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PART IV Page Report of Independent Registered Public Accounting Firm F‑2 Consolidated Balance Sheets at

Thursday, December 10, 2020 4 min read
Key Takeaway: Page Report of Independent Registered Public Accounting Firm F 2 Consolidated Balance Sheets at December 31, 2019 and 2018 F 3 Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 F 4 Consolidated Statements of Comprehensive Loss for the yea

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Report of Independent Registered Public Accounting Firm F 2
Consolidated Balance Sheets at December 31, 2019 and 2018 F 3
Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 F 4
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2019, 2018 and 2017 F 5
Consolidated Statements of Stockholders' (Deficit) Equity for the years ended December 31, 2019, 2018 and 2017 F 6
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017 F 7
Notes to Consolidated Financial Statements F 8
Index to Consolidated Financial
Page
Report of Independent Registered Public Accounting Firm F 2
Financial Statements:
Consolidated Balance Sheets F 3
Consolidated Statements of Operations F 4
Consolidated Statements of Comprehensive Loss F 5
Consolidated Statements of Stockholders' (Deficit) Equity F 6
Consolidated Statements of Cash Flows F 7
Notes to Consolidated Financial Statements F 8
REPORT OF INDEPENDENT REGISTERED PUBLIC
Directors and Stockholders
Opinion on the Financial
accompanying consolidated balance sheets of Neos
Therapeutics, Inc. and Subsidiaries (the
Company ) as of December 31, 2019 and 2018, and
the related consolidated statements of operations, comprehensive
loss, stockholders' equity (deficit), and cash flows for each
of the three years in the period ended December 31, 2019
and the related notes to the consolidated financial statements and
schedule (collectively, the financial statements). In our opinion,
the financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2019
and 2018, and the results of its operations and its cash flows for
each of the three years in the period ended December 31,
2019, in conformity with accounting principles generally accepted
in the United States of America.
statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with
U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the
audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. The
Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of
our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express
performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
the Company's auditor since 2010.
Neos Therapeutics, Inc. and
CONSOLIDATED BALANCE SHEET S
(In thousands, except share and per share
December 31, December 31,
2019 2018
ASSETS
Current Assets:
Cash and cash equivalents $ 16,830 $ 46,478
Short-term investments 8,064
Accounts receivable, net of allowances for chargebacks and cash discounts of $4,848 and $1,865 at December 31, 2019 and 2018, respectively 26,563 27,801
Inventories 11,010 10,367
Prepaid expenses and other current assets 4,092 4,032
Total current assets 66,559 88,678
Property and equipment, net 7,345 7,914
Operating lease right-of-use assets 3,044
Intangible assets, net 12,543 14,616
Other assets 1,382 149
Total assets $ 90,873 $ 111,357
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current Liabilities:
Accounts payable $ 6,650 $ 12,730
Accrued expenses 40,188 35,818
Current portion of operating lease liabilities 681
Current portion of long-term debt 15,836 8,557
Total current liabilities 63,355 57,105
Long-Term Liabilities:
Long-term debt, net of current portion 29,099 43,217
Operating lease liabilities 3,254
Derivative liability 1,135 2,017
Deferred rent 989
Other long-term liabilities 160 184
Total long-term liabilities 33,648 46,407
Stockholders' (Deficit) Equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding at December 31, 2019 and 2018
Common stock, $0.001 par value, 100,000,000 shares authorized at December 31, 2019 and 2018; 49,766,472 and 49,732,671 shares issued and outstanding, respectively, at December 31, 2019; 49,710,104 and 49,676,303 shares issued and outstanding, respectively, at December 31, 2018 50 50
Treasury stock, at cost, 33,801 shares at December 31, 2019 and 2018 (352) (352)
Additional paid-in capital 328,056 325,130
Accumulated deficit (333,885) (316,983)
Accumulated other comprehensive income 1
Total stockholders' (deficit) equity (6,130) 7,845
Total liabilities and stockholders' (deficit) equity $ 90,873 $ 111,357
consolidated financial statements.
Neos Therapeutics, Inc. and
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share
Year Ended December 31,
2019 2018 2017
Revenues:
Net product sales $ 64,649 $ 49,988 $ 27,132
Cost of goods sold 25,123 26,928 14,030
Gross profit 39,526 23,060 13,102
Research and development expenses 8,582 8,508 8,957
Selling and marketing expenses 28,122 44,133 46,881
General and administrative expenses 13,237 13,915 13,805
Loss from operations (10,415) (43,496) (56,541)
Interest expense (8,009) (8,974) (10,085)
Other income, net 1,533 795 854
Loss before income taxes (16,891) (51,675) (65,772)
Income tax expense (benefit) 11
Net loss $ (16,902) $ (51,675) $ (65,772)
Weighted average common shares outstanding used to compute net loss per share, basic and diluted 49,723,772 32,288,555 24,751,091
Net loss per share of common stock, basic and diluted $ (0.34) $ (1.60) $ (2.66)
consolidated financial statements.
Neos Therapeutics, Inc. and
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
Year Ended December 31,
2019 2018 2017
Net loss $ (16,902) $ (51,675) $ (65,772)
Other comprehensive income (loss):
Net unrealized gain (loss) on short-term investments 1 6 (5)
Total other comprehensive income (loss) $ 1 $ 6 $ (5)
Comprehensive loss $ (16,901) $ (51,669) $ (65,777)
consolidated financial statements.
Neos Therapeutics, Inc. and
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
(In thousands, except
Year Ended December 31,
2019 2018 2017
Shares Amount Shares Amount Shares Amount
Preferred Stock
Balance as of the beginning of the period $ $ $
Balance as of the end of the period
Common Stock
Balance as of the beginning of the period 49,710,104 50 29,030,757 29 16,079,902 16
Issuance of common stock, net of issuance costs 20,651,524 21 12,019,639 12
Issuance of common stock upon conversion of convertible notes 929,967 1
Issuance of common stock upon RSU conversion 20,328 26,991
Shares issued for exercise of stock options 36,040 832 1,249
Balance as of the end of the period 49,766,472 50 49,710,104 50 29,030,757 29
Treasury Stock
Balance as of the beginning of the period (33,801) (352) (33,801) (352) (18,906) (232)
Purchase of treasury stock (14,895) (120)
Balance as of the end of the period (33,801) (352) (33,801) (352) (33,801) (352)
Additional Paid-In Capital
Balance as of the beginning of the period 325,130 274,584 198,787
Issuance of common stock, net of issuance costs 47,271 64,548
Issuance of common stock upon conversion of convertible notes 6,585
Shares issued for exercise of stock options 11
Payroll tax withheld for RSU releases (2) (46)
Recognition of beneficial conversion feature on convertible notes 613
Share-based compensation expense 2,917 3,321 4,051
Balance as of the end of the period 328,056 325,130 274,584
Retained Earnings
Balance as of the beginning of the period (316,983) (265,308) (199,536)
Net loss (16,902) (51,675) (65,772)
Balance as of the end of the period (333,885) (316,983) (265,308)
Accumulated Other Comprehensive Income (Loss), Net
Balance as of the beginning of the period (6) (1)
Net unrealized gain on investments 1 6 (5)
Balance as of the end of the period 1 (6)
Total stockholders' (deficit) equity $ (6,130) $ 7,845 $ 8,947
consolidated financial statements
Therapeutics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2019 2018 2017
Cash Flows From Operating Activities:
Net loss $ (16,902) $ (51,675) $ (65,772)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense 2,917 3,321 4,051
Depreciation and amortization of property and equipment 2,059 1,750 1,363
Amortization of patents and other intangible assets 2,132 1,737 1,660
Changes in fair value of earnout, derivative and warrant liabilities (958) (387) (509)
Amortization of senior debt issuance costs and discounts 1,469 961 1,316
Amortization of short-term investment purchase discounts (90) (131) (126)
Deferred interest on debt 2,111
(Gain) loss on sale of equipment (3) (23)
Other adjustments (12) 48 (91)
Changes in operating assets and liabilities:
Accounts receivable 1,238 (14,130) (7,536)
Inventories (643) 1,365 (6,190)
Deferred contract sales organization fees 720
Other assets (63) (444) (414)
Accounts payable (6,197) 1,270 3,008
Accrued expenses 4,368 14,874 13,171
Operating lease liabilities (98)
Net cash used in operating activities (10,783) (41,441) (53,261)
Cash Flows From Investing Activities:
Purchases of short-term investments (17,231) (17,906) (48,015)
Sales and maturities of short-term investments 9,258 36,491 45,118
Proceeds from sale-leaseback of equipment 3,222
Proceeds from sale of equipment 2
Capital expenditures (1,088) (1,361) (2,497)
Intangible asset expenditures (59) (5) (361)
Net cash (used in) provided by investing activities (9,118) 17,219 (2,533)
Cash Flows From Financing Activities:
Proceeds from the issuance of common stock, net of issuance costs 11 47,292 64,560
Payments made on borrowings (8,598) (8,425) (989)
Proceeds from short-term line of credit 14,000
Payments made on short-term line of credit (14,000)
Payment of debt financing costs (1,158) (90) (40)
Payments made to purchase treasury stock (120)
Payment of payroll taxes withheld for releases of restricted stock units (2) (46)
Net cash (used in) provided by financing activities (9,747) 38,731 63,411
(Decrease) increase in cash and cash equivalents (29,648) 14,509 7,617
Cash and Cash Equivalents:
Beginning 46,478 31,969 24,352
Ending $ 16,830 $ 46,478 $ 31,969
Supplemental Disclosure of Noncash Transactions:
Acquired equipment under finance lease $ 406 $ $
Finance lease liability from purchase of equipment $ 406 $ 105 $
Derivative liability incurred in connection with Loan and Security Agreement $ 69 $ $
Deferred debt financing costs included in accounts payable and accrued expenses $ 119 $ $
Exit Fee liability incurred in connection with Second Amendment to Facility $ $ 750 $
Derivative Liability incurred in connection with Amendments to Facility $ $ 611 $ 2,107
Prepaid assets included in accounts payable $ $ $ 654
Issuance of senior secured convertible notes in lieu of interest payment $ $ $ 6,586
Issuance of common stock upon conversion of senior secured convertible notes $ $ $ 6,586
Capital lease liability from sale-leaseback transactions $ $ $ 3,222
Beneficial conversion feature incurred on convertible notes $ $ $ 613
Supplemental Cash Flow Information:
Interest paid $ 6,565 $ 8,158 $ 6,769
consolidated financial statements.
Neos Therapeutics, Inc. and
NOTES TO CONSOLIDATED FINANCIAL
1. Organization and nature of operations
Inc., a Delaware corporation, and its subsidiaries (the
Company ) is a fully integrated pharmaceutical
company. The Company has developed a broad, proprietary
modified-release drug delivery technology that enables the
manufacture of single and multiple ingredient extended-release
( XR ) pharmaceuticals in patient- and
caregiver-friendly orally disintegrating tablet ( ODT )
and oral suspension dosage forms. The Company has a pipeline of
extended-release pharmaceuticals including three products approved
by the U.S. Food and Drug Administration (the FDA )
for the treatment of attention deficit hyperactivity disorder
( ADHD ). Adzenys XR-ODT was approved by the FDA in
January 2016 and launched commercially in May 2016. The Company
received approval from the FDA for Cotempla XR-ODT, its
methylphenidate XR-ODT for the treatment of ADHD in patients 6 to
17 years old, in June 2017, and commercially launched in September
2017. Also, the Company received approval from the FDA for Adzenys
ER oral suspension ( Adzenys ER ) in September 2017 and
commercially launched this product in February 2018. In addition,
the Company manufactures and markets a generic Tussionex
(hydrocodone and chlorpheniramine) ( generic
Tussionex ), extended-release oral suspension for the
treatment of cough and upper respiratory symptoms of a cold. In
addition to its marketed products, the Company is developing
NT0502, its product candidate for the treatment of
2. Summary of significant accounting policies
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Last updated: Dec 10, 2020