Note 1.

Corporate Organization and Company Overview

(A) Company Overview

Aquestive Therapeutics, Inc. (“Aquestive” or “the Company”) is a pharmaceutical company focused on identifying, developing and commercializing differentiated products to address unmet medical needs and solve critical healthcare challenges, having been formed effective on January 1, 2018 via the conversion of MonoSol Rx, LLC to a Delaware corporation, and a simultaneous name change. The Company has a commercial proprietary product and a late-stage proprietary product pipeline focused on the treatment of diseases of the central nervous system, or CNS, and is developing orally administered complex molecules as alternatives to more invasive therapies. Aquestive is pursuing its business objectives through commercialization of its own products and through in-licensing and out-licensing arrangements. Production facilities are located in Portage, Indiana, and corporate headquarters, sales and commercialization operations and primary research laboratory facilities are based in Warren, New Jersey. The Company’s major customer and primary commercialization licensee has global operations headquartered in the United Kingdom with principal operations in the United States; other customers are principally located in the United States.

Aquestive is subject to risks common to companies in similar industries and stages of development, including, but not limited to, competition from larger companies, reliance on revenue from a limited number of products and customers, adequacy of existing and availability of additional operating and growth capital as and when required, reliance on a single manufacturing site, new technological innovations, dependence on key personnel, reliance on third-party service providers and sole source suppliers, dependence on patent-protected proprietary technology, ongoing government regulatory compliance requirements, dependence on the clinical and commercial success of its drug candidates, uncertainty of regulatory approval of its drug candidates, and uncertainty of broad adoption of its approved products, if any, by physicians and consumers.

(B) Corporate Conversion, Reorganization, Stock Splits and Equity Offerings

Corporate Conversion and Reorganization

Until December 31, 2017, the Company conducted its business through MonoSol Rx, LLC, a Delaware limited liability company, or MonoSol, which was originally formed in Delaware in January 2004. On January 1, 2018, MonoSol converted from a Delaware LLC into a Delaware corporation pursuant to a statutory conversion and changed its name to Aquestive Therapeutics, Inc. In connection with this conversion, the holders of membership units of MonoSol contributed their interests in MonoSol to Aquestive Partners, LLC, or APL, in exchange for proportionate interests in APL. As a result of the exchange, APL was issued 5,000 shares of voting common stock in the Company and became the parent and sole stockholder of the Company.

Stock Splits

In April 2018, the Board approved an amendment to the Certificate of Incorporation of the Company to:

(i)

increase the authorized number of capital stock from 25,000 to 350,000,000 shares, followed by a reduction of the authorized total to 250,000,000 in July 2018,

(ii)

authorize Non-Voting Common Stock, and

(iii)

affect a split of the Company’s common stock, par value $0.001 per share, such that each share be subdivided and reclassified into 37,212 shares of Voting Common Stock, par value $0.001 per share. Subsequently and in consideration of pricing considerations in connection with the Company’s planned initial public stock offering (the IPO), a reverse split was implemented, converting 12.34 outstanding shares into a single share of common stock of the same par value.

The net effect of these stock splits has been presented in these financial statements as if they occurred on January 1, 2018.

Initial Public Offering of Common Stock

On July 27, 2018, the Company closed the initial public offering (“IPO”) of 4,500,000 shares of common stock at an offering price of $15.00 per share. The Company received net proceeds of approximately $57,543 after deducting underwriting discounts, commissions, and offering related transaction costs of approximately $9,957. The underwriters’ over-allotment option was exercised in August 2018 and the Company issued 425,727 additional common shares at $15.00 per share in exchange for additional net proceeds of approximately $5,939, after deducting underwriter discounts of approximately $447. The sale of these common shares provided total net proceeds of $63,482. Immediately prior to the consummation of the IPO, all of the Company’s outstanding shares of non-voting common stock was automatically converted to 4,922,353 shares of voting common stock to settle all obligations to performance unit plan participants.

Follow-On Public Offering of Common Stock

On December 17, 2019, Aquestive received net proceeds of $37,835 after deducting underwriting discounts of $2,415 for the sale of 8,050,000 shares of common stock in a public offering. Professional fees and other costs of this offering totaled $540, in addition to the underwriting discounts.