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Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation. The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q/A represent the financial statements of the Company and its wholly owned subsidiaries. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2022, which included all disclosures required by generally accepted accounting principles in the United States (“U.S. GAAP”). In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company and the results of operations and cash flows for the interim periods presented. The results of operations for the period ended September 30, 2022 are not necessarily indicative of expected operating results for the full year or any future year.

Also see Note 2 – Previously Reported Financial Statements relating to the immaterial correction of an error in the condensed consolidated balance sheet and the condensed consolidated statement of stockholders’ equity for as of June 30, 2022.

Prior Period Reclassification

Prior Period Reclassification. Certain prior year amounts in the condensed statements of earnings and statements of cash flows have been reclassified to conform to the current year presentation, including a reclassification made in the presentation of amortization of intellectual property. This was previously included in research and development expenses and is currently recorded in general and administrative expense on the condensed consolidated statements of operations. These reclassifications did not impact operating results or cash flows for the three months ended September 30, 2022 and 2021 or its financial position as of September 30, 2022 or June 30, 2022.

Use of Estimates

Use of Estimates

Management uses estimates and assumptions relating to reporting amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying condensed consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, revenue recognition, allowance for doubtful accounts, determination of variable consideration for accruals of chargebacks, administrative fees and rebates, government rebates, returns and other allowances, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, fair value of long-lived assets, the value of goodwill, income tax provision, deferred taxes and valuation allowance, determination of right-of-use assets and lease liabilities, purchase price allocations, the depreciable lives of long-lived assets, classification of warrants equity versus liability, and valuation of derivative warrant liability. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. Management periodically evaluates estimates used in the preparation of the financial statements for reasonableness.

Previously Reported Financial Statements

Previously Reported Financial Statements

The classification of certain of the Company’s warrants were previously recorded as equity. These warrants according to GAAP should have been classified as derivative warrant liabilities at fair value and marked to market at each reporting period, with changes in fair value recorded in earnings. The affected filing periods are the quarterly unaudited financial statements as of March 31, 2022 and September 30, 2022, and the audited financial statements as of June 30, 2022.

​

SEC Staff Accounting Bulletin No. 99, “Materiality,” and FASB, Statement of Financial Accounting Concepts No. 2 “Qualitative Characteristics of Accounting Information” indicate that quantifying and aggregating errors is only the beginning of an analysis of materiality and that both quantitative and qualitative factors must be considered in determining whether individual errors are material. The Company evaluated the corrections and have determined that the impact was not material for the periods ended March 31, 2022 and June 30, 2022, but is material for the period ended September 30, 2022. The assessment resulted in the amendment of the previously reported financial statements reported in the Company’s first quarter of 2023 Form 10-Q. The balance sheet as at June 30, 2022 included in this amended Form 10-Q/A has been adjusted for the immaterial correction of this error. In addition, financial statements for the period ended March 31, 2022 and for the fiscal year ended June 30, 2022 will be adjusted at the time of their reissuance.

The condensed consolidated financial statements and certain of the notes to the condensed consolidated financial statements as of and for the three months ended September 30, 2022 have been restated to reflect the corrections. The impact of the restatement for the period ended September 30, 2022 is shown in the tables below and did not change the Company’s reported total assets, cash and cash equivalents, operating expenses, operating losses or cash flows from operations.

​

​	​	​	​	​	​	​	​	​	​
​	​	As of September 30, 2022
​	​	As Previously		​	​	​	​	​	​
​	​	Reported		​	Adjustment		​	As Restated
​	​	(in thousands)
Derivative warrant liability	​	$	—	​	$	5,558	​	$	5,558
Total liabilities	​	​	96,094	​	​	5,558	​	​	101,652
Additional paid-in capital	​	​	345,253	​	​	(9,126)	​	​	336,127
Accumulated deficit	​	​	(291,353)	​	​	3,574	​	​	(287,779)
Total stockholders’ equity	​	​	53,906	​	​	(5,558)	​	​	48,348

​

​

​

​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	September 30, 2022
​	​	As Previously		​	​	​	​	​	​
​	​	Reported		​	Adjustment		​	As Restated
​	​	(in thousands)
Statement of Operation data	​	​	​	​	​	​	​	​	​
Gain on derivative warrant liabilities	​	$	—	​	$	2,191	​	$	2,191
Total other (expense) income	​	​	(1,228)	​	​	2,180	​	​	952
Loss before income tax	​	​	(2,881)	​	​	2,180	​	​	(701)
Net loss	​	​	(2,881)	​	​	2,180	​	​	(701)
Basic and diluted net loss per common share	​	​	(1.14)	​	​	0.86	​	​	(0.28)
​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​
Statement of Cash Flow data	​	​	​	​	​	​	​	​	​
Net loss	​	$	(2,881)	​	$	2,180	​	$	(701)
Gain on derivative warrant liabilities	​	​	—	​	​	2,191	​	​	2,191
​	​	​	​	​	​	​	​	​	​
Net loss by segment	​	​	​	​	​	​	​	​	​
Rx Segment	​	$	(2,054)	​	$	2,180	​	$	126
Consumer Health Segment	​	​	(827)	​	​	—	​	​	(827)
Consolidated net loss	​	​	(2,881)	​	​	2,180	​	​	(701)

​

The condensed consolidated balance sheet and the condensed consolidated statement of stockholders’ equity as of June 30, 2022 have been adjusted for comparative purposes. The impact of the immaterial correction of an error for as of June 30, 2022 is shown in the table below.

​

​	​	​	​	​	​	​	​	​	​
​	​	As of June 30, 2022
​	​	As Previously		​	​	​	​	​	​
​	​	Reported		​	Adjustment		​	As Adjusted
​	​	(in thousands)
Derivative warrant liability	​	$	—	​	$	1,796	​	$	1,796
Total liabilities	​	​	91,531	​	​	1,784	​	​	93,315
Additional paid-in capital	​	​	334,560	​	​	(3,174)	​	​	331,386
Accumulated deficit	​	​	(288,472)	​	​	1,394	​	​	(287,078)
Total stockholders’ equity	​	​	46,092	​	​	(1,784)	​	​	44,308

​

Warrants

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”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, 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 either a Black-Scholes option model or Monte Carlo simulation model at issuance and for each reporting period when applicable.

Income Taxes

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 been no changes in tax law affecting the tax provision during the three months ended September 30, 2022.

An ownership change (generally a 50% change in equity ownership over a three-year period) could limit the Company’s ability to offset, post-change, U.S. federal taxable income. Section 382 of the Code imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change net operating loss carryforwards and certain recognized built-in losses. The Company believes that previous acquisitions, financing transactions, and equity ownership changes in the past five years may have caused an ownership change results in a limitation of its ability to use the pre-acquisition net operating loss carryovers. The ownership change scenario could result in increased future tax liability. The company is in the process of analyzing the impact of any possible ownership change the result of which may be a change to the Company’s net deferred tax asset or liability position.

Impairment of Other Intangibles Assets

Impairment of Other Intangibles Assets 

Acquired in-process research and development (“IPR&D) is an intangible asset classified as an indefinite-lived asset until the completion or abandonment of the associated research and development (“R&D”) effort. In periods after the acquired IPR&D, the Company may (1) continue internal R&D efforts associated with the acquired assets or collaborate with another party in R&D efforts; (2) dispose of the assets through sale; (3) outlicense the assets; (4) decide to temporarily postpone further development; or (5) abandon R&D efforts. IPR&D asset may be subject to different subsequent accounting treatment depending on the course of action chosen by the Company with respect to the asset. If the Company changes strategies related to the IPR&D the asset could potentially be impaired.

Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted

Recent Adopted Accounting Pronouncements

Reference Rate Reform. In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): “Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued if contract modifications are made on or before December 31, 2022. The Company adopted the guidance effective July 1, 2022 for the accounting of its LIBOR indexed revolving loans by prospectively applying the interest rate. The Company elected not to reassess the discount rate of its leases. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial position and results of operations.

Earnings Per Share. In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options”. The amendments in ASU 2021-04 provide guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted. The adoption of ASU 2021-04 and related updates did not have a material impact on its condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

Debt—Debt with Conversion and Other Options. In June 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)— “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 with no 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 Securities and Exchange Commission (”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 will adopt the guidance on July 1, 2023 and does not expect the adoption of the standard to have any material impact on the Company’s condensed consolidated financial position and results of operations.

Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” requiring the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of ASU 2016-13 is to provide additional information about the expected credit losses on financial instruments and other commitments to extend credit. The standard was effective for interim and annual reporting periods beginning after December 15, 2019. However, in October 2019, the FASB approved deferral of the adoption date for smaller reporting companies for fiscal periods beginning after December 15, 2022. The Company will adopt ASU 2016-13 for the fiscal year ended June 30, 2024. The Company is evaluating the impact of adoption of this standard and does not anticipate the application of ASU 2016-13 will have a material impact on the Company’s condensed consolidated financial position and results of operations.

For a complete set of the Company’s significant accounting policies, refer to our Annual Report on Form 10-K for the fiscal year ended June 30, 2022. There have been no significant changes to the Company’s significant accounting policies during the three months ended September 30, 2022.

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