AYTU BIOPHARMA, INC

Note1 - Nature of Business

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

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

The Company’s business from continuing operations is focused on its prescription pharmaceutical products sold primarily throughthird party wholesalers and pharmacies and which primarily consists oftwo product portfolios. Thefirst consists oftwo products for the treatment of attention deficit hyperactivity disorder (“ADHD”): Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets (“Adzenys”) and Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets (“Cotempla” and Adzenys together with Cotempla the “ADHD Portfolio”). Thesecond consists primarily of Karbinal® ER (carbinoxamine maleate extended-release oral suspension) (“Karbinal”), an extended-releasefirst-generation antihistamine suspension containing carbinoxamine indicated to treat numerous allergic conditions, and Poly-Vi-Flor and Tri-Vi-Flor,two complementary prescription fluoride-based supplement product lines containing combinations of fluoride and vitamins in various formulations for infants and children with fluoride deficiency (the “Pediatric Portfolio”).

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”). After the previously announced successful wind down and divestiture of the Consumer Health business that occurred during thefirst quarter of fiscal2025, the Company determined that its continuing operations now operate in a single operating and reportable segment. The Company’s CODM is its Chief Executive Officer who manages operations and regularly reviews the financial information of the Company’s continuing operations as a single operating segment for the purposes of allocating resources and evaluating its financial performance, and for which discrete financial information is available. The results of the Consumer Health business have been reported as discontinued operations (seeNote20* – Discontinued Operations*).

In* July 2023,the Company entered into an exclusive collaboration, distribution and supply agreement with Medomie Pharma Ltd (“Medomie”), a privately owned pharmaceutical company, for Medomie to sell Adzenys and Cotempla in Israel and the Palestinian Authority. In September 2024,the Company entered into an exclusive collaboration, distribution and supply agreement with Lupin Pharma Canada Ltd (“Lupin”), a subsidiary of global pharmaceutical company Lupin Limited, for Lupin to sell Adzenys and Cotempla in Canada. The Company will supply Adzenys and Cotempla to Medomie and Lupin based on forecasts and provide various product commercialization resources. Medomie and Lupin are responsible for seeking local regulatory approvals and marketing authorizations for both Adzenys and Cotempla, which is expected to occur over the next18* to24 months. The agreement with Medomie and the agreement with Lupin represent the Company’sfirst andsecond international commercial agreements for Adzenys and Cotempla, respectively.

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Note2 - Summary of Significant Accounting Policies

Principals of Consolidation

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

Basis of Presentation

The unaudited consolidated financial statements and notes thereto contained in this Form10-Q represent the financial statements of the Company and its wholly owned subsidiaries and have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and disclosures normally included in the complete financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s2024 Form10-K, which included all disclosures required by U.S. GAAP. In the opinion of management, these unaudited consolidated financial statements and notes thereto contain all adjustments necessary for the fair statement of the financial position of the Company and the results of operations and cash flows for the interim periods presented. The consolidated balance sheet as of* June 30, 2024*, was derived from the audited annual financial statements but doesnot contain all of the footnote disclosures from the annual financial statements. The results of operations for the period ended* December 31, 2024*, arenot necessarily indicative of expected operating results for the full year or any future period.

Use of Estimates

The preparation of financial statements and footnotes requires the use of management estimates, judgments and assumptions. Actual results* maydiffer from estimates. In the accompanying unaudited consolidated financial statements and notes thereto, estimates are used for, butnot* limited to, stock-based compensation; revenue recognition, determination of variable consideration for accruals of chargebacks, administrative fees and rebates, government rebates, returns and other allowances; allowance for credit losses; inventory impairment; determination of right-of-use (“ROU”) assets and lease liabilities; valuation of financial instruments, warrants and derivative warrant liabilities, intangible assets, and long-lived assets; purchase price allocations and the depreciable lives of long-lived assets; accruals for contingent liabilities; and determination of the income tax provision, deferred taxes and valuation allowance. Because of the uncertainties inherent in such estimates, actual results* may*differ from those estimates. The Company periodically evaluates estimates used in the preparation of the financial statements for reasonableness.

Prior Period Reclassification

Certain prior year amounts in the Company’s unaudited consolidated financial statements and the notes thereto have been reclassified to conform to the current year presentation. These reclassifications didnot impact operating results for thethree andsix months ended* December 31, 2024,and2023*, or cash flows for thesix months ended* December 31, 2024,and2023*, or the Company’s financial position as of* December 31, 2024*, or* June 30, 2024*.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic480, Distinguishing Liabilities from Equity (“ASC480”) and ASC Topic815, Derivatives and Hedging (“ASC815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC480, meet the definition of a liability pursuant to ASC480, and whether the warrants meet all of the requirements for equity classification under ASC815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Liability and equity classified warrants are valued using a Black-Scholes option pricing model or Monte Carlo simulation model at issuance and for each reporting period when applicable.

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Income Taxes

The Company calculates its quarterly income tax provision based on estimated annual effective tax rates applied to ordinary income (or loss) and other known items computed and recognized when they occur. There have beenno changes in tax law affecting the tax provision during thethree andsix months ended* December 31, 2024*.

The Company recorded for income (loss) from continuing operations an income tax benefit of $0.3 million, which represented an effective tax rate of negative 74.1% and income tax expense of $0.8 million, which represented an effective tax rate of 55.8%, for thethree months ended* December 31, 2024,and2023,* respectively. The Company recorded for income (loss) from continuing operations an income tax expense of $0.1 million, which represented an effective tax rate of 6.5% and income tax expense of $0.8 million, which represented an effective tax rate of negative 12.8% for thesix months ended* December 31, 2024,and2023*, respectively. These effective tax rates were primarily driven by the limitations on losses as a result of Section382 of the Internal Revenue Code changes in ownership coupled with existing valuation allowances, the divestiture of the Company’s Consumer Health business that occurred during thefirst quarter of fiscal2025 and changes to the Company’sfirst quarter of fiscal2025 projections, which resulted in an income tax benefit for the current quarter.

An ownership change has limited the Company’s ability to offset, post-change, United States federal taxable income. Section382 of the Internal Revenue Code imposes an annual limitation on the amount of post-ownership change taxable income a corporation* mayoffset with pre-ownership change net operating loss carryforwards and certain recognized built-in losses. Previous acquisitions, financing transactions, and equity ownership changes in the pastfive* years have caused a significant limitation on the Company’s ability to use the change in control net operating loss carryovers. The ownership changes result in increased future tax liability and are a driver of the change from azero percent effective tax rate.

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date. A valuation allowance is recorded to reduce the net deferred tax asset when it is more likely thannot that some portion or all of its deferred tax asset willnot be utilized.

The Company recognizes the effect of income tax positions only if those positions are more likely thannot to be sustained upon an examination. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the unaudited consolidated statements of operations.

Employee Retention Credit

On* March 27, 2020,the United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”), which allows for employers to claim a refundable payroll tax credit against the employer share of Social Security tax equal to70%* of the qualified wages paid to employees after* December 31, 2020,through September 30, 2021.*The ERC was designed to encourage businesses to keep employees on the payroll during the COVID-19 pandemic.

As there isno authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company accounted for the ERC by analogy to International Accounting Standard (“IAS”)20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS20”). In accordance with IAS20, the Company recorded a $3.8 million ERC accrual in other non-current liabilities, which represents the proceeds the Company received from the ERC program during thefirst quarter of fiscal2024. Further in accordance with IAS20, when management determines it has reasonable assurance that the Company has substantially met all eligibility requirements of the ERC and following any adjustments from its regulatory audit or upon further clarifications from the Internal Revenue Code of1986, as amended (the “IRC”), the ERC accrual shall be recognized as a benefit in other income in the unaudited consolidated statement of operations. The associated vendor fee of $0.4 million was expensed as incurred in thefirst quarter of fiscal2024.

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Recently Adopted Accounting Pronouncements

Debt - Debt with Conversion and Other Option

In* August 2020,the FASB issued Accounting Standards Update (“ASU”)No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic470-20) and Derivatives and Hedging*—Contracts in Entity’s Own Equity (Subtopic815*-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by removing major separation models currently required. Consequently, more convertible debt instruments will be reported as a single liability instrument withno* separate accounting for embedded conversion features. The amendments in this update are effective for public entities that are smaller reporting companies, as defined by the SEC, for the fiscal years beginning after* December 15, 2023,including interim periods within those fiscal years. Early adoption is permitted through a modified retrospective or full retrospective method. The Company adopted the guidance on July 1, 2024,and the adoption of the standard didnot* have a material impact on the Company’s consolidated financial statements.

Recent Accounting PronouncementsNot Yet Adopted**

Segment Reporting - Improvements to Reportable Segment Disclosures

In* November 2023,the FASB issued ASUNo.* 2023-07, Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures* (“ASU2023-07”). ASU2023-07 was issued to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance should be applied retrospectively unless it is impracticable to do so. ASU2023-07 is effective for fiscal years beginning after* December 15, 2023,and interim periods in fiscal years beginning after December 15, 2024.*Early adoption is permitted, including in an interim period. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.

Disaggregation of Income Statement Expenses

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement–* Reporting Comprehensive Income*–* Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses* (“ASU2024-03”). The amendments in ASU2024-03 require public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU2024-03 is effective for annual reporting periods beginning after* December 15, 2026,and interim reporting periods within annual reporting periods beginning after December 15, 2027.Early adoption is permitted, and the amendments may*be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statements and disclosures.

For a complete set of the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s2024 Form10-K. There have beenno significant changes to the Company’s significant accounting policies and there isno other accounting guidance that has been issued andnot yet adopted that is applicable to the Company and that would have a material effect on the Company’s unaudited consolidated financial statements and related disclosures as of* December 31, 2024*, and through the filing of this Form10-Q.

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Note3 - Revenue

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

Savings offers, rebates, and wholesaler chargebacks reflect the terms of underlying agreements, which* mayvary. Accordingly, actual amounts will depend on the mix of sales by product and contracting entity. Future returns may**not* follow historical trends. The Company’s periodic adjustments of its estimates are subject to time delays between the initial product sale, and the ultimate reporting and settlement of deductions. The Company entered into negotiations with a vendor related to certain variable interest accruals that reduce revenue for the Company’s ADHD Portfolio. As a result of these negotiations, the Company and the vendor agreed to a reduction to the liability purportedly owed by the Company of $3.3 million, which resulted in a decrease in the estimated variable consideration accrual, and a related increase in net revenue of $3.3 million in thefirst quarter of fiscal2025.

Revenueby Product Portfolio

Net revenue disaggregated by significant product portfolio for thethree andsix months ended* December 31, 2024,and2023*, were as follows:

Other includes net revenue from various discontinued or deprioritized products. The Consumer Health business was divested in thefirst quarter of fiscal2025 and is reported within discontinued operations (seeNote20* – Discontinued Operations*).

Revenue by Geographic Location

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

Note4 - Inventories

Inventories consist of raw materials, work in process and finished goods, and are recorded at the lower of cost or net realizable value, with cost determined on afirst-in,first-out basis. The Company periodically reviews the composition of its inventories to identify obsolete, slow-moving or otherwise unsaleable items. In the event that such items are identified and there areno alternate uses for the inventory, the Company will record a charge to reduce the value of the inventory to net realizable value in the periodfirst recognized. The Company incurred inventory write-downs of less than $0.1 million and $0.1 million for thethree months ended* December 31, 2024,and2023,* respectively, and $0.1 million for both thesix months ended* December 31, 2024,and2023,* respectively.

Inventories consist of the following:

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Note5 - Property and Equipment

Property and equipment are recorded at cost and depreciated on a straight-line basis over the assets’ estimated economic life. Leasehold improvements are amortized over the shorter of the estimated economic life or remaining lease term. Depreciation and amortization expense from property and equipment was less than $0.1 million and $0.3 million for thethree months ended* December 31, 2024,and2023*, respectively, and $0.1 and $0.6 million for thesix months ended* December 31, 2024,and2023*, respectively.

Property and equipment, net, consist of the following:

Note6 - Leases

The Company has entered into various operating lease agreements for certain of its offices, manufacturing facilities and equipment, and finance lease agreements for certain equipment. These leases have original lease periods expiring between calendar year2024 and calendar year2030. Most leases includeone or more options to renew, and the exercise of a lease renewal option typically occurs at the discretion of both parties. Certain non-real estate leases also include options to purchase the leased property. The Company’s lease agreements generally donot contain any material residual value guarantees or material restrictive covenants. The Company hadno remaining finance leases recorded as of* June 30, 2024.*

In* June 2024,the Company entered into a forward-starting operating lease agreement to lease office space in Berwyn, Pennsylvania from the owner of the office space that the Company is currently renting under a sublease arrangement. The Company determined that it is an operating lease, and that lease commencement occurred in July 2024.The initial lease termination date is July 31, 2030,and under the lease agreement the Company hasone five*-year renewal option to extend the lease through* July 2035.Undiscounted minimum monthly rent payments average approximately $13,000 over the initial term of the lease. The Company has elected to utilize the practical expedient tonot* separate lease and non-lease components upon recognition and variable lease payments will be expensed as incurred. The Company recorded an operating lease ROU asset of $0.5 million and a lease liability of $0.5 million at lease commencement in* July 2024.*The ROU asset and lease liability will be recorded at present value using an incremental borrowing rate of 12.3%.

The components of lease costs are as follows:

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Supplemental balance sheet information related to leases is as follows:

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

Supplemental cash flow information related to leases is as follows:

As of* June 30, 2024,the Company didnot* have any remaining finance leases. As of* December 31, 2024*, the Company’s future minimum lease payments were as follows:

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Note7 - Intangible Assets

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

Carrying amounts are net of any impairment charges from prior periods. An intangible asset withzero net carrying amount at the end of a reporting period isnot presented in the table of a future reporting period. Certain of the Company’s amortizable intangible assets include renewal options, extending the expected life of the asset. The renewal periods range between approximately 1 to 20 years depending on the license, patent or other agreement. Renewals are accounted for when they are reasonably assured. Intangible assets are amortized using the straight-line method over the estimated useful lives. Amortization expense of intangible assets was $1.2 million for both of thethree months ended* December 31, 2024,and2023*, and $2.5 million for both of thesix months ended* December 31, 2024,and2023*.

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

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Acquired Product Technology Rights

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

ADHD Portfolio

As part of the Neos Acquisition, the Company acquired developed product technology for the production and sale of Adzenys and Cotempla. The formulations for the ADHD products are protected by patented technology. The estimated remaining economic life of these proprietary technologies is14 years.

Karbinal

The Company acquired and assumed all rights and obligations pursuant to the supply and distribution agreement, as amended, with Tris Pharma, Inc. (“Tris”) for the exclusive rights to commercialize Karbinal in the United States (the “Tris Karbinal Agreement”). The Tris Karbinal Agreement’s initial term terminates in* Augustof2033,* with an optional initial 20-year extension.

Poly-Vi-Flor and Tri-Vi-Flor

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

Acquired Technology Rights

TRRP Technology

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

Note8 - Accrued Liabilities

Accrued liabilities consist of the following:

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

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Note9 - Other Liabilities

Other liabilities consist of the following:

Fixed Payment Arrangements

Fixed payment arrangements represent obligations to a licensor assumed as part of the acquisition of products from Cerecor, Inc. in2019, including fixed and variable payments.

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

The Tris Karbinal Agreement grants the Company the exclusive right to distribute and sell Karbinal in the United States. The initial term of the agreement was 20 years. The Company pays Tris a royalty equal to 23.5% of net revenue from the product. The Tris Karbinal Agreement also contains minimum unit sales commitments, which is based on a commercial year that spans from* August 1through July 31,of 70,000 units annually through2025.* The Company is required to pay Tris a royalty make-whole payment of $30 for each unit under the 70,000-unit annual minimum sales commitment through2025. The Tris Karbinal Agreement make-whole payment is capped at $2.1 million each year. The final annual make-whole payment is due in* August 2025.The Tris Karbinal Agreement also has multiple commercial milestone obligations that aggregate up to $3.0 million based on cumulative net revenue from the product, thefirst* of which is triggered at $40.0 million. As of* December 31, 2024*, the Tris Karbinal Agreement accrued fixed payment arrangement balance was $1.2 million recorded in other current liabilities on the consolidated balance sheet.

Employee Retention Credit

The $3.8 million ERC accrual in other non-current liabilities as of* December 31, 2024*, represents the proceeds the Company received from the ERC program during thefirst quarter of fiscal2024. Please seeNote2* – Significant Accounting Policies*for further detail.

Operating Lease Liabilities

The Company has entered into various operating lease agreements for certain of its offices, manufacturing facilities and equipment. Please seeNote6* - Leases* for further detail.

Other

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

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Note10 - Revolving Credit Facility

On* June 12, 2024,the Company and certain of its subsidiaries entered into consent, joinder and amendmentNo.* 5 (the “Eclipse AmendmentNo. 5”) to the loan and security agreement dated* October 2, 2019,as amended by amendmentNo.* 1, dated* March 19, 2021,amendmentNo.* 2, dated* January 26, 2022,amendmentNo.* 3, dated* June 1, 2022,amendmentNo.* 4 dated* March 24, 2023,and the Eclipse AmendmentNo.* 5 (together the “Eclipse Agreement”) with Eclipse Business Capital LLC (“Eclipse”), as agent, and the lenders party thereto (agent and such lenders, collectively, the “Eclipse Lender”). Under the Eclipse AmendmentNo. 5, which provided for among other things,two loan agreements, a term loan (the “Eclipse Term Loan”) and a revolving credit facility (the “Eclipse Revolving Loan”). The Eclipse Term Loan is described further inNote11* - Long-Term Debt*. The Eclipse Revolving Loan provides for a maximum amount available under the revolving credit facility provided under the Eclipse Agreement of $14.5 million at an interest rate of the secured overnight financing rate as administered by the SOFR Administrator (“SOFR”) plus 4.5%. In addition, the Company is required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of revolving loans under the Eclipse Agreement remains subject to a borrowing base and reserve, and availability blockage requirements. The Eclipse Revolving Loan maturity date, as amended, is* June 12, 2028,and the effective interest rate was 9.2% as of December 31, 2024*.

In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i)2.0% of the Eclipse Revolving Loan commitment if such event occurs on or before* June 12, 2025, (ii)1.0% of the Eclipse Revolving Loan commitment if such event occurs after June 12, 2025,but on or before June 12, 2026,and (iii)0.5% of the Eclipse Revolving Loan commitment if such event occurs after June 12, 2026,but on or before June 12, 2028.The Company mayalso be required to pay an early termination fee related to the Eclipse Term Loan as further described inNote11 - Long-Term Debt*. The Company* may*permanently terminate the Eclipse Agreement upon written notice to Eclipse.

The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants, and restrict the Company’s ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make asset sales without the prior written consent of Eclipse. A failure to comply with these covenants could permit Eclipse to declare the Company’s obligations under the Eclipse Agreement, together with accrued interest and fees, to be immediately due and payable, plus any additional applicable amounts relating to a prepayment or termination, as described above. As of* December 31, 2024*, the Company was in compliance with the covenants under the Eclipse Agreement. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as defined further in the Eclipse Agreement.

Total interest expense on the Eclipse Revolving Loan, including amortization of deferred financing costs, was less than $0.1 million for both of thethree months ended* December 31, 2024,and2023*, and was $0.1 million for both of thesix months ended* December 31, 2024,and2023*. The amounts drawn on the Eclipse Revolving Loan were $4.0 million and $2.4 million as of* December 31, 2024,and June 30, 2024,respectively. The unused revolving credit facility amount as of December 31, 2024*, was $7.9 million.

Note11 - Long-Term Debt

Avenue Capital Loan

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

Pursuant to the Avenue Capital Agreement, the Company was required to make interest only payments for thefirst 18 months following the Closing Date (the “Interest-only Period”). The Interest-only Period could be extended automatically without any action by any party forsix months provided as of the last day of the Interest-only Period then in effect, the Company received, prior to* June 15, 2023,a specified amount of net proceeds from the sale and issuance of its equity securities (“Interest-only Milestone1”). The Interest-only Period was able to be further extended automatically without any action by any party for an additionalsix* months provided, the Company had achieved, prior to* December 31, 2023, (i) Interest-only Milestone1* and (ii) a specified amount of trailing12 months revenue as of the date of determination.

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On* January 26, 2022 (“Issuance Date”), as consideration for entering into the Avenue Capital Agreement, the Company issued warrants to the Avenue Capital Lenders to purchase shares of common stock at an exercise price equal to $24.20 per share (the “Avenue Capital Warrants”). The Avenue Capital Warrants provided that in the event the Company were to engage in an equity offering at a price lower than $24.20 prior to June 30, 2022,the exercise price would be adjusted to the effective price of such equity offering and the number of shares of common stock to be issued under the Avenue Capital Warrants would be adjusted as set forth in the agreement. The Avenue Capital Warrants were immediately exercisable and expire on January 31, 2027.At inception, the Company accounted for the Avenue Capital Warrants as a derivative warrant liability as the number of warrants wasnot* fixed at the Issuance Date. The fair value of the Avenue Capital Warrants at issuance was approximately $0.6 million.

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

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

On* June 13, 2023,in conjunction with the Securities Purchase Agreement described inNote16 - Warrants*, the interest-only period of the Avenue Capital Agreement was extended further upon the achievement of both the revenue-based milestone and equity raise-based milestone stipulated in the Avenue Capital Agreement. As a result, the interest-only period was extended to* January 26, 2025.*

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

On* June 12, 2024,the Company used proceeds from the Eclipse Term Loan and a portion of the proceeds from the exercise of warrants to repay the Avenue Capital loan in full. Upon early repayment of the Avenue Capital loan, the Company was required to pay Avenue Capital a fee equal to 1.0% of the loan or $0.2 million. In addition, upon the payment in full of the obligations, the Company was required to pay Avenue Capital a fee in the amount of $0.6 million (“Final Payment”). At inception, the Company accounted for the Final Payment as additional obligations on the debt, with the corresponding charge being recorded as debt discount. At retirement, the early termination fee, the Final Payment fee, and the write-off of all remaining related debt discount and deferred financing costs were included in the calculation of loss on extinguishment of debt. The Company recorded a loss on extinguishment of debt of $0.6 million related to the retirement of the Avenue Capital loan in thefourth* quarter of fiscal2024.

Eclipse Term Loan

On* June 12,2024, the Company and certain of its subsidiaries entered into Eclipse AmendmentNo. 5, which provided for among other things, the Eclipse Term Loan and the Eclipse Revolving Loan described further inNote10 - Revolving Credit Facility*. The Eclipse Term Loan consists of a principal amount of $13.0 million, at an interest rate of SOFR plus 7.0%, with afour-year term maturing on* June 12, 2028,and a straight-line loan amortization period ofseven years, which would provide for a loan balance at the end of thefour-year term of $5.6 million to be repaid on June 12, 2028,the maturity date. The Company used the proceeds of the Eclipse Term Loan and a portion of the proceeds from warrant exercises described below to repay in full the Avenue Capital loan. The effective interest rate on the Eclipse Term Loan was 11.7% as of December 31, 2024*.

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In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i)3.0% of the Eclipse Term Loan if such event occurs on or before* June 12, 2025, (ii)2.0% of the Eclipse Term Loan if such event occurs after June 12, 2025,but on or before June 12, 2026, (iii)1.0% of the Eclipse Term Loan if such event occurs after June 12, 2026,but on or before June 12, 2027,and (iv)0.5% of the Eclipse Term Loan if such event occurs after June 12, 2026,but on or before June 12, 2028.The Company mayalso be required to pay an early termination fee related to the Eclipse Revolving Loan as further described inNote10** - Revolving Credit Facility. The Company may*permanently terminate the Eclipse Agreement upon written notice to Eclipse. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as further defined in the Eclipse Agreement.

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

Long-term debt consists of the following:

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

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Note12 - Fair Value Considerations

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

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative warrant liabilities, contingent consideration liabilities, fixed payment arrangements, and current and non-current debt. The carrying amounts of certain short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. Current and non-current debt are reported at their amortized costs on the Company’s consolidated balance sheets. The remaining financial instruments are reported on the Company’s consolidated balance sheets at amounts that approximate current fair values. The Company’s carrying value of its consolidated amounts of cash and cash equivalents approximate their fair value as of* December 31, 2024*, and* June 30, 2024*, and are categorized within level1 of the U.S. GAAP fair value hierarchy. The Company’s policy is to recognize transfers in and/or out of fair value hierarchy as of the date in which the event or change in circumstances caused the transfer. There wereno transfers between Level1, Level2 and Level3 in the periods presented.

Recurring Fair Value Measurements

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

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Summary of Level3 Input Changes**

A summary of changes to those fair value measures using Level3 inputs is as follows:

Significant Assumptions

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

Note13 - Commitments and Contingencies

Pediatric Portfolio Fixed Payments and Product Milestone

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

The Tris Karbinal Agreement also contains minimum unit sales commitments, which is based on a commercial year that spans from* August1* through* July31,* of 70,000 units annually through2025. The Company is required to pay Tris a royalty make-whole payment of $30 for each unit under the70,000‑unit annual minimum sales commitment through2025. The Tris Karbinal Agreement make-whole payment is capped at $2.1 million each year. The final annual make-whole payment is due in* August 2025.The Tris Karbinal Agreement also has multiple commercial milestone obligations that aggregate up to $3.0 million based on cumulative net revenue from the product, thefirst* of which is triggered at $40.0 million.

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Legal Matters

Witmer Class-Action Securities Litigation

A stockholder derivative suit was filed on* September 12, 2022,in the Delaware Chancery Court by Paul Witmer, derivatively and on behalf of all Aytu stockholders, against Armistice Capital, LLC, Armistice Capital Master Fund, Ltd., Steve Boyd (Armistice’s Chief Investment Officer and Managing Partner, and a former director of Aytu), and certain other current and former directors of Aytu, Joshua R. Disbrow, Gary Cantrell, John Donofrio, Jr., Michael Macaluso, Carl Dockery and Ketan B. Mehta. Plaintiff amended the complaint on April 5, 2023.The Amended Complaint dropped Mr. Macaluso as a defendant and alleges that (i) Armistice facilitated the sale of assets of Cerecor in2019* and Innovus in2020 to Aytu in exchange for convertible securities which it subsequently converted and sold at a profit on the open market; (ii) the Armistice defendants breached their fiduciary duties, were unjustly enriched and wasted corporate assets in connection with these acquisitions; (iii) the Armistice defendants breached their fiduciary duties by engaging in insider trading; and (iv) the other directors breached their fiduciary duties, and aided and abetted the Armistice defendants’ breaches of fiduciary duties, in connection with these acquisitions. The Amended Complaint sought unspecified damages, equitable relief, restitution, disgorgement of profits, enhanced governance and internal procedures, and attorneys’ fees. While the Company believes that this lawsuit is without merit and have vigorously defended against it, the Company agreed to settle the matter for various corporate governance modifications and the payment of plaintiff’s attorneys’ fees. On* January 13, 2025,*the court approved the settlement.

Granules PIV

On* October 31, 2024,the Company received a Paragraph IV Certification Notice Letter (“Notice Letter”) from Granules Pharmaceuticals, Inc. (“Granules”), stating that it intends to market a generic version of Adzenys before the expiration of all patents currently listed in the Orange Book. The Notice Letter states that Granules’ New Drug Application (“NDA”) for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents arenot* valid,not enforceable, and/or willnot be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. On* December 11, 2024,the Company filed a patent infringement lawsuit against Granules which triggered a stay precluding the United States Food and Drug Administration (“FDA”) from approving Granules’ NDA for a generic version of Adzenys for up to30* months or entry of judgment holding the patents invalid, unenforceable, ornot infringed, whichever occurs first. On* January 7, 2025,Granules submitted an answer to the complaint. This litigation is ongoing, and a trial has been scheduled for to being on December 7, 2026.*The Company plans to vigorously enforce its intellectual property rights related to Adzenys.

Revive Investing

The Company had been named as a nominal plaintiff in a lawsuit bytwo shareholders against Armistice Capital Master Fund, Ltd, entitled Revive Investing, LLC. et al v. Armistice Master Fund, Ltd. et al, Case1:20-cv-02849-CMA-TPO, in the United States District Court for the District of Colorado, contending that Armistice was liable for short swing trading profits in violation of Section16(b) of the Exchange Act for certain trades it made in Company stock in2019 and2020 and must disgorge those profits to the Company. That matter proceeded to trial before a jury, which on* January 29, 2025,returned a verdict findingno* liability.

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Note14 - Stockholders’** Equity**

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

On* September 28, 2021,the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 7, 2021.This shelf registration statement covered the offering, issuance and sale by the Company of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants, rights and units (the“2021* Shelf”). The2021 Shelf expired in* October 2024.*

On* August 11, 2022,the Company closed on an underwritten public offering (the “August 2022Offering”) utilizing the2021* Shelf, pursuant to which it sold an aggregate of (i)1,075,290 shares of its common stock; (ii) in lieu of common stock to certain investors that so chose, pre-funded warrants to purchase 87,500 shares of its common stock; and (iii) accompanying warrants to purchase 1,265,547 shares of its common stock. The shares of common stock and the pre-funded warrants were each sold in combination with corresponding common warrants, withone common warrant to purchaseone share of common stock for each share of common stock or each pre-funded warrant sold. The combined public offering price for each share of common stock and accompanying common warrant was $8.60, and the combined offering price for each pre-funded warrant and accompanying common warrant was $8.58, which equated to the public offering price per share of the common stock and accompanying common warrant, less the $0.02 per share exercise price of each pre-funded warrant. The pre-funded warrants were exercised in full in* August 2022.The common warrants have an exercise price of $8.60 per share of common stock and are exercisable for a period offive years from issuance. The Company raised $10.0 million in gross proceeds through the August 2022Offering before underwriting fees and other expenses of $0.9 million. The pre-funded and common warrants had a combined fair value of approximately $6.0 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements (seeNote16 - Warrants*).

On* June 8, 2023,using a placement agent, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional investors, pursuant to which the Company issued and sold an aggregate of (i)1,743,695 shares of the Company’s common stock; (ii) pre-funded warrants in lieu of shares to purchase 430,217 shares of common stock (the “June 2023Pre-Funded Warrants”); (iii) accompanying tranche A warrants to purchase 2,173,912 shares of common stock (the “Tranche A Warrants”); and (iv) accompanying tranche B warrants to purchase 2,173,912 shares of common stock in a best-efforts offering (the “Tranche B Warrants” and the Tranche A Warrants together with the Tranche B Warrants, the “Common Warrants”). The Common Warrants maybe exercised for either shares of common stock or pre-funded warrants to purchase common stock at a future exercise price of $0.0001 per share in the same form as the June 2023Pre-Funded Warrants (the “Exchange Warrants”). Each pre-funded warrant is exercisable forone share of common stock at an exercise price of $0.0001 per share. The pre-funded warrants are immediately exercisable and maybe exercised at any time until all of the pre-funded warrants are exercised in full. The Common Warrants are immediately exercisable at a price of $1.59 per share (or $1.5899 per Exchange Warrant). The Tranche A Warrants will expire upon the earlier of (i)five years after the date of issuance or (ii)30 days following the closing price of the Company’s common stock equaling200%* of the exercise price ($3.18 per share) for at least40 consecutive trading days. The Tranche B Warrants were exercised in* June 2024as further described below. The Company raised $4.0 million in gross proceeds and net proceeds were $3.4 million after deducting offering expenses. The June 2023Pre-Funded Warrants donot* have an expiration date. The warrants had a combined fair value of approximately $5.0 million at issuance and are classified as derivative warrant liabilities. The resulting offset is recorded in derivative warrant liabilities (loss) gain along with the issuance costs of $0.6 million in the unaudited consolidated financial statement of operations (seeNote16* - Warrants*).

On* June 14, 2024,the Tranche B Warrants were exercised, generating proceeds of $3.5 million. The Tranche B Warrants were converted into 367,478 shares of common stock and 1,806,434 pre-funded warrants to purchase shares of common stock with an exercise price of $0.0001 per share (the “Tranche B Pre-Funded Warrants”). The Tranche B Pre-Funded Warrants had a fair value of approximately $5.1 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements. The Company used a portion of the proceeds from the Tranche B Warrants exercise as part of the Avenue Capital loan repayment described further inNote11 - Long-Term Debt*.

On* September 26, 2024,the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024.This shelf registration statement covers the offering, issuance and sale by the Company of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants, rights and units (the“2024* Shelf”). Through the filing date of this Form10-Q, $100.0 million remains available under the2024 Shelf. This availability is subject to the SEC’s “baby shelf” limitation as set forth in SEC InstructionI.B.6 limitation to the Form S-3.

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Note15 - Equity Incentive Plans

2023 Equity Incentive Plan

On* May 18, 2023,the Company’s stockholders approved the Aytu BioPharma, Inc.2023 Equity Incentive Plan (the“2023* Equity Incentive Plan”). Prior to the Company’s adoption of the2023 Equity Incentive Plan, the Company awarded equity incentive grants to its directors and employees under the Aytu BioScience, Inc.2015 Stock Option and Incentive Plan (the “Aytu2015 Plan”) and the Neos Therapeutics, Inc.2015 Stock Options and Incentive Plan (the “Neos2015 Plan”, and collectively with the Aytu2015 Plan, the*“2015* Plans”). For the2023 Equity Incentive Plan, the stockholders approved (i)200,000 new shares; (ii)87,129 shares available for grant under the2015 Plans be “rolled over” to the2023 Equity Incentive Plan; and (iii) any shares that are returned to the Company under the2015 Plans be added to the2023 Equity Incentive Plan. With the approval of the2023 Equity Incentive Plan,no additional awards will be granted under the2015 Plans. All outstanding awards previously granted under previous stock incentive plans will remain outstanding and subject to the terms of the plans. Stock options granted under the2023 Equity Incentive Plan have contractual terms of 10 years or less from the grant date and a vesting period ranging from 3 to 4 years. The restricted stock awards and restricted stock units have a vesting period of 3 to 4 years. As of* December 31, 2024*, the Company had 87,636 shares that are available for grant under the2023 Equity Incentive Plan.

Aytu2015 Plan**

On* June1,* 2015, the Company’s stockholders approved the Aytu2015 Plan, which, as amended in* July2017,* provides for the award of stock options, stock appreciation rights, restricted stock, and other equity awards. On* February**13,* 2020, the Company’s stockholders approved an increase to 250,000 total shares of common stock in the Aytu2015 Plan. The shares of common stock underlying any awards that are forfeited, canceled, reacquired by Aytu prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) under the Aytu2015 Plan will be added back to the shares of common stock available for issuance under the2023 Equity Incentive Plan. Stock options granted under this plan have contractual terms of 10 years from the grant date and a vesting period ranging from 3 to 4 years. The restricted stock awards have a vesting period ranging from 4 to 10 years, and the restricted stock units have a vesting period of 4 years.

Neos2015 Plan**

Pursuant to the Neos Acquisition, the Company assumed 3,486 stock options and 1,786 restricted stock units previously granted under the Neos2015 Plan. Accordingly, on* April 19, 2021,the Company registered 5,272 shares of its common stock under the Neos2015* Plan with the SEC. The terms and conditions of the assumed equity securities remained the same as they were previously under the Neos2015 Plan. The Company allocated costs of the replacement awards attributable to pre-combination and post-combination service periods. The pre-combination service costs were included in the consideration transferred. The remaining costs attributable to the post-combination service period are being recognized as stock-based compensation expense over the remaining terms of the replacement awards. Stock options granted under this plan have contractual terms of 10 years from the grant date and a vesting period ranging from 1 to 4 years.

Stock Options

Stock option activity is as follows:

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

Restricted Stock

Restricted stock activity is as follows:

During thesix months ended* December 31, 2024*, the Company granted 20,000 shares of restricted stock under the Company’s2023 Equity Incentive Plan with a weighted average grant date fair value of $1.79 per share. As of* December 31, 2024*, there was $0.9 million total unrecognized compensation costs related to non-vested restricted stock granted under the Company’s equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.3 years.

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

Restricted Stock Units

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

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

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

Note16 - Warrants

Liability Classified Warrants

The Company accounts for liability classified warrants by recording the fair value of each instrument in its entirety and recording the fair value of the warrant derivative liability. The fair value of liability classified derivative financial instruments was calculated using either the Black-Scholes option pricing model or the Monte Carlo simulation model and is revalued every quarter. Changes in the fair value of liability classified derivative financial instruments in subsequent periods are recorded as unrealized derivative gain or loss in the consolidated statements of operations (seeNote12* – Fair Value Considerations*).

On* June 8, 2023,using a placement agent, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional investors, pursuant to which the Company issued and sold an aggregate of (i)1,743,695 shares of the Company’s common stock; (ii) June 2023Pre-Funded Warrants in lieu of shares to purchase 430,217 shares of common stock; (iii) accompanying Tranche A Warrants to purchase 2,173,912 shares of common stock; and (iv) accompanying Tranche B Warrants to purchase 2,173,912 shares of common stock in a best-efforts offering (the Tranche A Warrants together with the Tranche B Warrants, the “Common Warrants”). The Common Warrants maybe exercised for either shares of common stock or pre-funded warrants to purchase common stock at a future exercise price of $0.0001 per share in the same form as the June 2023Pre-Funded Warrants (the “Exchange Warrants”). Each pre-funded warrant is exercisable forone share of common stock at an exercise price of $0.0001 per share. The pre-funded warrants are immediately exercisable and maybe exercised at any time until all of the pre-funded warrants are exercised in full. The Common Warrants are immediately exercisable at a price of $1.59 per share (or $1.5899 per Exchange Warrant). The Tranche A Warrants will expire upon the earlier of (i)five years after the date of issuance or (ii)30 days following the closing price of the Company’s common stock equaling200%* of the exercise price ($3.18 per share) for at least40 consecutive trading days. The Tranche B Warrants were exercised in* June 2024as further described below. The Company raised $4.0 million in gross proceeds and net proceeds were $3.4 million after deducting offering expenses. The June 2023Pre-Funded Warrants donot* have an expiration date. The warrants had a combined fair value of approximately $5.0 million at issuance and are classified as derivative warrant liabilities. The resulting offset is recorded in derivative warrant liabilities gain (loss) along with the issuance costs of $0.6 million in the unaudited consolidated financial statement of operations (seeNote14** - Stockholders’* Equity*).

On* June 14, 2024,the Tranche B Warrants were exercised, generating proceeds of $3.5 million. The Tranche B Warrants were converted into 367,478 shares of common stock and 1,806,434 Tranche B Pre-Funded Warrants to purchase shares of common stock with an exercise price of $0.0001 per share. The Tranche B Pre-Funded Warrants, which donot* have an expiration date, had a fair value of approximately $5.1 million at issuance and are classified as derivative warrant liabilities, with the offset in additional paid in capital in stockholders’ equity in the Company’s consolidated financial statements. The Company used a portion of the proceeds from the Tranche B Warrants exercise as part of the Avenue Capital loan repayment described further inNote11* - Long-Term Debt*.

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On* August 11, 2022,the Company closed an offering (the “August 2022Offering”), pursuant to which, the Company issued pre-funded warrants to purchase 87,500 shares of its common stock and common warrants to purchase 1,265,547 shares of its common stock. The shares of common stock and the pre-funded warrants were each sold in combination with corresponding common warrants, whichone* common warrant to purchaseone share of common stock for each share of common stock or each pre-funded warrant was sold. The pre-funded warrants had an exercise price of $0.02 per share of common stock and were exercised in full in* August 2022.The common warrants have an exercise price of $8.60 per share of common stock and are exercisable for a period offive years from issuance. The common warrants provide that if there occurs any stock split, stock dividend stock recapitalization, or similar event (a “Stock Combination Event”), then the warrant exercise price will be adjusted to the greater of the quotient determined by dividing the sum of the VWAP of the common stock for each of thefive* lowest trading days during the20 consecutive trading day period ending immediately preceding the16th trading day after such Stock Combination Event, divided by five; or $2.32, and the number of shares of common stock to be issued would be adjusted proportionately as set forth in the agreement limited to a maximum of 2,325,581 shares. The common warrants also provide that in the event the Company were to engage in an equity offering at a common stock price lower than the warrant exercise price prior to thesecond anniversary of a Stock Combination Event, the exercise price would be adjusted to the greater of the effective price of such equity offering or $2.32 (seeNote14* – Capital Structure*).

In* November 2022and throughout the quarter ended December 31, 2022,the Company sold shares through its ATM Sales Agreement. Per the warrant agreement in the August 2022Offering, these sales qualified as an equity offering, and the sales price was less than the current exercise price of $8.60. As a result, the common warrants exercise price was adjusted to $3.30. On January 6, 2023,the Company consummated a 20 to1* reverse stock split. Pursuant to the warrant agreement described above, the Company triggered a Stock Combination Event, and the warrant exercise price and number to be issued was adjusted based on the average of each of the lowestfive trading days during thetwenty-day consecutive trading day period beginning on* December 30, 2022.Subsequently, as a result of the Securities Purchase Agreement in June 2023,the common warrants from the August 2022*Offering had an adjusted exercise price of $2.32.

A summary of warrants is as follows:

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Note17 - Earnings Per Share

Basic net income or loss per common share is calculated by dividing net income or loss available to common stockholders by the basic weighted-average number of common shares outstanding for the respective period. Diluted net income or loss per common share is calculated by dividing adjusted net income or loss by the diluted weighted-average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist of warrants to purchase common stock that are either liability classified or equity classified (seeNote16* – Warrants*); employee stock options (seeNote15* – Equity Incentive Plans*); employee unvested restricted stock (seeNote15* – Equity Incentive Plans); and employee unvested restricted stock units (seeNote15 – Equity Incentive Plans). For thethree* andsix months ended* December 31, 2024,and2023,* if the Company incurred a net loss from continuing operations; a net loss from discontinued operations, net of tax; or a net loss then the Company didnot include common equivalent shares in the computation of diluted net loss from continuing operations per share; diluted net loss from discontinued operations, net of tax; or diluted net loss per share because the effect would have been anti-dilutive.

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

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

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

Note18 - License Agreements

Actavis

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

Teva

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

Note19 - Restructuring Costs

As part of the Company’s previously announced restructuring activities related to the wind down and divestiture of the Consumer Health business and the closure of the Grand Prairie, Texas manufacturing site, the Company has incurred expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee benefit costs as well as other direct separation benefit costs, right of use asset impairment charges, fixed asset and other asset impairment charges, accelerated depreciation of fixed assets, contract termination costs, and inventory write-downs. Severance and employee benefit costs primarily relate to cash severance. Restructuring costs associated with the Consumer Health business are recorded within the net income (loss) from discontinued operations, net of tax in the unaudited consolidated financial statement of operations (seeNote20** - Discontinued Operations).

The expense associated with the closure of the Grand Prairie, Texas manufacturing site such as severance and employee benefits and exit and disposal activities are included in restructuring costs in the consolidated statements of operations. There have beenno inventory write-downs associated with this closure. During thethree andsix months ended* December 31, 2024,the Company incurred $1.3 million and $2.1 million, respectively, of costs associated with exit and disposal activities related to its previously announced operational realignment and related costs. The Company doesnot* expect to incur additional significant restructuring costs.

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Note20 - Discontinued Operations

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

The accounting requirements for reporting the Consumer Health business as discontinued operation were met when the wind down and divestiture was completed on* July 31, 2024.Accordingly, the accompanying unaudited consolidated financial statements for all periods presented reflect this business as a discontinued operation and certain assets and liabilities of discontinued operations have been reclassified to the current assets of discontinued operations; non-current assets of discontinued operations; and current liabilities of discontinued operations financial statement line items on the accompanying unaudited consolidated balance sheet as of June 30, 2024.The Company elected to record the contingent consideration portion of the arrangement when the consideration is determined to be realizable and, therefore, the Company didnot* record a contingent consideration asset at the transaction date and any subsequent proceeds willnot be recognized until the contingent consideration asset is realizable, at which point the Company recognizes it to income (loss) from discontinued operations.

The key components of net income (loss) from discontinued operations, net of tax for thethree andsix months ended* December 31, 2024,and2023,* were as follows:

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

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