Forward-Looking Statements



This "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section and other sections of this Annual Report on Form 10-K
contain forward-looking statements that are based on current expectations,
estimates, forecasts and projections about the industry and markets in which the
Company operates and on management's beliefs and



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assumptions. In addition, other written or oral statements, which constitute
forward-looking statements, may be made by or on behalf of the Company. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance, and involve certain risks, uncertainties and assumptions,
which are difficult to predict. See "Item 1A: Risk Factors" above. Therefore,
actual outcomes and results may differ materially from what is expressed or
forecasted in such forward-looking statements. The Company undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by
law.

Company Overview

Strategic Overview

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

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

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

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

We consider our business relationships with ABC, Cardinal and McKesson to be in
good standing, and we have fee for services contracts with each of them.
However, a change in purchasing patterns, a decrease in inventory levels, an
increase in returns of our products, delays in purchasing products and delays in
payment for products by one or more of these distributors could have a material
negative impact on our revenue, business, financial condition and results of
operations. We continue to explore



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business development opportunities to add additional products and/or capabilities to our existing portfolio and to expand our private label and contract manufacturing service opportunities.

We have two platforms for growth:

•Developing, manufacturing and marketing a portfolio of generic pharmaceutical products under our own or a private label in topical, injectable and other high-barrier forms; and

•Managing and expanding our current private label and contract development and manufacturing business.



Since 2010, the primary focus of our strategy has been on the growth of our own
generic prescription pharmaceutical business particularly within the generic
topical pharmaceutical product market, while moderating our contract development
and manufacturing to the prescription and OTC pharmaceutical and cosmetic
markets. In 2014, we broadened our primary target product focus from topical
pharmaceuticals to include a wider approach focused on high-barrier generic
prescription pharmaceutical products and generic and branded generic injectable
pharmaceutical products. We believed that expanding our development and
commercial base beyond topical generics, historically the cornerstone of our
expertise, to include injectable generics and other high-barrier dosage forms
would leverage our existing expertise and capabilities, and broaden our platform
for diversified strategic growth. While we experienced some success in that
regard, during the last year, as we have experienced the unfavorable impacts of
the COVID-19 pandemic on our business, we have begun to reexamine all of our
expertise and assets in order to reinvigorate and bolster our business. This has
resulted in our placing additional emphasis on the development of our private
label business as well as our contract development and manufacturing business.

Following five approvals from our internally developed pipeline of topical
generic products in 2019, there were no approvals from our internally developed
pipeline of topical generic products in 2020. We continue to be opportunistic in
efforts to license or acquire further products, intellectual property, or
pending applications to expand our portfolio. We expect to accelerate our growth
through the creation of unique opportunities based on the acquisition of
additional intellectual property and/or the expansion of the use of our existing
intellectual property. We are also exploring the options to monetize certain of
our non-core assets.

Based on IQVIA (NYSE: IQV) data, the addressable market for the seven ANDA
topical filings and three NDAs that we have pending with the FDA is estimated to
total over $140 million per annum. We expect to continue to expand our presence
in the generic topical and generic injectable pharmaceutical markets through the
submission of additional ANDAs to the FDA and the subsequent launch of products
if and when these applications are approved by the FDA.

Product and Pipeline Approvals

There were no significant approvals announced in 2020.

The following is a summary of significant approvals announced in 2019:

On January 2, 2019, we announced approval of an ANDA for Gentamicin Sulfate Ointment USP, 0.1%. This was our thirty-second approval from our internally developed pipeline of topical generic pharmaceutical medicines. We launched this product in the first quarter of 2019.



On January 24, 2019, we announced approval of an ANDA for Clobetasol Propionate
Ointment USP, 0.05%. This was our first approval for 2019, and our thirty-third
approval from our internally developed pipeline of topical generic
pharmaceutical medicines. We launched this product in the first quarter of 2019.

On March 14, 2019, we announced approval of an ANDA for Desonide ointment,
0.05%. This was our second approval of 2019, and our thirty-fourth approval from
our internally developed pipeline of topical generic pharmaceutical medicines.
We launched this product in the second quarter of 2019.

On March 19, 2019, we announced approval of an ANDA for Fluocinonide Topical
Solution USP, 0.05%. This was our third approval of 2019, and our thirty-fifth
approval from our internally developed pipeline of topical generic
pharmaceutical medicines. We launched this product in the early third quarter of
2019.





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On April 4, 2019, we announced approval of an ANDA for Fluocinonide Cream USP,
0.1%. This was our fourth approval of 2019, and our thirty-sixth approval from
our internally developed pipeline of topical generic pharmaceutical medicines.
We expect to launch this product in the second half of 2021.

On October 18, 2019, we announced approval of an ANDA for Gentamicin Sulfate
Cream USP, 0.1% (gentamicin base). This was our fifth approval of 2019, and our
thirty-seventh approval from our internally developed pipeline of topical
generic pharmaceutical medicines. We launched this product in the fourth quarter
of 2019.


Results of Operations

Fiscal year ended December 31, 2020 compared to fiscal year ended December 31, 2019



We had a net loss of $122.0 million, or $14.67 per share, during the year ended
December 31, 2020 ("Current Year") compared to a net loss of $25.1 million, or
$4.67 per share, during the year ended December 31, 2019 ("Prior Year"). Product
Sales, net, include Company Product Sales and Contract Manufacturing Sales, as
follows:

Revenues (in thousands):

                                                   Year Ended December 31,                          Increase/(Decrease)
Components of Revenue:                            2020                  2019                      $                        %
Product sales, net                          $      43,604          $    64,291          $          (20,687)                  (32) %
Contract manufacturing sales                        1,157                1,362                        (205)                  (15) %
Research and development services and
other income                                          548                  243                         305                   126  %
Total Revenues                              $      45,309          $    65,896          $          (20,587)                  (31) %

Total revenues were $45.3 million in the Current Year compared to $65.9 million in the Prior Year.



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

Costs and expenses (in thousands):



                                                      Year Ended December 31,                             Increase/(Decrease)
                                                     2020                     2019                      $                        %
Cost of revenues                             $      49,031               $    42,373          $            6,658                    16  %
Selling, general and administrative                 27,011                    20,785                       6,226                    30  %
Impairment charges                                 101,533                         -                     101,533                   100  %
Product development and research                     7,674                    10,758                      (3,084)                  (29) %
Totals costs and expenditures                $     185,249               $    73,916          $          111,333                   151  %



Total costs and expenditures increased 151%, or $111.3 million to $185.2 million
in the Current Year from $73.9 million in the Prior Year. Cost of revenues
increased as a percentage of total revenue to 108% in the Current Year as
compared to 64% in the Prior Year. Cost of revenues increased $6.7 million in
the Current Year mainly due to (i) lower sales volume increased absorption
expense (ii) additional quality expenses (iii) excess inventory reserve.

Selling, general and administrative expenses in the Current Year increased by
$6.2 million as compared to the Prior Year. The increase was primarily due to
(i) increased professional fees of $2.0 million, (ii) increased bad debt
expenses of $1.2 million, (iii) increased personnel costs of $1.4 million, and
(iv) increased legal, audit fees and all other of $2.7 million, partially offset
by (v) reduced ANDA filing fees of $0.5 million, (vi) a write off to clinical
studies of $0.3 million and (vii) reduced travel expenses of $0.3 million.




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Impairment charges of $101.5 million were recorded in the Current Year. A
property, plant and equipment impairment charge of $79.8 million was recorded in
the Current Year. An intangible assets impairment charge of $21.7 million was
recorded in the Current Year related to product acquisition costs of $13.5
million, trademark and technology of $8.1 million and IPR&D of $0.1 million.
There were no impairment charges in the Prior Year.

Product development and research expenses decreased by $3.1 million as compared
to the Prior Year. The decrease in product development and research expenses was
primarily due to (i) a $1.7 million decrease in personnel costs, (ii) a $1.0
million decrease in outside testings, (iii) an $0.8 million decrease in clinical
studies, (iv) a decrease in GDUFA fees, ANDA filings and lab supplies
aggregating $1.0 million, partially offset by (v) a $1.4 million increase in
write off of material costs associated with research and development activities.

Other (Expense) Income, net (in thousands):



                                                    Year Ended December 31,                           (Increase)/Decrease
                                                   2020                  2019                      $                         %
Other income                                 $       3,349          $         -          $            3,349                     100  %
Foreign exchange gain/(loss)                 $       4,961          $    (1,523)         $            6,484                    (426) %
Debt partial extinguishment of 2019
Notes                                                    -                 (185)                        185                    (100) %
Interest and other expense, net                    (28,824)             (21,154)                     (7,670)                    (36) %
Gain/(loss) on debt restructuring                   51,858                 (920)                     52,778                   (5737) %
Inducement loss                                     (9,183)                   -                      (9,183)                    100  %
Change in the fair value of derivative
liabilities                                  $      (2,305)         $     6,769                      (9,074)                   (134) %

Other income of $3.4 million in the Current Year is related to the forgiveness of the PPP government grant advance.



Foreign exchange gain of $5.0 million in the Current Year is related to the
foreign currency translation of our intercompany loans denominated in U.S.
dollars to our foreign subsidiaries to be repaid in November 2022. Depending on
the changes in foreign currency exchange rates, we will continue to record a
non-cash gain or loss on translation for the remaining term of these loans.

Debt partial extinguishment on the 2019 Notes was $0.2 million in the Prior Year.

The net increase in interest and other expense in the Current Year of $7.7 million is related to the increase in total debt and a higher cost of capital.



The gain on debt restructuring and inducement loss of $42.7 million in the
Current Year is due to the exchange of Series A and Series B Convertible Notes
for Series C and Series D Convertible Notes in the amount of $8.2 million as
well as the conversion of Series D Convertible Notes in the amount of $34.5
million.

The change in the fair value of derivatives of $2.3 million included a $2.0
million loss on the derivative liability pertaining to the Series C Notes and a
$0.8 million loss on the Warrants, partially offset by a $0.5 million gain on
the 2023 Series B Notes. The change in fair value of derivative liabilities of
$6.8 million in the Prior Year included a $6.8 million loss on the derivative
liability pertaining to the Series B Notes.


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

                                                   Year Ended December 31,                            Increase/(Decrease)
                                                  2020                    2019                      $                        %
Net loss attributable to common
stockholders                               $    (122,022)            $   (25,124)         $           96,898                   386  %
Basic and diluted loss per share           $      (14.67)            $     (4.67)         $            10.00                   214  %







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Net loss for the Current Year was $122.0 million as compared to net loss of
$25.1 million for the Prior Year. The increase in net loss for the Current Year
was due primarily to (i) a decrease in revenues of $20.6 million, (ii) an
increase in costs and expenses of $111.3 million, (iii) an increase in interest
expense of $7.7 million, and (iv) the derivative liability increase of $9.1
million offset by (v) the gain on debt restructuring and inducement loss of
$43.6 million, (vi) a $6.5 million increase in foreign exchange gain, and (vii)
gain of $3.4 million in other income from government grant as stated above.

Liquidity and Capital Resources



The Company has incurred significant losses and generated negative cash flows
from operations in recent years and expects to continue to incur losses and
generate negative cash flow for the foreseeable future. As a result, we had an
accumulated deficit of $243.5 million, total principal amount of outstanding
borrowings of $181.6 million, and limited capital resources to fund ongoing
operations at December 31, 2020. These capital resources were comprised of cash
and equivalents of $6.7 million at December 31, 2020 and the generation of cash
inflows from working capital. The Company is not currently generating revenues
from operations that are sufficient to cover its operating expenses, and its
available capital resources are not sufficient for it to continue to meet its
obligations as they become due. As a result, the Company has engaged financial
and legal advisors to assist it in, among other things, analyzing all available
strategic alternatives to address its liquidity and capital structure. However,
the Company cannot provide assurances that additional capital will be available
when needed or that any strategic alternatives or restructuring pursued will be
on acceptable terms.

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

The $9.5 million decrease in our cash during the twelve months ended
December 31, 2020 was mainly to support our operational activities, which
included continued inventory management/build to help avoid failure-to-supply
fees and normal timing differences in working capital balances. In addition, we
had an accumulated deficit of $243.5 million as of December 31, 2020, inclusive
of a $122.0 million net loss in this year.

Series A Notes



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

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

Series B Notes



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



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



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

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

Series C Notes



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

The Company also issued approximately $32.3 million in aggregate principal
amount of Series C Notes in exchange for approximately $35.9 million in
aggregate principal amount, plus accrued but unpaid interest thereon, of the
Company's outstanding Series B Notes, giving effect to a 10% discount on the
principal amount of the Series B Notes exchanged. In addition, the Company
issued approximately $3.7 million in aggregate principal amount of Series C
Notes in exchange for approximately $8.2 million in aggregate principal amount,
plus accrued but unpaid interest thereon, of the Company's outstanding Series A
Notes, giving effect to a 55% discount on the principal amount of the Series A
Notes exchanged.

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

Series D Notes



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





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

Senior Credit Facilities



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

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

The Term Loans are governed by the Second Lien Credit Agreement. The Term Loans
include a 24-month paid-in-kind interest option available to the Company should
it choose to defer cash payments in order to maintain the liquidity needed to
continue launching new products, and preparing for an FDA prior approval
inspection of its new injectable manufacturing facility. The Company has elected
the paid-in-kind interest option and increased the principal balance of Term
Loans by $14.4 million and $22.9 million for the twelve months and since
inception through the period ended December 31, 2020 respectively.

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

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

Both April 2020 Amendments provide that in the event of receipt of net proceeds
from a disposition triggering a mandatory prepayment, net proceeds of such
disposition will be applied as follows: (i) first, to be retained by the Company
or applied to




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

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



In connection with the Term Loan Amendments dated April 6, 2020, the Company
issued to the Term Loan lenders certain Warrants to purchase up to, in the
aggregate, 538,995 of post reverse stock split shares of the Company's common
stock at an exercise price of $0.01 per share. The Warrants initially were
recorded at fair value upon issuance and classified as a liability as the
Company did not have sufficient authorized unissued shares for the Warrants'
exercise. The Warrants were remeasured to fair value up to the reverse stock
split date, with any fair value adjustments recognized in the condensed
consolidated statements of operations. The Warrants were reclassified as equity
at their fair value upon the reverse stock split date and will not be remeasured
subsequently. The estimated fair value of the Warrants on the date of issuance
of $1.4 million was recorded as a debt discount. The Warrants had a fair value
of $2.2 million as of the reverse stock split date which was reclassified to
equity. The Warrants are exercisable at any time after the reverse stock split
which occurred on May 28, 2020 and will remain exercisable, in whole or in part,
for a period of 5 years from the issuance date. As of December 31, 2020, all
538,995 Warrants remain outstanding (Note 9).

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

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

In connection with the transactions contemplated by the July 2020 Second Lien
Amendment, the Company issued to the lenders party to the Second Lien Credit
Agreement certain Warrants to purchase shares of the Company's common stock. The
Warrants are exercisable for up to, in the aggregate, 134,667 shares of the
Company's common stock at an exercise price of $0.01 per share of common stock.
The Warrants are immediately exercisable upon issuance and will remain
exercisable, in whole or in part, for a period of five years from the original
issuance date. The number of shares issuable upon the exercise of the Warrants
is subject to customary adjustments upon the occurrence of certain events,
including (i) payment of a dividend or distribution to holders of shares of the
Company's common stock payable in shares of the Company's common stock, (ii) a
subdivision, capital reorganization or reclassification of the Company's common
stock or (iii) a merger, sale or other change of control transaction. As of
December 31, 2020, all 134,667 Warrants remain outstanding.

The Company was in compliance with its financial covenants as of December 31,
2020. However, the Company is at risk of failing the trailing twelve month
Adjusted EBITDA covenant for the first quarter of 2022. If the Company fails to
comply with its trailing twelve months revenue covenant, events of default under
the First Lien Credit Agreement and the Second Lien Credit Agreement would be
triggered and its obligations under the Senior Credit Facilities or other
agreements (including as a result of cross-default provisions of the indentures
relating to the Series C Notes and Series D Notes) may be accelerated. As such,
the Company recorded a $5.6 million derivative liability associated with certain
mandatory prepayment penalties and the recognition of future interest payments
in the anticipation of a potential future default on its Senior Credit
Facilities. The Company reversed the event of default liability of in the third
quarter of 2020 based on the Series C Notes offering which terminates the
previous revenue covenant under the Senior Credit Facilities, according to which
the Company recognized a $5.6
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million gain in change in the fair value of the derivative liability line on the Condensed Consolidated Statement of Operations for twelve months ended December 31, 2020 (Note 7).

Government Grant Advance



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

Nasdaq Delisting Notice

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

The negative financial conditions described above raise substantial doubt about
our ability to continue as a going concern as of December 31, 2020. To that end,
and as described above, the Company is not currently generating revenues from
operations that are sufficient to cover its operating expenses, and its
available capital resources are not sufficient for it to continue to meet its
obligations as they become due. As a result, the Company has engaged financial
and legal advisors to assist it in, among other things, analyzing all available
strategic alternatives to address its liquidity and capital structure. However,
the Company cannot provide assurances that additional capital will be available
when needed or that any strategic alternatives or restructuring pursued will be
on acceptable. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Operating Activities



Our operating activities used $16.8 million of cash during the year ended
December 31, 2020 compared to $18.4 million during the year ended December 31,
2019. The cash used for the year ended December 31, 2020 was mostly due to an
increase in inventories of $9.8 million, and a reduction in deferred income of
$2.4 million, in addition to $3.3 million of interest paid on our Notes,
Revolver, and Term Loans. The cash used for the year ended December 31, 2019 was
mostly due to an increase in accounts receivable of $3.7 million and inventories
of $6.1 million, and a reduction in deferred income of $2.4 million, in addition
to $5.6 million of interest paid on our Notes, Revolver and Term Loans.

Investing Activities



Our investing activities used $3.9 million during the year ended December 31,
2020 compared to $8.2 million for the year ended December 31, 2019. The funds
used for the year ended December 31, 2020 included $4.0 million in capital
expenditure, the majority of which were for the continued facility expansion in
Buena, NJ. The funds used for the year ended December 31, 2019 included $8.2
million in capital expenditure, the majority of which were for the continued
facility expansion in Buena, NJ.

Financing Activities



Our financing activities provided $9.0 million of cash during the year ended
December 31, 2020 compared to $30.4 million of cash provided by in the year
ended December 31, 2019. The cash provided during the year ended December 31,
2020 primarily consisted of $12.0 million of proceeds from the Series C Notes.
The cash provided during the year ended December 31, 2019 consisted of proceeds
from the Series B Notes net of issuance costs of $26.9 million as well as net
borrowing from the Company's Senior Credit Facility of $19.2 million, offset by
the settlement of our 2019 Notes of $15.7 million.

Off-Balance Sheet Arrangements

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

Contractual Obligations

Our contractual obligations and commitments as of December 31, 2020 are
presented below. Outstanding debt and interest obligation are discussed in Note
6 of our Consolidated Financial Statements. As more fully described under Item 2
- Properties, we lease a warehouse in Vineland, New Jersey, office space in
Iselin, New Jersey, office space in Mississauga, Canada. Our remaining
obligations under these leases are summarized below.

                                                                        Obligations Due by Period
                                                                             (in thousands)
                                                         Less than 1                                                More than 5
Contractual Obligations               Total              Year                1-3 Years          3-5 Years           Years
Short term debt obligations           $       -          $        -

$ - $ - $ - Long term debt obligations

              181,580                   -            181,580                   -                     -
Interest on debt obligations             49,306              22,740             26,566                   -                     -
Operating Lease                           2,776                 587              1,338                 851                     -
Total                                 $ 233,662          $   23,327          $ 209,484          $      851          $          -

Critical Accounting Policies and Estimates



Our consolidated financial statements were prepared in accordance with U.S.
generally accepted accounting principles, which require us to make subjective
decisions, assessments and estimates about the effect of matters that are
inherently uncertain. As the number of variables and assumptions affecting the
judgment increases, such judgments become even more subjective. While we believe
our assumptions are reasonable and appropriate, actual results may be materially
different than estimated.

Impairment

The Company assesses the recoverability of its long-lived assets, which include
property and equipment and definite-lived intangible assets, whenever
significant events or changes in circumstances indicate impairment may have
occurred. If indicators of impairment exist, projected future undiscounted cash
flows associated with the asset are compared to its carrying amount to determine
whether the asset's value is recoverable. Any resulting impairment is recorded
as a reduction in the carrying value of the related asset in excess of fair
value and a charge to operating results. For the twelve months ended
December 31, 2020, the Company determined that there was an impairment of $101.5
million to its long-lived assets.

Fair Value of Financial Instruments



The carrying amounts of cash and cash equivalents, trade receivables, restricted
cash, accounts payable and other accrued liabilities at December 31, 2020
approximate their fair value for all periods presented. The Company measures
fair value in accordance with ASC 820-10, "Fair Value Measurements and
Disclosures". ASC 820-10 clarifies that fair value is an exit price,
representing the amount that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants. As
such, fair value is a market-based measurement that should be determined based
on assumptions that market participants would use in pricing an asset or a
liability. As a basis for considering such assumptions, ASC 820-10 establishes a
three-tier value hierarchy, which prioritizes the inputs used in the valuation
methodologies in measuring fair value:

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

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


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

                                        Fair Value       Net Carrying Value
2023 Series C Convertible Notes        $    30,148      $            31,922
2023 Series D Convertible Notes              1,459                    5,796

Accounts Receivable and Allowance for Doubtful Accounts



The Company extends credit to wholesaler and distributor customers and national
retail chain customers, based upon credit evaluations, in the normal course of
business, primarily with 60 to 90-day terms. The Company maintains
customer-related accruals and allowances that consist primarily of chargebacks,
rebates, sales returns, shelf stock allowances, administrative fees and other
incentive programs. Some of these adjustments relate specifically to the generic
prescription pharmaceutical business. Typically, the aggregate gross-to-net
adjustments related to these customers can exceed 70% of the gross sales through
this distribution channel. Certain of these accruals and allowances are recorded
in the balance sheet as current liabilities and others are recorded as a
reduction to accounts receivable.

The Company extends credit to its contract services customers based upon credit
evaluations in the normal course of business, primarily with 30-day terms. The
Company does not require collateral from its customers. Bad debt provisions are
provided for on the allowance method based on historical experience and
management's evaluation of outstanding accounts receivable. The Company reviews
the allowance for doubtful accounts regularly, and past due balances are
reviewed individually for collectability. The Company charges off uncollectible
receivables against the allowance when the likelihood of collection is remote.

Revenue Recognition



The Company recognizes revenue when a customer obtains control of promised goods
or services, in an amount that reflects the consideration which the entity
expects to receive in exchange for those goods or services. The Company's
revenue is recorded net of accruals for estimated chargebacks, rebates, cash
discounts, other allowances, and returns. The Company derives its revenues from
three types of transactions: sales of its own pharmaceutical products (Company
product sales), sales of manufactured product for its customers (contract
manufacturing sales), and research and product development services performed
for third parties. Due to differences in the substance of these transaction
types, the transactions require, and the Company utilizes, different revenue
recognition policies for each. Taxes collected from customers and remitted to
government authorities are excluded from revenues.

Adoption of ASC Topic 606, "Revenue from Contracts with Customers"



In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers
(Topic 606)." The standard, including subsequently issued amendments, replaces
most existing revenue recognition guidance in U.S. GAAP. The key focus of the
new standard is that an entity should recognize revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those
goods or services.

The Company performed a comprehensive review of its existing revenue
arrangements as of January 1, 2018 following the five-step model. Based on the
Company's analysis, there were no changes identified that impacted the amount or
timing of revenues recognized under the new guidance as compared to the previous
guidance. Additionally, the Company's analysis indicated that there were no
changes to how costs to obtain and fulfill our customer contracts would be
recognized under the new guidance as compared to the previous guidance. The
impact of the adoption of this standard on the Company's Consolidated Balance
Sheet, Consolidated Statement of Operations, and Consolidated Statement of Cash
Flows was not material. The adoption of the new guidance impacted the way the
Company analyzes, documents, and discloses revenue recognition under customer
contracts beginning on January 1, 2018 and resulted in additional disclosures in
the Company's financial statements.

Company Product Sales





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

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

Revenue and Provision for Sales Returns and Allowances



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

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

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

Net revenues and accounts receivable balances in the Company's consolidated financial statements are presented net of SRA estimates. Certain SRA balances are included in accounts payable and accrued expenses.

Use of Estimates



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

Accounting Pronouncements

See Note 2 to the Consolidated Financial Statements for Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements.

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