ZYLA LIFE SCIENCES The following discussion and analysis of our financial condition and result of
operations should be read in conjunction with our 2019 Annual Report on
Form 10-K filed with the
Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words "may," "might," "will," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "project," "potential," "continue," "seek to" and "ongoing," or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain, including, but not limited to, risks related to: our ability to continue as a going concern; the impact of our bankruptcy on our business going forward, including with regard to relationships with vendors and customers; the impact of our acquisition of products fromIroko Pharmaceuticals, Inc. (together with its subsidiaries, "Iroko"), including our assumption of related liabilities, potential exposure to successor liability and credit risk ofIroko and its affiliates; our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; our current and future indebtedness; our ability to maintain compliance with the covenants in our debt documents; our ability to obtain additional financing or to refinance our existing indebtedness; the level of commercial success of our products; our ability to execute on our sales and marketing strategy, including developing relationships with customers, physicians, payors and other constituencies; the continued development of our commercialization capabilities, including sales, marketing and market 39
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access capabilities; the rate and degree of market acceptance of any of our products and product candidates; the success of competing products that are or become available; the entry of any generic products for SPRIX Nasal Spray, Indocin suppositories or any of our other products; recently enacted and future legislation regarding the healthcare system; the difficulties in obtaining and maintaining regulatory approval of our products and product candidates, and any related restrictions, limitations and/or warnings in the product label under any approval we may obtain; the accuracy of our estimates of the size and characteristics of the potential markets for our products and our ability to serve those markets; the performance of third parties, including contract research organizations, manufacturers, pharmacy networks, distributors and collaborators; our failure to recruit or retain key personnel, including our executive officers; regulatory developments inthe United States and foreign countries; obtaining and maintaining intellectual property protection for our products and product candidates and our proprietary technology; our ability to operate our business without infringing the intellectual property rights of others; our ability to integrate and grow any businesses or products that we may acquire; the success and timing of our preclinical studies and clinical trials; litigation related to opioids and public or legislative pressure on the opioid industry; the outcome of any litigation in which we are or may be involved; the failure or delay of the Merger to be consummated; the termination of the Merger Agreement in circumstances that require us to pay Assertio a termination fee of$3.4 million or reimbursement of out-of-pocket expenses up to$1.75 million ; the diversion of management's attention from our ongoing business operations; the effect of the announcement of the Merger on our business relationships (including, without limitation, partners and customers), operating results and business generally; the obtaining of the requisite consents to the Merger, including, without limitation, the approvals of our and Assertio's respective stockholders; the spread of epidemic, pandemic, or contagious disease; and general market conditions. You should refer to the "Risk Factors" section of our most recent Annual Report on Form 10-K (which are incorporated herein by reference) and our other filings with theSEC for a discussion of additional important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, us. Furthermore, such forward-looking statements speak only as of the date of this report. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Our Current Business
OnMarch 16, 2020 , we entered into an the Agreement and Plan of Merger (the "Merger Agreement") by and among us, Assertio Therapeutics, Inc. ("Assertio"),Alligator Zebra Holdings, Inc. ("Parent"),Zebra Merger Sub, Inc. , a wholly-owned subsidiary of Parent ("Merger Sub") andAlligator Merger Sub, Inc. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into us, with us continuing as the surviving corporation and a wholly-owned subsidiary of Parent. Pursuant to the terms of the Merger Agreement, at the time the merger is effective, each issued and outstanding share of common stock, par value$0.001 per share, of the Company (the "Common Stock") (other than Excluded Shares (as defined below) and Dissenting Shares (as defined below)) will be converted into the right to receive 2.5 shares (the "Exchange Ratio") of common stock, par value$0.0001 per share, of Parent ("Parent Common Stock"). Each share of Common Stock that is held by the Company as treasury stock or that is owned, directly or indirectly, by Parent, the Company, Merger Sub, or any subsidiary of the Company (collectively, "Excluded Shares"), immediately prior to the effective time of the Merger (the "Effective Time") will cease to be outstanding and will be cancelled and retired and will cease to exist, and no consideration will be delivered in exchange therefor. "Dissenting Shares" are shares of the Common Stock (other than Excluded Shares) outstanding immediately prior to the Effective Time and held by a holder who is entitled to demand and has properly demanded appraisal for such shares of the Common Stock in accordance with Section 262 of the Delaware General Corporation Law. Consummation of the Merger is subject to certain conditions to closing, including, among others: (1) requisite approvals of our and Assertio's stockholders; (2) the absence of certain legal impediments to the consummation of the Merger; (3) the approval for listing on theNasdaq Stock Market of the shares of Parent Common Stock to be issued as Merger consideration, (4) effectiveness of the registration statement on Form S-4 registering the shares of Parent Common Stock and other equity instruments to be issued in the Merger, (5) subject to certain exceptions, the accuracy of the representations, warranties and compliance with the covenants of each party to the Merger Agreement, and (6) Assertio, Parent and their respective Subsidiaries having minimum cash and cash 40
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equivalents equal to$25 million in the aggregate (as calculated pursuant to the Merger Agreement). We are working toward completing the Merger as quickly as possible and currently expect to consummate the merger in the second calendar quarter of 2020. We are a commercial-stage life science company committed to bringing differentiated products to patients and healthcare providers. We are focused on marketing our portfolio of medicines used both in and outside of the hospital by orthopedic surgeons, gynecologists, neurologists, internists, gastroenterologists, physiatrists, rheumatologists and podiatrists. Our six commercially available products include: SPRIX® (ketorolac tromethamine) Nasal Spray, ZORVOLEX® (diclofenac), INDOCIN® (indomethacin) suppositories, VIVLODEX® (meloxicam), INDOCIN oral suspension and OXAYDO® (oxycodone HCI, USP) tablets for oral use only -CII. VIVLODEX and ZORVOLEX are SOLUMATRIX® Technology non-steroidal anti-inflammatory products. InNovember 2019 , we divested assets related to TIVORBEX® (indomethacin), which was a SoluMatrix product, to a third party, although we continue to supply TIVORBEX tablets to that third party. InJanuary 2020 , we amended the terms of the license agreement with iCeutica. To leverage our commercial infrastructure and augment our current product portfolio, we continually seek to acquire additional late-stage product candidates or approved products to develop and/or commercialize. OnJanuary 31, 2019 , we completed the acquisition of five marketed non-narcotic, nonsteroidal anti- inflammatory drug ("NSAID") products fromIroko (the "Iroko Acquisition"). To facilitate this transaction and reorganize our capital structure, inJanuary 2019 , we completed proceedings under Chapter 11 of the United States Bankruptcy Code in the District ofDelaware . In exchange for the products,Iroko received among other consideration,$45.0 million in principal amount of our 13% senior secured notes and shares of common stock and warrants to purchase common stock of the reorganized Company representing in the aggregate approximately 49% of outstanding common stock at issuance, subject to dilution for shares of common stock issued pursuant to our stock-based incentive compensation plan. Pursuant to the Chapter 11 plan of reorganization, holders of our then outstanding convertible notes received shares of common stock of the reorganized Company, and holders of our then outstanding senior secured notes received in the aggregate of$20.0 million in cash,$50.0 million in principal amount of our 13% senior secured notes, as well as shares of common stock and warrants to purchase common stock of the reorganized Company representing, in the aggregate, approximately 19.38% of outstanding common stock at issuance, subject to dilution for shares of common stock issued pursuant to our stock-based incentive compensation plan.
Critical Accounting Policies and Significant Judgments and Estimates
We believe there have been no significant changes in our critical accounting policies and significant judgments and estimates as discussed in our audited consolidated financial statements and the notes thereto for the year endedDecember 31, 2019 , other than as noted below.Goodwill Goodwill is calculated as the excess of the reorganization equity value over the fair value of tangible and identifiable intangible assets pursuant to ASC 852 Reorganizations.Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually or when a triggering event occurs that could indicate a potential impairment by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that the fair value of net assets are below their carrying amounts. A reporting unit is the same as, or one level below, an operating segment. Our operations are currently comprised of a single, entity wide reporting unit. OnMarch 16, 2020 , the Company entered into a Merger Agreement with Assertio whereby Assertio, Parent and their respective Subsidiaries are required to have minimum cash and cash equivalents equal to$25 million in the aggregate (as calculated pursuant to the Merger Agreement) upon closing of the merger with the Company. The execution of the merger agreement triggered the testing of goodwill for impairment and as a result, an impairment charge of$4.8 million was recognized during the three months endedMarch 31, 2020 . 41 Table of Contents
Acquisition-related contingent consideration
Pursuant to the Iroko Products Acquisition, we have obligations relating to contingent payment consideration for future royalty obligations toIroko based upon annual INDOCIN product net sales over$20.0 million . We recorded the acquisition-date fair value of these contingent liabilities, based on the likelihood of contingent earn-out payments. The earn-out payments are subsequently remeasured to fair value each reporting date. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in our Consolidated Statements of Operations. The royalty term commenced on the Effective Date and ends on the tenth anniversary of the Effective Date,January 31, 2029 . Results of Operations Comparison of the three months endedMarch 31, 2020 (successor) to the period fromFebruary 1, 2019 throughMarch 31, 2019 (Successor) and the period fromJanuary 1, 2019 throughJanuary 31, 2019 (Predecessor) Successor Predecessor Period from Period from February 1, Three months 2019 January 1, 2019 ended through through March 31, (in thousands) March 31, 2020 2019 January 31, 2019 Change Revenue Net product sales$ 19,066 $ 15,810 $ 1,775$ 1,481 Total revenue 19,066 15,810 1,775 1,481 Costs and Expenses Cost of sales (excluding amortization of product rights) 3,444 12,461 554 (9,571) Amortization of product rights 3,497 2,332 171 994 General and administrative 7,474 3,365 5,413 (1,304) Sales and marketing 9,972 5,131 2,773 2,068 Research and development - 5 186 (191) Restructuring & other charges 284 - 799 (515) Change in fair value of contingent consideration payable 4,000 200 - 3,800 Impairment of goodwill 4,830 - - 4,830 Total costs and expenses 33,501 23,494 9,896 111 Loss from operations (14,435) (7,684) (8,121) 1,370 Other (income) expense: Interest expense, net 3,808 2,193 (52) 1,667 Other gain - - (140) 140
Loss (gain) on foreign currency exchange (4)
- - (4) Total other (income) expense 3,804 2,193 (192) 1,803 Reorganization items - 606 (115,169) 114,563 Net (loss) income$ (18,239) $
(10,483)$ 107,240 $ (114,996) Net product sales Net product sales increased$1.5 million for the three months endedMarch 31, 2020 compared to the three months endedMarch 31, 2019 . Net product sales for the three months endedMarch 31, 2020 consisted of$11.9 million for INDOCIN products,$5.7 million for SPRIX Nasal Spray,$0.9 million for the SOLUMATRIX products, and$0.6 million for OXAYDO. Net product sales for the three months endedMarch 31, 2019 consisted of$7.5 million for INDOCIN products,$5.2 million for SPRIX Nasal Spray,$3.8 million for the SOLUMATRIX products, and$1.1 million for OXAYDO.
Cost of sales (excluding amortization of product rights)
Cost of sales (excluding amortization of product rights) decreased by
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Cost of sales for SPRIX Nasal Spray, OXAYDO, SOLUMATRIX products and INDOCIN
products reflects the average cost of inventory shipped to wholesalers and
specialty pharmaceutical companies during the three months ended
Cost of sales for SPRIX Nasal Spray, OXAYDO, SOLUMATRIX products and INDOCIN products reflects the fair value of finished goods inventory for the period fromFebruary 1, 2019 toMarch 31, 2019 .
Cost of sales for SPRIX Nasal Spray and OXAYDO reflect the average cost of
inventory shipped to wholesalers and specialty pharmaceutical companies from
Amortization of product rights
Amortization of product rights increased$1.0 million for the three months endedMarch 31, 2020 compared to the three months endedMarch 31, 2019 . Amortization of product rights relates to the INDOCIN, OXAYDO and SPRIX Nasal Spray intangible assets. The increase was due to the acquisition onJanuary 31, 2019 of the INDOCIN product rights that were valued at$90.1 million and the increase in the value of the SPRIX Nasal Spray intangible assets to$31.9 million , offset in part by a decrease in the value of OXAYDO, as a result of a Fresh Start Accounting adjustment.
General and administrative expenses
Successor Predecessor
Period from Period from
February 1,
Three months 2019 January 1, 2019
ended through through
March 31,
(in thousands) March 31, 2020 2019 January 31, 2019 Change
Legal, accounting, tax and insurance $ 2,664
204 $ 1,861
Salary and related benefits and employee
costs 2,005 1,319 839 (153)
Other professional fees including public
company costs 668 352 106 210
Regulatory and related 651 490 503 (342)
Stock compensation 554 60 3,466 (2,972)
Intellectual property 234 11 3 220
Other general and administrative costs 698 534 292 (128)
Total general and administrative expenses $ 7,474
5,413 $ (1,304) General and administrative expenses decreased$1.3 million for the three months endedMarch 31, 2020 compared to the three months endedMarch 31, 2019 . The decrease was primarily due to lower stock-based compensation expense of$3.0million partially offset by an increase in legal, accounting, tax and insurance expense of$1.9 million . Increased legal is attributed to the pending merger with Assertio. Unamortized stock-based compensation expense of$3.5 million was recognized onJanuary 31, 2019 as a result of the reorganization. 43 Table of Contents Sales and marketing expenses Successor Predecessor Period from Period from February 1, Three months 2019 January 1, 2019 ended through through March 31, (in thousands) March 31, 2020 2019 January 31, 2019 Change
Salary and related benefits and employee costs $ 5,814
1,410 $ 968
Promotional and marketing programs 3,086 1,279 657 1,150
Other professional fees including consultants 438 159 65 214
Stock compensation 12 - 444 (432)
Other sales and marketing expenses 622 257 197 168
Total sales and marketing expenses $ 9,972 $ 5,131 2,773$ 2,068 Sales and marketing expenses increased$2.1 million for the three months endedMarch 31, 2020 compared to the three months endedMarch 31, 2019 . The increase was primarily due to higher promotional and marketing program expenses of$1.1 million and higher employee compensation costs of$1.0 million .
Research and development expenses
Research and development expenses decreased by$0.2 million for the three months endedMarch 31, 2020 compared to the three months endedMarch 31, 2019 . This decrease was driven by a discontinuation of costs that did not directly support the growth of our commercial business.
Restructuring and other charges
Restructuring and other charges of
Restructuring and other charges of$0.8 million for the three months endedMarch 31, 2019 reflect costs of severance payments related to the reduction of executive officers and a reduction in force in ourDenmark facility inJanuary 2019 .
Change in fair value of acquisition-related contingent consideration
Acquisition-related contingent consideration, which consists of our future royalty obligations toIroko based upon annual INDOCIN product net sales over$20.0 million , was recorded on the acquisition date,January 31, 2019 , at the estimated fair value of the obligation, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration is remeasured quarterly. The change in fair value of the acquisition-related contingent consideration during the three months endedMarch 31, 2020 was$4.0 million and was primarily attributable to higher revenue projections and a decrease in the applicable discount rate. Interest expense
Interest expense increased by$1.7 million for the three months endedMarch 31, 2020 compared to the three months endedMarch 31, 2019 . Interest on Successor debt began onJanuary 31, 2019 . The interest expense of$3.8 million for the three months endedMarch 31, 2020 includes non-cash interest and amortization of debt discount totaling$0.3 million . The interest expense of$2.1 million for the three months endedMarch 31, 2019 includes non-cash interest and amortization of debt discount totaling$1.2 million . 44 Table of Contents Reorganization items
Reorganization items of
Provision (benefit) for income taxes
We had no provision nor benefit for income taxes for the three months ended
Liquidity and Capital Resources
Since our inception, we have incurred net losses and generally negative cash flows from our operations. We incurred net loss of$18.2 million , net loss of$10.5 million and net income of$107.2 million for the three months endedMarch 31, 2020 , the period fromFebruary 1, 2019 throughMarch 31, 2019 and the period fromJanuary 1, 2019 throughJanuary 31, 2019 , respectively. Our operating activities provided$5.3 million of cash during the three months endedMarch 31, 2020 , used$16.4 million for the period fromFebruary 1, 2019 throughMarch 31, 2019 and provided$0.8 million of cash for the period fromJanuary 1, 2019 throughJanuary 31, 2019 . AtMarch 31, 2020 we had an accumulated deficit of$64.9 million , a working capital deficit of$32.8 million and cash, cash equivalents and restricted cash totaling$14.9 million . Cash Flows The following table summarizes our cash flows for the three months endedMarch 31, 2020 , the period fromFebruary 1, 2019 throughMarch 31, 2019 and the period fromJanuary 1, 2019 throughJanuary 31, 2019 : (in thousands) Successor Predecessor Period from Period from February 1, Three months 2019 January 1, 2019 ended through through March 31, March 31, 2020 2019 January 31, 2019 Net cash provided by (used in): Operating activities $ 5,326$ (16,400) $ 822 Investing activities (3) 4,991 - Financing activities (2,815) 4,775 (19,104) Effect of foreign currency translation on cash 69 (26) 6 Net increase (decrease) in cash, cash equivalents and restricted cash $ 2,577$ (6,660) $ (18,276)
Cash Flows from Operating Activities
Net cash provided by operating activities for the three months endedMarch 31, 2020 of$5.3 million was primarily due to the net loss of$18.2 million . The net loss was partially offset by non-cash adjustments of$3.7 million related to depreciation and amortization expense,$4.8 million related to impairment of goodwill, and$4.0 million due to the change in fair value of contingent consideration. Net cash inflows from changes in operating assets and liabilities of$9.8 million consisted of an increase in accounts receivable of$5.4 million , an increase in inventory of$1.2 million , offset by an increase in accounts payable of$10.3 million and an increase in accrued expenses of$5.0 million . Net cash used in operating activities for the period fromFebruary 1, 2019 throughMarch 31, 2019 was$16.4 million and consisted primarily of a net loss of$10.5 million . The net loss was partially offset by$2.5 million in depreciation and amortization expense. Net cash outflows from changes in operating assets and liabilities of$9.7 million consisted of an increase in accounts receivable of$35.8 million , offset by decrease in inventory of$10.6 million and an increase in accrued expenses of$12.1 million . 45 Table of Contents Net cash provided by operating activities for the period fromJanuary 1, 2019 throughJanuary 31, 2019 was$0.8 million and consisted primarily of net income of$107.2 million . In addition to net income, there were reorganization items of$121.1 million . Net cash inflows from changes in operating assets and liabilities of$10.4 million primarily consisted of a decrease in accounts receivable of$3.9 million , a decrease in other receivables of$0.7 million and a decrease in accrued expenses of$5.2 million .
Cash Flows from Investing Activities
Net cash provided by investing activities for the period fromFebruary 1, 2019 throughMarch 31, 2019 was$5.0 million and consisted of cash inflows of$2.5 million and$2.5 million for the maturity and sale of investments, respectively.
Cash Flows from Financing Activities
Net cash used in financing activities was
Net cash provided by financing activities was$4.8 million for the period fromFebruary 1, 2019 throughMarch 31, 2019 and consisted of net proceeds from the Highbridge Credit Agreement, net of principal repayments.
Net cash used in financing activities was
Operating and Capital Expenditure Requirements
We have not achieved profitability since our inception and we expect to continue to incur net losses for the foreseeable future. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, sales and marketing expenses, manufacturing, commercial infrastructure, legal and other regulatory expense, business development opportunities and general overhead costs, including interest and principal repayments on indebtedness.
To date, we have been unable to achieve profitability, and with just our existing products and product candidates, we believe we are unlikely to achieve profitability in the future.
Until such time if ever, as we can generate substantial product revenues, we
expect to finance our cash needs through a combination of equity or debt
financings and collaboration arrangements. In order to meet these additional
cash requirements, we may seek to sell additional equity or convertible debt
securities that may result in dilution to our holders of our common stock. If we
issue additional equity, the holders of our common stock will be diluted. The
indenture governing the 13% Senior Secured Notes contains covenants that, among
other things, restrict our ability to issue additional indebtedness. Although
our ability to issue additional indebtedness is significantly limited by such
covenants, if we raise additional funds through the issuance of convertible debt
securities, these securities could have rights senior to those of our Successor
Zyla common stock and could contain covenants that restrict our operations. We
may also seek to raise additional financing through the issuance of debt which,
if available and permitted pursuant to the documents governing the 13% Senior
Secured Notes, the Credit Agreement and any other indebtedness we may incur in
the future, may involve agreements that include restrictive covenants limiting
our ability to take important actions, such as incurring additional debt, making
capital expenditures or declaring dividends. If we raise additional funds
through collaboration arrangements in the future, we may have to relinquish
valuable rights to our technologies, future revenue streams or product
candidates or grant licenses on terms that may not be favorable to us. There
can be no assurance that we will be able to obtain additional equity or debt
financing on terms acceptable to us, if at all. If we are unable to raise
capital when needed or on attractive terms, we could be forced to delay any
future commercialization efforts or grant rights to develop and market product
candidates that we would otherwise prefer to develop and market ourselves. In
addition, certain agreements we entered into in connection with the consummation
of the Iroko Products Acquisition and the Chapter 11 Cases further restrict and
limit our ability to raise additional capital, including agreements with respect
to pre-emptive rights. Accordingly, our ability to raise additional capital is
restricted by these agreements as well.
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Going Concern
As ofMarch 31, 2020 , we had cash, cash equivalents and restricted cash of$14.9 million . Even though we have emerged from bankruptcy and have funds available under the Credit Agreement, we continue to have significant indebtedness and our ability to continue as a going concern is contingent upon the successful integration of the Iroko Products Acquisition, increasing our revenue, managing our expenses and complying with the terms of our new debt agreements. We cannot be certain that these initiatives will be successful. Our current debt arrangements with holders of the Series A-1 and Series A-2 Notes as well as the Credit Agreement involve agreements that include minimum liquidity requirements and covenants limiting or restricting our ability to take specific actions. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that may not be favorable to us. The unaudited financial statements as ofMarch 31, 2020 have been prepared under the assumption that we will continue as a going concern for the next 12 months. Our ability to continue as a going concern is dependent upon our uncertain ability to successfully integrate the Iroko Products into our business, increasing our revenue, managing our expenses and complying with the terms of our new debt agreements. These unaudited financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Contractual Obligations and Purchase Commitments
(in thousands) Payments Due By Period
Less than More than
Total 1 year 1 to 3 years 3 to 5 years 5 years
Operating lease obligations (1) $ 3,049 $ 1,276 $ 1,657 $ 116 $ - 13% Series A-1 Notes (2) 72,638 7,736 18,803 46,099 - 13% Series A-2 Notes (3) 65,374 6,963 16,922 41,489 - Promissory Note (4) 3,894 3,894 - - - Credit agreement (5) 6,010 513 5,497 - -
Supply Agreement - Cosette Pharmaceuticals (6) 6,480 6,480 - - - Supply Agreement - Catalent (7) 1,000 500 500 - - Supply Agreement - JHS (8) 3,600 1,440
2,160 - -
Total $ 162,045 $ 28,802 $ 45,539 $ 87,704 $ -
(1) Operating lease obligations reflect our obligation to make payments in
connection with the leases for our vehicles, office space and office
equipment. The vehicle lease expires in
expires on February 28, 2022 .
(2) On
our 13% senior secured notes, designated as Series A-1 Notes, to former
holders of First Lien Secured Notes Claims. The Series A-1 Notes are subject
to an interest holiday from
Interest on the Series A-1 notes accrues at a rate of 13% per annum, and is
payable semi-annually in arrears on
commencing on
above. The stated maturity date of the Series A-1 Notes is
(3) On
our 13% senior secured notes, designated as Series A-2 Notes, to
certain of its affiliates. Interest on the Series A-2 notes accrues at a rate
of 13% per annum, and is payable semi-annually in arrears on
November of each year, commencing on
the Series A-1 Notes is January 31, 2024 .
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(4) On
issued a
certain inventory purchases by
Acquisition (the "Interim Promissory Note"). The Interim Promissory Note
bears interest at a rate of 8% per annum (payable by way of increasing the
principal amount of the Interim Promissory Note on each interest payment
date), is subordinate to the Notes, and matures on July 31, 2020 .
(5) On
with
agent certain funds managed by
lenders, which Credit Agreement consists of a
credit. We drew
25% of the commitment amount outstanding at all times. Advances under the
Credit Agreement bear interest at the Company's option at either the LIBOR
Rate (as defined in the Credit Agreement) plus 5.00% or the Base Rate (as
defined in the Credit Agreement) plus 4.00%. The Credit Agreement matures on
March 20, 2022 .
(6) On
from Iroko , we assumed a Collaborative License, Exclusive Manufacture and
Global Supply Agreement with Cosette Pharmaceuticals, Inc. (formerly G&Wof INDOCIN Suppositories to Zyla for commercial distribution in the United
States. We are obligated to purchase all of our requirements for INDOCIN
Suppositories from
minimum purchase requirements for the calendar years 2019 and 2020. The term
of the Supply Agreement extends through July 31, 2023 , and there are no
minimum requirements in any of the other subsequent years.
(7) On
assumed a Commercial Supply Agreement ("CSA") with Catalent Pharma Solutions
("Catalent") for the manufacture of certain SOLUMATRIX products. Based on the
CSA, we are obligated to purchase certain minimum amounts of manufacturing
and product maintenance services on an annual basis for the term of the
contract ("Minimum Requirement") through September 2021 .
(8) On
"Agreement") with
supply of SPRIX® Nasal Spray. Based on the Agreement, we are obligated to
purchase certain minimum amounts of manufacturing and supply services on an
annual basis for the term of the agreement through July 30, 2022 .
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under
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