TELIGENT : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

This "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section and other sections of this Quarterly Report on Form 10-Q
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act
of 1934, as amended, and the Private Securities Litigation Reform Act of 1995,
that are based on current expectations, estimates, forecasts and projections
about the industry and markets in which the Company operates and on management's
beliefs and assumptions. In addition, other written or oral statements, which
constitute forward-looking statements, may be made by or on behalf of the
Company. Words such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates," variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are based
on current expectations of management and are not guarantees of future
performance, and involve certain risks, uncertainties, and assumptions, which
are difficult to predict. These risks and uncertainties include, without
limitation, competitive factors, outsourcing trends in the pharmaceutical
industry, the general economic conditions in the markets in which the Company
operates, levels of industry research and development spending, the Company's
ability to continue to attract and retain qualified personnel, the fixed price
nature of product development agreements or the loss of customers and other
factors described in the Company's filings with the Securities and Exchange
Commission, including the "Risk Factors" section as set forth in our Annual
Report on Form 10-K for the year ended December 31, 2019, as updated below in
this Quarterly Report on Form 10-Q. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such forward-looking
statements. The forward-looking statements set forth herein speak only as of the
date of this report. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required by applicable law. The Company
operates its business under one reportable segment.

Company Overview

Strategic Overview

Teligent, Inc. and its subsidiaries (collectively the "Company") is a specialty
generic pharmaceutical company. All references to "Teligent," the "Company,"
"we," "us," and "our" refer to Teligent, Inc. Our mission is to become a leader
in the specialty generic pharmaceutical market. Our platform for growth is
centered around the development, manufacturing and marketing a portfolio of
generic pharmaceutical products in our own label in topical, injectable, complex
and ophthalmic dosage forms. We believe that expanding our development and
commercial base beyond topical generics, historically the cornerstone of our
expertise, to include injectable generics, complex generics and ophthalmic
generics (what we call our "TICO" strategy"), 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-eight generic topical pharmaceutical
products and four branded injectable pharmaceutical products. We have received
FDA approvals for thirty-six topical generic products from our internally
developed pipeline and we have seventeen Abbreviated New Drug Applications,
("ANDAs") submitted to the FDA that are awaiting approval. In Canada, we sell
thirty-six generic and branded generic injectable products and medical
devices. In addition, we have 45 product candidates at various stages of our
development pipeline. Generic pharmaceutical products are bioequivalent to their
brand name counterparts. We also provide contract manufacturing services to the
pharmaceutical, ("OTC"), and cosmetic markets. We operate our business under one
segment. Our common stock is traded on the Nasdaq Global Select Market under the
trading symbol "TLGT." Our principal executive office, laboratories and
manufacturing facilities are located at 105 Lincoln Avenue, Buena, New Jersey.
We have additional offices located in Iselin, New Jersey, Mississauga, Canada,
and Tallinn, Estonia.

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

The three large wholesale drug distributors are AmerisourceBergen Corporation
("ABC"); Cardinal Health, Inc. ("Cardinal"); and McKesson Drug Company,
("McKesson"). ABC, Cardinal and McKesson are key distributors of our products,
as well as a broad range of health care products for many other companies. None
of these distributors is an end user of our products. Generally, if sales to any
one of these distributors were to diminish or cease, we believe that the end
users of our products would likely find little difficulty obtaining our products
either directly from us or from another distributor. However, the loss of one or
more of these distributors, together with a delay or inability to secure an
alternative distribution source for end users, could have a material negative
impact on our revenue, business, financial condition and results of operations.
There are generally three major negotiating entities in the US market. Walgreens
Boot Alliance, Inc. consists of Walgreens, Amerisource
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Bergen's PRxO Generics program, and Econdisc members. Red Oak Sourcing consists
of CVS and Cardinal's source program. 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 have fee for services contracts with each of them. However, a
change in purchasing patterns, a decrease in inventory levels, an increase in
returns of our products, delays in purchasing products and delays in payment for
products by one or more of these distributors could have a material negative
impact on our revenue, business, financial condition and results of operations.
We continue to analyze the market for other specialty generic drug products
through internal research and development. In addition, we continue to explore
business development opportunities to add additional products and/or
capabilities to our existing portfolio.

For the three months ended June 30, 2020, one customer accounted for 27% of the
Company's revenue. For the three months ended June 30, 2019, two of the
Company's customers accounted for 53% of the Company's revenue, consisting of
22% and 31%, respectively. For the six months ended, 2020, two of the Company's
customers accounted for 30% of the Company's revenue, consisting of 19% and 11%,
respectively. For the six months ended, 2019, two of the Company's customers
accounted for 50% of the Company's revenue, consisting of 25% each respectively.
Accounts receivable related to the Company's major customers comprised 45% of
all accounts receivable as of June 30, 2020 and 64% as of June 30, 2019,
respectively. The loss of one or more of these major customers could have a
significant impact on our revenues and harm our business and results of
operations.

Our customers in the contract manufacturing business generally consist of
pharmaceutical companies, as well as cosmetic and OTC product marketers, who
require product development/manufacturing support. For the three months ended
June 30, 2020, approximately 31% of our contract manufacturing revenue was
derived from pharmaceutical projects, as compared to 47% of total contract
manufacturing revenue for the three months ended June 30, 2019. For the six
months ended June 30, 2020, approximately 34% of our contract manufacturing
revenue was derived from pharmaceutical projects, as compared to 62% of total
contract manufacturing revenue for the six months ended June 30, 2019. None of
our contract manufacturing services customers represented greater than 10% of
total revenue for the three and six months ended June 30, 2020 and 2019,
respectively.

COVID-19 Pandemic Update

The current financial results and anticipated future results of the Company have been negatively impacted due to COVID-19.

The Company performed an impairment analysis for the quarter ended March 31,
2020, by comparing the expected future cash flows of the assets to the carrying
value of the related intangible assets. As a result, the Company recorded an
impairment charge of $8.4 million, related to trademarks and technology of $4.9
million and product acquisition costs of $3.5 million. There were no changes to
the assumptions made at the first quarter of this year that would suggest
further impairment. The Company did not have impairment triggers during the
second quarter of 2020 related to the long-lived assets.

The Company initiated a company-wide cost reduction initiative targeted at
eliminating discretionary spending and ensuring that remaining expenditures are
reduced in line with the lower demand for its products in light of COVID-19
impact to the business. Effective on May 4, 2020, the Company's Executive
Leadership Team and all employees with annual salaries exceeding $100,000
accepted a 20% and 15% eight-week reduction in pay, respectively. Over the same
eight-week period, the Company furloughed a portion of employees at its Buena,
NJ manufacturing facility.

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

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

In order to preserve cash and align manufacturing-related resources with
downward adjustments made to our production schedule, we initiated a reduction
in force at our Buena, NJ manufacturing facility effective June 19, 2020. In
connection with the reduction, the Company terminated 53 employees and
furloughed another 15 employees.The Company's employee base after these actions
and a company-wide effort to reduce recruitment is down 31% from the start of
the year. The Company provided terminated employees with a severance package and
will continue to provide health insurance coverage to its furloughed employees.
The associated one-time employee severance costs totaled $0.3 million and are
reflected in primarily cost of revenues and the product development and research
expenses in the Company's Condensed Consolidated Statement of Operations for the
three and six months ended June 30, 2020.

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

Product and Pipeline Approvals

There were no significant approvals announced in 2020 to date.

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
its internally developed pipeline of topical generic pharmaceutical medicines.
We expect to launch this product in the second half of 2021.

Results of Operations

Three months ended June 30, 2020 compared to June 30, 2019

We had a net loss of $14.3 million, or $2.56 per share, for the three months
ended June 30, 2020 (the "Current Period"), compared to a net loss of $4.0
million, or $0.74 per share, for the three months ended June 30, 2019 (the
"Prior Period"). Product Sales, net, include Company Product Sales and Contract
Manufacturing Sales.

Revenues:
                                                  Three Months Ended June 30,                                     Increase/(Decrease)
Components of Revenue:                             2020                  2019                 $                         %
Product sales, net                           $       13,335          $   18,256          $ (4,921)                               (27) %
Research and development services and
other income                                            251                  85               166                                195  %
Total Revenues                               $       13,586          $   18,341          $ (4,755)                               (26) %



Total revenues decreased by 26% to $13.6 million in the Current Period from the
$18.3 million recorded in the Prior Period. The $4.8 million decrease in
comparison to the Prior Period was driven primarily by a net reduction of $3.9
million in our US Sales due to lost contract volume and incremental price
erosion and a $0.9 million decrease in Canadian revenues due to supply
constraints.

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

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Costs and Expenses:
                                                   Three Months Ended June 30,                                        Increase/(Decrease)
                                                    2020                   2019                 $                           %
Cost of revenues                             $        11,084          $     9,800          $   1,284                                  13  %
Selling, general and administrative
expenses                                               4,989                5,187               (198)                                 (4) %
Product development and research
expenses                                               1,880                2,668               (788)                                (30) %
Totals costs and expenditures                         17,953               17,655                298                                   2  %

Cost of revenues increased by 13% to $11.1 million in the Current Period in comparison to the $9.8 million reported in the Prior Period. Gross margin decreased to 18% in the Current Period from 47% in the Prior Period. The deteriorated gross profit in the Current Period in comparison to the Prior Period was attributable to a build in inventory reserves and lower contract volume and price erosion continued from the first quarter of this year.

Selling, general and administrative expenses in the Current Period decreased by
$0.2 million to $5.0 million as compared to a $5.2 million in the Prior Period.
The decrease was primarily due to i) a $0.2 million decline in professional and
legal fees, ii) a $0.1 million decline in amortization expenses due to an
impairment charge incurred in the first quarter of this year plus a $0.1 million
of contribution expense in 2019 vs. none in 2020, and partially offset by iii)
an increase of $0.3 million in personnel costs.

Product development and research expenses decreased by $0.8 million to $1.9
million as compared to the $2.7 million reported in the Prior Period. The
decrease in product development and research expenses was due primarily to (i) a
$0.6 million decline in personnel costs, (ii) a $0.2 million decline in outside
testing, iii) a $0.2 million decline in GDUFA fees and associated Abbreviated
New Drug Applications filings, iv) a $0.1 million decline in occupancy and
business insurances, partially offset by v) a $0.2 million increase in clinical
studies, and (vi) a $0.2 million increase in exhibit and pilot batch costs.

Other (Expense) Income, net:
                                               Three Months Ended June 30,                                       (Increase)/Decrease
                                                2020                  2019                 $                           %
Interest and other expense, net           $       (7,520)         $   (5,155)         $  (2,365)                                 (46) %
Foreign currency exchange gain                     2,124                 553              1,572                                  284  %
Change in the fair value of
derivative liabilities                            (4,591)                  -             (4,591)                                (100) %

                                          $       (9,987)         $   (4,602)         $  (5,385)                                (117) %

The net increase in interest and other expense in the Current Period is due primarily to an increase in interest expense of $2.4 million related to the increase in total debt and a higher cost of capital.

Foreign exchange gain of $2.1 million in the Current Period was mainly related
to the foreign currency translation of our intercompany loans denominated in
U.S. dollars to our foreign subsidiaries to be repaid in November 2022.
Depending on the changes in foreign currency exchange rates, we will continue to
record a non-cash gain or loss on translation for the remaining term of these
loans.

The change in the fair value of derivatives of $4.6 million was related to a
$3.5 million loss on the 2023 Series B Notes, a $0.3 million loss on the Senior
Credit Facilities, and a $0.8 million loss on the Warrants in the Current Period
( Note 8).

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

                                              Three Months Ended June 30,                                      Increase/(Decrease)
                                               2020                   2019                 $                         %
Net loss attributable to common
stockholders                            $       (14,332)         $    (3,989)         $ 10,343                                259  %
Basic and diluted loss per share        $         (2.56)         $     (0.74)         $   1.82                               (246) %



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Net loss for the Current Period was $14.3 million as compared to a net loss of
$4.0 million of the Prior Period. The decline was primarily due to a decrease in
revenues of $4.8 million, an increase in interest expense of $2.4 million, the
derivative liability increases of $4.6 million, a $0.3 million increase in cost
and expenses, partially offset by a $1.6 million increase on foreign currency
exchange gain, as discussed above.

Six months ended June 30, 2020 compared to June 30, 2019

We had a net loss of $41.2 million, or $7.50 per share, for the six months ended
June 30, 2020 (the "Current Year"), compared to a net loss of $12.7 million, or
$2.36 per share, for the six months ended June 30, 2019 (the "Prior Year").
Product Sales, net, include Company Product Sales and Contract Manufacturing
Sales.

Revenues:
                                                  Six months ended June 30,                                       Increase/(Decrease)
Components of Revenue:                             2020                 2019                 $                          %
Product sales, net                           $      20,671          $   31,293          $ (10,622)                               (34) %

Research and development services and
other income                                           362                 170                192                                113  %
Total Revenues                               $      21,033          $   31,463          $ (10,430)                               (33) %



Total revenues decreased by 33% to $21.0 million of the Current Year from the
$31.5 million reported in the Prior Year. The decrease of $10.4 million was
driven primarily by a net reduction of $8.0 million in US sales due to lost
contract volume and incremental price erosion and a decrease of $2.4 million in
Canadian revenues due to supply constraints.

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

Costs and Expenses:
                                                   Six months ended June 30,                                        Increase/(Decrease)
                                                   2020                  2019                 $                           %
Cost of revenues                             $      19,694          $    17,160          $   2,534                                  15  %
Selling, general and administrative
expenses                                            11,706               10,700              1,006                                   9  %
Impairment charges                                   8,373                    -              8,373                                 100  %
Product development and research
expenses                                             3,680                5,657             (1,977)                                (35) %
Totals costs and expenditures                $      43,453          $    33,517          $   9,936                                  30  %



Cost of revenues increased by 15% to $19.7 million of the Current Year from a
$17.2 million of the Prior Year. Gross margin decreased to 6% in the Current
Year from 45% of the Prior Year. The decrease was attributable to an inventory
reserve build of $1.9 million and decreased volume lowering fixed cost
absorption and product mix changes continued from the first quarter of this
year.

Selling, general and administrative expenses in the Current Period increased by
$1.0 million to $11.7 million as compared to $10.7 million reported in the Prior
Period. The increase was primarily due to a $1.1 million increase in personnel
costs and partially offset by a $0.2 million decline in professional and legal
fees.

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

Product development and research expenses decreased by $2.0 million to $3.7
million as compared to $5.7 million reported in the Prior Year. The decrease in
product development and research expenses was primarily due to (i) a $0.9
million decline in personnel cost, ii) a $0.7 million decline in outside testing
and lab supplies, (iii) a $0.1 million decline in clinical studies, and (iv) a
$0.3 million decline in GDUFA fees and associated Abbreviated New Drug
Applications filings.

Other (Expense) Income, net:

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                                                  Six months ended June 30,                                        (Increase)/Decrease
                                                  2020                  2019                 $                           %
Interest and other expense, net             $      (13,396)         $  (10,102)         $  (3,294)                                  33  %
Foreign currency exchange gain/(loss)                  528                (291)               819                                 (281) %
Change in the fair value of
derivative liabilities                              (5,849)                  -             (5,849)                                 100  %
Debt partial extinguishment of 2019
Notes                                                    -                (185)               185                                 (100) %
                                            $      (18,717)         $  (10,578)         $  (8,139)                                  77  %

Interest and other expense, net increased in the Current Period primarily resulted from an increase in interest expense of $3.3 million related to our current debt structure.

Foreign exchange gain of $0.5 million in the Current Year was related to the
foreign currency translation of our intercompany loans denominated in U.S.
dollars to our foreign subsidiaries to be repaid in November 2022. Depending on
the changes in foreign currency exchange rates, we will continue to record a
non-cash gain or loss on translation for the remaining term of these loans.

The change in the fair value of derivatives of $5.8 million included a $5.6
million loss on the derivative liability pertaining to the our Senior Credit
Facility, a $0.8 million loss on the Warrants, and partially offset by a $0.5
million gain on the 2023 Series B Notes in the Current Year (Note 8).

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

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

                                              Six months ended June 30,                                       Increase/(Decrease)
                                              2020                   2019                 $                         %
Net loss attributable to common
stockholders                            $      (41,168)         $   (12,713)         $ 28,455                                224  %

Basic and diluted loss per share $ (7.50) $ (2.36) $ 5.13

                                217  %



Net loss for the Current Year was $41.2 million as compared to a net loss of
$12.7 million reported in the Prior Year. The decline was due primarily to a
decrease in revenues of $10.4 million, an increase in cost and expenses of $9.9
million, an increase in interest expense of $3.3 million, the derivative
liability increase of $5.8 million, and a $0.8 million increase of foreign
exchange gain, 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 $162.6 million, total principal amount of outstanding
borrowings of $195.8 million, and limited capital resources to fund ongoing
operations at June 30, 2020. These capital resources were comprised of cash and
equivalents of $6.5 million at June 30, 2020 and the generation of cash inflows
from working capital. The Company's available capital resources may not be
sufficient for it to continue to meet its obligations as they become due over
the next twelve months if the Company cannot improve its operating results or
increase its operating cash inflows. In the event these capital resources are
not sufficient, the Company may need to raise additional capital through the
sale of equity or debt securities, enter into strategic business collaboration
agreements with other companies, seek other funding facilities, or sell assets.
However, the Company cannot provide assurances that additional capital will be
available on acceptable terms or at all. Moreover, if the Company is unable to
meet its obligations when they become due over the next twelve months through
its available capital resources, or obtain new sources of capital when needed,
the Company may have to delay expenditures, reduce the scope of its
manufacturing operations, reduce or eliminate one or more of its development
programs, make significant changes to its operating plan or cease its
operations.

Our liquidity needs have typically arisen from the funding of our new
manufacturing facility, product manufacturing costs, research and development
programs and the launch of new products. In the past, we have met these cash
requirements through cash inflows from operations, working capital management,
and proceeds from borrowings discussed in Note 7. Although the construction of
our new manufacturing facility was substantially completed in October of 2018,
additional investment was made in order to prepare the facility and our
employees for a prior approval inspection from the FDA for our injectable line.
In
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addition, we expect to continue to incur significant expenditures for the
development of new products in our pipeline, and the manufacturing, sales and
marketing of our existing product. While we rely heavily on cash flows from
operating activities and borrowings from outside sources to execute our
operational strategy, meet our financial commitments and other short-term
financial needs, we cannot be certain that sufficient capital will be generated
through operations or will be available to the Company to the extent required
and on acceptable terms.

The $9.7 million decrease in our cash during the six months ended June 30, 2020
was mainly to support our operational activities, which included a $9.1 million
build in inventory to help avoid failure-to-supply fees and normal timing
differences in working capital balances. In addition, we had an accumulated
deficit of $162.6 million as of June 30, 2020, inclusive of a $41.2 million net
loss in this year.

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

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
the Protective Advance clause in the Company's First Lien Credit Agreement with
Ares Capital, the Company borrowed an incremental $2.5 million from its existing
revolving credit facility. Consistent with the terms of the revolving credit
facility, Protective Advances are secured by the Administrative Agent's liens,
constitute Obligations pursuant to the First Lien Credit Agreement, and bear
interest at the rate applicable to the outstanding revolving credit facility
balances, however, the Protective Advance is repayable on demand. The liability
was subsequently paid off in November 2019 along with repayment fee of $0.1
million. The Company drew down the remaining $10 million under its borrowing
capacity of Delayed Draw Term Loan A before its expiry in December of 2019. The
$15 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 $4.8 million and $15.7 million for the three months and since inception
through the period ended June 30, 2020, respectively.

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

Effective on April 6, 2020, the Revolver bears interest, amended pursuant to
Amendment No. 2, 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%. Effective on April 6, 2020, the
Term Loans bear interest, amended pursuant to Amendment No. 4, 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
                                       48
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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 amendments provide that in the event of receipt of net proceeds from a
disposition triggering a mandatory prepayment, net proceeds of such disposition
will be applied as follows: (i) first, to be retained by the Company or applied
to amounts outstanding under the First Lien Credit Agreement until such time as
liquidity of the Company and its subsidiaries equals $10.0 million, (ii) next to
amounts outstanding under the Revolver (without a permanent reduction in the
revolving loan commitments of the lenders) until such amounts are paid in full
(with the first lien administrative agent having the right to waive such
prepayment, in which event, such net proceeds are applied to amounts outstanding
under the Second Lien Credit Agreement), and (iii) finally, to amounts
outstanding under the Term Loans. In addition, pursuant to the Revolver, the
Company has agreed at all times to maintain book cash of the Company and its
subsidiaries not in excess of $10.0 million with any excess being required to
prepay the outstanding obligations under the Revolver.

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

In connection with the Term Loan Amendments dated April 6, 2020, the Company
issued to the Term Loan lenders certain Warrants to purchase up to, in the
aggregate, 538,995 of post reverse stock split shares of the Company's common
stock at an exercise price of $0.01 per share. The Warrants initially were
recorded at fair value upon issuance and classified as a liability as the
Company did not have sufficient authorized unissued shares for the Warrants'
exercise. The Warrants were remeasured to fair value till 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 June 30, 2020, all 538,995
Warrants remain outstanding (Note 8).

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 October 31, 2019, the Company closed its offering of the 2023 Series B Notes
in the aggregate principal amount of $34.4 million ("2023 Series B Notes" and
together with the 2023 Notes, the "Notes"). The 2023 Series B Notes will mature
in May 2023 and are convertible at the option of the holder at any time prior to
its maturity. The initial conversion price was $7.20 per share, subject to
adjustment under certain circumstances. The 2023 Series B Notes and any shares
of common stock issuable upon conversion of the 2023 Series B Notes (the
"Conversion Shares") have not been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or any state or other jurisdiction's
securities laws, and the 2023 Notes and the Conversion Shares may not be offered
or sold in the United States absent registration or an applicable exemption from
the registration requirements of the Securities Act and applicable state or
other jurisdictions' securities laws. The Company does not intend to file a
registration statement for the resale of the 2023 Series B Notes or any
Conversion Shares.

As part of the offering, the Company entered into agreements with certain
holders of its existing 2023 Notes to exchange $9.0 million of the 2023 Notes
for $5.1 million of the 2023 Series B Notes. The gross cash proceeds of
approximately $29.3 million from the financing were used to extinguish the
Company's existing 2019 Notes in December 2019 and intended to pay amounts owing
with respect to other indebtedness and to fund general corporate and working
capital requirements. The net proceeds from the financing were $26.9 million
after deducting a total of $2.3 million of the initial purchasers' discounts and
professional fees associated with the transaction. The 2023 Series B Notes bear
interest at a rate of 7.00% per annum if paid in cash, semiannually in arrears
on May 1 and November 1 of each year, beginning on May 1, 2020. The Company also
has an option, and has agreed with its senior lender, to PIK the interest at
8.00% per annum, to defer cash payments. As of June 30, 2020, the Company has
elected the paid-in-kind interest option and increased the principal balance of
the 2023 Series B Notes by $1.4 million as of June 30, 2020. The effective
interest rate of the 2023 Notes, inclusive of the debt discount and issuance
costs is 27.4%.

                                       49
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The Company was in compliance with its financial covenants as of June 30, 2020.
On July 20, 2020, the Company entered into (i) a Consent and Amendment No. 3 to
First Lien Revolving Credit Agreement (the "First Lien Amendment"), and (ii) a
Consent and Amendment No. 5 to Second Lien Credit Agreement (the "Second Lien
Amendment"). The First Lien Amendment amends the First Lien Credit Agreement to,
among other things, (i) permit the issuance of the New 2023 Notes and the other
transactions contemplated by the Indenture, (ii) modify the terms of certain
mandatory prepayments, (iii) modify certain negative covenants and (iv) modify
certain financial covenants. The Second Lien Amendment amends the Second Lien
Credit Agreement to, among other things, (i) permit the issuance of the New 2023
Notes and the other transactions contemplated by the Indenture, (ii) modify the
terms of certain mandatory prepayments, (iii) modify certain negative covenants,
(iv) modify certain financial covenants and (v) extend the time period in which
the Company may elect to pay interest in kind. On July 20, 2020, the Company
closed its Series C Senior Convertible Notes offering in the aggregate principal
amount of $13.8 million. Interest on the New 2023 Notes initially accrues at the
rate of 9.5%, is payable in kind by issuing additional principal amount of New
2023 Notes, and will be payable semiannually in arrears on March 1 and September
1 of each year, beginning on September 1, 2020. The New 2023 Notes mature in
March 2023. After taking into account an original issue discount and other
transaction fees (including fees payable to the purchasers in the form of
additional New 2023 Notes), the Company received approximately $10.0 million of
net cash proceeds, which will be used to fund general corporate and working
capital purposes. If the Company fails to comply with its covenants, an event of
default under the Credit Agreements would be triggered and its obligations under
the Senior Credit Facilities or other agreements (including as a result of
cross-default provisions) may be accelerated. The 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 at June 30, 2020 was $5.6 million (Note 8).

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

In June 2019, the Company received a de-listing notice from the NASDAQ due to
its share price being below $1.00 for 30 consecutive trading days. The notice
specified that the Company's share price must trade above $1.00 per share for
ten consecutive trading days prior to December 2, 2019 in order to prevent its
common stock from being de-listed. For the 180 days preceding December 2, 2019
the Company's share price remained below $1.00. The Company requested a second
180-day extension. NASDAQ denied its request and the Company chose to file for
an appeal. The Company was granted a hearing date for the end of January 2020.
Subsequent to the appeal hearing, NASDAQ set a deadline of April 17, 2020 for
the Company to regain compliance with NASDAQ's continuing listing requirements.
In early March 2020 the COVID-19 global pandemic triggered a significant decline
in global capital markets, including NASDAQ. In light of this significant
decline, the Company requested NASDAQ to reconsider the April 17, 2020 deadline.
NASDAQ agreed to the Company's request and set a new deadline to regain
compliance by June 1, 2020. In response to the COVID-19 pandemic and related
extraordinary market conditions, NASDAQ provided additional temporary relief
("Relief") from the continued listing bid price and market value of publicly
held shares listing requirements through August 17, 2020. Under the Relief, the
company will have additional time to regain compliance with the NASDAQ through
August 17, 2020. In January 2020, the Company's Board of Directors and
shareholders approved a reverse stock split in the range of any whole number
between five (5) and ten (10) to one (1). While the Company believes that the
reverse stock split will ultimately increase its share price above $1.00 for the
required ten consecutive trading days, it can provide no assurances that its
shares will trade above $1.00 per share for the required time period. A
de-listing from the NASDAQ would be a "Fundamental Change" under the Company's
2023 Series A and Series B Unsecured Convertible Notes which triggers a right by
the holders to require the Company repurchase the Convertible Notes. In such an
event, the Company would need to seek financing to repurchase the Convertible
Notes and there is no guarantee that such financing would be available or on
terms acceptable to the Company. If noteholders demanded a repurchase of the
notes and the Company could not finance the repurchase, it would be in default
under the Indentures governing the Convertible Notes, and in that event the
lenders of the Ares Credit agreements would have the right, but not the
obligation, to declare all of the outstanding balance under those agreements due
and payable as well. Therefore, in the event of the Company's shares are
de-listed from the NASDAQ, the Company would likely have to seek some
combination of waivers from its lenders and noteholders and seek new capital
through the sale of equity or debt securities. If the Company is unable to
obtain such waivers or raise new capital to meet these obligations if they
become due, it may have to seek other strategic alternatives, including ceasing
operations. On May 28, 2020, the Company effectuated a one-for-ten reverse stock
split (Note 2). On June 18, 2020, the Company received a written notice from the
NASDAQ that it has regained compliance with the Bid Price Requirement. While the
Company believes it will comply with the NASDAQ listing requirements, it can
provide no assurances that it will be able to remain in compliance.

                                       50
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On July 28, 2020, the Company received a notice (the "Notice") from The Nasdaq
Stock Market stating that the Company was not in compliance with Nasdaq Listing
Rule 5450(b)(3)(C) relating to the minimum Market Value of Publicly Held Shares
(the "MVPHS Rule"). The notice stated that the Company failed to maintain a
minimum market value of publicly held shares of $15.0 million for the 30
consecutive days preceding the date of the notice. The notice has no immediate
effect on the Company's Nasdaq listing or trading of the Company's common stock.
The Company has a compliance period for the MVPHS Rule of 180 calendar days, or
until January 25, 2021, in which to regain compliance. To regain compliance the
Company's minimum market value of publicly held shares must equal $15.0 million
or more for a minimum of 10 consecutive business days, Nasdaq will notify the
Company that it has achieved compliance with the Rule. If the Company does not
regain compliance by January 25, 2021, then Nasdaq will notify the Company that
the Company's common stock will be delisted from the Nasdaq Global Market,
unless the Company requests a hearing before a Nasdaq Hearings Panel. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

The negative financial conditions described above raise substantial doubt about our ability to continue as a going concern as of June 30, 2020.

Our cash flows from operating, investing and financing activities, as reflected
in the condensed Consolidated Statements of Cash Flows, are summarized in the
following table:
                                             Six months ended June 30,
                                              2020                     2019
Net cash provided by (used in)
Operating Activities             $        (11,143)                  $ (10,288)
Investing Activities             $         (2,369)                  $  (5,101)
Financing Activities             $          3,371                   $   7,199



Operating Activities

Our operating activities used $11.1 million and $10.3 million of cash and cash
equivalents in the six months ended June 30, 2020 and 2019, respectively, mainly
to support our operational activities, which included a $9.1 million build in
inventory to help avoid failure-to-supply fees and normal timing differences in
working capital balances.

Investing Activities

Our investing activities used $2.4 million of cash and equivalents during the
six months ended June 30, 2020, compared to $5.1 million used during the same
period last year, which was used for the continued facility expansion in Buena,
NJ.

Financing Activities

On May 15, 2020, we received $3.4 million of proceeds from the U.S. Small
Business Administration Paycheck Protection Program and has been utilizing the
advance to balance its employee-related actions previously taken with the
business needs to ensure a significant portion of the loan will be forgiven
(Note 1). During the six months ended June 30, 2019, our financing activities
provided $7.2 million of cash and cash equivalents, which included $10.0 million
of proceeds from the Revolver.

Our capital resources were comprised of cash and cash equivalents of $5.9 million and $15.5 million as of June 30, 2020 and December 31, 2019 respectively. We had working capital of $30.2 million and $45.0 million at June 30, 2020 and December 31, 2019, respectively.

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

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
                                       51
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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.

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

Effective on April 6, 2020, the Revolver bears interest, amended pursuant to
Amendment No. 2, 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%. Effective on April 6, 2020, the
Term Loans bear interest, amended pursuant to Amendment No. 4, 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. The Company has
elected the paid-in-kind interest option and increased the principal balance of
Term Loans by $4.8 million and $15.7 million for the three months and since
inception through the period ended June 30, 2020, respectively.

On October 31, 2019, the Company closed its offering of the 2023 Series B Notes
in the aggregate principal amount of $34.4 million ("2023 Series B Notes" and
together with the 2023 Notes, the "Notes"). The 2023 Series B Notes will mature
in May 2023 and are convertible at the option of the holder at any time prior to
its maturity. The initial conversion price was $7.2 per share, subject to
adjustment under certain circumstances. consider to remove the previous
disclosure. The 2023 Series B Notes and any shares of common stock issuable upon
conversion of the 2023 Series B Notes (the "Conversion Shares") have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any state or other jurisdiction's securities laws, and the 2023 Notes and the
Conversion Shares may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of
the Securities Act and applicable state or other jurisdictions' securities laws.
The Company does not intend to file a registration statement for the resale of
the 2023 Series B Notes or any Conversion Shares.

As part of the offering, the Company entered into agreements with certain
holders of its existing 2023 Notes to exchange $9.0 million of the 2023 Notes
for $5.1 million of the 2023 Series B Notes. The gross cash proceeds of
approximately $29.3 million from the financing were used to extinguish the
Company's existing 2019 Notes in December 2019 and intended to pay amounts owing
with respect to other indebtedness and to fund general corporate and working
capital requirements. The net proceeds from the financing were $26.9 million
after deducting a total of $2.3 million of the initial purchasers' discounts and
professional fees associated with the transaction. The 2023 Series B Notes bear
interest at a rate of 7.00% per annum if paid in cash, semiannually in arrears
on May 1 and November 1 of each year, beginning on May 1, 2020. The Company also
has an option, and has agreed with its senior lender, to PIK the interest at
8.00% per annum, to defer cash payments. The Company has elected the
paid-in-kind interest option and increased the principal balance of the 2023
Series B Notes by $1.4 million as of June 30, 2020.

On May 15, 2020, the Company received $3.4 million of proceeds from the U.S.
Small Business Administration Paycheck Protection Program ( the 'Government
Grant Advance") and has been utilizing the advance to balance its
employee-related actions previously taken with the business needs to ensure a
significant portion of the loan will be forgiven. The Advance matures in 2 years
with accrued interest at an annual rate of 1.00%, being deferred for payments
until the date of forgiveness or 24 weeks from the date when the fund was
received by the Company. According to ASC 450-30, Gain Contingencies, the
                                       52
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Company recorded the $3.4 million of proceeds in the Government Grant Advance
line on its Condensed Consolidated Balance Sheet as of June 30, 2020. The
Company will record the related earnings impact on its Condensed Consolidated
Statement of Operations in the period when the associated conditions attached to
the Advance are reasonably assured to be met.

Off Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

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

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