

Income tax expense

     (52 )     (48 )     (26 )     (48 )

Net income (loss) from discontinued operations, net of tax

   $ 123     $ (839 )   $ 504     $ (1,486 )

 

The key components of assets and liabilities of discontinued operations as of June 30, 2024, were as follows:

 

   

June 30,

  
   

2024

  
    (in thousands)  

ASSETS

        

Current assets of discontinued operations:

        

Accounts receivable, net

   $ 91  

Inventories

     492  

Prepaid expenses and other current assets

     538  

Total current assets of discontinued operations

     1,121  

Non-current assets of discontinued operations:

        

Other non-current assets

     44  

Total current and non-current assets of discontinued operations

   $ 1,165  
         

LIABILITIES

        

Current liabilities of discontinued operations:

        

Accounts payable

   $ 126  

Accrued liabilities

     431  

Total current liabilities of discontinued operations

   $ 557  

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This discussion should be read in conjunction with the Company’s 2024 Form 10-K. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. For additional information regarding these risks and uncertainties, please see the risk factors included in the Company’s 2024 Form 10-K, and in Part II, Item 1A of this Form 10-Q.

 

Objective

 

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 and cash flows for the three and six months ended December 31, 2024, and our financial condition as of December 31, 2024. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and notes thereto.

 

Overview

 

We are a pharmaceutical company focused on commercializing novel therapeutics. Our strategy is to become a leading pharmaceutical company that improves the lives of patients. We use a focused approach of in-licensing, acquiring, developing, and commercializing novel prescription therapeutics in order to continue building our portfolio of revenue-generating products and leveraging our commercial team’s expertise to build leading brands within large therapeutic markets. Our primary focus is on commercializing innovative prescription products that address conditions frequently developed or diagnosed in childhood, 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 July 2024 we completed the wind down and divestiture of our Consumer Health business (see Part I, Item 1, Note 20 – Discontinued Operations in this Form 10-Q for further detail) and now operate our business as a single operating and reporting segment, which is focused on our prescription pharmaceutical products sold primarily through third party wholesalers and pharmacies and which primarily consists of two product portfolios, the ADHD Portfolio and the Pediatric Portfolio. The ADHD Portfolio consists of products for the treatment of ADHD, primarily Adzenys (amphetamine), an extended-release orally disintegrating tablet and Cotempla (methylphenidate), an extended-release orally disintegrating tablet. The Pediatric Portfolio consists primarily of Karbinal (carbinoxamine maleate extended-release oral suspension), 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. During the fourth quarter of fiscal 2024, we successfully completed the transition of all manufacturing of our ADHD products to a United States-based third-party contract manufacturer to improve the profitability of these products.

 

In July 2023, we entered into an exclusive collaboration, distribution and supply agreement with Medomie, a privately owned pharmaceutical company, for Medomie to sell Adzenys and Cotempla in Israel and the Palestinian Authority. In September 2024, we entered into an exclusive collaboration, distribution and supply agreement with Lupin, a subsidiary of global pharmaceutical company Lupin Limited, for Lupin to sell Adzenys and Cotempla in Canada. We will supply Adzenys and Cotempla to Medomie and Lupin based on forecasts and provide various product commercialization resources. Medomie and Lupin are responsible for seeking local regulatory approvals and marketing authorizations for both Adzenys and Cotempla, which is expected to occur over the next 18 to 24 months. The agreement with Medomie and the agreement with Lupin represent our first and second international commercial agreements for Adzenys and Cotempla, respectively.

 

In light of our own business activities and external developments in the biopharmaceutical industry, we regularly review our performance, prospects and risks such as the potential impact to our business resulting from our competitive landscape (i.e., entry of generic competitors, payer pressures, new branded entrants, etc.). These reviews have included consideration of potential partnerships, collaborations, and other strategic transactions such as acquisitions or divestitures of programs or technology to enhance stockholder value. We continue to evaluate potential strategic transactions and business combinations, but there can be no guarantee that we will be able to enter into such transactions, and there can be no guarantee that such transactions will achieve our desired goals.

 

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Business Environment

 

We continue to experience inflationary pressure and have experienced supply chain disruptions related to the sourcing of raw materials, energy, logistics and labor. While we do not have sales or operations in Russia or Ukraine and we do not expect to have significant sales or operations in the Middle East, it is possible that the conflict or actions taken in response, 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. We expect that inflationary pressures and supply chain disruptions could continue to be significant across the business throughout fiscal 2025. We have not experienced stock outages for our ADHD products since the launch of those products, and the pediatric product supply has remained adequate to satisfy demand for the preceding four years.

 

In October 2024, we received a Paragraph IV Certification Notice Letter (“Notice Letter”) from Granules Pharmaceuticals, Inc. (“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. We plan to vigorously enforce our intellectual property rights related to Adzenys.

 

On November 11, 2024, we separated from Mark K. Oki as our Chief Financial Officer. Mr. Oki continued to work as a non-executive employee with us through December 1, 2024, and accordingly entered into a separation and release agreement (the “Separation Agreement”), pursuant to which Mr. Oki received payment for accrued but unused personal time off, a separation payment of $0.5 million to be paid out over twelve months, COBRA coverage for up to 12 months and acceleration of any unvested options or restricted stock held by Mr. Oki.

 

On November 11, 2024, Ryan J. Selhorn was appointed as our Chief Financial Officer, Corporate Secretary and Treasurer. Mr. Selhorn, age 43, previously served as our Executive Vice President, Finance and Business Optimization since November 2022. Prior to this, Mr. Selhorn was our Senior Vice President, Finance and Operations, Consumer Healthcare Division from February 2022 to November 2022 and as Vice President, Finance, Consumer Healthcare Division from February 2020 to February 2022. Mr. Selhorn served as Vice President and Chief Financial Officer from April 2018 at Innovus, a publicly held consumer healthcare company, until our acquisition of Innovus in February 2020. From August 2013 to April 2018, Mr. Selhorn served as Chief Financial Officer and Chief Accounting Officer of Signature Analytics, a privately held fractional Chief Financial Officer and accounting firm, where he also served as Chief Financial Officer of Medicinova, Inc., a publicly held biotechnology company. Mr. Selhorn worked at Grant Thornton LLP, a public accounting firm, from October 2003 to July 2013, most recently in the role of Senior Manager, Transaction Advisory Services. Mr. Selhorn received his B.S./B.A., Accounting and Finance from Georgetown University and is a Certified Public Accountant (inactive).

 

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Results of Operations

 

The results of operations for the three and six months ended December 31, 2024, compared to the three and six months ended December 31, 2023, is as follows:

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

Change

    

2024

    

2023

    

Change

  
   

(in thousands)

  

Net revenue

   $ 16,221     $ 18,748     $ (2,527 )   $ 32,795     $ 36,565     $ (3,770 )

Cost of sales

     5,435       4,145       1,290       10,024       8,924       1,100  

Gross profit

     10,786       14,603       (3,817 )     22,771       27,641       (4,870 )
                                                 

Operating expenses:

                                                

Selling and marketing

     5,272       5,218       54       10,931       11,309       (378 )

General and administrative

     4,449       4,800       (351 )     9,574       11,095       (1,521 )

Research and development

     522       521       1       948       1,116       (168 )

Amortization of intangible assets

     921       918       3       1,842       1,842       —  

Restructuring costs

     1,317       —       1,317       2,101       —       2,101  

Total operating expenses

     12,481       11,457       1,024       25,396       25,362       34  

(Loss) income from operations

     (1,695 )     3,146       (4,841 )     (2,625 )     2,279       (4,904 )

Other income, net

     140       96       44       682       680       2  

Interest expense

     (1,079 )     (1,266 )     187       (2,073 )     (2,549 )     476  

Derivative warrant liabilities gain (loss)

     3,016       (577 )     3,593       5,896       (6,484 )     12,380  

Income (loss) from continuing operations before income tax expense

     382       1,399       (1,017 )     1,880       (6,074 )     7,954  

Income tax benefit (expense)

     283       (780 )     1,063       (122 )     (780 )     658  

Net income (loss) from continuing operations

     665       619       46       1,758       (6,854 )     8,612  

Net income (loss) from discontinued operations, net of tax

     123       (839 )     962       504       (1,486 )     1,990  

Net income (loss)

   $ 788     $ (220 )   $ 1,008     $ 2,262     $ (8,340 )   $ 10,602  

 

Net Revenue 

 

Net revenue by portfolio for the three and six months ended December 31, 2024, compared to the three and six months ended December 31, 2023, is as follows:

 

​

  

Three Months Ended

    

Six Months Ended

  

​

  

December 31,

    

December 31,

  

​

  

2024

    

2023

    

Change

    

2024

    

2023

    

Change

  

​

  

(in thousands)

  

ADHD Portfolio

   $ 13,816     $ 16,572     $ (2,756 )   $ 29,080     $ 31,700     $ (2,620 )

Pediatric Portfolio

     2,400       2,145       255       3,693       4,710       (1,017 )

Other

     5       31       (26 )     22       155       (133 )

Total net revenue

   $ 16,221     $ 18,748     $ (2,527 )   $ 32,795     $ 36,565     $ (3,770 )

 

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During the six months ended December 31, 2024, net revenue decreased by $3.8 million, or 10%, compared to the same period ended December 31, 2023, primarily due to a decrease in net revenue from the Pediatric Portfolio driven by payer changes last fiscal year that negatively affected prescription coverage and a decrease in ADHD Portfolio net revenue partially offset by 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.

 

During the three months ended December 31, 2024, net revenue decreased by $2.5 million, or 13%, compared to the same period ended December 31, 2023, primarily due to a decrease of $2.8 million in the ADHD Portfolio as the macro trends continue to show a return to a more normalized status following the competitor stimulant shortages over the past 18 months, which helped to temporarily increase ADHD Portfolio net revenue in prior periods. The decrease in the ADHD Portfolio is partially offset by an increase in the Pediatric Portfolio which is driven by the success of initiatives we have implemented to increase coverage and promotion.

 

Gross Profit

 

During the three and six months ended December 31, 2024, gross profit decreased by $3.8 million, or 26% and $4.9 million, or 18%, compared to the same periods ended December 31, 2023, respectively. Gross profit percentage was 66% and 69% for the three and six months ended December 31, 2024, compared to 78% and 76% for the same periods ended December 31, 2023, respectively. The decrease in gross profit percentage is primarily related to increased cost of sales for our ADHD Portfolio inventory as we sell through self-manufactured inventory burdened with certain fixed costs associated with its manufacture, which were capitalized into inventory costs in prior periods and is expected to normalize in the coming quarters as we finish selling through our self-manufactured inventory.

 

Selling and Marketing

 

During the three months ended December 31, 2024, selling and marketing expense was relatively flat compared to the same period ended December 31, 2023, and during the six months ended December 31, 2024, selling and marketing expense decreased by $0.4 million, or 3%, compared to the same period ended December 31, 2023. Selling and marketing expense decreases are primarily driven by reduced commission expense and variable commercial marketing program fees in response to lower revenue, partially offset by increases in labor and service costs.

 

General and Administrative

 

During the three and six months ended December 31, 2024, general and administrative expense decreased by $0.4 million, or 7% and $1.5 million, or 14% compared to the same periods ended December 31, 2023. The decrease is primarily a result of continued cost reduction efforts and improved operational efficiencies.

 

Research and Development

 

During the three and six months ended December 31, 2024, research and development expense was relatively flat compared to the same periods ended December 31, 2023. Our research and development costs are primarily associated with support for our commercialized products and costs associated with maintaining our intellectual property on our AR-101 asset, for which we have indefinitely suspended clinical development.

 

Amortization of Intangible Assets

 

During the three and six months ended December 31, 2024, amortization expense of intangible assets, excluding amounts included in cost of sales, was relatively consistent compared to the same periods ended December 31, 2023.

 

Restructuring Costs

 

During the three and six months ended December 31, 2024, we incurred $1.3 million and $2.1 million of restructuring costs, respectively, related to our previously announced operational realignment and related costs. During the three and six months ended December 31, 2023, no restructuring costs were incurred.

 

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Other Income, Net

 

During the three and six months ended December 31, 2024, other income, net was relatively consistent compared to the same periods ended December 31, 2023.

 

Interest Expense

 

During the three and six months ended December 31, 2024, interest expense decreased by $0.2 million, or 15% and $0.5 million, or 19%, compared to the same periods ended December 31, 2023, primarily due to the extinguishment of our $15.0 million term loan while entering into the $13.0 million Eclipse Term Loan on more favorable terms during the fourth quarter of fiscal 2024.

 

Derivative Warrant Liabilities Gain (Loss)

 

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 six months ended December 31, 2024, we recognized an unrealized gain of $3.0 million and $5.9 million, respectively, from the fair value adjustment primarily driven by a decrease in our stock price during the three and six months ended December 31, 2024. For the three and six months ended December 31, 2023, we recognized an unrealized loss of $0.6 million and $6.5 million, respectively, from the fair value adjustment primarily driven by an increase in our stock price during the three and six months ended December 31, 2023. 

 

Income Tax Expense

 

For income (loss) from continuing operations we recorded an income tax benefit of $0.3 million, which represented an effective tax rate of negative 74.1% and income tax expense of $0.8 million, which represented an effective tax rate of 55.8%, for the three months ended December 31, 2024, and 2023, respectively. For income (loss) from continuing operations we recorded an income tax expense of $0.1 million, which represented an effective tax rate of 6.5% and income tax expense of $0.8 million, which represented an effective tax rate of negative 12.8% for the six months ended December 31, 2024, and 2023, respectively. 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 current quarter.

 

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 Part I, Item 1, Note 20 – Discontinued Operations in this Form 10-Q for further detail.

 

Liquidity and Capital Resources

 

Sources of Liquidity

 

We have obligations related to our loan agreements, milestone payments for licensed products, and manufacturing purchase commitments.

 

We finance our operations through a combination of sales of our common stock and warrants, borrowings under our line of credit facility and from cash generated from operations.

 

Shelf Registrations

 

On September 26, 2024, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024. This shelf registration 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”). Through the filing date of this Form 10-Q, $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.

 

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Eclipse Agreement

 

In June 2024, we and certain of our subsidiaries entered into the Eclipse Amendment No. 5, with the Eclipse Lender. Under the Eclipse Agreement No. 5, we have two loan agreements, the Eclipse Term Loan and the Eclipse Revolving Loan.

 

The Eclipse Term Loan consists of a principal amount of $13.0 million, at an interest rate of 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 June 12, 2028, the maturity date. We used the proceeds of the Eclipse Term Loan and a portion of the proceeds from warrant exercises described below to repay in full a $15.0 million term note.

 

The Eclipse Revolving Loan allows us to borrow up to $14.5 million at an interest rate of SOFR plus 4.5%. 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, 2028.

 

Cash Flows

 

The following table shows cash flows for the six months ended December 31, 2024, and 2023:

 

   

Six Months Ended December 31,

  
   

2024

    

2023

    

Change

  
   

(in thousands)

  

Net cash provided by (used in) operating activities

   $ 1,715     $ (346 )   $ 2,061  

Net cash provided by (used in) investing activities

   $ 526     $ (250 )   $ 776  

Net cash used in financing activities

   $ (1,849 )   $ (2,860 )   $ 1,011  

 

Net Cash Provided By (Used In) Operating Activities

 

Net cash provided by (used in) operating activities during these periods primarily reflects our net income (loss) from continuing operations, partially offset by cash provided by discontinued operations and changes in working capital and non-cash charges including stock-based compensation expense, derivative warrant liabilities gain or loss, depreciation, amortization and accretion, and other charges.

 

During the six months ended December 31, 2024, net cash provided by operating activities totaled $1.7 million, which was primarily the result of an increase in accounts payable and accrued liabilities and a decrease in inventories, partially offset by increases in accounts receivable, prepaid expenses and other current assets and cash used in operations (net income of $2.3 million offset primarily by non-cash depreciation, amortization and accretion, stock compensation expense and derivative warrant liabilities adjustment).

 

During the six months ended December 31, 2023, net cash used in operating activities totaled $0.4 million. The use of cash was primarily the result of the decrease in accrued liabilities, partially offset by funds from the ERC program recorded in other operating liabilities (see Note 2 – Summary of Significant Accounting Policies and Note 9 – Other Liabilities). Additionally, these were partially offset by positive cash earnings (net loss offset by non-cash depreciation, amortization and accretion, derivative warrant liabilities adjustment, and stock compensation expense).

 

Net Cash Provided By (Used In) Investing Activities

 

Net cash provided by investing activities for the six months ended December 31, 2024, was driven by cash received from the sale of fixed assets, partially offset by cash payments for fixed asset purchases.

 

Net cash used in investing activities was nominal during the six months ended December 31, 2023.

 

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Net Cash Used In Financing Activities

 

Net cash used in financing activities of $1.8 million during the six months ended December 31, 2024, was primarily from payments made to fixed payment arrangements and payments made on borrowings, partially offset by net proceeds received from the revolving credit facility. 

 

Net cash used in financing activities of $2.9 million during the six months ended December 31, 2023, was primarily from payments made to fixed payment arrangements and net payments made on revolving credit facility.

 

Contractual Obligations, Commitments and Contingencies

 

As a result of our acquisitions and licensing agreements, we are contractually and contingently obliged to pay, when due, various fixed and contingent milestone payments. See Note 13 – Commitments and Contingencies in the accompanying notes to the unaudited consolidated financial statements for further information.

 

In May 2022, we entered into the Tuzistra License Agreement. Pursuant to such termination, as of December 31, 2024, we have accrued a settlement liability of $5.8 million payable to Tris in other current liabilities on the consolidated balance sheet payable to Tris, with a provision that allows the Company to pay interest on any principal amounts due but remaining unpaid past July 2024.

 

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 December 31, 2024, the Tris Karbinal Agreement accrued fixed payment arrangement balance was $1.2 million recorded in other current liabilities on the consolidated balance sheet.

 

In connection with our acquisition of the assets from Rumpus VEDS, LLC, Rumpus Therapeutics, LLC, Rumpus Vascular, LLC (collectively, “Rumpus”), and only if we resume and ultimately complete clinical development of AR101 and gain regulatory clearances to commercialize the product in multiple markets around the world, we may be required to pay up to $67.5 million in regulatory and commercial-based earn-out payments to Rumpus, which are primarily paid against commercial milestone achievements. Under the licensing agreement with Denovo Biopharma LLC (“Denovo”), we made a payment of $0.6 million for a license fee in April 2022. In addition, upon the achievement of regulatory and commercial milestones, we may be required to pay up to $101.7 million. Under the licensing agreement with Johns Hopkins University (“JHU”), upon achievement of regulatory and commercial milestone, we may be required to pay up to $1.6 million to JHU. In fiscal 2022, two milestones payable to Rumpus were achieved totaling $4.0 million, which were paid in 109,447 shares of common stock and $2.6 million in cash. We also assumed the responsibility for royalties of 3.0% of net revenue from the product, with a minimum of $20,000 per year, and upon the achievement of certain regulatory and commercial milestones, up to $1.6 million. With clinical development currently suspended, only if and when we resume and ultimately complete clinical development of AR101, are substantially all milestone payments payable to these parties.

 

Critical Accounting Estimates

 

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a detailed discussion about our critical accounting estimates, refer to our 2024 Form 10-K.

 

Off-Balance Sheet Arrangements

 

We have not entered into any 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, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

 

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2024, at reasonable assurance levels, in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Accordingly, we believe that the financial statements presented in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented herein.

 

Inherent Limitations on Effectiveness of Internal Controls over Financial Reporting

 

Our management team, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple errors or mistakes. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during the period covered by this Form 10-Q, that have a material effect, or are reasonably likely to have a material effect, on our internal control over financial reporting.

 

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEDINGS

 

From time to time, we become involved in or are threatened with legal disputes arising from our business and operations in the normal course of business. Most of these disputes are not likely to have a material effect on our business, financial condition, or operations.

 

Witmer Class-Action Securities Litigation

 

A stockholder derivative suit was filed on September 12, 2022, in the Delaware Chancery Court by Paul Witmer, derivatively and on behalf of all Aytu stockholders, against Armistice Capital, LLC, Armistice Capital Master Fund, Ltd., Steve Boyd (Armistice’s Chief Investment Officer and Managing Partner, and a former director of Aytu), and certain other current and former directors of Aytu, Joshua R. Disbrow, Gary Cantrell, John Donofrio, Jr., Michael Macaluso, Carl Dockery and Ketan B. Mehta. Plaintiff amended the complaint on April 5, 2023. The Amended Complaint dropped Mr. Macaluso as a defendant and alleges that (i) Armistice facilitated the sale of assets of Cerecor in 2019 and Innovus in 2020 to Aytu in exchange for convertible securities which it subsequently converted and sold at a profit on the open market; (ii) the Armistice defendants breached their fiduciary duties, were unjustly enriched and wasted corporate assets in connection with these acquisitions; (iii) the Armistice defendants breached their fiduciary duties by engaging in insider trading; and (iv) the other directors breached their fiduciary duties, and aided and abetted the Armistice defendants’ breaches of fiduciary duties, in connection with these acquisitions. The Amended Complaint sought unspecified damages, equitable relief, restitution, disgorgement of profits, enhanced governance and internal procedures, and attorneys’ fees. While the Company believes that this lawsuit is without merit and have vigorously defended against it, the Company agreed to settle the matter for various corporate governance modifications and the payment of plaintiff’s attorneys’ fees. On January 13, 2025, the court approved the settlement.

 

Granules PIV

 

On October 31, 2024, the Company received a Paragraph IV Certification Notice Letter (“Notice Letter”) from Granules Pharmaceuticals, Inc. (“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’ New Drug Application (“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. On December 11, 2024, the Company filed a patent infringement lawsuit against Granules which triggered a stay precluding the United States Food and Drug Administration (“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 a trial has been scheduled for to being on December 7, 2026. The Company plans to vigorously enforce its intellectual property rights related to Adzenys.

 

Revive Investing

 

The Company had been named as a nominal plaintiff in a lawsuit by two shareholders against Armistice Capital Master Fund, Ltd, entitled Revive Investing, LLC. et al v. Armistice Master Fund, Ltd. et al, Case 1:20-cv-02849-CMA-TPO, in the United States District Court for the District of Colorado, contending that Armistice was liable for short swing trading profits in violation of Section 16(b) of the Exchange Act for certain trades it made in Company stock in 2019 and 2020 and must disgorge those profits to the Company. That matter proceeded to trial before a jury, which on January 29, 2025, returned a verdict finding no liability.

 

For a description of our material pending legal proceedings, see Note 13 – Commitments and Contingencies of the notes to the unaudited consolidated financial statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by reference. As of the filing of this report, no legal proceedings are pending against us that we believe individually or collectively are likely to have a materially adverse effect upon our financial condition, results of operations, or cash flows.

 

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ITEM 1A. RISK FACTORS

 

Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects, financial condition, and results of operations, and you should carefully consider them. The risk factors included in our 2024 Form 10-K have not materially changed, except as reflected in the following new risk factors:

 

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

 

The global credit and financial markets have experienced extreme volatility and disruptions (including as a result of actual or perceived changes in interest rates and economic inflation), which included severely diminished liquidity and credit availability, declines in consumer confidence, slower economic growth, high inflation, uncertainty about economic stability and swings in unemployment rates. The financial markets and the global economy may also be adversely affected by the impact of supply chain disruptions, labor shortages, fluctuations in currency exchange rates, changes in interest rates, military conflict, acts of terrorism or other geopolitical events. Sanctions imposed, and other actions taken, by the United States and other countries in response to geopolitical conflicts, including the one in Ukraine, may also continue to adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. There can be no assurance that a deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions, including our ability to purchase necessary supplies on acceptable terms, if at all. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to further delay or abandon clinical development plans, if we were to resume such development. In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget.

 

The United States government has indicated its intent to alter its approach to international trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries. In addition, the United States government has initiated or is considering imposing tariffs on certain foreign goods. Related to this action, certain foreign governments, including China, have instituted or are considering imposing tariffs on certain United States goods. It remains unclear what the United States administration or foreign governments will or will not do with respect to tariffs or other international trade agreements and policies. A trade war or other governmental action related to tariffs or international trade agreements or policies has the potential to disrupt our research activities, affect our suppliers and/or the United States or global economy or certain sectors thereof and, thus, could adversely impact our businesses.

 

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We are and may become involved in litigation or other proceedings from time to time relating to the enforcement or defense of patent and other intellectual property rights, which could cause us to divert our resources and could put our intellectual property at risk.

 

To prevent infringement or unauthorized use of our intellectual property, we have in the past, and may in the future, need to file infringement claims. For example, on December 11, 2024, we filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Granules Pharmaceuticals, Inc. (see Part I, Item II, Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q for further detail of this matter). When we pursue litigation to stop another party from using the inventions claimed in any patents we own or control, that party has the right to ask the court to rule that such patents are invalid or should not be enforced against that third party. In addition to patent infringement lawsuits, we may decide to file interferences, oppositions, ex parte reexaminations, post-grant review, or inter partes review proceedings before the United States Patent and Trademark Office (the “USPTO”) and corresponding foreign patent offices. Litigation and other proceedings relating to intellectual property are unpredictable and expensive and may consume time and resources and divert the attention of managerial and scientific personnel. Such litigations and proceedings could substantially increase our operating losses and reduce the resources available for research, development, and other activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings or may be required to divert such resources from our ongoing and planned research and development activities. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing or misappropriating or successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

 

There also is a risk that a court or patent office in such proceeding will decide that our patents or the patents of our licensors are not valid or are not enforceable, and that we do not have the right to stop the other party from using the inventions. Additionally, even if the validity of such patents is upheld, the court may refuse to stop the other party on the ground that such other party’s activities do not infringe our rights to such patents. If we are not successful in enforcing or defending our intellectual property, our competitors could develop and market products based on our discoveries and technologies, which may reduce the commercial viability of, and demand for, our product candidates and any future products.

 

ITEM 5. OTHER INFORMATION

 

Rule 10b5-1 Trading Plans

 

During the quarter ended  December 31, 2024, none of our directors or executive officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as those terms are defined in Item 408 of Regulation S-K).

 

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ITEM 6. EXHIBITS

 

Exhibit No.

  

Description
10.1   Amended and Restated Employment Agreement by and between Aytu BioPharma, Inc. and Ryan J. Selhorn dated November 11, 2024, previously filed as Exhibit 10.1 to the Company’s current report on Form 8-K as filed with the SEC on November 13, 2024, and incorporated herein by reference.
10.2*   Separation and Release Agreement by and between Aytu BioPharma, Inc. and Mark K. Oki dated December 1, 2024.

31.1*

  

Certificate of the Chief Executive Officer of Aytu BioPharma, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

  

Certificate of the Chief Financial Officer of Aytu BioPharma, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

  

Certificate of the Chief Executive Officer and the Chief Financial Officer of Aytu BioPharma, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*

   XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*   Inline XBRL Taxonomy Schema Linkbase Document.
101.CAL*   Inline XBRL Taxonomy Calculation Linkbase Document.
101.DEF*   Inline XBRL Taxonomy Definition Linkbase Document.
101.LAB*   Inline XBRL Taxonomy Labels Linkbase Document.
101.PRE*   Inline XBRL Taxonomy Presentation Linkbase Document.

104*

  

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

*    Filed herewith.

**  Furnished herewith.

 

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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 hereunto duly authorized.

 

 

AYTU BIOPHARMA, INC.
     

Date: February 12, 2025

By:

/s/ Joshua R. Disbrow
   

Joshua R. Disbrow
    Chief Executive Officer
    (Principal Executive Officer)
     
Date: February 12, 2025 By: /s/ Ryan J. Selhorn
    Ryan J. Selhorn
    Chief Financial Officer
    (Principal Financial Officer)
   

(Principal Accounting Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

Exhibit 10.2

 

SEPARATION & RELEASE AGREEMENT

 

This Separation & Release Agreement (“Separation Agreement” or “Agreement”) is entered into by and between Mark K. Oki (“you”) and Aytu BioPharma, Inc., and its predecessors, successors, assigns, parents, affiliates, subsidiaries, and related companies (collectively “the Company”).

 

WHEREAS, your employment with the Company will terminate effective as of the close of business on December 1, 2024; and

 

WHEREAS, you and the Company want to fully and finally settle all issues, differences, and claims, whether potential or actual, between you and the Company, including, but not limited to, any claims that might arise out of your employment with the Company or the termination of your employment with the Company.

 

NOW, THEREFORE, in consideration of the mutual promises contained in this Separation Agreement, you and the Company agree as follows:

 

1.         TERMINATION OF EMPLOYMENT. You agree and acknowledge that your employment with the Company terminated at the close of business on December 1, 2024 (the “Termination Date”). You will be paid your regular salary through the Termination Date. Except as provided in this Separation Agreement, all privileges of employment will end as of the Termination Date. Please note that you may not sign this Agreement until on or after your Termination Date.

 

Upon your receipt of your final paycheck, which includes payment for employment through your Termination Date, you will have received all wages owed to you by virtue of your employment with the Company or the termination thereof.

 

Upon your receipt of Forty Nine Thousand Three Hundred Twenty Dollars ($49,320.00), less applicable deductions and withholdings, from the Company for your accrued but unused personal time off as of your Termination Date, you will have received all vacation benefits owed to you by virtue of your employment with the Company or the termination thereof and in accordance with Company policy and applicable law.

 

If you are currently participating in any Company group health insurance plans, information regarding your right to elect COBRA coverage will be sent to you via separate letter.

 

You specifically acknowledge and agree that you are not eligible for any other payments or benefits by virtue of your employment with the Company or the termination thereof except for those expressly described in this Agreement.

 

 
 

 

2.         CONSIDERATION. In consideration of your promises and obligations under this Separation Agreement — subject to the terms and conditions of this Separation Agreement, including the release of claims set forth in Section 3 below — the Company will provide you with the following compensation, provided that you timely sign and do not revoke this Separation Agreement:

 

(a)         Separation Payment. Consistent with the Amended and Re-stated Employment Agreement dated February 13, 2023 (the “Employment Agreement”), the Company will pay Four Hundred Ninety-Nine Thousand Five Hundred Ninety Dollars, $499,590.00, less applicable deductions and withholdings for state and federal taxes (the “Separation Payment”) payable over twelve months in twelve equal installments. The Separation Payments are comprised of $427,450.00 representing your annual base salary and $72,140.00 representing your pro-rated annual bonus at the 40% target of your annual base salary. The Separation Payments will begin on the first payroll date that begins 30 days after your Termination Date, provided you have timely signed and have not revoked this Separation Agreement as described below, and provided the Company has received all Company property from you, as set forth in Section 8. In the event the revocation period set forth in Section 5 has not yet expired within thirty (30) days after your Termination Date, you will be paid within thirty (30) days after the expiration of the revocation period set forth in Section 5, provided you have timely signed the Agreement and the Company has received all Company property from you, as set forth in Section 8.

 

(b)         Continued COBRA Coverage. Provided that you timely elect COBRA coverage after the Termination Date, the Company shall pay the monthly employer COBRA premiums for the same level of group health coverage as in effect on the Termination Date for the twelve (12) month period (“COBRA Coverage Period”) following the Termination Date, provided (i) that you sign this Agreement and do not revoke it; (ii) that you do not become eligible for group health coverage through other employment during the COBRA Coverage Period; and (iii) you remain eligible for COBRA health care coverage throughout the COBRA Coverage Period. The Company retains the right to terminate such payment of COBRA premiums on your behalf and instead pay you a lump sum amount equal to the COBRA premium times the number of months remaining in the specified period if the Company determines in its discretion that continued payment of the COBRA premiums is or may be discriminatory under Section 105(h) of the Internal Revenue Code. Notwithstanding the foregoing, for the period from December 1, 2025 through November 30, 2025, the Company’s subsidy will equal 100% of the COBRA premium to the extent required by the American Rescue Plan Act.

 

(c)         Accelerated Vesting. Notwithstanding anything to the contrary in the applicable stock-based award agreement, and provided you sign and do not revoke this Separation Agreement, all vested stock options shall remain exercisable from the Termination Date until the expiration date of the applicable award, and all options which are unvested as of the Termination Date shall be accelerated as of the date immediately following the expiration of the seven (7) day revocation period, as set forth in Section 4, and shall be deemed vested and immediately exercisable by you. Further, any issued restricted stock will immediately vest following the expiration of the seven (7) day revocation period as set forth in Section 4, provided that you sign this Agreement and do not revoke it.  As of the Separation Date, the amount of stock options that will remain exercisable at a strike price of $1.73 is 13,000 and the amount of restricted shares that will vest immediately following the expiration of the seven (7) day revocation period is 417.

 

2
 

 

You agree and acknowledge that the above Separation Payment, Continued COBRA Coverage, and Accelerated Vesting (collectively, “Consideration Payments”) are not otherwise owed to you absent your execution of this Separation Agreement.

 

3.         RELEASE OF CLAIMS. You and the Company intend to settle any and all claims that you have or may have against the Company, including, but not limited to, any claims related to the Company’s hiring you, your employment with the Company, and the termination of your employment with the Company. You agree that, in exchange for the Company’s promises in this Separation Agreement, and in exchange for the consideration paid to you by the Company described above in Section 2, you, on behalf of your heirs, successors and assigns, hereby release and discharge the Company, as well as its officers, managers, members, insurers, agents and employees (the “Released Parties”) from all liability for damages and from all claims—whether known or unknown—that you may have against the Released Parties occurring through the date you sign this Separation Agreement. Your release of claims is intended to extend to and includes, among other things, claims of any kind arising under or based upon the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act; the Worker Adjustment and Retraining Notification Act; Title VII of the Civil Rights Act of 1964; the Americans with Disabilities Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act; the Equal Pay Act; the Occupational Safety and Health Act; the Families First Coronavirus Response Act; Colorado Anti-Discrimination Act; Colorado Lawful Off-Duty Activities statute; Colorado Wage Equality Regardless of Sex Act; and any other federal, state, or local law, rule, or regulation prohibiting employment discrimination or otherwise relating to employment; and any claims based upon any other theory, whether legal or equitable, arising from or related to any matter or fact arising out of the events giving rise to this Separation Agreement occurring through the date you sign this Separation Agreement.

 

You also agree and understand that you are giving up any and all other claims — known or unknown — whether grounded in contract or tort theories, including but not limited to: wrongful discharge; breach of contract; tortious interference with contractual relations; claims for unpaid compensation; claims for punitive damages or attorneys’ fees; promissory estoppel; detrimental reliance; breach of the implied covenant of good faith and fair dealing; breach of express or implied promise; breach of manuals or other policies; breach of fiduciary duty; assault; battery; fraud; false imprisonment; invasion of privacy; intentional or negligent misrepresentation; defamation, including libel, slander, discharge defamation and self-publication defamation; discharge in violation of public policy; whistleblower; intentional or negligent infliction of emotional distress; or any other theory, whether legal or equitable.

 

3
 

 

You understand that nothing contained in this Separation Agreement, including, but not limited to, this Section 3, will be interpreted to prevent you from filing a charge with the Equal Employment Opportunity Commission (“EEOC”), the Occupational Safety and Health Administration (“OSHA”), the National Labor Relations Board (“NLRB”) or other local civil rights enforcement agency, or from participating in or cooperating with an EEOC or other such agency investigation or proceeding. Furthermore, you understand that under the U.S. Defend Trade Secrets Act of 2016, you will not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made in confidence to government officials, either directly or indirectly, or to an attorney, in each case solely for the purpose of reporting or investigating a suspected violation of law, or in a complaint or other document filed in a lawsuit or other proceeding, provided such filing is made under seal. Nothing in this Separation Agreement shall prohibit or restrict you from cooperating and/or testifying fully and truthfully in any action, proceeding (actual or threatened), or regulatory matter before any tribunal, governmental agency, or regulatory body or from initiating communications directly with, responding to any inquiry from, or providing testimony before, the SEC, FINRA, any state or federal regulatory authority, or any other self-regulatory organization regarding any matter. You agree, however, to waive the right to receive future monetary recovery directly from the Released Parties, including payments that result from any complaints or charges that you file with any governmental agency or that are filed on your behalf. This Separation Agreement does not limit your right to receive an award for information provided to any government agencies.

 

Notwithstanding any provision of this Separation Agreement to the contrary, by execution of this Separation Agreement, you are not releasing (i) any claims or rights you may have to the Consideration Payments; (ii) any rights you may have to vested retirement benefits; or (iii) any claims that cannot be waived by law.

 

4.         RIGHT TO REVOKE. You are hereby informed of your right to revoke your release of claims, insofar as it extends to potential claims under the Age Discrimination in Employment Act, by informing the Company of your intent to do so within seven (7) calendar days following your signing of this Separation Agreement. You understand that any such revocation must be made in writing and delivered by hand or by certified mail, return receipt requested, postmarked on or before the last day within the applicable revocation period to:

 

  Jaime Ventura
  7900 East Union Avenue
  Suite 920
  Denver, CO 80237

 

If you exercise your right to revoke any portion of your release of claims, the Company may, at its option, either nullify this Separation Agreement in its entirety, or keep it in effect in all respects other than as to that portion of your release of claims that you have revoked. You agree and understand that if the Company chooses to nullify the Separation Agreement in its entirety, the Company will have no obligations under this Separation Agreement.

 

5.         TIME TO ACCEPT. You will have twenty-one (21) days from December 1, 2024, the date on which you received this Separation Agreement, to consider whether to sign it. You may, however, sign this Separation Agreement sooner, if you voluntarily choose to do so, but in no event may this Separation Agreement be signed before your Termination Date. Changes to this Separation Agreement, whether material or immaterial, will not restart the twenty-one (21) day consideration period. During this time, the Company advises you to consult with an attorney of your choice. To receive the consideration described in Section 2, you must sign this Separation Agreement and return the signed original by close of business on December 22, 2024 to:

 

  Jake Siciliano
  7900 East Union Avenue, Suite 920
  Denver, CO 80237 USA.

 

4
 

 

6.         NO RECOGNITION OF WRONGDOING. The signing of the Separation Agreement and payment of the consideration described in it do not represent any admission of wrongdoing or violation of any statute, agreement, or common law by the Company.

 

7.         NON-DISPARAGEMENT AND CONTINUING OBLIGATIONS. You agree that, except in the context of an EEOC or other government agency investigation or proceeding, in compelled sworn testimony, or as otherwise required by law, you will not make critical, disparaging or defamatory comments in any respect regarding the Company or its predecessors, successors, assigns, parents, affiliates, subsidiaries, and related companies, and/or their officers, directors, shareholders, agents, employees, and insurers; nor will you make any comments concerning the conduct or events which precipitated the termination of your employment. You further agree that all post-employment confidentiality, non-competition, and/or non-solicitation restrictions contained in any prior agreements you entered into with the Company are ongoing and will continue in full force and effect after the termination of your employment regardless of whether you elect to sign this Separation Agreement, including continuing obligations contained in your Employment Agreement.

 

8.         RETURN OF PROPERTY. You acknowledge and affirm that you have returned and do not retain in any form or format, all Company documents, data, and other property in your possession or control. Company “documents, data, and other property” includes, without limitation, any computers, tablets, fax machines, cell phones, access cards, keys, reports, manuals, records, product samples, inventory, correspondence and/or other documents or materials related to the Company’s business that you have compiled, generated or received while working for the Company, including all copies, samples, computer data, disks, or records of such material. After returning these documents, data, and other property you have permanently deleted from any electronic media in your possession, custody, or control (such as computers, cell phones, hand-held devices, back-up devices, zip drives, PDAs, etc.), or to which you have access (such as remote e-mail exchange servers, back-up servers, off-site storage, etc.), all documents or electronically stored images of the Company, including writings, drawings, graphs, charts, sound recordings, images, and other data or data compilations stored in any medium from which such information can be obtained.

 

Furthermore, you agree to promptly provide the Company with a list of any documents that you created or are otherwise aware to be password protected and the password(s) necessary to access such password protected documents.

 

The Company’s obligations under this Separation Agreement are contingent upon you returning all Company documents, data, and other property as set forth above.

 

5
 

 

9.         EMPLOYEE ACKOWLEDGMENTS, REPRESENTATIONS, AND WARRANTIES. You represent and warrant that you have received any and all wages, accrued vacation pay, and/or commissions for work performed (including any overtime compensation) and any and all FMLA leave to which you may have been entitled. You, on your own behalf and on behalf of your agents, representatives, successors or assigns, further acknowledge, certify, and agree that the Consideration Payments set forth herein constitute consideration above and beyond any and all payment due and owing to you for any and all purported wages or other compensation owed in connection with your employment with the Company or with the separation thereof. You further represent and warrant that you are not aware of any facts or circumstances that might justify a claim against the released parties for any violation of the Family and Medical Leave Act (“FMLA”), the Fair Labor Standards Act (“FLSA”), the Families First Coronavirus Response Act (“FFCRA”) or comparable state statutes. You further acknowledge and warrant that you do not have any workplace injuries for which you intend to file a workers’ compensation claim against the Company or any Released Party.

 

10.         COOPERATION.  For a period of three (3) months, or longer if deemed necessary by the Company in its sole discretion, following the Termination Date, you agree to be reasonably available and cooperate with the Company and its counsel in connection with any reasonable requests for assistance regarding matters relating to your employment with the Company.  You understand and agree that such cooperation includes, but is not limited to, reasonably making yourself available to the Company and/or its counsel to answer questions and provide information regarding your employment with the Company, as well as Company processes, employees, operations, and past practices.

 

You further agree to be available to and cooperate with the Company and its counsel in connection with any investigation, administrative proceeding or litigation relating to any matter, occurring during your employment, in which you were involved or of which you have knowledge.  You understand and agree that such cooperation includes, but is not limited to, reasonably making yourself available to the Company and/or its counsel upon reasonable notice for interviews and factual investigations; appearing, at the Company’s sole expense, to give testimony without requiring service of a subpoena or other legal process; volunteering to the Company or its counsel pertinent information; and turning over all relevant documents which are or may come into your possession, at the Company’s sole expense.  You agree that, in the event you are subpoenaed by any person or entity to give testimony (in a deposition, court proceeding or otherwise) which in any way relates to your employment with the Company, you will give prompt notice of such request to Aytu BioPharma, Inc., Attn: Joshua Disbrow, 7900 East Union Avenue, Suite 920, Denver, CO USA 80237, or via email to josh.disbrow@aytubio.com, and will make no disclosure until the Company has had a reasonable opportunity to contest the right of the requesting person or entity to such disclosure.  Notwithstanding the foregoing, nothing in this paragraph or in this Agreement shall prohibit or restrict you from cooperating and/or testifying fully and truthfully in any action, proceeding (actual or threatened), or regulatory matter before any tribunal, governmental agency, or regulatory body or from initiating communications directly with, responding to any inquiry from, or providing testimony before, the SEC, FINRA, any state or federal regulatory authority, or any other self-regulatory organization regarding any matter.  This Agreement does not limit your right to receive an award for information provided to any government agencies.  

 

6
 

 

11.         COMPLIANCE WITH SECTION 409A OF THE INTERNAL REVENUE CODE. If any compensation or benefits provided by this Agreement may result in the application of section 409A of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), the Company shall, in consultation with you, modify the Agreement in the least restrictive manner necessary in order to exclude such compensation from the definition of “deferred compensation” within the meaning of such Section 409A of the Internal Revenue Code or in order to comply with the provisions of Section 409A of the Internal Revenue Code, other applicable provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions and without any diminution in the value of the payments to Employee. Any payments that qualify for the “short-term” deferral exception under Treasury Regulations Section 1.409A-1(b)(4), the “separation pay” exception under Treasury Regulations Section 1.409A-1(b)(9)(iii) or any other exception under Section 409A of the Internal Revenue Code will be paid under the applicable exceptions to the greatest extent possible. Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of the Internal Revenue Code. Anything in this Agreement to the contrary notwithstanding, if at the time of your separation from service within the meaning of Section 409A of the Internal Revenue Code, you are considered a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code, and if any payment that you become entitled to under this Agreement is considered deferred compensation subject to interest, penalties and additional tax imposed pursuant to Section 409A of the Internal Revenue Code as a result of the application of Section 409A(a)(2)(B)(i) of the Internal Revenue Code, then no such payment shall be payable prior to the date that is the earlier of (i) six months and one day after your separation from service or (ii) your death. In no event shall the Termination Date of your employment be deemed to occur until you experience a “separation from service” within the meaning of Section 409A of the Internal Revenue Code, and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the Termination Date. All reimbursements provided under this Agreement shall be provided in accordance with the requirements of Section 409A of the Internal Revenue Code, including, where applicable, the requirement that (a) the amount of expenses eligible for reimbursement during one calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year; (b) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the calendar year in which the expense is incurred; and (c) the right to any reimbursement will not be subject to liquidation or exchange for another benefit. If any payment that you become entitled to under this Agreement is considered deferred compensation subject to interest, penalties, and additional tax imposed pursuant to Section 409A of the Internal Revenue Code, you understand and agree that you shall be responsible for any and all such interest, penalties and additional tax.

 

12.          CONTROLLING LAW. This Separation Agreement shall be governed by and interpreted in accordance with the laws of the State of Colorado, without regard to the State’s conflicts laws.

 

13.         VENUE. The parties agree that any and all legal actions or proceedings brought to interpret or enforce this Separation Agreement, or in any other way arising out of or in relation to this Separation Agreement, shall be brought exclusively in the state or federal courts in Colorado and hereby consent to the jurisdiction of such courts for any such action and further waive any objection to the convenience of the forum or venue.

 

14.         ASSIGNABILITY. You understand and agree that this Separation Agreement is personal to you. The duties, rights, and obligations set forth herein may not be delegated or assigned by you to any other person without prior written consent of the Company. The Company’s rights and obligations hereunder may be assigned to any successor following a sale of the Company, the Company’s assets, or any other transaction involving a change in control.

 

7
 

 

15.         WAIVER. Either party’s failure to exercise, or delay in exercising, any right, power, or privilege under this Separation Agreement shall not operate as a waiver; nor shall any single or partial exercise of any right, power, or privilege under this Separation Agreement preclude any other or further exercise of such right, power, or privilege.

 

16.         ENTIRE AGREEMENT. This Separation Agreement, including all exhibits referenced herein, contains all understandings and agreements between you and the Company with respect to the subject matter of this Separation Agreement. Any change or addition to this Separation Agreement must be in writing and signed by you and the Company.

 

17.         EQUITABLE MODIFICATION/SEVERABILITY. If any portion of this Agreement is held invalid by operation of law, it shall be modified to the extent required to render it enforceable. If modification is not permitted by law, the invalid provision shall be struck and the remaining terms of this Agreement shall not be affected, provided, however, that if the releases in Section 3 of this Agreement are held invalid, the Company shall have the right to seek rescission of this Agreement.

 

You agree that no promise or inducement has been offered except as set forth in this Separation Agreement, and that you are signing this Separation Agreement without reliance upon any statement or representation by the Company or any representative or agent of the Company except as set forth in this Separation Agreement.

 

YOU AGREE AND ACKNOWLEDGE THAT YOU HAVE BEEN PROVIDED WITH A REASONABLE AND SUFFICIENT PERIOD OF TWENTY-ONE (21) DAYS WITHIN WHICH TO CONSIDER WHETHER OR NOT TO ACCEPT THIS SEPARATION AGREEMENT, AND WE ADVISE YOU IN WRITING OF YOUR RIGHT TO CONSULT WITH AN ATTORNEY FOR ADVICE IN CONNECTION WITH THIS SEPARATION AGREEMENT PRIOR TO SIGNING THE SEPARATION AGREEMENT. YOU ACKNOWLEDGE AND AGREE THAT YOU HAVE ENTERED INTO THIS SEPARATION AGREEMENT FREELY AND VOLUNTARILY.

 

PLEASE READ CAREFULLY BEFORE SIGNING. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

[Signature Page to Follow.]

 

8
 

 

IN WITNESS WHEREOF, the parties have executed this Separation Agreement by their signatures below.

 

      AYTU BIOPHARMA, INC.
Dated: December 1, 2024    
           
           
      By /s/ Joshua R. Disbrow  
      Its Chief Executive Officer  
           
           
           
Dated: December 1, 2024   /s/ Mark K. Oki  
      Mark K. Oki  

 

9

Exhibit 31.1

 

AYTU BIOPHARMA, INC.

Certification by Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Joshua R. Disbrow, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Aytu BioPharma, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities particularly during the period in which this report is being prepared;

 

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

 

a)

All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 12, 2025

    
     
     
 

By:

/s/ Joshua R. Disbrow
   

Joshua R. Disbrow
    Chief Executive Officer
    (Principal Executive Officer)

 

 

Exhibit 31.2

 

AYTU BIOPHARMA, INC.

Certification by Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Ryan J. Selhorn, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Aytu BioPharma, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities particularly during the period in which this report is being prepared;

 

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

 

a)

All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 12, 2025

    
     
     
 

By:

/s/ Ryan J. Selhorn
   

Ryan J. Selhorn
    Chief Financial Officer
    (Principal Financial Officer)
   

(Principal Accounting Officer)

 

 

Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S. C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Joshua R. Disbrow, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10‑Q of Aytu BioPharma, Inc. for the fiscal quarter ended December 31, 2024, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10‑Q fairly presents, in all material respects, the financial condition and results of operations of Aytu BioPharma, Inc.

 

 

Date: February 12, 2025

    
     
     
 

By:

/s/ Joshua R. Disbrow
   

Joshua R. Disbrow
    Chief Executive Officer
   

(Principal Executive Officer)

 

 

 

I, Ryan J. Selhorn, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10‑Q of Aytu BioPharma, Inc. for the fiscal quarter ended December 31, 2024, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10‑Q fairly presents, in all material respects, the financial condition and results of operations of Aytu BioPharma, Inc.

 

 

Date: February 12, 2025

    
     
     
 

By:

/s/ Ryan J. Selhorn
   

Ryan J. Selhorn
    Chief Financial Officer
    (Principal Financial Officer)
   

(Principal Accounting Officer)

 

 
v3.25.0.1
Document And Entity Information - shares
 6 Months Ended
Dec. 31, 2024
Feb. 01, 2025
Document Information [Line Items]    
Entity Central Index Key 0001385818  
Entity Registrant Name AYTU BIOPHARMA, INC.  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2025  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Dec. 31, 2024  
Document Transition Report false  
Entity File Number 001-38247  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 47-0883144  
Entity Address, Address Line One 7900 East Union Avenue, Suite 920  
Entity Address, City or Town Denver  
Entity Address, State or Province CO  
Entity Address, Postal Zip Code 80237  
City Area Code 720  
Local Phone Number 437-6580  
Title of 12(b) Security Common Stock, par value $0.0001 per share  
Trading Symbol AYTU  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   6,169,848
v3.25.0.1
Unaudited Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Current assets:    
Cash and cash equivalents $ 20,398 $ 20,006
Accounts receivable, net 25,403 23,526
Inventories 11,085 12,141
Prepaid expenses and other current assets 6,167 5,097
Current assets of discontinued operations 0 1,121
Total current assets 63,053 61,891
Non-current assets:    
Property and equipment, net 516 693
Operating lease right-of-use assets 1,178 829
Intangible assets, net 49,958 52,453
Other non-current assets 1,522 2,185
Non-current assets of discontinued operations 0 44
Total non-current assets 53,174 56,204
Total assets 116,227 118,095
Liabilities, Current [Abstract]    
Accounts payable 11,699 10,314
Accrued liabilities 39,372 38,143
Revolving credit facility 4,012 2,395
Current portion of debt 1,857 1,857
Other Liabilities, Current 7,108 8,962
Current liabilities of discontinued operations 0 557
Total current liabilities 64,048 62,228
Liabilities, Noncurrent [Abstract]    
Debt, net of current portion 9,983 10,877
Derivative warrant liabilities 6,386 12,745
Other Liabilities, Noncurrent 5,045 4,529
Total non-current liabilities 21,414 28,151
Commitments and contingencies (note 13)
Stockholders’ equity:    
Preferred stock, par value $.0001; 50,000,000 shares authorized; no shares issued or outstanding 0 0
Common stock, par value $.0001; 200,000,000 shares authorized; 6,169,681 and 5,972,638 shares issued and outstanding, respectively 1 1
Additional paid-in capital 348,475 347,688
Accumulated deficit (317,711) (319,973)
Total stockholders’ equity 30,765 27,716
Total liabilities and stockholders’ equity $ 116,227 $ 118,095
v3.25.0.1
Unaudited Consolidated Balance Sheets (Parentheticals) - $ / shares
Dec. 31, 2024
Jun. 30, 2024
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, authorizzed (in shares) 50,000,000 50,000,000
Preferred stock, issued (in shares) 0 0
Preferred stock, outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, authorized (in shares) 200,000,000 200,000,000
Common stock, issued (in shares) 6,169,681 5,972,638
Common stock, outstanding (in shares) 6,169,681 5,972,638
v3.25.0.1
Unaudited Consolidated Statements of Operations - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Net revenue $ 16,221 $ 18,748 $ 32,795 $ 36,565
Cost of sales 5,435 4,145 10,024 8,924
Gross profit 10,786 14,603 22,771 27,641
Operating expenses:        
Selling and marketing 5,272 5,218 10,931 11,309
General and administrative 4,449 4,800 9,574 11,095
Research and development 522 521 948 1,116
Amortization of intangible assets 921 918 1,842 1,842
Restructuring costs 1,317 0 2,101 0
Total operating expenses 12,481 11,457 25,396 25,362
(Loss) income from operations (1,695) 3,146 (2,625) 2,279
Other income, net 140 96 682 680
Interest expense (1,079) (1,266) (2,073) (2,549)
Derivative, Gain (Loss) on Derivative, Net 3,016 (577) 5,896 (6,484)
Income (loss) from continuing operations before income tax expense 382 1,399 1,880 (6,074)
Income tax benefit (expense) 283 (780) (122) (780)
Net income (loss) from continuing operations 665 619 1,758 (6,854)
Net income (loss) from discontinued operations, net of tax 123 (839) 504 (1,486)
Net income (loss) $ 788 $ (220) $ 2,262 $ (8,340)
Basic weighted-average common shares outstanding (note 17) (in shares) 6,132,060 5,517,670 6,100,204 5,499,951
Diluted weighted-average common shares outstanding (note 17) (in shares) 8,485,112 5,517,670 8,782,794 5,499,951
Net income (loss) per share (note 17):        
Basic - continuing operations (in dollars per share) $ 0.11 $ 0.11 $ 0.29 $ (1.25)
Diluted - continuing operations (in dollars per share) (0.28) 0.11 (0.47) (1.25)
Basic - discontinued operations, net of tax (in dollars per share) 0.02 (0.15) 0.08 (0.27)
Diluted - discontinued operations, net of tax (in dollars per share) 0.01 (0.15) 0.06 (0.27)
Basic - net income (loss) (in dollars per share) 0.13 (0.04) 0.37 (1.52)
Diluted - net loss (in dollars per share) $ (0.26) $ (0.04) $ (0.41) $ (1.52)
v3.25.0.1
Unaudited Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance (in shares) at Jun. 30, 2023 5,517,174      
Balance at Jun. 30, 2023 $ 1 $ 343,485 $ (304,129) $ 39,357
Stock-based compensation expense (in shares) 13,061      
Stock-based compensation expense   930   930
Net income (loss) $ 0   (8,120) (8,120)
Balance (in shares) at Sep. 30, 2023 5,530,235      
Balance at Sep. 30, 2023 $ 1 344,415 (312,249) 32,167
Balance (in shares) at Jun. 30, 2023 5,517,174      
Balance at Jun. 30, 2023 $ 1 343,485 (304,129) 39,357
Net income (loss)       (8,340)
Balance (in shares) at Dec. 31, 2023 5,567,347      
Balance at Dec. 31, 2023 $ 1 345,321 (312,469) 32,853
Balance (in shares) at Sep. 30, 2023 5,530,235      
Balance at Sep. 30, 2023 $ 1 344,415 (312,249) 32,167
Stock-based compensation expense (in shares) 108      
Stock-based compensation expense   820   820
Issuance of common stock from exercise of warrants (in shares) 37,004      
Issuance of common stock from exercise of warrants   86   86
Net income (loss) $ 0   (220) (220)
Balance (in shares) at Dec. 31, 2023 5,567,347      
Balance at Dec. 31, 2023 $ 1 345,321 (312,469) 32,853
Balance (in shares) at Jun. 30, 2024 5,972,638      
Balance at Jun. 30, 2024 $ 1 347,688 (319,973) 27,716
Stock-based compensation expense (in shares) 564      
Stock-based compensation expense   173   173
Issuance of common stock from exercise of warrants (in shares) 176,000      
Issuance of common stock from exercise of warrants   463   463
Net income (loss) $ 0   1,474 1,474
Balance (in shares) at Sep. 30, 2024 6,149,202      
Balance at Sep. 30, 2024 $ 1 348,324 (318,499) 29,826
Balance (in shares) at Jun. 30, 2024 5,972,638      
Balance at Jun. 30, 2024 $ 1 347,688 (319,973) 27,716
Net income (loss)       2,262
Balance (in shares) at Dec. 31, 2024 6,169,681      
Balance at Dec. 31, 2024 $ 1 348,475 (317,711) 30,765
Balance (in shares) at Sep. 30, 2024 6,149,202      
Balance at Sep. 30, 2024 $ 1 348,324 (318,499) 29,826
Stock-based compensation expense (in shares) 20,479      
Stock-based compensation expense   151   151
Net income (loss) $ 0   788 788
Balance (in shares) at Dec. 31, 2024 6,169,681      
Balance at Dec. 31, 2024 $ 1 $ 348,475 $ (317,711) $ 30,765
v3.25.0.1
Unaudited Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Cash flows from operating activities:    
Net income (loss) $ 2,262 $ (8,340)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:    
Depreciation, amortization and accretion 2,766 3,634
Stock-based compensation expense 324 1,432
Derivative warrant liabilities (gain) loss (5,896) 6,484
Amortization of debt discount and issuance costs 55 302
Inventory write-down 95 51
Other non-cash adjustments (529) (50)
Non-cash adjustments from discontinued operations 254 1,176
Changes in operating assets and liabilities:    
Accounts receivable, net (1,794) (1,566)
Inventories 961 (1,805)
Prepaid expenses and other current assets (679) (830)
Accounts payable 1,329 (3,062)
Accrued liabilities 2,341 (3,554)
Other operating assets and liabilities, net 306 3,805
Changes in operating assets and liabilities from discontinued operations (80) 1,977
Net cash provided by (used in) operating activities 1,715 (346)
Cash flows from investing activities:    
Cash received from sales of fixed assets 668 0
Cash payments for fixed asset purchases (142) 0
Other investing activities 0 (250)
Net cash provided by (used in) investing activities 526 (250)
Cash flows from financing activities:    
Proceeds from issuance of stock and warrants 0 86
Net proceeds received from (payments made on) revolving credit facility 1,617 (537)
Payment made to fixed payment arrangements (2,537) (2,204)
Payment of stock issuance costs 0 (160)
Payments made to borrowings (929) (45)
Net cash used in financing activities (1,849) (2,860)
Net change in cash and cash equivalents 392 (3,456)
Cash and cash equivalents at beginning of period 20,006 22,985
Cash and cash equivalents at end of period 20,398 19,529
Supplemental disclosure of cash flow information:    
Cash paid for interest 752 2,170
Cash paid for income taxes 1,419 432
Non-cash investing and financing activities:    
Other non-cash investing and financing activities $ 483 $ 0
v3.25.0.1
Note 1 - Nature of Business
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1 - Nature of Business

 

Aytu BioPharma, Inc. (“Aytu,” the “Company,” “we,” “us,” or “our”), is a pharmaceutical company focused on commercializing novel therapeutics. The Company was originally incorporated as Rosewind Corporation on August 9, 2002, in the state of Colorado and was re-incorporated as Aytu BioScience, Inc. in the state of Delaware on June 8, 2015. Following the acquisition of Neos Therapeutics, Inc. (“Neos”) in March 2021 (the “Neos Acquisition”), the Company changed its name to Aytu BioPharma, Inc.

 

The Company’s strategy is to become a leading pharmaceutical company that improves the lives of patients. The Company uses a focused approach of in-licensing, acquiring, developing, and commercializing novel prescription therapeutics in order to continue building its portfolio of revenue-generating products and leveraging its commercial team’s expertise to build leading brands within large therapeutic markets. The Company’s primary focus is on commercializing innovative prescription products that address conditions frequently developed or diagnosed in childhood.

 

The Company’s business from continuing operations is focused on its prescription pharmaceutical products sold primarily through third party wholesalers and pharmacies and which primarily consists of two product portfolios. The first consists of two products for the treatment of attention deficit hyperactivity disorder (“ADHD”): Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets (“Adzenys”) and Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets (“Cotempla” and Adzenys together with Cotempla the “ADHD Portfolio”). The second consists primarily of Karbinal® ER (carbinoxamine maleate extended-release oral suspension) (“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 (the “Pediatric Portfolio”).

 

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”). After the previously announced successful wind down and divestiture of the Consumer Health business that occurred during the first quarter of fiscal 2025, the Company determined that its continuing operations now operate in a single operating and reportable segment. The Company’s CODM is its Chief Executive Officer who manages operations and regularly reviews the financial information of the Company’s continuing operations as a single operating segment for the purposes of allocating resources and evaluating its financial performance, and for which discrete financial information is available. The results of the Consumer Health business have been reported as discontinued operations (see Note 20 – Discontinued Operations).

 

In July 2023, the Company entered into an exclusive collaboration, distribution and supply agreement with Medomie Pharma Ltd (“Medomie”), a privately owned pharmaceutical company, for Medomie to sell Adzenys and Cotempla in Israel and the Palestinian Authority. In September 2024, the Company entered into an exclusive collaboration, distribution and supply agreement with Lupin Pharma Canada Ltd (“Lupin”), a subsidiary of global pharmaceutical company Lupin Limited, for Lupin to sell Adzenys and Cotempla in Canada. The Company will supply Adzenys and Cotempla to Medomie and Lupin based on forecasts and provide various product commercialization resources. Medomie and Lupin are responsible for seeking local regulatory approvals and marketing authorizations for both Adzenys and Cotempla, which is expected to occur over the next 18 to 24 months. The agreement with Medomie and the agreement with Lupin represent the Company’s first and second international commercial agreements for Adzenys and Cotempla, respectively.
v3.25.0.1
Note 2 - Summary of Significant Accounting Policies
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Significant Accounting Policies [Text Block]

 

Note 2 - Summary of Significant Accounting Policies

 

Principals of Consolidation

 

The Company’s unaudited consolidated financial statements and notes thereto include the accounts of its wholly owned subsidiaries Aytu Therapeutics, LLC and Neos Therapeutics, Inc. and their respective wholly owned subsidiaries, as well as Innovus Pharmaceuticals, Inc. (“Innovus”) and its wholly owned subsidiaries prior to the divestiture of Innovus on July 31, 2024. All significant inter-company balances and transactions have been eliminated in consolidation.

 

Basis of Presentation

 

The unaudited consolidated financial statements and notes thereto contained in this Form 10-Q represent the financial statements of the Company and its wholly owned subsidiaries and have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and disclosures normally included in the complete financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2024 Form 10-K, which included all disclosures required by U.S. GAAP. In the opinion of management, these unaudited consolidated financial statements and notes thereto contain all adjustments necessary for the fair statement of the financial position of the Company and the results of operations and cash flows for the interim periods presented. The consolidated balance sheet as of  June 30, 2024, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The results of operations for the period ended December 31, 2024, are not necessarily indicative of expected operating results for the full year or any future period.

 

Use of Estimates

 

The preparation of financial statements and footnotes requires the use of management estimates, judgments and assumptions. Actual results may differ from estimates. In the accompanying unaudited consolidated financial statements and notes thereto, estimates are used for, but not limited to, stock-based compensation; revenue recognition, determination of variable consideration for accruals of chargebacks, administrative fees and rebates, government rebates, returns and other allowances; allowance for credit losses; inventory impairment; determination of right-of-use (“ROU”) assets and lease liabilities; valuation of financial instruments, warrants and derivative warrant liabilities, intangible assets, and long-lived assets; purchase price allocations and the depreciable lives of long-lived assets; accruals for contingent liabilities; and determination of the income tax provision, deferred taxes and valuation allowance. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. The Company periodically evaluates estimates used in the preparation of the financial statements for reasonableness.

 

Prior Period Reclassification

 

Certain prior year amounts in the Company’s unaudited consolidated financial statements and the notes thereto have been reclassified to conform to the current year presentation. These reclassifications did not impact operating results for the three and six months ended December 31, 2024, and 2023, or cash flows for the six months ended December 31, 2024, and 2023, or the Company’s financial position as of December 31, 2024, or June 30, 2024.

 

Warrants

 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Liability and equity classified warrants are valued using a Black-Scholes option pricing model or Monte Carlo simulation model at issuance and for each reporting period when applicable.

 

Income Taxes

 

The Company calculates its quarterly income tax provision based on estimated annual effective tax rates applied to ordinary income (or loss) and other known items computed and recognized when they occur. There have been no changes in tax law affecting the tax provision during the three and six months ended December 31, 2024.

 

The Company recorded for income (loss) from continuing operations an income tax benefit of $0.3 million, which represented an effective tax rate of negative 74.1% and income tax expense of $0.8 million, which represented an effective tax rate of 55.8%, for the three months ended December 31, 2024, and 2023, respectively. The Company recorded for income (loss) from continuing operations an income tax expense of $0.1 million, which represented an effective tax rate of 6.5% and income tax expense of $0.8 million, which represented an effective tax rate of negative 12.8% for the six months ended December 31, 2024, and 2023, respectively. 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 the Company’s Consumer Health business that occurred during the first quarter of fiscal 2025 and changes to the Company’s first quarter of fiscal 2025 projections, which resulted in an income tax benefit for the current quarter.

 

An ownership change has limited the Company’s ability to offset, post-change, United States federal taxable income. Section 382 of the Internal Revenue Code imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change net operating loss carryforwards and certain recognized built-in losses. Previous acquisitions, financing transactions, and equity ownership changes in the past five years have caused a significant limitation on the Company’s ability to use the change in control net operating loss carryovers. The ownership changes result in increased future tax liability and are a driver of the change from a zero percent effective tax rate.

 

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date. A valuation allowance is recorded to reduce the net deferred tax asset when it is more likely than not that some portion or all of its deferred tax asset will not be utilized.

 

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained upon an examination. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the unaudited consolidated statements of operations.

 

Employee Retention Credit

 

On March 27, 2020, the United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”), which allows for employers to claim a refundable payroll tax credit against the employer share of Social Security tax equal to 70% of the qualified wages paid to employees after December 31, 2020, through September 30, 2021. The ERC was designed to encourage businesses to keep employees on the payroll during the COVID-19 pandemic.

 

As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company accounted for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”). In accordance with IAS 20, the Company recorded a $3.8 million ERC accrual in other non-current liabilities, which represents the proceeds the Company received from the ERC program during the first quarter of fiscal 2024. Further in accordance with IAS 20, when management determines it has reasonable assurance that the Company has substantially met all eligibility requirements of the ERC and following any adjustments from its regulatory audit or upon further clarifications from the Internal Revenue Code of 1986, as amended (the “IRC”), the ERC accrual shall be recognized as a benefit in other income in the unaudited consolidated statement of operations. The associated vendor fee of $0.4 million was expensed as incurred in the first quarter of fiscal 2024.

 

Recently Adopted Accounting Pronouncements

 

Debt - Debt with Conversion and Other Option

 

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 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, which simplifies the accounting for convertible instruments by removing major separation models currently required. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The amendments in this update are effective for public entities that are smaller reporting companies, as defined by the SEC, for the fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted through a modified retrospective or full retrospective method. The Company adopted the guidance on July 1, 2024, and the adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

 

Recent Accounting Pronouncements Not Yet Adopted

 

Segment Reporting - Improvements to Reportable Segment Disclosures

 

In  November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 was issued to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance should be applied retrospectively unless it is impracticable to do so. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted, including in an interim period. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.

 

Disaggregation of Income Statement Expenses

 

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 require public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.

 

For a complete set of the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s 2024 Form 10-K. There have been no significant changes to the Company’s significant accounting policies and there is no other accounting guidance that has been issued and not yet adopted that is applicable to the Company and that would have a material effect on the Company’s unaudited consolidated financial statements and related disclosures as of December 31, 2024, and through the filing of this Form 10-Q.
v3.25.0.1
Note 3 - Revenue
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

 

Note 3 - Revenue

 

Net revenue from continuing operations consists of sales of prescription pharmaceutical products from the Company’s ADHD Portfolio and Pediatric Portfolio, principally to a limited number of wholesale distributors and pharmacies in the United States. Net revenue is recognized at the point in time that control of the product transfers to the customer, which typically aligns with shipping terms (i.e., upon delivery), generally “free-on-board” destination when shipped domestically within the United States, consistent with contractual terms.

 

Savings offers, rebates, and wholesaler chargebacks reflect the terms of underlying agreements, which may vary. Accordingly, actual amounts will depend on the mix of sales by product and contracting entity. Future returns may not follow historical trends. The Company’s periodic adjustments of its estimates are subject to time delays between the initial product sale, and the ultimate reporting and settlement of deductions. The Company entered into negotiations with a vendor related to certain variable interest accruals that reduce revenue for the Company’s ADHD Portfolio. As a result of these negotiations, the Company and the vendor agreed to a reduction to the liability purportedly owed by the Company of $3.3 million, which resulted in a decrease in the estimated variable consideration accrual, and a related increase in net revenue of $3.3 million in the first quarter of fiscal 2025.

 

Revenue by Product Portfolio

 

Net revenue disaggregated by significant product portfolio for the three and six months ended December 31, 2024, and 2023, were as follows:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands)

 

ADHD Portfolio

 $13,816  $16,572  $29,080  $31,700 

Pediatric Portfolio

  2,400   2,145   3,693   4,710 

Other

  5   31   22   155 

Total net revenue

 $16,221  $18,748  $32,795  $36,565 

 

Other includes net revenue from various discontinued or deprioritized products. The Consumer Health business was divested in the first quarter of fiscal 2025 and is reported within discontinued operations (see Note 20 – Discontinued Operations).

 

Revenue by Geographic Location

 

The Company’s net revenue is predominately within the United States, with insignificant international sales.
v3.25.0.1
Note 4 - Inventories
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Inventory Disclosure [Text Block]

Note 4 - Inventories

 

Inventories consist of raw materials, work in process and finished goods, and are recorded at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company periodically reviews the composition of its inventories to identify obsolete, slow-moving or otherwise unsaleable items. In the event that such items are identified and there are no alternate uses for the inventory, the Company will record a charge to reduce the value of the inventory to net realizable value in the period first recognized. The Company incurred inventory write-downs of less than $0.1 million and $0.1 million for the three months ended December 31, 2024, and 2023, respectively, and $0.1 million for both the six months ended December 31, 2024, and 2023, respectively.

 

Inventories consist of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Raw materials

 $494  $266 

Work in process

  3,103   5,725 

Finished goods

  7,488   6,150 

Inventories

 $11,085  $12,141 

 
v3.25.0.1
Note 5 - Property and Equipment
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Property, Plant and Equipment Disclosure [Text Block]

Note 5 - Property and Equipment

 

Property and equipment are recorded at cost and depreciated on a straight-line basis over the assets’ estimated economic life. Leasehold improvements are amortized over the shorter of the estimated economic life or remaining lease term. Depreciation and amortization expense from property and equipment was less than $0.1 million and $0.3 million for the three months ended December 31, 2024, and 2023, respectively, and $0.1 and $0.6 million for the six months ended December 31, 2024, and 2023, respectively.

 

Property and equipment, net, consist of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Manufacturing and lab equipment

 $721  $1,838 

Office equipment, furniture and other

  282   945 

Leasehold improvements

  164   35 

Property and equipment, gross

  1,167   2,818 

Less: accumulated depreciation and amortization

  (651)  (2,125)

Property and equipment, net

 $516  $693 

 
v3.25.0.1
Note 6 - Leases
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Leases Disclosure [Text Block]

Note 6 - Leases

 

The Company has entered into various operating lease agreements for certain of its offices, manufacturing facilities and equipment, and finance lease agreements for certain equipment. These leases have original lease periods expiring between calendar year 2024 and calendar year 2030. Most leases include one or more options to renew, and the exercise of a lease renewal option typically occurs at the discretion of both parties. Certain non-real estate leases also include options to purchase the leased property. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. The Company had no remaining finance leases recorded as of June 30, 2024.

 

In June 2024, the Company entered into a forward-starting operating lease agreement to lease office space in Berwyn, Pennsylvania from the owner of the office space that the Company is currently renting under a sublease arrangement. The Company determined that it is an operating lease, and that lease commencement occurred in July 2024. The initial lease termination date is July 31, 2030, and under the lease agreement the Company has one five-year renewal option to extend the lease through July 2035. Undiscounted minimum monthly rent payments average approximately $13,000 over the initial term of the lease. The Company has elected to utilize the practical expedient to not separate lease and non-lease components upon recognition and variable lease payments will be expensed as incurred. The Company recorded an operating lease ROU asset of $0.5 million and a lease liability of $0.5 million at lease commencement in July 2024. The ROU asset and lease liability will be recorded at present value using an incremental borrowing rate of 12.3%.

 

The components of lease costs are as follows:

 

  

Three Months Ended

  

Six Months Ended

  
  

December 31,

  

December 31,

  
  

2024

  

2023

  

2024

  

2023

 

Statement of Operations Classification

  

(in thousands)

  

Lease cost:

                 

Operating lease cost

 $143  $381  $265  $741 

Operating expenses

Short-term lease cost

  86   21   177   44 

Operating expenses

Finance lease cost:

                 

Amortization of leased assets

  —   15   —   29 

Cost of sales

Interest on lease liabilities

  —   1   —   2 

Interest expense

Total lease cost

 $229  $418  $442  $816  

 

Supplemental balance sheet information related to leases is as follows:

 

  

December 31,

  

June 30,

  
  2024  2024 

Balance Sheet Classification

  

(in thousands)

  

Assets:

         

Non-current: operating leases

 $1,178  $829 

Operating lease right-of-use assets

          

Liabilities:

         

Current: operating leases

 $182  $712 

Other current liabilities

Non-current: operating leases

  1,106   577 

Other non-current liabilities

Total lease liabilities

 $1,288  $1,289  

 

The remaining weighted-average lease term and discount rate used are as follows:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 

Weighted-average remaining lease term (years):

        

Operating lease right-of-use assets

  5.6   2.7 

Weighted-average discount rate:

        

Operating lease right-of-use assets

  12.1%  10.0%

 

Supplemental cash flow information related to leases is as follows:

 

  

Six Months Ended

 
  

December 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Cash flow classification of lease payments:

        

Operating cash flows from operating leases

 $606  $697 

Operating cash flows from finance leases

 $—  $2 

Financing cash flows from finance leases

 $—  $46 

 

As of June 30, 2024, the Company did not have any remaining finance leases. As of December 31, 2024, the Company’s future minimum lease payments were as follows:

 

  

Operating

 
  

(in thousands)

 

2025 (remaining 6 months)

 $123 

2026

  399 

2027

  377 

2028

  386 

2029

  358 

2030

  230 

Thereafter

  19 

Total lease payments

  1,892 

Less: imputed interest

  (479)

Less: tenant improvement allowance

  (125)

Lease liabilities

 $1,288 

 
v3.25.0.1
Note 7 - Intangible Assets
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]

Note 7 - Intangible Assets

 

A summary of the Company’s definite-lived intangible assets as of December 31, 2024, and June 30, 2024, respectively, is as follows:

 

  

December 31, 2024

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

  

Weighted-Average Remaining Life

 
  

(in thousands)

  

(in years)

 

Acquired product technology rights

 $41,268  $(14,791) $26,477   10.3 

Acquired technology rights

  30,200   (6,719)  23,481   13.2 

Total intangible assets

 $71,468  $(21,510) $49,958   11.7 

 

  

June 30, 2024

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

  

Weighted-Average Remaining Life

 
  

(in thousands)

  

(in years)

 

Acquired product technology rights

 $41,268  $(13,184) $28,084   10.7 

Acquired technology rights

  30,200   (5,831)  24,369   13.8 

Total intangible assets

 $71,468  $(19,015) $52,453   12.0 

 

Carrying amounts are net of any impairment charges from prior periods. An intangible asset with zero net carrying amount at the end of a reporting period is not presented in the table of a future reporting period. Certain of the Company’s amortizable intangible assets include renewal options, extending the expected life of the asset. The renewal periods range between approximately 1 to 20 years depending on the license, patent or other agreement. Renewals are accounted for when they are reasonably assured. Intangible assets are amortized using the straight-line method over the estimated useful lives. Amortization expense of intangible assets was $1.2 million for both of the three months ended December 31, 2024, and 2023, and $2.5 million for both of the six months ended December 31, 2024, and 2023.

 

The following table summarizes the estimated future amortization expense to be recognized over the next five fiscal years and periods thereafter:

 

  

Estimated Future Amortization Expense

 
  

(in thousands)

 

2025 (remaining 6 months)

 $2,495 

2026

  4,989 

2027

  4,989 

2028

  4,989 

2029

  4,989 

2030

  2,847 

Thereafter

  24,660 

Total future amortization expense

 $49,958 

 

Acquired Product Technology Rights

 

The acquired product technology rights are related to the rights to production, supply and distribution agreements of various products pursuant to the acquisitions of the Pediatric Portfolio in November 2019 and the Neos Acquisition in March 2021.

 

ADHD Portfolio

 

As part of the Neos Acquisition, the Company acquired developed product technology for the production and sale of Adzenys and Cotempla. The formulations for the ADHD products are protected by patented technology. The estimated remaining economic life of these proprietary technologies is 14 years.

 

Karbinal

 

The Company acquired and assumed all rights and obligations pursuant to the supply and distribution agreement, as amended, with Tris Pharma, Inc. (“Tris”) for the exclusive rights to commercialize Karbinal in the United States (the “Tris Karbinal Agreement”). The Tris Karbinal Agreement’s initial term terminates in August of 2033, with an optional initial 20-year extension.

 

Poly-Vi-Flor and Tri-Vi-Flor

 

The Company acquired and assumed all rights and obligations pursuant to a supply and license agreement and various assignment and release agreements, including a previously agreed to settlement and license agreements (the “Poly-Tri Agreements”) for the exclusive rights to commercialize Poly-Vi-Flor and Tri-Vi-Flor in the United States.

 

Acquired Technology Rights

 

TRRP Technology

 

As part of the Neos Acquisition, the Company acquired time release resin particle (“TRRP”) proprietary technology, which is a proprietary drug delivery technology protected by the Company as a trade secret that allows the Company to modify the drug release characteristics of each of its respective products. The TRRP technology underlines each of the ADHD Portfolio core products and can potentially be used in future product development initiatives as well.
v3.25.0.1
Note 8 - Accrued Liabilities
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Accrued Liabilities [Text Block]

Note 8 - Accrued Liabilities

 

Accrued liabilities consist of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Accrued savings offers

 $14,507  $11,054 

Accrued program liabilities

  7,021   9,964 

Accrued customer and product related fees

  5,735   5,395 

Return reserve

  5,111   4,832 

Accrued employee compensation

  3,971   4,603 

Other accrued liabilities

  3,027   2,295 

Total accrued liabilities

 $39,372  $38,143 

 

Accrued savings offers represent programs for the Company’s patients covered under commercial payor plans in which the cost of a prescription to such patients is discounted. Accrued program liabilities include government and commercial rebates. Accrued customer and product related fees include accrued expenses and deductions for rebates, wholesaler chargebacks and fees, and other product-related fees and deductions such as royalties for Pediatric Portfolio products, accrued distributor fees, and Medicaid liabilities. The return reserve represents the Company’s accrual for estimated product returns. Accrued employee compensation includes sales commissions, paid time off earned, accrued payroll and accrued bonus. Other accrued liabilities consist of various other accruals, none of which individually or in the aggregate represent greater than five percent of total liabilities.

 
v3.25.0.1
Note 9 - Other Liabilities
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Other Liabilities Disclosure [Text Block]

Note 9 - Other Liabilities

 

Other liabilities consist of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Fixed payment arrangements

 $6,926  $8,337 

Employee retention credit

  3,759   3,759 

Operating lease liabilities

  1,288   1,289 

Other

  180   106 

Total other liabilities

  12,153   13,491 

Less: current portion of other liabilities

  (7,108)  (8,962)

Total non-current portion of other liabilities

 $5,045  $4,529 

 

Fixed Payment Arrangements

 

Fixed payment arrangements represent obligations to a licensor assumed as part of the acquisition of products from Cerecor, Inc. in 2019, including fixed and variable payments.

 

In May 2022, the Company entered into an agreement with Tris to terminate the license, development, manufacturing and supply agreement dated November 2, 2018, related to Tuzistra XR (the “Tuzistra License Agreement”). Pursuant to such termination, as of December 31, 2024, the Company has accrued a settlement liability of $5.8 million in other current liabilities on the consolidated balance sheet payable to Tris, with a provision that allows the Company to pay interest on any principal amounts due but remaining unpaid past July 2024.

 

The Tris Karbinal Agreement grants the Company the exclusive right to distribute and sell Karbinal in the United States. The initial term of the agreement was 20 years. The Company pays Tris a royalty equal to 23.5% of net revenue from the product. The Tris Karbinal Agreement also contains minimum unit sales commitments, which is based on a commercial year that spans from August 1 through July 31, of 70,000 units annually through 2025. The Company is required to pay Tris a royalty make-whole payment of $30 for each unit under the 70,000-unit annual minimum sales commitment through 2025. The Tris Karbinal Agreement make-whole payment is capped at $2.1 million each year. The final annual make-whole payment is due in August 2025. The Tris Karbinal Agreement also has multiple commercial milestone obligations that aggregate up to $3.0 million based on cumulative net revenue from the product, the first of which is triggered at $40.0 million. As of December 31, 2024, the Tris Karbinal Agreement accrued fixed payment arrangement balance was $1.2 million recorded in other current liabilities on the consolidated balance sheet.

 

Employee Retention Credit 

 

The $3.8 million ERC accrual in other non-current liabilities as of December 31, 2024, represents the proceeds the Company received from the ERC program during the first quarter of fiscal 2024. Please see Note 2 – Significant Accounting Policies for further detail.

 

Operating Lease Liabilities 

 

The Company has entered into various operating lease agreements for certain of its offices, manufacturing facilities and equipment. Please see Note 6 - Leases for further detail.

 

Other

 

Other consists of taxes payable, deferred cost related to the Company’s technology transfer, and various other accruals, none of which individually or in the aggregate represent greater than five percent of total liabilities.

 
v3.25.0.1
Note 10 - Revolving Credit Facility
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Short-Term Debt [Text Block]

Note 10 - Revolving Credit Facility

 

On June 12, 2024, the Company and certain of its subsidiaries entered into consent, joinder and amendment No. 5 (the “Eclipse Amendment No. 5”) to the loan and security agreement dated October 2, 2019, as amended by amendment No. 1, dated March 19, 2021, amendment No. 2, dated January 26, 2022, amendment No. 3, dated June 1, 2022, amendment No. 4 dated March 24, 2023, and the Eclipse Amendment No. 5 (together the “Eclipse Agreement”) with Eclipse Business Capital LLC (“Eclipse”), as agent, and the lenders party thereto (agent and such lenders, collectively, the “Eclipse Lender”). Under the Eclipse Amendment No. 5, which provided for among other things, two loan agreements, a term loan (the “Eclipse Term Loan”) and a revolving credit facility (the “Eclipse Revolving Loan”). The Eclipse Term Loan is described further in Note 11 - Long-Term Debt. The Eclipse Revolving Loan provides for a maximum amount available under the revolving credit facility provided under the Eclipse Agreement of $14.5 million at an interest rate of the secured overnight financing rate as administered by the SOFR Administrator (“SOFR”) plus 4.5%. In addition, the Company is 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 revolving loans under the Eclipse Agreement remains subject to a borrowing base and reserve, and availability blockage requirements. The Eclipse Revolving Loan maturity date, as amended, is June 12, 2028, and the effective interest rate was 9.2% as of December 31, 2024.

 

In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i) 2.0% of the Eclipse Revolving Loan commitment if such event occurs on or before June 12, 2025, (ii) 1.0% of the Eclipse Revolving Loan commitment if such event occurs after June 12, 2025, but on or before June 12, 2026, and (iii) 0.5% of the Eclipse Revolving Loan commitment if such event occurs after June 12, 2026, but on or before June 12, 2028. The Company may also be required to pay an early termination fee related to the Eclipse Term Loan as further described in Note 11 - Long-Term Debt. The Company may permanently terminate the Eclipse Agreement upon written notice to Eclipse.

 

The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants, and restrict the Company’s 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 Eclipse. A failure to comply with these covenants could permit Eclipse to declare the Company’s obligations under the Eclipse Agreement, together with accrued interest and fees, to be immediately due and payable, plus any additional applicable amounts relating to a prepayment or termination, as described above. As of December 31, 2024, the Company was in compliance with the covenants under the Eclipse Agreement. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as defined further in the Eclipse Agreement.

 

Total interest expense on the Eclipse Revolving Loan, including amortization of deferred financing costs, was less than $0.1 million for both of the three months ended December 31, 2024, and 2023, and was $0.1 million for both of the six months ended December 31, 2024, and 2023. The amounts drawn on the Eclipse Revolving Loan were $4.0 million and $2.4 million as of  December 31, 2024, and June 30, 2024, respectively. The unused revolving credit facility amount as of December 31, 2024, was $7.9 million.
v3.25.0.1
Note 11 - Long-term Debt
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Long-Term Debt [Text Block]

Note 11 - Long-Term Debt

 

Avenue Capital Loan

 

On January 26, 2022 (“Closing Date”), the Company entered into a loan and security agreement (the “Avenue Capital Agreement”) with Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund II, L.P. as lenders (the “Avenue Capital Lenders”), and Avenue Capital Management II, L.P. as administrative agent (the “Avenue Capital Agent”), collectively (“Avenue Capital”), pursuant to which the Avenue Capital Lenders provided the Company and certain of its subsidiaries with a secured $15.0 million loan. The interest rate on the loan was the greater of the prime rate or 3.25%, plus 7.4%, payable monthly in arrears. The maturity date of the loan was January 26, 2025. The proceeds from the Avenue Capital Agreement were used towards the repayment of the term loans.

 

Pursuant to the Avenue Capital Agreement, the Company was required to make interest only payments for the first 18 months following the Closing Date (the “Interest-only Period”). The Interest-only Period could be extended automatically without any action by any party for six months provided as of the last day of the Interest-only Period then in effect, the Company received, prior to June 15, 2023, a specified amount of net proceeds from the sale and issuance of its equity securities (“Interest-only Milestone 1”). The Interest-only Period was able to be further extended automatically without any action by any party for an additional six months provided, the Company had achieved, prior to December 31, 2023, (i) Interest-only Milestone 1 and (ii) a specified amount of trailing 12 months revenue as of the date of determination.

 

On January 26, 2022 (“Issuance Date”), as consideration for entering into the Avenue Capital Agreement, the Company issued warrants to the Avenue Capital Lenders to purchase shares of common stock at an exercise price equal to $24.20 per share (the “Avenue Capital Warrants”). The Avenue Capital Warrants provided that in the event the Company were to engage in an equity offering at a price lower than $24.20 prior to June 30, 2022, the exercise price would be adjusted to the effective price of such equity offering and the number of shares of common stock to be issued under the Avenue Capital Warrants would be adjusted as set forth in the agreement. The Avenue Capital Warrants were immediately exercisable and expire on January 31, 2027. At inception, the Company accounted for the Avenue Capital Warrants as a derivative warrant liability as the number of warrants was not fixed at the Issuance Date. The fair value of the Avenue Capital Warrants at issuance was approximately $0.6 million.

 

On March 7, 2022, the Company closed on an equity offering of shares of common stock and warrants at an offering price of $25.00 per share. As this offering precluded the Company from pursuing any equity financing prior to July 7, 2022, and the effective price of the March 7, 2022, offering was more than the exercise price of the Avenue Capital Warrants, the shares of common stock issuable upon exercise of the Avenue Capital Warrants were set at an exercise price of $24.20.

 

On October 25, 2022, the Company entered into an agreement with Avenue Venture Opportunities Fund, L.P (“Avenue”) to extend the interest-only period of its existing senior secure loan facility held with Avenue. The amendment to the original loan agreement, which was executed in January 2022, extended the interest-only period to January 2024. In exchange for this extension of the interest-only period, the Company and Avenue agreed to reset the exercise price of the warrants issued in conjunction with the original loan agreement to $8.60, corresponding to the warrant exercise price associated with the Company’s August 2022 equity financing.

 

On June 13, 2023, in conjunction with the Securities Purchase Agreement described in Note 16 - Warrants, the interest-only period of the Avenue Capital Agreement was extended further upon the achievement of both the revenue-based milestone and equity raise-based milestone stipulated in the Avenue Capital Agreement. As a result, the interest-only period was extended to January 26, 2025.

 

In addition to the debt discount discussed above, the Company also incurred $0.4 million loan origination, legal and other fees. The debt discount and issuance costs were being amortized over the term of the loan, using the effective interest method resulting in an effective rate of 16.6%. Total interest expense on the Avenue Capital loan, including debt discount amortization, was $0.7 million and $1.5 million for the three and six months ended December 31, 2023, respectively.

 

On June 12, 2024, the Company used proceeds from the Eclipse Term Loan and a portion of the proceeds from the exercise of warrants to repay the Avenue Capital loan in full. Upon early repayment of the Avenue Capital loan, the Company was required to pay Avenue Capital a fee equal to 1.0% of the loan or $0.2 million. In addition, upon the payment in full of the obligations, the Company was required to pay Avenue Capital a fee in the amount of $0.6 million (“Final Payment”). At inception, the Company accounted for the Final Payment as additional obligations on the debt, with the corresponding charge being recorded as debt discount. At retirement, the early termination fee, the Final Payment fee, and the write-off of all remaining related debt discount and deferred financing costs were included in the calculation of loss on extinguishment of debt. The Company recorded a loss on extinguishment of debt of $0.6 million related to the retirement of the Avenue Capital loan in the fourth quarter of fiscal 2024.

 

Eclipse Term Loan

 

On June 12, 2024, the Company and certain of its subsidiaries entered into Eclipse Amendment No. 5, which provided for among other things, the Eclipse Term Loan and the Eclipse Revolving Loan described further in Note 10 - Revolving Credit Facility. The Eclipse Term Loan consists of a principal amount of $13.0 million, at an interest rate of SOFR plus 7.0%, with a four-year term maturing on June 12, 2028, 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 June 12, 2028, the maturity date. The Company used the proceeds of the Eclipse Term Loan and a portion of the proceeds from warrant exercises described below to repay in full the Avenue Capital loan. The effective interest rate on the Eclipse Term Loan was 11.7% as of December 31, 2024.

 

In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i) 3.0% of the Eclipse Term Loan if such event occurs on or before June 12, 2025, (ii) 2.0% of the Eclipse Term Loan if such event occurs after June 12, 2025, but on or before June 12, 2026, (iii) 1.0% of the Eclipse Term Loan if such event occurs after June 12, 2026, but on or before June 12, 2027, and (iv) 0.5% of the Eclipse Term Loan if such event occurs after June 12, 2026, but on or before June 12, 2028. The Company may also be required to pay an early termination fee related to the Eclipse Revolving Loan as further described in Note 10 - Revolving Credit Facility. The Company may permanently terminate the Eclipse Agreement upon written notice to Eclipse. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as further defined in the Eclipse Agreement.

 

The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants, and restricts the Company’s ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make certain asset sales without the prior written consent of the Eclipse Lender. A failure to comply with these covenants could permit the Eclipse Lender to declare the Company’s obligations under the agreement, together with accrued interest and fees, to be immediately due and payable, plus any additional applicable amounts relating to a prepayment or termination, as described above. As of December 31, 2024, the Company was in compliance with the covenants under the Eclipse Agreement. The Company incurred interest expense on the Eclipse Term Loan, including debt discount and issuance costs amortization, of $0.4 million and $0.8 million for the three and six months ended  December 31, 2024, respectively.

 

Long-term debt consists of the following:

 

  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Term loan principal amount

 $12,071  $13,000 

Unamortized debt discount and issuance costs

  (231)  (266)

Total debt

  11,840   12,734 

Less: current portion of debt

  (1,857)  (1,857)

Total debt, net of current portion

 $9,983  $10,877 

 

Future principal payments of the Eclipse Term Loan are as follows:

 

  

Future Principal Payments

 
  

(in thousands)

 

2025 (remaining 6 months)

 $928 

2026

  1,857 

2027

  1,857 

2028

  7,429 

Total future principal payments

  12,071 

Less: unamortized debt discount and issuance costs

  (231)

Less: current portion of debt

  (1,857)

Total debt, net of current portion

 $9,983 
v3.25.0.1
Note 12 - Fair Value Considerations
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

 

Note 12 - Fair Value Considerations

 

The Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to determine fair value as follows:

 

 

●

Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to Aytu for identical assets or liabilities;

 

 

●

Level 2: Inputs that include quoted prices for similar assets and liabilities in active or inactive markets or that are observable for the asset or liability either directly or indirectly; and

 

 

●

Level 3: Unobservable inputs that are supported by little or no market activity.

 

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative warrant liabilities, contingent consideration liabilities, fixed payment arrangements, and current and non-current debt. The carrying amounts of certain short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. Current and non-current debt are reported at their amortized costs on the Company’s consolidated balance sheets. The remaining financial instruments are reported on the Company’s consolidated balance sheets at amounts that approximate current fair values. The Company’s carrying value of its consolidated amounts of cash and cash equivalents approximate their fair value as of  December 31, 2024, and June 30, 2024, and are categorized within level 1 of the U.S. GAAP fair value hierarchy. The Company’s policy is to recognize transfers in and/or out of fair value hierarchy as of the date in which the event or change in circumstances caused the transfer. There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.

 

Recurring Fair Value Measurements

 

The Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of  December 31, 2024, and June 30, 2024, by level within the fair value hierarchy as follows:

 

  Fair Value at December 31,  Fair Value Measurements at December 31, 2024 
  

2024

  

(Level 1)

  

(Level 2)

  

(Level 3)

 
  

(in thousands)

 

Liabilities:

                

Derivative warrant liabilities

 $6,386  $—  $—  $6,386 

Total

 $6,386  $—  $—  $6,386 

 

   Fair Value at June 30,  Fair Value Measurements at June 30, 2024 
  

2024

  

(Level 1)

  

(Level 2)

  

(Level 3)

 
  

(in thousands)

 

Liabilities:

                

Derivative warrant liabilities

 $12,745  $—  $—  $12,745 

Total

 $12,745  $—  $—  $12,745 

 

Summary of Level 3 Input Changes

 

A summary of changes to those fair value measures using Level 3 inputs is as follows:

 

  

Derivative

 
  

Warrant Liabilities

 
  

(in thousands)

 

Balance as of June 30, 2024

 $12,745 

Settlements (1)

  (463)

Included in earnings

  (5,896)

Balance as of December 31, 2024

 $6,386 

(1) 

Relates to the exercise of 176,000 of the Tranche B Pre-Funded Warrants during the first quarter of fiscal 2025, which were liability classified and exercised at a price of $0.0001 per share.

 

Significant Assumptions

 

The valuation methodologies and key assumptions used for the mark to market fair value measurements of derivative warrant liabilities as of December 31, 2024, are as follows:

 

  

June 2023 Warrants

  

Warrants

 
  

Tranche A

  

Other (1)

 
  

Monte Carlo &

    
  

Black-Scholes

  

Black-Scholes

 

Aytu closing stock price

 

$ 1.70

  

$ 1.70

 

Equivalent term (years)

 3.4  2.1-2.7 

Expected volatility

 

80.8%

  

74.7%-80.5%

 

Risk-free rate

 

4.3%

  

4.3%

 

Dividend yield

 

0.0%

  

0.0%

 

(1) 

Includes August 2022 Warrants, March 2022 Warrants, Avenue Capital Warrants and Tranche B Pre-Funded Warrants. See Note 16 - Warrants for definitions of these terms and further information.

 
v3.25.0.1
Note 13 - Commitments and Contingencies
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

Note 13 - Commitments and Contingencies

 

Pediatric Portfolio Fixed Payments and Product Milestone

 

The Tris Karbinal Agreement grants the Company the exclusive right to distribute and sell Karbinal in the United States. The initial term of the agreement was 20 years. The Company pays Tris a royalty equal to 23.5% of net revenue from the product.

 

The Tris Karbinal Agreement also contains minimum unit sales commitments, which is based on a commercial year that spans from August 1 through July 31, of 70,000 units annually through 2025. The Company is required to pay Tris a royalty make-whole payment of $30 for each unit under the 70,000‑unit annual minimum sales commitment through 2025. The Tris Karbinal Agreement make-whole payment is capped at $2.1 million each year. The final annual make-whole payment is due in August 2025. The Tris Karbinal Agreement also has multiple commercial milestone obligations that aggregate up to $3.0 million based on cumulative net revenue from the product, the first of which is triggered at $40.0 million.

 

Legal Matters

 

Witmer Class-Action Securities Litigation

 

A stockholder derivative suit was filed on September 12, 2022, in the Delaware Chancery Court by Paul Witmer, derivatively and on behalf of all Aytu stockholders, against Armistice Capital, LLC, Armistice Capital Master Fund, Ltd., Steve Boyd (Armistice’s Chief Investment Officer and Managing Partner, and a former director of Aytu), and certain other current and former directors of Aytu, Joshua R. Disbrow, Gary Cantrell, John Donofrio, Jr., Michael Macaluso, Carl Dockery and Ketan B. Mehta. Plaintiff amended the complaint on April 5, 2023. The Amended Complaint dropped Mr. Macaluso as a defendant and alleges that (i) Armistice facilitated the sale of assets of Cerecor in 2019 and Innovus in 2020 to Aytu in exchange for convertible securities which it subsequently converted and sold at a profit on the open market; (ii) the Armistice defendants breached their fiduciary duties, were unjustly enriched and wasted corporate assets in connection with these acquisitions; (iii) the Armistice defendants breached their fiduciary duties by engaging in insider trading; and (iv) the other directors breached their fiduciary duties, and aided and abetted the Armistice defendants’ breaches of fiduciary duties, in connection with these acquisitions. The Amended Complaint sought unspecified damages, equitable relief, restitution, disgorgement of profits, enhanced governance and internal procedures, and attorneys’ fees. While the Company believes that this lawsuit is without merit and have vigorously defended against it, the Company agreed to settle the matter for various corporate governance modifications and the payment of plaintiff’s attorneys’ fees. On January 13, 2025, the court approved the settlement.

 

Granules PIV

 

On October 31, 2024, the Company received a Paragraph IV Certification Notice Letter (“Notice Letter”) from Granules Pharmaceuticals, Inc. (“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’ New Drug Application (“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. On December 11, 2024, the Company filed a patent infringement lawsuit against Granules which triggered a stay precluding the United States Food and Drug Administration (“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 a trial has been scheduled for to being on December 7, 2026. The Company plans to vigorously enforce its intellectual property rights related to Adzenys.

 

Revive Investing

 

The Company had been named as a nominal plaintiff in a lawsuit by two shareholders against Armistice Capital Master Fund, Ltd, entitled Revive Investing, LLC. et al v. Armistice Master Fund, Ltd. et al, Case 1:20-cv-02849-CMA-TPO, in the United States District Court for the District of Colorado, contending that Armistice was liable for short swing trading profits in violation of Section 16(b) of the Exchange Act for certain trades it made in Company stock in 2019 and 2020 and must disgorge those profits to the Company. That matter proceeded to trial before a jury, which on January 29, 2025, returned a verdict finding no liability.

 
v3.25.0.1
Note 14 - Stockholders' Equity
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Equity [Text Block]

Note 14 - Stockholders’ Equity

 

The Company has 200 million shares of common stock authorized with a par value of $0.0001 per share and 50 million shares of preferred stock authorized with a par value of $0.0001 per share. As of December 31, 2024, included in common stock outstanding are 36,256 shares of unvested restricted stock issued to executives, directors and employees.

 

On September 28, 2021, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 7, 2021. This shelf registration statement covered the offering, issuance and sale by the Company of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants, rights and units (the “2021 Shelf”). The 2021 Shelf expired in October 2024.

 

On August 11, 2022, the Company closed on an underwritten public offering (the “August 2022 Offering”) utilizing the 2021 Shelf, pursuant to which it sold an aggregate of (i) 1,075,290 shares of its common stock; (ii) in lieu of common stock to certain investors that so chose, pre-funded warrants to purchase 87,500 shares of its common stock; and (iii) accompanying warrants to purchase 1,265,547 shares of its common stock. The shares of common stock and the pre-funded warrants were each sold in combination with corresponding common warrants, with one common warrant to purchase one share of common stock for each share of common stock or each pre-funded warrant sold. The combined public offering price for each share of common stock and accompanying common warrant was $8.60, and the combined offering price for each pre-funded warrant and accompanying common warrant was $8.58, which equated to the public offering price per share of the common stock and accompanying common warrant, less the $0.02 per share exercise price of each pre-funded warrant. The pre-funded warrants were exercised in full in August 2022. The common warrants have an exercise price of $8.60 per share of common stock and are exercisable for a period of five years from issuance. The Company raised $10.0 million in gross proceeds through the August 2022 Offering before underwriting fees and other expenses of $0.9 million. The pre-funded and common warrants had a combined fair value of approximately $6.0 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements (see Note 16 - Warrants).

 

On June 8, 2023, using a placement agent, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional investors, pursuant to which the Company issued and sold an aggregate of (i) 1,743,695 shares of the Company’s common stock; (ii) pre-funded warrants in lieu of shares to purchase 430,217 shares of common stock (the “June 2023 Pre-Funded Warrants”); (iii) accompanying tranche A warrants to purchase 2,173,912 shares of common stock (the “Tranche A Warrants”); and (iv) accompanying tranche B warrants to purchase 2,173,912 shares of common stock in a best-efforts offering (the “Tranche B Warrants” and the Tranche A Warrants together with the Tranche B Warrants, the “Common Warrants”). The Common Warrants may be exercised for either shares of common stock or pre-funded warrants to purchase common stock at a future exercise price of $0.0001 per share in the same form as the June 2023 Pre-Funded Warrants (the “Exchange Warrants”). Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.0001 per share. The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full. The Common Warrants are immediately exercisable at a price of $1.59 per share (or $1.5899 per Exchange Warrant). The Tranche A Warrants will expire upon the earlier of (i) five years after the date of issuance or (ii) 30 days following the closing price of the Company’s common stock equaling 200% of the exercise price ($3.18 per share) for at least 40 consecutive trading days. The Tranche B Warrants were exercised in June 2024 as further described below. The Company raised $4.0 million in gross proceeds and net proceeds were $3.4 million after deducting offering expenses. The June 2023 Pre-Funded Warrants do not have an expiration date. The warrants had a combined fair value of approximately $5.0 million at issuance and are classified as derivative warrant liabilities. The resulting offset is recorded in derivative warrant liabilities (loss) gain along with the issuance costs of $0.6 million in the unaudited consolidated financial statement of operations (see Note 16 - Warrants).

 

On June 14, 2024, the Tranche B Warrants were exercised, generating proceeds of $3.5 million. The Tranche B Warrants were converted into 367,478 shares of common stock and 1,806,434 pre-funded warrants to purchase shares of common stock with an exercise price of $0.0001 per share (the “Tranche B Pre-Funded Warrants”). The Tranche B Pre-Funded Warrants had a fair value of approximately $5.1 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements. The Company used a portion of the proceeds from the Tranche B Warrants exercise as part of the Avenue Capital loan repayment described further in Note 11 - Long-Term Debt.

 

On September 26, 2024, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024. This shelf registration statement covers the offering, issuance and sale by the Company of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants, rights and units (the “2024 Shelf”). Through the filing date of this Form 10-Q, $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.

 
v3.25.0.1
Note 15 - Equity Incentive Plans
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

Note 15 - Equity Incentive Plans

 

2023 Equity Incentive Plan

 

On May 18, 2023, the Company’s stockholders approved the Aytu BioPharma, Inc. 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”). Prior to the Company’s adoption of the 2023 Equity Incentive Plan, the Company awarded equity incentive grants to its directors and employees under the Aytu BioScience, Inc. 2015 Stock Option and Incentive Plan (the “Aytu 2015 Plan”) and the Neos Therapeutics, Inc. 2015 Stock Options and Incentive Plan (the “Neos 2015 Plan”, and collectively with the Aytu 2015 Plan, the “2015 Plans”). For the 2023 Equity Incentive Plan, the stockholders approved (i) 200,000 new shares; (ii) 87,129 shares available for grant under the 2015 Plans be “rolled over” to the 2023 Equity Incentive Plan; and (iii) any shares that are returned to the Company under the 2015 Plans be added to the 2023 Equity Incentive Plan. With the approval of the 2023 Equity Incentive Plan, no additional awards will be granted under the 2015 Plans. All outstanding awards previously granted under previous stock incentive plans will remain outstanding and subject to the terms of the plans. Stock options granted under the 2023 Equity Incentive Plan have contractual terms of 10 years or less from the grant date and a vesting period ranging from 3 to 4 years. The restricted stock awards and restricted stock units have a vesting period of 3 to 4 years. As of December 31, 2024, the Company had 87,636 shares that are available for grant under the 2023 Equity Incentive Plan.

 

Aytu 2015 Plan

 

On June 1, 2015, the Company’s stockholders approved the Aytu 2015 Plan, which, as amended in July 2017, provides for the award of stock options, stock appreciation rights, restricted stock, and other equity awards. On February 13, 2020, the Company’s stockholders approved an increase to 250,000 total shares of common stock in the Aytu 2015 Plan. The shares of common stock underlying any awards that are forfeited, canceled, reacquired by Aytu prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) under the Aytu 2015 Plan will be added back to the shares of common stock available for issuance under the 2023 Equity Incentive Plan. Stock options granted under this plan have contractual terms of 10 years from the grant date and a vesting period ranging from 3 to 4 years. The restricted stock awards have a vesting period ranging from 4 to 10 years, and the restricted stock units have a vesting period of 4 years.

 

Neos 2015 Plan

 

Pursuant to the Neos Acquisition, the Company assumed 3,486 stock options and 1,786 restricted stock units previously granted under the Neos 2015 Plan. Accordingly, on April 19, 2021, the Company registered 5,272 shares of its common stock under the Neos 2015 Plan with the SEC. The terms and conditions of the assumed equity securities remained the same as they were previously under the Neos 2015 Plan. The Company allocated costs of the replacement awards attributable to pre-combination and post-combination service periods. The pre-combination service costs were included in the consideration transferred. The remaining costs attributable to the post-combination service period are being recognized as stock-based compensation expense over the remaining terms of the replacement awards. Stock options granted under this plan have contractual terms of 10 years from the grant date and a vesting period ranging from 1 to 4 years.

 

Stock Options

 

Stock option activity is as follows:

 

          

Weighted

 
          

Average

 
      

Weighted

  

Remaining

 
  

Number of

  

Average

  

Contractual

 
  

Options

  

Exercise Price

  

Life in Years

 

Outstanding at June 30, 2024

  146,539  $6.18   8.8 

Granted

  83,000  $1.84   2.3 

Forfeited/cancelled

  (8,147) $5.73   — 

Outstanding at December 31, 2024

  221,392  $4.57   8.3 
             

Exercisable at December 31, 2024

  81,399  $9.02   6.6 

 

During the six months ended  December 31, 2024, the Company granted 83,000 stock options with a weighted average exercise price per option of $1.84. As of December 31, 2024, there was $0.2 million total unrecognized compensation costs related to non-vested stock options granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.3 years.

 

Restricted Stock

 

Restricted stock activity is as follows:

 

      

Weighted

 
      

Average Grant

 
  

Number of

  

Date Fair

 
  

Shares

  

Value

 

Unvested at June 30, 2024

  24,105  $100.34 

Granted

  20,000  $1.79 

Vested

  (7,853) $15.33 

Unvested at December 31, 2024

  36,252  $64.38 

 

During the six months ended  December 31, 2024, the Company granted 20,000 shares of restricted stock under the Company’s 2023 Equity Incentive Plan with a weighted average grant date fair value of $1.79 per share. As of December 31, 2024, there was $0.9 million total unrecognized compensation costs related to non-vested restricted stock granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.3 years.

 

During the six months ended  December 31, 2024, no restricted stock was granted outside of the Company’s equity incentive plan. As of December 31, 2024, there was $0.2 million total unrecognized compensation costs related to non-vested restricted stock issued outside of the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.5 years. As of December 31, 2024, 4 shares of restricted stock remain unvested that were granted outside of the Company’s equity incentive plan.

 

Restricted Stock Units

 

Restricted stock units (“RSU” or “RSUs”) activity is as follows:

 

      

Weighted

 
      

Average Grant

 
  

Number of

  

Date Fair

 
  

Shares

  

Value

 

Unvested at June 30, 2024

  1,775  $24.14 

Vested

  (1,043) $24.13 

Forfeited

  (167) $26.20 

Unvested at December 31, 2024

  565  $23.55 

 

During the six months ended  December 31, 2024, no RSUs were granted. As of December 31, 2024, there was less than $0.1 million of unrecognized compensation costs related to non-vested RSUs granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 0.2 years.

 

Stock-based compensation expense related to the fair value of stock options, restricted stock, and RSUs was included in the consolidated statements of operations as set forth in the below table:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands)

 

Cost of sales

 $—  $1  $1  $1 

Research and development

  1   2   3   3 

Selling and marketing

  14   —   46   — 

General and administrative

  136   704   274   1,428 

Net income (loss) from discontinued operations, net of tax

  —   113   —   318 

Total stock-based compensation expense

 $151  $820  $324  $1,750 

 
v3.25.0.1
Note 16 - Warrants
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Warrants or Rights Disclosure [Text Block]

Note 16 - Warrants

 

Liability Classified Warrants

 

The Company accounts for liability classified warrants by recording the fair value of each instrument in its entirety and recording the fair value of the warrant derivative liability. The fair value of liability classified derivative financial instruments was calculated using either the Black-Scholes option pricing model or the Monte Carlo simulation model and is revalued every quarter. Changes in the fair value of liability classified derivative financial instruments in subsequent periods are recorded as unrealized derivative gain or loss in the consolidated statements of operations (see Note 12 – Fair Value Considerations).

 

On June 8, 2023, using a placement agent, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional investors, pursuant to which the Company issued and sold an aggregate of (i) 1,743,695 shares of the Company’s common stock; (ii) June 2023 Pre-Funded Warrants in lieu of shares to purchase 430,217 shares of common stock; (iii) accompanying Tranche A Warrants to purchase 2,173,912 shares of common stock; and (iv) accompanying Tranche B Warrants to purchase 2,173,912 shares of common stock in a best-efforts offering (the Tranche A Warrants together with the Tranche B Warrants, the “Common Warrants”). The Common Warrants may be exercised for either shares of common stock or pre-funded warrants to purchase common stock at a future exercise price of $0.0001 per share in the same form as the June 2023 Pre-Funded Warrants (the “Exchange Warrants”). Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.0001 per share. The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full. The Common Warrants are immediately exercisable at a price of $1.59 per share (or $1.5899 per Exchange Warrant). The Tranche A Warrants will expire upon the earlier of (i) five years after the date of issuance or (ii) 30 days following the closing price of the Company’s common stock equaling 200% of the exercise price ($3.18 per share) for at least 40 consecutive trading days. The Tranche B Warrants were exercised in June 2024 as further described below. The Company raised $4.0 million in gross proceeds and net proceeds were $3.4 million after deducting offering expenses. The June 2023 Pre-Funded Warrants do not have an expiration date. The warrants had a combined fair value of approximately $5.0 million at issuance and are classified as derivative warrant liabilities. The resulting offset is recorded in derivative warrant liabilities gain (loss) along with the issuance costs of $0.6 million in the unaudited consolidated financial statement of operations (see Note 14 - Stockholders’ Equity).

 

On June 14, 2024, the Tranche B Warrants were exercised, generating proceeds of $3.5 million. The Tranche B Warrants were converted into 367,478 shares of common stock and 1,806,434 Tranche B Pre-Funded Warrants to purchase shares of common stock with an exercise price of $0.0001 per share. The Tranche B Pre-Funded Warrants, which do not have an expiration date, had a fair value of approximately $5.1 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements. The Company used a portion of the proceeds from the Tranche B Warrants exercise as part of the Avenue Capital loan repayment described further in Note 11 - Long-Term Debt.

 

On August 11, 2022, the Company closed an offering (the “August 2022 Offering”), pursuant to which, the Company issued pre-funded warrants to purchase 87,500 shares of its common stock and common warrants to purchase 1,265,547 shares of its common stock. The shares of common stock and the pre-funded warrants were each sold in combination with corresponding common warrants, which one common warrant to purchase one share of common stock for each share of common stock or each pre-funded warrant was sold. The pre-funded warrants had an exercise price of $0.02 per share of common stock and were exercised in full in August 2022. The common warrants have an exercise price of $8.60 per share of common stock and are exercisable for a period of five years from issuance. The common warrants provide that if there occurs any stock split, stock dividend stock recapitalization, or similar event (a “Stock Combination Event”), then the warrant exercise price will be adjusted to the greater of the quotient determined by dividing the sum of the VWAP of the common stock for each of the five lowest trading days during the 20 consecutive trading day period ending immediately preceding the 16th trading day after such Stock Combination Event, divided by five; or $2.32, and the number of shares of common stock to be issued would be adjusted proportionately as set forth in the agreement limited to a maximum of 2,325,581 shares. The common warrants also provide that in the event the Company were to engage in an equity offering at a common stock price lower than the warrant exercise price prior to the second anniversary of a Stock Combination Event, the exercise price would be adjusted to the greater of the effective price of such equity offering or $2.32 (see Note 14 – Capital Structure).

 

In November 2022 and throughout the quarter ended December 31, 2022, the Company sold shares through its ATM Sales Agreement. Per the warrant agreement in the August 2022 Offering, these sales qualified as an equity offering, and the sales price was less than the current exercise price of $8.60. As a result, the common warrants exercise price was adjusted to $3.30. On January 6, 2023, the Company consummated a 20 to 1 reverse stock split. Pursuant to the warrant agreement described above, the Company triggered a Stock Combination Event, and the warrant exercise price and number to be issued was adjusted based on the average of each of the lowest five trading days during the twenty-day consecutive trading day period beginning on December 30, 2022. Subsequently, as a result of the Securities Purchase Agreement in June 2023, the common warrants from the August 2022 Offering had an adjusted exercise price of $2.32.

 

A summary of warrants is as follows:

 

          

Weighted

 
          

Average

 
      

Weighted

  

Remaining

 
  

Number of

  

Average

  

Contractual

 
  

Warrants

  

Exercise Price

  

Life in Years (4)

 

Outstanding June 30, 2024 (1)

  6,075,880  $3.71   3.6 

Warrants exercised (2)

  (176,000) $0.0001   — 

Outstanding December 31, 2024 (3)

  5,899,880  $3.22   2.0 

(1) 

The number of warrants outstanding as of June 30, 2024, is comprised of 3,821,115 liability classified warrants, 430,217 liability classified June 2023 Pre-Funded Warrants, 1,806,434 liability classified Tranche B Pre-Funded Warrants and 18,114 equity classified warrants.

(2) 

Warrants exercised during the first quarter of fiscal 2025 were 176,000 of the Tranche B Warrants, which were exercised at a price of $0.0001 per share.

(3) 

The number of warrants outstanding as of December 31, 2024, is comprised of 3,821,115 liability classified warrants, 430,217 liability classified June 2023 Pre-Funded Warrants, 1,630,424 liability classified Tranche B Pre-Funded Warrants and 18,114 equity classified warrants.

(4) 

As pre-funded warrants do not have an expiration date, they have been excluded from the calculation of the weighted average remaining contractual life in years.

 
v3.25.0.1
Note 17 - Earnings Per Share
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Earnings Per Share [Text Block]

Note 17 - Earnings Per Share

 

Basic net income or loss per common share is calculated by dividing net income or loss available to common stockholders by the basic weighted-average number of common shares outstanding for the respective period. Diluted net income or loss per common share is calculated by dividing adjusted net income or loss by the diluted weighted-average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist of warrants to purchase common stock that are either liability classified or equity classified (see Note 16 – Warrants); employee stock options (see Note 15 – Equity Incentive Plans); employee unvested restricted stock (see Note 15 – Equity Incentive Plans); and employee unvested restricted stock units (see Note 15 – Equity Incentive Plans). For the three and six months ended December 31, 2024, and 2023, if the Company incurred a net loss from continuing operations; a net loss from discontinued operations, net of tax; or a net loss then the Company did not include common equivalent shares in the computation of diluted net loss from continuing operations per share; diluted net loss from discontinued operations, net of tax; or diluted net loss per share because the effect would have been anti-dilutive.

 

The following is a reconciliation of the numerator and the denominator used in the basic per share calculations:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands, except share and per share data)

 

BASIC

                

Numerators:

                

Net income (loss) from continuing operations

 $665  $619  $1,758  $(6,854)

Net income (loss) from discontinued operations, net of tax

  123   (839)  504   (1,486)

Net income (loss)

 $788  $(220) $2,262  $(8,340)

Denominator:

                

Basic weighted-average common shares outstanding

  6,132,060   5,517,670   6,100,204   5,499,951 

Per share calculations:

                

Net income (loss) per share from continuing operations

 $0.11  $0.11  $0.29  $(1.25)

Net income (loss) per share from discontinued operations, net of tax

 $0.02  $(0.15) $0.08  $(0.27)

Net income (loss) per share

 $0.13  $(0.04) $0.37  $(1.52)

 

The following is a reconciliation of the numerator and the denominator used in the diluted per share calculations:

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  
   

(in thousands, except share and per share data)

  

DILUTED: CONTINUING OPERATIONS

                                

Numerator:

                                

Net income (loss) from continuing operations

   $ 665     $ 619     $ 1,758     $ (6,854 )

Adjustment for change in fair value of warrant liabilities

     (3,016 )     —       (5,896 )     —  

Adjusted numerator - net (loss) income from continuing operations

   $ (2,351 )   $ 619     $ (4,138 )   $ (6,854 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net (loss) income per share from continuing operations

   $ (0.28 )   $ 0.11     $ (0.47 )   $ (1.25 )
                                 

DILUTED: DISCONTINUED OPERATIONS

                                

Numerator:

                                

Net income (loss) from discontinued operations, net of tax

   $ 123     $ (839 )   $ 504     $ (1,486 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net income (loss) per share from discontinued operations, net of tax

   $ 0.01     $ (0.15 )   $ 0.06     $ (0.27 )
                                 

DILUTED: NET INCOME (LOSS)

                                

Numerator:

                                

Net income (loss)

   $ 788     $ (220 )   $ 2,262     $ (8,340 )

Adjustment for change in fair value of warrant liabilities

     (3,016 )     —       (5,896 )     —  

Adjusted numerator - net loss

   $ (2,228 )   $ (220 )   $ (3,634 )   $ (8,340 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net loss per share

   $ (0.26 )   $ (0.04 )   $ (0.41 )   $ (1.52 )

 

The following table sets forth securities that could be considered anti-dilutive, and therefore are excluded from the calculation of diluted weighted-average common shares outstanding and related per share calculations:

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  

Warrants to purchase common stock - liability classified (note 16)

     3,539,679       6,498,980       3,212,550       6,498,980  

Warrants to purchase common stock - equity classified (note 16)

     18,114       39,072       18,114       39,072  

Employee unvested restricted stock (note 15)

     25,291       40,017       22,882       40,017  

Employee unvested restricted stock units (note 15)

     512       2,898       565       2,898  

Employee stock options (note 15)

     221,392       149,087       221,392       149,087  

Total anti-dilutive securities

     3,804,988       6,730,054       3,475,503       6,730,054  

 
v3.25.0.1
Note 18 - License Agreements
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Licensing Agreements [Text Block]

Note 18 - License Agreements

 

Actavis

 

On October 17, 2017, the Company entered into an agreement granting Actavis Laboratories FL, Inc. (“Actavis”) (acquired by Teva Pharmaceutical Industries) a non-exclusive license to certain patents owned by the Company by which Actavis has the right to manufacture and market its generic version of Adzenys under its ANDA beginning on September 1, 2025, or earlier under certain circumstances. The ANDA was approved by the FDA on June 22, 2023.

 

Teva

 

On December 21, 2018, the Company and Teva Pharmaceuticals USA, Inc. (“Teva”) entered into an agreement granting Teva a non-exclusive license to certain patents owned by Neos by which Teva has the right to manufacture and market its generic version of Cotempla under an abbreviated new drug application (“ANDA”) filed by Teva beginning on July 1, 2026, or earlier under certain circumstances. The ANDA was approved by the FDA on June 19, 2020.
v3.25.0.1
Note 19 - Restructuring Costs
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Restructuring and Related Activities Disclosure [Text Block]

Note 19 - Restructuring Costs

 

As part of the Company’s previously announced restructuring activities related to the wind down and divestiture of the Consumer Health business and the closure of the Grand Prairie, Texas manufacturing site, the Company has incurred expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee benefit costs as well as other direct separation benefit costs, right of use asset impairment charges, fixed asset and other asset impairment charges, accelerated depreciation of fixed assets, contract termination costs, and inventory write-downs. Severance and employee benefit costs primarily relate to cash severance. Restructuring costs associated with the Consumer Health business are recorded within the net income (loss) from discontinued operations, net of tax in the unaudited consolidated financial statement of operations (see Note 20 - Discontinued Operations).

 

The expense associated with the closure of the Grand Prairie, Texas manufacturing site such as severance and employee benefits and exit and disposal activities are included in restructuring costs in the consolidated statements of operations. There have been no inventory write-downs associated with this closure. During the three and six months ended December 31, 2024, the Company incurred $1.3 million and $2.1 million, respectively, of costs associated with exit and disposal activities related to its previously announced operational realignment and related costs. The Company does not expect to incur additional significant restructuring costs.

 
v3.25.0.1
Note 20 - Discontinued Operations
 6 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 20 - Discontinued Operations

 

On July 31, 2024, after the wind down of operations, the Company entered into a definitive agreement to divest its Consumer Health business to a private, e-commerce focused company. The divested business encompasses the established e-commerce platform, certain inventory and associated consumer brands, intellectual property, external workforce and contracts, and provides for the Company to receive contingent consideration payments on certain future sales of former Consumer Health business products.

 

The accounting requirements for reporting the Consumer Health business as discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, the accompanying unaudited consolidated financial statements for all periods presented reflect this business as a discontinued operation and certain assets and liabilities of discontinued operations have been reclassified to the current assets of discontinued operations; non-current assets of discontinued operations; and current liabilities of discontinued operations financial statement line items on the accompanying unaudited consolidated balance sheet as of June 30, 2024. The Company elected to record the contingent consideration portion of the arrangement when the consideration is determined to be realizable and, therefore, the Company did not record a contingent consideration asset at the transaction date and any subsequent proceeds will not be recognized until the contingent consideration asset is realizable, at which point the Company recognizes it to income (loss) from discontinued operations.

 

The key components of net income (loss) from discontinued operations, net of tax for the three and six months ended December 31, 2024, and 2023, were as follows:

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  
   

(in thousands)

  

Net revenue

   $ —     $ 4,186     $ 717     $ 8,468  

Cost of sales

     —       (2,586 )     (359 )     (5,122 )

Selling and marketing

     —       (1,358 )     (155 )     (2,689 )

General and administrative

     —       (642 )     (2 )     (1,312 )

Amortization of intangible assets

     —       (382 )     —       (764 )

Non-operating other expense, net

     —       (9 )     (4 )     (19 )

Recognized contingent consideration

     175       —       587       —  

Loss on divestiture

     —       —       (254 )     —  

Income (loss) from discontinued operations before income taxes

     175       (791 )     530       (1,438 )

Income tax expense

     (52 )     (48 )     (26 )     (48 )

Net income (loss) from discontinued operations, net of tax

   $ 123     $ (839 )   $ 504     $ (1,486 )

 

The key components of assets and liabilities of discontinued operations as of June 30, 2024, were as follows:

 

   

June 30,

  
   

2024

  
    (in thousands)  

ASSETS

        

Current assets of discontinued operations:

        

Accounts receivable, net

   $ 91  

Inventories

     492  

Prepaid expenses and other current assets

     538  

Total current assets of discontinued operations

     1,121  

Non-current assets of discontinued operations:

        

Other non-current assets

     44  

Total current and non-current assets of discontinued operations

   $ 1,165  
         

LIABILITIES

        

Current liabilities of discontinued operations:

        

Accounts payable

   $ 126  

Accrued liabilities

     431  

Total current liabilities of discontinued operations

   $ 557  

 
v3.25.0.1
Insider Trading Arrangements
 3 Months Ended
Dec. 31, 2024
Insider Trading Arr Line Items  
Rule 10b5-1 Arrangement Adopted [Flag] false
Non-Rule 10b5-1 Arrangement Adopted [Flag] false
Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Terminated [Flag] false
v3.25.0.1
Significant Accounting Policies (Policies)
 6 Months Ended
Dec. 31, 2024
Accounting Policies [Abstract]  
Consolidation, Policy [Policy Text Block]

Principals of Consolidation

 

The Company’s unaudited consolidated financial statements and notes thereto include the accounts of its wholly owned subsidiaries Aytu Therapeutics, LLC and Neos Therapeutics, Inc. and their respective wholly owned subsidiaries, as well as Innovus Pharmaceuticals, Inc. (“Innovus”) and its wholly owned subsidiaries prior to the divestiture of Innovus on July 31, 2024. All significant inter-company balances and transactions have been eliminated in consolidation.

 
Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

 

The unaudited consolidated financial statements and notes thereto contained in this Form 10-Q represent the financial statements of the Company and its wholly owned subsidiaries and have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and disclosures normally included in the complete financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2024 Form 10-K, which included all disclosures required by U.S. GAAP. In the opinion of management, these unaudited consolidated financial statements and notes thereto contain all adjustments necessary for the fair statement of the financial position of the Company and the results of operations and cash flows for the interim periods presented. The consolidated balance sheet as of  June 30, 2024, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The results of operations for the period ended December 31, 2024, are not necessarily indicative of expected operating results for the full year or any future period.

 
Use of Estimates, Policy [Policy Text Block]

Use of Estimates

 

The preparation of financial statements and footnotes requires the use of management estimates, judgments and assumptions. Actual results may differ from estimates. In the accompanying unaudited consolidated financial statements and notes thereto, estimates are used for, but not limited to, stock-based compensation; revenue recognition, determination of variable consideration for accruals of chargebacks, administrative fees and rebates, government rebates, returns and other allowances; allowance for credit losses; inventory impairment; determination of right-of-use (“ROU”) assets and lease liabilities; valuation of financial instruments, warrants and derivative warrant liabilities, intangible assets, and long-lived assets; purchase price allocations and the depreciable lives of long-lived assets; accruals for contingent liabilities; and determination of the income tax provision, deferred taxes and valuation allowance. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. The Company periodically evaluates estimates used in the preparation of the financial statements for reasonableness.

 
Reclassification, Comparability Adjustment [Policy Text Block]

Prior Period Reclassification

 

Certain prior year amounts in the Company’s unaudited consolidated financial statements and the notes thereto have been reclassified to conform to the current year presentation. These reclassifications did not impact operating results for the three and six months ended December 31, 2024, and 2023, or cash flows for the six months ended December 31, 2024, and 2023, or the Company’s financial position as of December 31, 2024, or June 30, 2024.

 
Warrants [Policy Text Block]

Warrants

 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Liability and equity classified warrants are valued using a Black-Scholes option pricing model or Monte Carlo simulation model at issuance and for each reporting period when applicable.

 
Income Tax, Policy [Policy Text Block]

Income Taxes

 

The Company calculates its quarterly income tax provision based on estimated annual effective tax rates applied to ordinary income (or loss) and other known items computed and recognized when they occur. There have been no changes in tax law affecting the tax provision during the three and six months ended December 31, 2024.

 

The Company recorded for income (loss) from continuing operations an income tax benefit of $0.3 million, which represented an effective tax rate of negative 74.1% and income tax expense of $0.8 million, which represented an effective tax rate of 55.8%, for the three months ended December 31, 2024, and 2023, respectively. The Company recorded for income (loss) from continuing operations an income tax expense of $0.1 million, which represented an effective tax rate of 6.5% and income tax expense of $0.8 million, which represented an effective tax rate of negative 12.8% for the six months ended December 31, 2024, and 2023, respectively. 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 the Company’s Consumer Health business that occurred during the first quarter of fiscal 2025 and changes to the Company’s first quarter of fiscal 2025 projections, which resulted in an income tax benefit for the current quarter.

 

An ownership change has limited the Company’s ability to offset, post-change, United States federal taxable income. Section 382 of the Internal Revenue Code imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change net operating loss carryforwards and certain recognized built-in losses. Previous acquisitions, financing transactions, and equity ownership changes in the past five years have caused a significant limitation on the Company’s ability to use the change in control net operating loss carryovers. The ownership changes result in increased future tax liability and are a driver of the change from a zero percent effective tax rate.

 

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date. A valuation allowance is recorded to reduce the net deferred tax asset when it is more likely than not that some portion or all of its deferred tax asset will not be utilized.

 

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained upon an examination. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the unaudited consolidated statements of operations.

 
Employee Retention Credit [Policy Text Block]

Employee Retention Credit

 

On March 27, 2020, the United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”), which allows for employers to claim a refundable payroll tax credit against the employer share of Social Security tax equal to 70% of the qualified wages paid to employees after December 31, 2020, through September 30, 2021. The ERC was designed to encourage businesses to keep employees on the payroll during the COVID-19 pandemic.

 

As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company accounted for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”). In accordance with IAS 20, the Company recorded a $3.8 million ERC accrual in other non-current liabilities, which represents the proceeds the Company received from the ERC program during the first quarter of fiscal 2024. Further in accordance with IAS 20, when management determines it has reasonable assurance that the Company has substantially met all eligibility requirements of the ERC and following any adjustments from its regulatory audit or upon further clarifications from the Internal Revenue Code of 1986, as amended (the “IRC”), the ERC accrual shall be recognized as a benefit in other income in the unaudited consolidated statement of operations. The associated vendor fee of $0.4 million was expensed as incurred in the first quarter of fiscal 2024.

 
New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

 

Debt - Debt with Conversion and Other Option

 

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 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, which simplifies the accounting for convertible instruments by removing major separation models currently required. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The amendments in this update are effective for public entities that are smaller reporting companies, as defined by the SEC, for the fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted through a modified retrospective or full retrospective method. The Company adopted the guidance on July 1, 2024, and the adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

 

Recent Accounting Pronouncements Not Yet Adopted

 

Segment Reporting - Improvements to Reportable Segment Disclosures

 

In  November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 was issued to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance should be applied retrospectively unless it is impracticable to do so. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted, including in an interim period. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.

 

Disaggregation of Income Statement Expenses

 

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 require public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.

 

For a complete set of the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s 2024 Form 10-K. There have been no significant changes to the Company’s significant accounting policies and there is no other accounting guidance that has been issued and not yet adopted that is applicable to the Company and that would have a material effect on the Company’s unaudited consolidated financial statements and related disclosures as of December 31, 2024, and through the filing of this Form 10-Q.
v3.25.0.1
Note 3 - Revenue (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Disaggregation of Revenue [Table Text Block]
  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands)

 

ADHD Portfolio

 $13,816  $16,572  $29,080  $31,700 

Pediatric Portfolio

  2,400   2,145   3,693   4,710 

Other

  5   31   22   155 

Total net revenue

 $16,221  $18,748  $32,795  $36,565 
v3.25.0.1
Note 4 - Inventories (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Raw materials

 $494  $266 

Work in process

  3,103   5,725 

Finished goods

  7,488   6,150 

Inventories

 $11,085  $12,141 
v3.25.0.1
Note 5 - Property and Equipment (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Property, Plant and Equipment [Table Text Block]
  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Manufacturing and lab equipment

 $721  $1,838 

Office equipment, furniture and other

  282   945 

Leasehold improvements

  164   35 

Property and equipment, gross

  1,167   2,818 

Less: accumulated depreciation and amortization

  (651)  (2,125)

Property and equipment, net

 $516  $693 
v3.25.0.1
Note 6 - Leases (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Lease, Cost [Table Text Block]
  

Three Months Ended

  

Six Months Ended

  
  

December 31,

  

December 31,

  
  

2024

  

2023

  

2024

  

2023

 

Statement of Operations Classification

  

(in thousands)

  

Lease cost:

                 

Operating lease cost

 $143  $381  $265  $741 

Operating expenses

Short-term lease cost

  86   21   177   44 

Operating expenses

Finance lease cost:

                 

Amortization of leased assets

  —   15   —   29 

Cost of sales

Interest on lease liabilities

  —   1   —   2 

Interest expense

Total lease cost

 $229  $418  $442  $816  
  

December 31,

  

June 30,

 
  

2024

  

2024

 

Weighted-average remaining lease term (years):

        

Operating lease right-of-use assets

  5.6   2.7 

Weighted-average discount rate:

        

Operating lease right-of-use assets

  12.1%  10.0%
  

Six Months Ended

 
  

December 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Cash flow classification of lease payments:

        

Operating cash flows from operating leases

 $606  $697 

Operating cash flows from finance leases

 $—  $2 

Financing cash flows from finance leases

 $—  $46 
Schedule of Lease by Balance Sheet Information [Table Text Block]
  

December 31,

  

June 30,

  
  2024  2024 

Balance Sheet Classification

  

(in thousands)

  

Assets:

         

Non-current: operating leases

 $1,178  $829 

Operating lease right-of-use assets

          

Liabilities:

         

Current: operating leases

 $182  $712 

Other current liabilities

Non-current: operating leases

  1,106   577 

Other non-current liabilities

Total lease liabilities

 $1,288  $1,289  
Lessee, Liability, Maturity [Table Text Block]
  

Operating

 
  

(in thousands)

 

2025 (remaining 6 months)

 $123 

2026

  399 

2027

  377 

2028

  386 

2029

  358 

2030

  230 

Thereafter

  19 

Total lease payments

  1,892 

Less: imputed interest

  (479)

Less: tenant improvement allowance

  (125)

Lease liabilities

 $1,288 
v3.25.0.1
Note 7 - Intangible Assets (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Schedule of Finite-Lived Intangible Assets [Table Text Block]
  

December 31, 2024

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

  

Weighted-Average Remaining Life

 
  

(in thousands)

  

(in years)

 

Acquired product technology rights

 $41,268  $(14,791) $26,477   10.3 

Acquired technology rights

  30,200   (6,719)  23,481   13.2 

Total intangible assets

 $71,468  $(21,510) $49,958   11.7 
  

June 30, 2024

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

  

Weighted-Average Remaining Life

 
  

(in thousands)

  

(in years)

 

Acquired product technology rights

 $41,268  $(13,184) $28,084   10.7 

Acquired technology rights

  30,200   (5,831)  24,369   13.8 

Total intangible assets

 $71,468  $(19,015) $52,453   12.0 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]
  

Estimated Future Amortization Expense

 
  

(in thousands)

 

2025 (remaining 6 months)

 $2,495 

2026

  4,989 

2027

  4,989 

2028

  4,989 

2029

  4,989 

2030

  2,847 

Thereafter

  24,660 

Total future amortization expense

 $49,958 
v3.25.0.1
Note 8 - Accrued Liabilities (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Schedule of Accrued Liabilities [Table Text Block]
  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Accrued savings offers

 $14,507  $11,054 

Accrued program liabilities

  7,021   9,964 

Accrued customer and product related fees

  5,735   5,395 

Return reserve

  5,111   4,832 

Accrued employee compensation

  3,971   4,603 

Other accrued liabilities

  3,027   2,295 

Total accrued liabilities

 $39,372  $38,143 
v3.25.0.1
Note 9 - Other Liabilities (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Other Liabilities [Table Text Block]
  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Fixed payment arrangements

 $6,926  $8,337 

Employee retention credit

  3,759   3,759 

Operating lease liabilities

  1,288   1,289 

Other

  180   106 

Total other liabilities

  12,153   13,491 

Less: current portion of other liabilities

  (7,108)  (8,962)

Total non-current portion of other liabilities

 $5,045  $4,529 
v3.25.0.1
Note 11 - Long-term Debt (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Schedule of Long-Term Debt Instruments [Table Text Block]
  

December 31,

  

June 30,

 
  

2024

  

2024

 
  

(in thousands)

 

Term loan principal amount

 $12,071  $13,000 

Unamortized debt discount and issuance costs

  (231)  (266)

Total debt

  11,840   12,734 

Less: current portion of debt

  (1,857)  (1,857)

Total debt, net of current portion

 $9,983  $10,877 
Schedule of Maturities of Long-Term Debt [Table Text Block]
  

Future Principal Payments

 
  

(in thousands)

 

2025 (remaining 6 months)

 $928 

2026

  1,857 

2027

  1,857 

2028

  7,429 

Total future principal payments

  12,071 

Less: unamortized debt discount and issuance costs

  (231)

Less: current portion of debt

  (1,857)

Total debt, net of current portion

 $9,983 
v3.25.0.1
Note 12 - Fair Value Considerations (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]
  Fair Value at December 31,  Fair Value Measurements at December 31, 2024 
  

2024

  

(Level 1)

  

(Level 2)

  

(Level 3)

 
  

(in thousands)

 

Liabilities:

                

Derivative warrant liabilities

 $6,386  $—  $—  $6,386 

Total

 $6,386  $—  $—  $6,386 
   Fair Value at June 30,  Fair Value Measurements at June 30, 2024 
  

2024

  

(Level 1)

  

(Level 2)

  

(Level 3)

 
  

(in thousands)

 

Liabilities:

                

Derivative warrant liabilities

 $12,745  $—  $—  $12,745 

Total

 $12,745  $—  $—  $12,745 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]
  

Derivative

 
  

Warrant Liabilities

 
  

(in thousands)

 

Balance as of June 30, 2024

 $12,745 

Settlements (1)

  (463)

Included in earnings

  (5,896)

Balance as of December 31, 2024

 $6,386 
Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]
  

June 2023 Warrants

  

Warrants

 
  

Tranche A

  

Other (1)

 
  

Monte Carlo &

    
  

Black-Scholes

  

Black-Scholes

 

Aytu closing stock price

 

$ 1.70

  

$ 1.70

 

Equivalent term (years)

 3.4  2.1-2.7 

Expected volatility

 

80.8%

  

74.7%-80.5%

 

Risk-free rate

 

4.3%

  

4.3%

 

Dividend yield

 

0.0%

  

0.0%

 
v3.25.0.1
Note 15 - Equity Incentive Plans (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Share-Based Payment Arrangement, Option, Activity [Table Text Block]
          

Weighted

 
          

Average

 
      

Weighted

  

Remaining

 
  

Number of

  

Average

  

Contractual

 
  

Options

  

Exercise Price

  

Life in Years

 

Outstanding at June 30, 2024

  146,539  $6.18   8.8 

Granted

  83,000  $1.84   2.3 

Forfeited/cancelled

  (8,147) $5.73   — 

Outstanding at December 31, 2024

  221,392  $4.57   8.3 
             

Exercisable at December 31, 2024

  81,399  $9.02   6.6 
Nonvested Restricted Stock Shares Activity [Table Text Block]
      

Weighted

 
      

Average Grant

 
  

Number of

  

Date Fair

 
  

Shares

  

Value

 

Unvested at June 30, 2024

  24,105  $100.34 

Granted

  20,000  $1.79 

Vested

  (7,853) $15.33 

Unvested at December 31, 2024

  36,252  $64.38 
Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]
      

Weighted

 
      

Average Grant

 
  

Number of

  

Date Fair

 
  

Shares

  

Value

 

Unvested at June 30, 2024

  1,775  $24.14 

Vested

  (1,043) $24.13 

Forfeited

  (167) $26.20 

Unvested at December 31, 2024

  565  $23.55 
Share-Based Payment Arrangement, Cost by Plan [Table Text Block]
  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands)

 

Cost of sales

 $—  $1  $1  $1 

Research and development

  1   2   3   3 

Selling and marketing

  14   —   46   — 

General and administrative

  136   704   274   1,428 

Net income (loss) from discontinued operations, net of tax

  —   113   —   318 

Total stock-based compensation expense

 $151  $820  $324  $1,750 
v3.25.0.1
Note 16 - Warrants (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]
          

Weighted

 
          

Average

 
      

Weighted

  

Remaining

 
  

Number of

  

Average

  

Contractual

 
  

Warrants

  

Exercise Price

  

Life in Years (4)

 

Outstanding June 30, 2024 (1)

  6,075,880  $3.71   3.6 

Warrants exercised (2)

  (176,000) $0.0001   — 

Outstanding December 31, 2024 (3)

  5,899,880  $3.22   2.0 
v3.25.0.1
Note 17 - Earnings Per Share (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
  

Three Months Ended

  

Six Months Ended

 
  

December 31,

  

December 31,

 
  

2024

  

2023

  

2024

  

2023

 
  

(in thousands, except share and per share data)

 

BASIC

                

Numerators:

                

Net income (loss) from continuing operations

 $665  $619  $1,758  $(6,854)

Net income (loss) from discontinued operations, net of tax

  123   (839)  504   (1,486)

Net income (loss)

 $788  $(220) $2,262  $(8,340)

Denominator:

                

Basic weighted-average common shares outstanding

  6,132,060   5,517,670   6,100,204   5,499,951 

Per share calculations:

                

Net income (loss) per share from continuing operations

 $0.11  $0.11  $0.29  $(1.25)

Net income (loss) per share from discontinued operations, net of tax

 $0.02  $(0.15) $0.08  $(0.27)

Net income (loss) per share

 $0.13  $(0.04) $0.37  $(1.52)
   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  
   

(in thousands, except share and per share data)

  

DILUTED: CONTINUING OPERATIONS

                                

Numerator:

                                

Net income (loss) from continuing operations

   $ 665     $ 619     $ 1,758     $ (6,854 )

Adjustment for change in fair value of warrant liabilities

     (3,016 )     —       (5,896 )     —  

Adjusted numerator - net (loss) income from continuing operations

   $ (2,351 )   $ 619     $ (4,138 )   $ (6,854 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net (loss) income per share from continuing operations

   $ (0.28 )   $ 0.11     $ (0.47 )   $ (1.25 )
                                 

DILUTED: DISCONTINUED OPERATIONS

                                

Numerator:

                                

Net income (loss) from discontinued operations, net of tax

   $ 123     $ (839 )   $ 504     $ (1,486 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net income (loss) per share from discontinued operations, net of tax

   $ 0.01     $ (0.15 )   $ 0.06     $ (0.27 )
                                 

DILUTED: NET INCOME (LOSS)

                                

Numerator:

                                

Net income (loss)

   $ 788     $ (220 )   $ 2,262     $ (8,340 )

Adjustment for change in fair value of warrant liabilities

     (3,016 )     —       (5,896 )     —  

Adjusted numerator - net loss

   $ (2,228 )   $ (220 )   $ (3,634 )   $ (8,340 )

Denominator:

                                

Basic weighted-average common shares outstanding

     6,132,060       5,517,670       6,100,204       5,499,951  

Dilutive effect of warrants to purchase common stock

     2,342,087       —       2,669,216       —  

Dilutive effect of unvested restricted stock and restricted stock units

     10,965       —       13,374       —  

Diluted weighted-average common shares outstanding

     8,485,112       5,517,670       8,782,794       5,499,951  

Per share calculation:

                                

Net loss per share

   $ (0.26 )   $ (0.04 )   $ (0.41 )   $ (1.52 )
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]
   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  

Warrants to purchase common stock - liability classified (note 16)

     3,539,679       6,498,980       3,212,550       6,498,980  

Warrants to purchase common stock - equity classified (note 16)

     18,114       39,072       18,114       39,072  

Employee unvested restricted stock (note 15)

     25,291       40,017       22,882       40,017  

Employee unvested restricted stock units (note 15)

     512       2,898       565       2,898  

Employee stock options (note 15)

     221,392       149,087       221,392       149,087  

Total anti-dilutive securities

     3,804,988       6,730,054       3,475,503       6,730,054  
v3.25.0.1
Note 20 - Discontinued Operations (Tables)
 6 Months Ended
Dec. 31, 2024
Notes Tables  
Disposal Groups, Including Discontinued Operations [Table Text Block]
   

Three Months Ended

    

Six Months Ended

  
   

December 31,

    

December 31,

  
   

2024

    

2023

    

2024

    

2023

  
   

(in thousands)

  

Net revenue

   $ —     $ 4,186     $ 717     $ 8,468  

Cost of sales

     —       (2,586 )     (359 )     (5,122 )

Selling and marketing

     —       (1,358 )     (155 )     (2,689 )

General and administrative

     —       (642 )     (2 )     (1,312 )

Amortization of intangible assets

     —       (382 )     —       (764 )

Non-operating other expense, net

     —       (9 )     (4 )     (19 )

Recognized contingent consideration

     175       —       587       —  

Loss on divestiture

     —       —       (254 )     —  

Income (loss) from discontinued operations before income taxes

     175       (791 )     530       (1,438 )

Income tax expense

     (52 )     (48 )     (26 )     (48 )

Net income (loss) from discontinued operations, net of tax

   $ 123     $ (839 )   $ 504     $ (1,486 )
   

June 30,

  
   

2024

  
    (in thousands)  

ASSETS

        

Current assets of discontinued operations:

        

Accounts receivable, net

   $ 91  

Inventories

     492  

Prepaid expenses and other current assets

     538  

Total current assets of discontinued operations

     1,121  

Non-current assets of discontinued operations:

        

Other non-current assets

     44  

Total current and non-current assets of discontinued operations

   $ 1,165  
         

LIABILITIES

        

Current liabilities of discontinued operations:

        

Accounts payable

   $ 126  

Accrued liabilities

     431  

Total current liabilities of discontinued operations

   $ 557  
v3.25.0.1
Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Sep. 30, 2023
Dec. 31, 2024
Dec. 31, 2023
Jun. 30, 2024
Income Tax Expense (Benefit) $ (283) $ 780   $ 122 $ 780  
Effective Income Tax Rate Reconciliation, Percent 74.10% 55.80%   6.50% 12.80%  
Employee Retention Credit $ 3,759     $ 3,759   $ 3,759
Employee Retention Credit, Vendor Fee     $ 400      
Other Noncurrent Liabilities [Member]            
Employee Retention Credit $ 3,800   $ 3,800 $ 3,800    
v3.25.0.1
Note 3 - Revenue (Details Textual)
$ in Millions
 3 Months Ended
Sep. 30, 2024
USD ($)
Contract with Customer, Liability, Cumulative Catch-up Adjustment to Revenue, Change in Estimate of Transaction Price $ 3.3
v3.25.0.1
Note 3 - Revenue - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Revenue $ 16,221 $ 18,748 $ 32,795 $ 36,565
Rx Segment [Member]        
Revenue 16,221 18,748 32,795 36,565
Rx Segment [Member] | ADHD Portfolio [Member]        
Revenue 13,816 16,572 29,080 31,700
Rx Segment [Member] | The Pediatric Portfolio [Member]        
Revenue 2,400 2,145 3,693 4,710
Rx Segment [Member] | Product and Service, Other [Member]        
Revenue $ 5 $ 31 $ 22 $ 155
v3.25.0.1
Note 4 - Inventories (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Inventory Write-down $ 100 $ 100 $ 95 $ 51
v3.25.0.1
Note 4 - Inventories - Schedule of Inventories (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Raw materials $ 494 $ 266
Work in process 3,103 5,725
Finished goods 7,488 6,150
Inventories $ 11,085 $ 12,141
v3.25.0.1
Note 5 - Property and Equipment (Details Textual) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Depreciation $ 0.1 $ 0.3 $ 0.1 $ 0.6
v3.25.0.1
Note 5 - Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Property and equipment, gross $ 1,167 $ 2,818
Less: accumulated depreciation and amortization (651) (2,125)
Property and equipment, net 516 693
Manufacturing Equipment [Member]    
Property and equipment, gross 721 1,838
Office Equipment, Furniture and Other [Member]    
Property and equipment, gross 282 945
Leasehold Improvements [Member]    
Property and equipment, gross $ 164 $ 35
v3.25.0.1
Note 6 - Leases (Details Textual) - USD ($)
Dec. 31, 2024
Jun. 30, 2024
Finance Lease, Liability   $ 0
Operating Lease, Right-of-Use Asset $ 1,178,000 829,000
Operating Lease, Liability $ 1,288,000 1,289,000
Office Space in Berwyn, Pennsylvania [Member]    
Operating Lease, Undiscounted Minimum Monthly Payment   13,000
Operating Lease, Right-of-Use Asset   500,000
Operating Lease, Liability   $ 500,000
Lessee, Operating Lease, Discount Rate   12.30%
v3.25.0.1
Note 6 - Leases - Lease Cost (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Jun. 30, 2024
Total lease cost $ 229 $ 418 $ 442 $ 816  
Operating lease right-of-use assets (Year) 5 years 7 months 6 days   5 years 7 months 6 days   2 years 8 months 12 days
Operating lease right-of-use assets 12.10%   12.10%   10.00%
Operating cash flows from operating leases     $ 606 697  
Operating cash flows from finance leases     0 2  
Financing cash flows from finance leases     0 46  
Operating Expense [Member]          
Operating lease cost $ 143 381 265 741  
Short-term lease cost 86 21 177 44  
Cost of Sales [Member]          
Amortization of leased assets 0 15 0 29  
Other Expense [Member]          
Interest on lease liabilities $ 0 $ 1 $ 0 $ 2  
v3.25.0.1
Note 6 - Leases - Lease Balance Sheet Information (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Operating lease right-of-use assets $ 1,178 $ 829
Current: operating leases 182 712
Non-current: operating leases 1,106 577
Total lease liabilities $ 1,288 $ 1,289
v3.25.0.1
Note 6 - Leases - Lease Balance Sheet Information (Details) (Parentheticals) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Liabilities, Current [Abstract]    
Other Liabilities, Current $ 7,108 $ 8,962
Liabilities, Noncurrent [Abstract]    
Liabilities, Noncurrent 21,414 28,151
Other Liabilities, Noncurrent $ 5,045 $ 4,529
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Other Liabilities, Current Other Liabilities, Current
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] Other Liabilities, Noncurrent Other Liabilities, Noncurrent
v3.25.0.1
Note 6 - Leases - Schedule of Lease Liability Maturity (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
2025 (remaining 6 months) $ 123  
2026 399  
2027 377  
2028 386  
2029 358  
2030 230  
Thereafter 19  
Total lease payments 1,892  
Less: imputed interest (479)  
Less: tenant improvement allowance 125  
Operating Lease, Liability $ 1,288 $ 1,289
v3.25.0.1
Note 7 - Intangible Assets (Details Textual) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended 18 Months Ended
Dec. 31, 2024
Dec. 31, 2024
Dec. 31, 2024
Amortization Expense of Intangible Assets $ 1.2 $ 2.5  
Tris Karbinal Agreement [Member]      
Supply and Distribution Agreement, Extension Term (Year)     20 years
Minimum [Member]      
Finite-Lived Intangible Asset, Useful Life, Renewable Period (Year)   1 year  
Maximum [Member]      
Finite-Lived Intangible Asset, Useful Life, Renewable Period (Year)   20 years  
v3.25.0.1
Note 7 - Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Finite-lived intangible assets, gross $ 71,468 $ 71,468
Finite-lived intangible assets, amortization (21,510) (19,015)
Finite-lived intangible assets, net $ 49,958 $ 52,453
Finite-lived intangible assets, remaining life (Year) 11 years 8 months 12 days 12 years
Technology-Based Intangible Assets [Member]    
Finite-lived intangible assets, gross $ 41,268 $ 41,268
Finite-lived intangible assets, amortization (14,791) (13,184)
Finite-lived intangible assets, net $ 26,477 $ 28,084
Finite-lived intangible assets, remaining life (Year) 10 years 3 months 18 days 10 years 8 months 12 days
Developed Technology Rights [Member]    
Finite-lived intangible assets, gross $ 30,200 $ 30,200
Finite-lived intangible assets, amortization (6,719) (5,831)
Finite-lived intangible assets, net $ 23,481 $ 24,369
Finite-lived intangible assets, remaining life (Year) 13 years 2 months 12 days 13 years 9 months 18 days
v3.25.0.1
Note 7 - Intangible Assets - Future Amortization Expense (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
2025 (remaining 9 months), future amortization expense $ 2,495  
2026, future amortization expense 4,989  
2027, future amortization expense 4,989  
2028, future amortization expense 4,989  
2029, future amortization expense 4,989  
2030, future amortization expense 2,847  
Thereafter, future amortization expense 24,660  
Total future amortization expense $ 49,958 $ 52,453
v3.25.0.1
Note 8 - Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Accrued savings offers $ 14,507 $ 11,054
Accrued program liabilities 7,021 9,964
Accrued customer and product related fees 5,735 5,395
Return reserve 5,111 4,832
Accrued employee compensation 3,971 4,603
Other accrued liabilities 3,027 2,295
Total accrued liabilities $ 39,372 $ 38,143
v3.25.0.1
Note 9 - Other Liabilities (Details Textual)
 6 Months Ended
Dec. 31, 2024
USD ($)
Jun. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Fixed Payment Arrangements $ 6,926,000 $ 8,337,000  
Employee Retention Credit 3,759,000 $ 3,759,000  
Business Combination, Contingent Consideration, Liability 0    
Other Noncurrent Liabilities [Member]      
Employee Retention Credit $ 3,800,000   $ 3,800,000
Tris Karbinal Agreement [Member]      
Supply and Distribution Commitment, Period (Year) 20 years    
Supply and Distribution Commitment, Royalty, Percentage of Net Sales 23.50%    
Supply and Distribution Agreement, Minimum Sales Per Year 70,000    
Supply and Distribution Agreement, Royalty Make Whole Payment Under Annual Minimum Sales Commitment, Per Unit $ 30    
Supply and Distribution Agreement, Maximum Yearly Make-whole Payment 2,100,000    
Supply and Distribution Agreement, Maximum Milestone Obligations 3,000,000    
Supply and Distribution Agreement, First Milestone, Minimum Net Revenues 40,000,000    
Tris Karbinal Agreement [Member] | Other Current Liabilities [Member]      
Settlement Liabilities, Current 5,800,000    
Fixed Payment Arrangements $ 1,200,000    
v3.25.0.1
Note 9 - Other Liabilities - Schedule of Other Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Fixed payment arrangements $ 6,926 $ 8,337
Employee retention credit 3,759 3,759
Operating Lease, Liability 1,288 1,289
Other 180 106
Total other liabilities 12,153 13,491
Less: current portion of other liabilities (7,108) (8,962)
Total non-current portion of other liabilities $ 5,045 $ 4,529
v3.25.0.1
Note 10 - Revolving Credit Facility (Details Textual) - Eclipse Business Capital LLC Loan Agreement [Member] - Secured Debt [Member] - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 12, 2024
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Jun. 30, 2024
Mar. 24, 2024
Line of Credit Facility, Maximum Borrowing Capacity $ 14.5            
Debt Instrument, Basis Spread on Variable Rate 4.50%            
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage 0.50%            
Debt Instrument, Interest Rate, Effective Percentage   9.20%   9.20%      
Interest Expense, Debt   $ 0.1 $ 0.1 $ 0.1 $ 0.1    
Long-Term Line of Credit   4.0   4.0   $ 2.4  
Line of Credit Facility, Remaining Borrowing Capacity   $ 7.9   $ 7.9      
On or Before January 26, 2023 [Member]              
Line of Credit Facility, Termination, Fee, Percentage of Commitment             2.00%
After January 26, 2023 But Before January 26, 2024 [Member]              
Line of Credit Facility, Termination, Fee, Percentage of Commitment             1.00%
After January 26, 2024 But Before January 26, 2025 [Member]              
Line of Credit Facility, Termination, Fee, Percentage of Commitment             0.50%
v3.25.0.1
Note 11 - Long-term Debt (Details Textual) - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended 6 Months Ended
Jun. 12, 2024
Jan. 26, 2022
Dec. 31, 2024
Jun. 30, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Oct. 25, 2022
Mar. 07, 2022
Avenue Capital Issuance [Member]                  
Shares Issued, Price Per Share (in dollars per share)                 $ 25
Avenue Capital Warrants [Member]                  
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)   $ 24.2           $ 8.6 $ 24.2
Warrants and Rights Outstanding   $ 0.6              
Avenue Capital Loan [Member]                  
Debt Instrument, Face Amount   $ 15.0              
Debt Instrument, Interest Rate, Stated Percentage   3.25%              
Loan Processing Fee   $ 0.4              
Debt Instrument, Prepayment Fee, Percentage     16.60%     16.60%      
Interest Expense, Debt         $ 0.7   $ 1.5    
Debt Instrument, Final Payment $ 0.6                
Gain (Loss) on Extinguishment of Debt       $ (0.6)          
Avenue Capital Loan [Member] | After January 26, 2024 But Before January 26, 2025 [Member]                  
Debt Instrument, Prepayment Fee, Percentage 1.00%                
Debt Instrument, Prepayment Fee, Amount $ 0.2                
Avenue Capital Loan [Member] | Prime Rate [Member]                  
Debt Instrument, Basis Spread on Variable Rate   7.40%              
Eclipse Term loan [Member]                  
Debt Instrument, Face Amount $ 13.0                
Interest Expense, Debt     $ 0.4     $ 0.8      
Debt Instrument, Term (Year) 4 years                
Debt Instrument, Amortization Period (Year) 7 years                
Long-Term Debt, Maturity, Year Four $ 5.6                
Debt Instrument, Interest Rate, Effective Percentage     11.70%     11.70%      
Eclipse Term loan [Member] | On or Before June 12 2025 [Member]                  
Debt Instrument, Termination Fee, Percentage 3.00%                
Eclipse Term loan [Member] | After June 12, 2025, but on or before June 12, 2026 [Member]                  
Debt Instrument, Termination Fee, Percentage 2.00%                
Eclipse Term loan [Member] | After June 12, 2026, but on or before June 12, 2027 [Member]                  
Debt Instrument, Termination Fee, Percentage 1.00%                
Eclipse Term loan [Member] | After June 12, 2026, but on or before June 12, 2028 [Member]                  
Debt Instrument, Termination Fee, Percentage 0.50%                
Eclipse Term loan [Member] | Secured Overnight Financing Rate (SOFR) [Member]                  
Debt Instrument, Basis Spread on Variable Rate 7.00%                
v3.25.0.1
Note 11 - Long-term Debt - Schedule of Long-term Debt (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Term loan principal amount $ 12,071 $ 13,000
Less: unamortized debt discount and issuance costs (231) (266)
Total debt 11,840 12,734
Less: current portion of debt (1,857) (1,857)
Total debt, net of current portion $ 9,983 $ 10,877
v3.25.0.1
Note 11 - Long-term Debt - Future Principal Payments (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
2025 (remaining 6 months) $ 928  
2026 1,857  
2027 1,857  
2028 7,429  
Total future principal payments 12,071  
Less: unamortized debt discount and issuance costs (231) $ (266)
Less: current portion of debt (1,857) (1,857)
Total debt, net of current portion $ 9,983 $ 10,877
v3.25.0.1
Note 12 - Fair Value Considerations (Details Textual) - Tranche B Pre-Funded Warrants [Member] - $ / shares
Sep. 30, 2024
Jun. 14, 2024
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) 176,000 1,806,434
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) $ 0.0001 $ 0.0001
v3.25.0.1
Note 12 - Fair Value Considerations - Recurring Fair Value Measurements (Details) - USD ($)
$ in Thousands
Dec. 31, 2024
Jun. 30, 2024
Derivative warrant liabilities $ 6,386 $ 12,745
Financial liabilities, fair value 6,386 12,745
Fair Value, Inputs, Level 1 [Member]    
Derivative warrant liabilities 0 0
Financial liabilities, fair value 0 0
Fair Value, Inputs, Level 2 [Member]    
Derivative warrant liabilities 0 0
Financial liabilities, fair value 0 0
Fair Value, Inputs, Level 3 [Member]    
Derivative warrant liabilities 6,386 12,745
Financial liabilities, fair value $ 6,386 $ 12,745
v3.25.0.1
Note 12 - Fair Value Considerations - Summary of Level 3 Changes (Details) - Fair Value, Inputs, Level 3 [Member]
$ in Thousands
 6 Months Ended
Dec. 31, 2024
USD ($)
Balance $ 12,745
Settlements (1) (463) [1]
Included in earnings (5,896)
Balance $ 6,386
[1] Relates to the exercise of 176,000 of the Tranche B Pre-Funded Warrants during the first quarter of fiscal 2025, which were liability classified and exercised at a price of $0.0001 per share.
v3.25.0.1
Note 12 - Fair Value Considerations - Summary of Level 3 Changes (Details) (Parentheticals) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Income Statement [Abstract]        
Derivative, Gain (Loss) on Derivative, Net $ 3,016 $ (577) $ 5,896 $ (6,484)
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]     Derivative, Gain (Loss) on Derivative, Net  
v3.25.0.1
Note 12 - Fair Value Considerations - Valuation Assumptions (Details)
Dec. 31, 2024
Measurement Input, Share Price [Member] | June 2023 Warrants Tranche A [Member]  
Derivative liability, measurement input 1.7
Measurement Input, Share Price [Member] | Other Warrants [Member]  
Derivative liability, measurement input 1.7 [1]
Measurement Input, Expected Term [Member] | June 2023 Warrants Tranche A [Member]  
Derivative liability, measurement input 3.4
Measurement Input, Expected Term [Member] | Other Warrants [Member] | Minimum [Member]  
Derivative liability, measurement input 2.1 [1]
Measurement Input, Expected Term [Member] | Other Warrants [Member] | Maximum [Member]  
Derivative liability, measurement input 2.7 [1]
Measurement Input, Price Volatility [Member] | June 2023 Warrants Tranche A [Member]  
Derivative liability, measurement input 0.808
Measurement Input, Price Volatility [Member] | Other Warrants [Member] | Minimum [Member]  
Derivative liability, measurement input 0.747 [1]
Measurement Input, Price Volatility [Member] | Other Warrants [Member] | Maximum [Member]  
Derivative liability, measurement input 0.805 [1]
Measurement Input, Risk Free Interest Rate [Member] | June 2023 Warrants Tranche A [Member]  
Derivative liability, measurement input 0.043
Measurement Input, Risk Free Interest Rate [Member] | Other Warrants [Member]  
Derivative liability, measurement input 0.043 [1]
Measurement Input, Expected Dividend Rate [Member] | June 2023 Warrants Tranche A [Member]  
Derivative liability, measurement input 0
Measurement Input, Expected Dividend Rate [Member] | Other Warrants [Member]  
Derivative liability, measurement input 0 [1]
[1] Includes August 2022 Warrants, March 2022 Warrants, Avenue Capital Warrants and Tranche B Pre-Funded Warrants. See Note 16 - Warrants for definitions of these terms and further information.
v3.25.0.1
Note 13 - Commitments and Contingencies (Details Textual) - Tris Karbinal Agreement [Member]
 6 Months Ended
Dec. 31, 2024
USD ($)
Supply and Distribution Commitment, Period (Year) 20 years
Supply and Distribution Commitment, Royalty, Percentage of Net Sales 23.50%
Supply and Distribution Agreement, Minimum Sales Per Year 70,000
Supply and Distribution Agreement, Royalty Make Whole Payment Under Annual Minimum Sales Commitment, Per Unit $ 30
Supply and Distribution Agreement, Maximum Milestone Obligations 3,000,000
Supply and Distribution Agreement, First Milestone, Minimum Net Revenues 40,000,000
Maximum [Member]  
Supply and Distribution Agreement, Royalty Make Whole Payment Under Annual Minimum Sales Commitment, Per Unit $ 2,100,000
v3.25.0.1
Note 14 - Stockholders' Equity (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands
 6 Months Ended
Jun. 14, 2024
Jun. 08, 2023
Aug. 11, 2022
Dec. 31, 2024
Dec. 31, 2023
Sep. 30, 2024
Sep. 26, 2024
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2022
Jun. 17, 2020
Common Stock, Shares Authorized (in shares)       200,000,000       200,000,000      
Common Stock, Par or Stated Value Per Share (in dollars per share)       $ 0.0001       $ 0.0001      
Preferred Stock, Shares Authorized (in shares)       50,000,000       50,000,000      
Preferred Stock, Par or Stated Value Per Share (in dollars per share)       $ 0.0001       $ 0.0001      
Common Stock, Shares, Outstanding (in shares)       6,169,681       5,972,638      
Payments of Stock Issuance Costs       $ (0) $ 160            
August 2022 Prefunded Warrants [Member]                      
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)     87,500                
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)     $ 0.02                
August 2022 Common Warrants [Member]                      
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)     1,265,547                
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)     1                
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)     $ 8.6           $ 2.32 $ 3.3  
Warrants and Rights Outstanding, Term (Year)     5 years                
August 2022 Common and Prefunded Warrants [Member]                      
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)     1                
Sale of Stock, Price Per Share (in dollars per share)     $ 8.58                
Warrants and Rights Outstanding, Term (Year)     5 years                
Warrants and Rights Outstanding     $ 6,000                
Pre-Funded Warrants [Member]                      
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)   430,217                  
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)   1                  
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)   $ 0.0001 $ 0.02                
Tranche A Common Warrants [Member]                      
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)   2,173,912                  
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)   $ 3.18                  
Warrants and Rights Outstanding, Term (Year)   5 years                  
Tranche B Common Warrants [Member]                      
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)   2,173,912   1,630,424       1,806,434      
Proceeds from Warrant Exercises $ 3,500                    
Stock Issued During Period, Shares, Warrants Exercised (in shares) 367,478                    
Common Warrants [Member]                      
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)   $ 1.59                  
Common Warrants Exchanged for PreFunded Warrants [Member]                      
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)   $ 1.5899                  
Securities Purchase Agreement Warrants [Member]                      
Warrants and Rights Outstanding   $ 5,000                  
Payments of Stock Issuance Costs   $ 600                  
Tranche B Pre-Funded Warrants [Member]                      
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) 1,806,434         176,000          
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) $ 0.0001         $ 0.0001          
Warrants and Rights Outstanding $ 5,100                    
Class of Warrant or Right, Issued During Period (in shares) 1,806,434                    
The 2020 Shelf [Member]                      
Sale of Stock, Maximum Amount of Equity Issuable                     $ 100,000
The August 2022 Offering [Member]                      
Stock Issued During Period, Shares, New Issues (in shares)     1,075,290                
Sale of Stock, Price Per Share (in dollars per share)     $ 8.6                
Proceeds from Issuance or Sale of Equity     $ 10,000                
Payment of Financing and Stock Issuance Costs     $ 900                
Securities Purchase Agreement [Member]                      
Stock Issued During Period, Shares, New Issues (in shares)   1,743,695                  
Proceeds from Issuance or Sale of Equity   $ 4,000                  
Payment of Financing and Stock Issuance Costs   $ 3,400                  
The 2024 Shelf [Member]                      
Sale of Stock, Maximum Amount of Equity Issuable             $ 100,000        
Restricted Stock [Member]                      
Common Stock, Shares, Outstanding (in shares)       36,256              
v3.25.0.1
Note 15 - Equity Incentive Plans (Details Textual) - USD ($)
$ / shares in Units, $ in Millions
 6 Months Ended
May 18, 2023
Apr. 19, 2021
Jun. 01, 2015
Dec. 31, 2024
Jun. 30, 2024
Feb. 13, 2020
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number (in shares)       221,392 146,539  
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares)       83,000    
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share)       $ 1.84    
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)       20,000    
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)       $ 1.79    
Share-Based Payment Arrangement, Option [Member]            
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount       $ 0.2    
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)       2 years 3 months 18 days    
Restricted Stock [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in shares)       36,252 24,105  
Restricted Stock Units (RSUs) [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in shares)       565 1,775  
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)       2 months 12 days    
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)       0    
Share-Based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount       $ 0.1    
The 2023 Equity Incentive Plan [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized (in shares) 200,000          
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares) 87,129     87,636    
The 2023 Equity Incentive Plan [Member] | Share-Based Payment Arrangement, Option [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year) 10 years          
The 2023 Equity Incentive Plan [Member] | Share-Based Payment Arrangement, Option [Member] | Minimum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year) 3 years          
The 2023 Equity Incentive Plan [Member] | Share-Based Payment Arrangement, Option [Member] | Maximum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year) 4 years          
The 2023 Equity Incentive Plan [Member] | Restricted Stock and Restricted Stock Units (RSUs) [Member] | Minimum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year) 3 years          
The 2023 Equity Incentive Plan [Member] | Restricted Stock and Restricted Stock Units (RSUs) [Member] | Maximum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year) 4 years          
The 2023 Equity Incentive Plan [Member] | Restricted Stock [Member]            
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)       2 years 3 months 18 days    
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)       20,000    
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)       $ 1.79    
Share-Based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount       $ 0.9    
The 2015 Plan [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)           250,000
The 2015 Plan [Member] | Share-Based Payment Arrangement, Option [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)     10 years      
The 2015 Plan [Member] | Share-Based Payment Arrangement, Option [Member] | Minimum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)     3 years      
The 2015 Plan [Member] | Share-Based Payment Arrangement, Option [Member] | Maximum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)     4 years      
The 2015 Plan [Member] | Restricted Stock [Member] | Minimum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)     4 years      
The 2015 Plan [Member] | Restricted Stock [Member] | Maximum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)     10 years      
The 2015 Plan [Member] | Restricted Stock Units (RSUs) [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)     4 years      
Neos 2015 Plan [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)   5,272        
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number (in shares)   3,486        
Neos 2015 Plan [Member] | Share-Based Payment Arrangement, Option [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)   10 years        
Neos 2015 Plan [Member] | Share-Based Payment Arrangement, Option [Member] | Minimum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)   1 year        
Neos 2015 Plan [Member] | Share-Based Payment Arrangement, Option [Member] | Maximum [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)   4 years        
Neos 2015 Plan [Member] | Restricted Stock Units (RSUs) [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in shares)   1,786        
Outside Equity Incentive Plan [Member] | Restricted Stock [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in shares)       4    
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)       1 year 6 months    
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)       0    
Share-Based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount       $ 0.2    
v3.25.0.1
Note 15 - Equity Incentive Plans - Stock Option Activity (Details) - $ / shares
 6 Months Ended 12 Months Ended
Dec. 31, 2024
Jun. 30, 2024
Outstanding, options (in shares) 146,539  
Outstanding, options, weighted average exercise price (in dollars per share) $ 6.18  
Outstanding, options, weighted average remaining contractual life (Year) 8 years 3 months 18 days 8 years 9 months 18 days
Granted, options (in shares) 83,000  
Granted, options, weighted average exercise price (in dollars per share) $ 1.84  
Granted, options, weighted average remaining contractual life (Year) 2 years 3 months 18 days  
Forfeited/Cancelled, options (in shares) (8,147)  
Forfeited/Cancelled, options, weighted average exercise price (in dollars per share) $ 5.73  
Outstanding, options (in shares) 221,392 146,539
Outstanding, options, weighted average exercise price (in dollars per share) $ 4.57 $ 6.18
Exercisable, options (in shares) 81,399  
Exercisable, options, weighted average exercise price (in dollars per share) $ 9.02  
Exercisable, options, weighted average remaining contractual life (Year) 6 years 7 months 6 days  
v3.25.0.1
Note 15 - Equity Incentive Plans - Restricted Stock Activity (Details)
 6 Months Ended
Dec. 31, 2024
$ / shares
shares
Granted, shares (in shares) | shares 20,000
Granted, weighted average grant date fair value (in dollars per share) | $ / shares $ 1.79
Restricted Stock [Member]  
Unvested, shares (in shares) | shares 24,105
Unvested, weighted average grant date fair value (in dollars per share) | $ / shares $ 100.34
Vested, shares (in shares) | shares (7,853)
Vested, weighted average grant date fair value (in dollars per share) | $ / shares $ 15.33
Unvested, shares (in shares) | shares 36,252
Unvested, weighted average grant date fair value (in dollars per share) | $ / shares $ 64.38
v3.25.0.1
Note 15 - Equity Incentive Plans - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member]
 6 Months Ended
Dec. 31, 2024
$ / shares
shares
Unvested, shares (in shares) | shares 1,775
Unvested, weighted average grant date fair value (in dollars per share) | $ / shares $ 24.14
Vested, shares (in shares) | shares (1,043)
Vested, weighted average grant date fair value (in dollars per share) | $ / shares $ 24.13
Forfeited, shares (in shares) | shares (167)
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares $ 26.2
Unvested, shares (in shares) | shares 565
Unvested, weighted average grant date fair value (in dollars per share) | $ / shares $ 23.55
v3.25.0.1
Note 15 - Equity Incentive Plans - Stock Compensation Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Total stock-based compensation expense $ 151 $ 820 $ 324 $ 1,750
Cost of Sales [Member]        
Total stock-based compensation expense 0 1 1 1
Research and Development Expense [Member]        
Total stock-based compensation expense 1 2 3 3
Selling and Marketing Expense [Member]        
Total stock-based compensation expense 14 0 46 0
General and Administrative Expense [Member]        
Total stock-based compensation expense 136 704 274 1,428
Net Loss From Discontinued Operations [Member]        
Total stock-based compensation expense $ 0 $ 113 $ 0 $ 318
v3.25.0.1
Note 16 - Warrants (Details Textual)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 14, 2024
USD ($)
$ / shares
shares
Jun. 08, 2023
USD ($)
$ / shares
shares
Jan. 06, 2023
Sep. 30, 2024
$ / shares
shares
Dec. 31, 2024
USD ($)
shares
Dec. 31, 2023
USD ($)
Jun. 30, 2024
shares
Jun. 30, 2023
$ / shares
Dec. 31, 2022
$ / shares
Aug. 11, 2022
$ / shares
shares
Payments of Stock Issuance Costs | $         $ (0) $ 160        
Class of Warrant or Right, Outstanding (in shares)         5,899,880 [1]   6,075,880 [2]      
Class of Warrant or Right, Exercised During Period (in shares) [3]         176,000          
Reverse Stock Split [Member]                    
Stockholders' Equity Note, Stock Split, Conversion Ratio     20              
Pre-Funded Warrants [Member]                    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)   430,217                
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares   $ 0.0001               $ 0.02
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)   1                
Tranche A Common Warrants [Member]                    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)   2,173,912                
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares   $ 3.18                
Warrants and Rights Outstanding, Term (Year)   5 years                
Tranche B Common Warrants [Member]                    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)   2,173,912     1,630,424   1,806,434      
Proceeds from Warrant Exercises | $ $ 3,500                  
Stock Issued During Period, Shares, Warrants Exercised (in shares) 367,478                  
Class of Warrant or Right, Exercised During Period (in shares)       176,000            
Class of Warrant or Right, Exercise Price, Exercised During Period (in dollars per share) | $ / shares       $ 0.0001            
Common Warrants [Member]                    
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares   $ 1.59                
Common Warrants Exchanged for PreFunded Warrants [Member]                    
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares   $ 1.5899                
Tranche B Pre-Funded Warrants [Member]                    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) 1,806,434     176,000            
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares $ 0.0001     $ 0.0001            
Warrants and Rights Outstanding | $ $ 5,100                  
August 2022 Prefunded Warrants [Member]                    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)                   87,500
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares                   $ 0.02
August 2022 Common Warrants [Member]                    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)                   1,265,547
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares               $ 2.32 $ 3.3 $ 8.6
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)                   1
Warrants and Rights Outstanding, Term (Year)                   5 years
August 2022 Common Warrants [Member] | Minimum [Member]                    
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares                   $ 2.32
August 2022 Common Warrants [Member] | Maximum [Member]                    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)                   2,325,581
Liability Warrants [Member]                    
Class of Warrant or Right, Outstanding (in shares)       3,821,115     3,821,115      
Liability Pre-Funded Warrants [Member]                    
Class of Warrant or Right, Outstanding (in shares)         430,217   430,217      
Equity Warrants [Member]                    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)             18,114      
Class of Warrant or Right, Outstanding (in shares)         18,114          
Securities Purchase Agreement [Member]                    
Stock Issued During Period, Shares, New Issues (in shares)   1,743,695                
Proceeds from Issuance or Sale of Equity | $   $ 4,000                
Payment of Financing and Stock Issuance Costs | $   3,400                
Securities Purchase Agreement Warrants [Member]                    
Warrants and Rights Outstanding | $   5,000                
Payments of Stock Issuance Costs | $   $ 600                
[1] The number of warrants outstanding as of December 31, 2024, is comprised of 3,821,115 liability classified warrants, 430,217 liability classified June 2023 Pre-Funded Warrants, 1,630,424 liability classified Tranche B Pre-Funded Warrants and 18,114 equity classified warrants.
[2] The number of warrants outstanding as of June 30, 2024, is comprised of 3,821,115 liability classified warrants, 430,217 liability classified June 2023 Pre-Funded Warrants, 1,806,434 liability classified Tranche B Pre-Funded Warrants and 18,114 equity classified warrants.
[3] Warrants exercised during the first quarter of fiscal 2025 were 176,000 of the Tranche B Warrants, which were exercised at a price of $0.0001 per share.
v3.25.0.1
Note 16 - Warrants - Schedule of Warrants Outstanding (Details) - $ / shares
 6 Months Ended 12 Months Ended
Dec. 31, 2024
Jun. 30, 2024
 [1]
Outstanding, balance (in shares) [1] 6,075,880  
Outstanding, weighted average remaining contractual term (Year) [2] 2 years [3] 3 years 7 months 6 days
Warrants exercised (2) (in shares) [4] (176,000)  
Outstanding, balance (in shares) 5,899,880 [3] 6,075,880
Weighted Average [Member]    
Outstanding, weighted average exercise price (in dollars per share) [1] $ 3.71  
Warrants exercised, weighted average exercise price (in dollars per share) [4] 0.0001  
Outstanding, weighted average exercise price (in dollars per share) $ 3.22 [3] $ 3.71
[1] The number of warrants outstanding as of June 30, 2024, is comprised of 3,821,115 liability classified warrants, 430,217 liability classified June 2023 Pre-Funded Warrants, 1,806,434 liability classified Tranche B Pre-Funded Warrants and 18,114 equity classified warrants.
[2] As pre-funded warrants do not have an expiration date, they have been excluded from the calculation of the weighted average remaining contractual life in years.
[3] The number of warrants outstanding as of December 31, 2024, is comprised of 3,821,115 liability classified warrants, 430,217 liability classified June 2023 Pre-Funded Warrants, 1,630,424 liability classified Tranche B Pre-Funded Warrants and 18,114 equity classified warrants.
[4] Warrants exercised during the first quarter of fiscal 2025 were 176,000 of the Tranche B Warrants, which were exercised at a price of $0.0001 per share.
v3.25.0.1
Note 17 - Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Sep. 30, 2024
Dec. 31, 2023
Sep. 30, 2023
Dec. 31, 2024
Dec. 31, 2023
Net income (loss) from continuing operations $ 665   $ 619   $ 1,758 $ (6,854)
Net income (loss) from discontinued operations, net of tax 123   (839)   504 (1,486)
Net income (loss) $ 788   $ (220)   $ 2,262 $ (8,340)
Basic weighted-average common shares outstanding (note 17) (in shares) 6,132,060   5,517,670   6,100,204 5,499,951
Basic - continuing operations (in dollars per share) $ 0.11   $ 0.11   $ 0.29 $ (1.25)
Basic - discontinued operations, net of tax (in dollars per share) 0.02   (0.15)   0.08 (0.27)
Net income (loss) per share (in dollars per share) $ 0.13   $ (0.04)   $ 0.37 $ (1.52)
Adjustment for change in fair value of warrant liabilities $ (3,016)   $ 0   $ (5,896) $ 0
Dilutive effect of warrants to purchase common stock (in shares) 2,342,087   0   2,669,216 0
Dilutive effect of unvested restricted stock and restricted stock units (in shares) 10,965   0   13,374 0
Diluted weighted-average common shares outstanding (in shares) 8,485,112   5,517,670   8,782,794 5,499,951
Diluted - continuing operations (in dollars per share) $ (0.28)   $ 0.11   $ (0.47) $ (1.25)
Diluted - discontinued operations, net of tax (in dollars per share) $ 0.01   $ (0.15)   $ 0.06 $ (0.27)
Net income (loss) $ 788 $ 1,474 $ (220) $ (8,120) $ 2,262 $ (8,340)
Adjusted numerator - net loss $ (2,228)   $ (220)   $ (3,634) $ (8,340)
Diluted - net loss (in dollars per share) $ (0.26)   $ (0.04)   $ (0.41) $ (1.52)
Continuing Operations [Member]            
Net income (loss) from continuing operations $ 665   $ 619   $ 1,758 $ (6,854)
Basic weighted-average common shares outstanding (note 17) (in shares) 6,132,060   5,517,670   6,100,204 5,499,951
Adjustment for change in fair value of warrant liabilities $ (3,016)   $ 0   $ (5,896) $ 0
Adjusted numerator - net (loss) income from continuing operations $ (2,351)   $ 619   $ (4,138) $ (6,854)
Dilutive effect of warrants to purchase common stock (in shares) 2,342,087   0   2,669,216 0
Dilutive effect of unvested restricted stock and restricted stock units (in shares) 10,965   0   13,374 0
Diluted weighted-average common shares outstanding (in shares) 8,485,112   5,517,670   8,782,794 5,499,951
Diluted - continuing operations (in dollars per share) $ (0.28)   $ 0.11   $ (0.47) $ (1.25)
Discontinued Operations [Member]            
Net income (loss) from discontinued operations, net of tax $ 123   $ (839)   $ 504 $ (1,486)
Basic weighted-average common shares outstanding (note 17) (in shares) 6,132,060   5,517,670   6,100,204 5,499,951
Dilutive effect of warrants to purchase common stock (in shares) 2,342,087   0   2,669,216 0
Dilutive effect of unvested restricted stock and restricted stock units (in shares) 10,965   0   13,374 0
Diluted weighted-average common shares outstanding (in shares) 8,485,112   5,517,670   8,782,794 5,499,951
Diluted - discontinued operations, net of tax (in dollars per share) $ 0.01   $ (0.15)   $ 0.06 $ (0.27)
v3.25.0.1
Note 17 - Earnings Per Share - Schedule of Anti-Dilutive Securities (Details) - shares
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Antidilutive securities (in shares) 3,804,988 6,730,054 3,475,503 6,730,054
Liability Warrants [Member]        
Antidilutive securities (in shares) 3,539,679 6,498,980 3,212,550 6,498,980
Equity-based Warrants [Member]        
Antidilutive securities (in shares) 18,114 39,072 18,114 39,072
Restricted Stock [Member]        
Antidilutive securities (in shares) 25,291 40,017 22,882 40,017
Restricted Stock Units (RSUs) [Member]        
Antidilutive securities (in shares) 512 2,898 565 2,898
Share-Based Payment Arrangement, Option [Member]        
Antidilutive securities (in shares) 221,392 149,087 221,392 149,087
v3.25.0.1
Note 19 - Restructuring Costs (Details Textual) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2024
Grand Prairie, Texas Manufacturing Site [Member]    
Business Exit Costs $ 1.3 $ 2.1
v3.25.0.1
Note 20 - Discontinued Operations - Schedule of Discontinued Operations (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Jun. 30, 2024
Net income (loss) from discontinued operations, net of tax $ 123 $ (839) $ 504 $ (1,486)  
Current assets of discontinued operations:          
Total current assets of discontinued operations 0   0   $ 1,121
LIABILITIES          
Total current liabilities of discontinued operations 0   0   557
Consumer Health Divesture [Member]          
Net revenue 0 4,186 717 8,468  
Cost of sales 0 (2,586) (359) (5,122)  
Selling and marketing 0 (1,358) (155) (2,689)  
General and administrative 0 (642) (2) (1,312)  
Amortization of intangible assets 0 (382) 0 (764)  
Non-operating other expense, net 0 (9) (4) (19)  
Recognized contingent consideration 175 0 587 0  
Loss on divestiture 0 0 (254) 0  
Income (loss) from discontinued operations before income taxes 175 (791) 530 (1,438)  
Income tax expense (52) (48) (26) (48)  
Net income (loss) from discontinued operations, net of tax $ 123 $ (839) $ 504 $ (1,486)  
Current assets of discontinued operations:          
Accounts receivable, net         91
Inventories         492
Prepaid expenses and other current assets         538
Total current assets of discontinued operations         1,121
Non-current assets of discontinued operations:          
Other non-current assets         44
Total current and non-current assets of discontinued operations         1,165
LIABILITIES          
Accounts payable         126
Accrued liabilities         431
Total current liabilities of discontinued operations         $ 557
AYTU BioPharma (NASDAQ:AYTU)
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AYTU BioPharma (NASDAQ:AYTU)
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