Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements

Subsequent to the issuance of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, management determined a material adjustment was needed to correct the accounting for the early and partial extinguishment of the Company’s Convertible 3.75% Senior Notes due 2019 (the “2019 Notes”) that resulted from the separate exchange agreements entered into with certain holders of the 2019 Notes in April 2018 (see Note 7 for further information regarding the 2019 Notes). Accordingly, the accompanying unaudited interim condensed consolidated financial statements of the Company for the three and six-months ended June 30, 2018, and the related notes hereto, have been restated to correct this error. In addition, the Company has elected to correct certain other accounting errors, which management believes are immaterial on an individual and aggregate basis to the Company’s unaudited interim condensed consolidated financial statements for the three and six-months ended June 30, 2018 and 2017. The correction of all the foregoing accounting errors is collectively referred to herein as "the Restatement". A summary of the correction of these accounting errors, and their impact on the unaudited condensed consolidated financial statements for the three and six-month periods ended June 30, 2018 and June 30, 2017, are as follows:

(1)In April 2018, the Company entered into separate exchange agreements with certain holders of the 2019 Notes to exchange an aggregate of $75.1 million of the 2019 Notes for an equal amount of newly issued Convertible 4.75% Senior Notes due 2023. The effect of this exchange was accounted for as an early and partial extinguishment of $75.1 million of the 2019 Notes, whereby an aggregate of approximately $10.1 million unamortized debt discount and financing costs associated with the 2019 Notes were written off and recognized as non-cash interest expense. Upon further analysis, management determined that the exchange of $75.1 million of 2019 Notes should have been accounted for by applying the cash conversion guidance prescribed by ASC 470-20, which requires, upon derecognition, among other things, an allocation of the fair value of the consideration transferred at settlement between (i) the extinguished liability component and (ii) the reacquired equity component. Accordingly, the accompanying unaudited interim condensed consolidated financial statements as of and for the three and six-month periods ended June 30, 2018 have been restated to reflect the application of this guidance in ASC 470-20 by decreasing the amount of non-cash interest expense recognized during the three and six-month periods ended June 30, 2018 by approximately $7.6 million, increasing the Company’s outstanding Convertible 4.75% Senior Notes, net of debt discount and debt issuance costs, as of June 30, 2018 by approximately $0.4 million, and decreasing additional paid-in capital as of June 30, 2018 by approximately $8.0 million.

(2)The Company identified approximately $0.3 million of uncollectible accounts receivable related to certain prior period pricing and shipment errors. Accordingly, the accompanying unaudited interim condensed consolidated financial statements as of and for the three and six-month periods ended June 30, 2018 has been revised to reflect the write-off of these out of period amounts by decreasing Revenue, net by approximately $0.3 million for the three and six-month periods ended June 30, 2018, respectively, decreasing Accounts Receivable, net, by $0.4 million and increasing Accounts Payable by $0.1 million as of June 30, 2018.

(3)The Company identified approximately $0.2 million of uncollectible accounts receivable related to pricing and shipment errors that were previously written off and incorrectly classified within as Selling, General and Administrative Expenses rather than a reduction of Revenue, net. Accordingly, the accompanying unaudited interim condensed consolidated financial statements as of and for the three and six-month periods ended June 30, 2018 has been revised to reflect the proper classification of this amount by decreasing Revenues, net and decreasing Selling, General and Administrative Expenses by approximately $0.2 million for the three and six-month periods ended June 30, 2018, respectively.

(4)The Company identified approximately $0.3 million of costs that were previously incurred and should have been capitalized to Property, Plant and Equipment, net rather than recognized as Cost of Revenues. Accordingly, the accompanying unaudited interim condensed consolidated financial statements as of and for the three and six-month periods ended June 30, 2018 has been revised to reflect the proper classification of this out of period amount by increasing Property, Plant, and Equipment as of June 30, 2018 and reducing Cost of Revenues for the three and six-month periods ended June 30, 2018 by approximately $0.3 million, respectively. The effect on depreciation expense associated with the correction of this error was nil.

(5) The Company pays wholesalers certain fees associated with the sale of the Company’s product. The payment of these fees had been historically classified by the Company as cost of revenues and accrued expenses prior to the adoption of ASC 606, Revenue from Contracts with Customers. As disclosed in Note 4, the Company adopted ASC 606 on January 1, 2018 using the modified retrospective method, at which time the Company began classifying the payment of wholesaler fees as a reduction of revenue and accounts receivable. Upon further analysis, however, management determined that these fees should have always been classified as a reduction of revenue and accounts receivable, rather than as costs of revenues and accrued expenses, because the services provided by the Company’s wholesalers cannot generally be provided by third parties and the underlying fees are not specifically identifiable from other services. As a result, the accompanying unaudited interim condensed consolidated financial statements as of and for the three and six-month periods ended June 30, 2017 has been revised to correct the presentation of wholesaler fees as a reduction of revenue rather than as cost of revenues. The correction of this error resulted in a reduction of revenue of approximately of $2.0 million and $4.2 million, respectively, for the three and six-month periods ended June 30, 2017. In addition, the correction of this error resulted in a reduction in accounts receivable and decrease in accrued expenses of approximately $5.4 million, respectively, as of June 30, 2017 and $7.0 million, respectively, as of December 31, 2017.

(6) Prior to the adoption of ASC 606, the Company classified Medicaid, Medicare and other rebates (the “Rebates”) as a reduction of accounts receivable, whereas subsequent to adoption of ASC 606 the Company began classifying the Rebates as accrued expenses. Upon further analysis, management determined that the Rebates should have always been classified as accrued expenses because their terms require cash settlement and are payable to third parties that are other than the Company’s customer. The correction of this error resulted in an increase in accounts receivable and increase in accrued expenses of $2.5 million, respectively, as of June 30, 2017 and $1.6 million, respectively, as of December 31, 2017.

The following tables summarize the effect of the Restatement on the Company's unaudited interim condensed consolidated financial statements as of and for the three and six-months ended June 30, 2017 (in thousands):



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three months ended June 30, 2018										Six months ended June 30, 2018
	As Previously Reported			Adjustments				As Restated			As Previously Reported			Adjustments				As Restated
Revenues:
Revenues, net	$	16,751		$	(502	)	(2), (3)	$	16,249		$	31,296		$	(502	)	(2), (3)	$	30,794

Costs and Expenses:
Cost of revenues	11,728			(263		)	(4)	11,465			21,053			(263		)	(4)	20,790
Selling, general and administrative expenses	5,961			(234		)	(3)	5,727			11,321			(234		)	(3)	11,087

Total costs and expenses	21,656			(497		)		21,159			39,732			(497		)		39,235

Operating loss	(4,905		)	(5		)		(4,910		)	(8,436		)	(5		)		(8,441		)

Other Income (Expense):
Partial extinguishment of Convertible 3.75% Notes	(10,069		)	7,602			(1)	(2,467		)	(10,069		)	7,602			(1)	(2,467		)

Loss before income tax expense	(20,693		)	7,597				(13,096		)	(25,471		)	7,597				(17,874		)

Net loss	$	(20,716	)	$	7,597			$	(13,119	)	$	(25,518	)	$	7,597			$	(17,921	)

Basic and diluted loss per share	$	(0.39	)	$	0.14			$	(0.25	)	$	(0.48	)	$	0.14			$	(0.34	)



CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	June 30, 2018							June 30, 2018
	As Previously Reported			Adjustments				As Restated
Accounts receivable, net	$	16,232		$	(151	)	(2)	$	16,081
Total current assets	49,688			(151		)		49,537

Property, plant and equipment	83,027			263			(4)	83,290

Total assets	$	186,667		$	112			$	186,779

Current liabilities:
Accounts payable	$	8,654		$	117		(2)	$	8,771

Total current liabilities	17,923			117				18,040

Convertible 4.75% Senior Notes, net of debt discount and debt issuance costs (face of $75,090, as of June 30, 2018)	54,963			406			(1)	55,369
Total liabilities	147,544			523				148,067


Additional paid in capital	126,532			(8,008		)	(1)	118,524
Accumulated deficit	(85,612		)	7,597				(78,015		)
Total stockholders’ equity	39,123			(411		)		38,712
Total liabilities and stockholders' equity	$	186,667		$	112			$	186,779



CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

	Three months ended June 30, 2018									Six months ended June 30, 2018
	As Previously Reported			Adjustments			As Restated			As Previously Reported			Adjustments			As Restated
Net loss	$	(20,716	)	$	7,597	(1),(2),(3),(4)	$	(13,119	)	$	(25,518	)	$	7,597	(1),(2),(3),(4)	$	(17,921	)

Comprehensive loss	$	(20,744	)	$	7,597	(1),(2),(3),(4)	$	(13,147	)	$	(25,850	)	$	7,597	(1),(2),(3),(4)	$	(18,253	)



CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

	Six months ended June 30, 2018
	As Previously Reported			Adjustments				As Restated
Net loss	$	(25,518	)	$	7,597		(1),(2),(3),(4)	$	(17,921	)
Additional Paid in Capital	126,532			(8,008		)	(1)	118,524
Total Stockholder's Equity	$	39,123		$	(411	)	(1),(2),(3),(4)	$	38,712




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six months ended June 30, 2018
	As Previously Reported			Adjustments				As Restated
Cash flows from operating activities:
Net income (loss)	$	(25,518	)	$	7,597		(1),(2),(3),(4)	$	(17,921	)

Stock based compensation	1,113			(10		)	(4)	1,103
Partial extinguishment of Convertible 3.75% Senior Notes	10,069			(7,602		)	(1)	2,467

Changes in operating assets and liabilities:
Accounts receivable	1,023			(5,250		)	(2),(5), (a)	(4,227		)
Accounts payable and accrued expenses	(9,604		)	5,518			(5), (a)	(4,086		)

Net cash provided by operating activities	(12,763		)	253				(12,510		)

Cash flows from investing activities:
Capital expenditures	(12,270		)	(253		)	(4)	(12,523		)

Net cash used in investing activities	(12,270		)	(253		)		(12,523		)

Non cash investing and financing transactions:
Capitalized stock compensation in capital expenditures	53			10			(4)	63



	Condensed Consolidated Statements of Operations
	Three Months Ended June 30, 2017							Six Months Ended June 30, 2017
	As Previously Reported		Adjustments			As Revised		As Previously Reported		Adjustments			As Revised

Revenue, net	$	18,408	$	1,976	(5)	$	16,432	$	38,299	$	4,204	(5)	$	34,095
Cost of revenues	10,371		1,976		(5)	8,395		19,328		4,204		(5)	15,124
Total costs and expenses	20,190		1,976		(5)	18,214		37,114		4,204		(5)	32,910



	Condensed Consolidated Balance Sheet							Condensed Consolidated Balance Sheet
	June 30, 2017							December 31, 2017
	As Previously Reported		Adjustments			As Revised		As Previously Reported		Adjustments			As Revised

Accounts receivable, net	$	27,272	$	2,853	(5),(6)	$	24,419	$	18,143	$	5,401	(5),(6)	$	12,742
Total current assets	95,009		2,853		(5),(6)	92,156		64,532		5,401		(5),(6)	59,131
Total assets	196,385		2,853		(5),(6)	193,532		189,986		5,401		(5),(6)	184,585

Accrued expenses	12,019		2,853		(5),(6)	9,166		13,502		5,401		(5),(6)	8,101
Total current liabilities	21,728		2,853		(5),(6)	18,875		24,097		5,401		(5),(6)	18,696
Total liabilities	137,977		2,853		(5),(6)	135,124		145,233		5,401		(5),(6)	139,832
Total liabilities and stockholders' equity	196,385		2,853		(5),(6)	193,532		189,986		5,401		(5),(6)	184,585



	Condensed Consolidated Statement of Cash Flows
	Six Months Ended June 30, 2017
	As Previously Reported			Adjustments				As Revised

Cash flows from operating activities
Accounts receivable	$	(5,530	)	$	(1,522	)	(5),(6)	$	(4,008	)
Accounts payable and accrued expenses	2,414			1,522			(5),(6)	892