RELATED PARTY TRANSACTIONS	6 Months Ended
Jun. 30, 2021
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	NOTE 8 – RELATED PARTY TRANSACTIONS In July 2017, we completed a $4.0 million private placement with Mr. Schutte, consisting of 8,912,655 units (“Units”) of the Company, at a price of $0.4488 per Unit (the “Transaction”). Each Unit consists of one share of common stock and a warrant to purchase one fifth (0.2) of a share of common stock. The issue price of the Units was equal to 85% of the average last sale price of our common stock for the five trading days prior to completion of the Transaction. The warrants are immediately exercisable for 1,782,532 common shares at a price of $0.528 per share (which equals the average last sale price of the Company’s common stock for the five trading days prior to completion of the Transaction) and expire five years after issuance (subject to earlier expiration in event of certain acquisitions). We have assigned a relative fair value of $495 thousand to the warrants out of the total $4.0 million proceeds from the private placement transaction and have accounted these warrants as equity. As part of the closing of the Transaction, the Company and Essex Woodlands Health Ventures V, L.P. (“Essex”) and Galen Partners III, L.P. (“Galen”) amended and restated the existing Voting Agreement including such parties to provide for Mr. Schutte to join as a party (as so amended, the “Second Amended and Restated Voting Agreement”). The Second Amended and Restated Voting Agreement provides that our Board of Directors shall remain comprised of no more than seven members (subject to certain exceptions), (i) one of whom is the Company’s Chief Executive Officer, (ii) three of whom are independent under Nasdaq standards, and (iii) one of whom shall be designated by each of Essex, Galen and Mr. Schutte, and the parties to such agreement would vote for such persons. The right of each of Essex, Galen and Mr. Schutte to designate one director to our Board will continue as long as he or it and their affiliates collectively hold at least 600,000 shares of our common stock (including warrants exercisable for such shares). Immanuel Thangaraj is the designee of Essex. Mr. Schutte has not designated a director as of the date of filing of this Report on Form 10-Q. Galen had not designated a director and lost that right in December 2017 when it disposed of its shares of common stock in the Company. Once such shareholder no longer holds such securities, the additional forfeited seat would become a seat for an independent director to thereafter be nominated to the Board of Directors from time to time by the then current directors and as applicable, to be elected by the directors to fill the vacancy created by the forfeited seat or submitted to the vote of shareholders at the Company’s next annual meeting. An independent director has not been named to fill the seat forfeited by Galen. MainPointe Pharmaceuticals LLC Mr. Schutte is the principal owner of MainPointe Pharmaceuticals LLC, a Kentucky limited liability company (“MainPointe”). In March 2017, we granted MainPointe an exclusive license to our Impede Technology to commercialize our Nexafed® and Nexafed® Sinus Pressure + Pain Products in the United States and Canada for an upfront licensing fee of $2.5 million. The Company is receiving a 7.5% royalty on sales of licensed products. MainPointe also has options to expand the territory and products covered for additional sums. Included in the reported royalty revenue for the three months ended June 30, 2021 and 2020 is $0 thousand and $3 thousand, respectively of royalty revenue from MainPointe. Included in the reported royalty revenue for the six months ended June 30, 2021 and 2020 is $2 thousand and $6 thousand, respectively of royalty revenue from MainPointe. (See Note 2). On January 1, 2020, MainPointe assigned to AD Pharma, with Acura’s consent, all of its right, title and interest in the MainPointe Agreement between MainPointe and Acura; which was rescinded by AD Pharma in October 2020. Loans with Mr. John Schutte At December 31, 2018, we had borrowed an aggregate of $4.35 million from Mr. Schutte, a related-party. During the period January 1, 2019 through June 27, 2019 we borrowed an aggregate of $650 thousand from Mr. Schutte. On June 28, 2019 we borrowed an additional $725 thousand from Mr. Schutte, bringing the aggregate principal of the loans and accrued interest to $6.0 million, and consolidated the loans into a single promissory note with a fixed interest rate of 7.5%, maturity date of July 1, 2023, granted conversion rights of principal and interest into shares of our common stock at a price of $0.16 per share, issued a warrant for 10.0 million common shares having an exercise price of $0.01 per share, and granted a security interest in all of the Company’s assets, which includes our intellectual property. The principal amount of the note is convertible into 37.5 million shares of our common stock. The $6.0 million convertible debt, the common stock purchase warrant and the security agreement were all assigned and transferred by Mr. Schutte to AD Pharma on June 28, 2019. On June 9, 2021, we received notice of conversion from AD Pharma for the $6.0 million Promissory Note and approximately $877 thousand of accrued but unpaid interest. The principal and interest were converted into 42,984,375 shares of the Company’s common stock. Effective with this conversion, the Promissory Note is retired and the Company is working with AD Pharma, LLC to release their security interest in all the Company’s assets. AD Pharma directly owns approximately 66% of our common stock at June 30, 2021. AD Pharma Agreement covering LTX-03 On June 28, 2019 we entered into a License, Development and Commercialization Agreement, as amended in October 2020 and in July 2021 (the “AD Pharma Amended Agreement”), with Abuse Deterrent Pharma, LLC (“AD Pharma”), a special purpose company representing a consortium of investors for the completion of development of LTX-03 (hydrocodone bitartrate with acetaminophen) immediate-release tablets utilizing Acura’s patented LIMITx™ technology which addresses the consequences of excess oral administration of opioid tablets, the most prevalent route of opioid overdose and abuse. The AD Pharma Amended Agreement grants AD Pharma exclusive commercialization rights in the United States to LTX-03 as well as LTX-02 (oxycodone/acetaminophen) and LTX-09 (alprazolam). The AD Pharma Amended Agreement required AD Pharma to pay us a monthly license payment of $350 thousand for a period from inception up to April 2020 at which time the payment became $200 thousand per month and ended on July 31, 2021, and to reimburse us all our outside development costs for LTX-03. On each of July 1, 2021, July 8, 2021, and August 4, 2021 we received from AD Pharma the $200 thousand payment for the February 2021, March 2021, and April 2021 license fees, respectively. AD Pharma is delinquent in remitting monthly license payments for May, 2021 thru July, 2021 which aggregates to $0.6 million, and approximately $97 thousand of reimbursable LTX-03 development expenses. Failure to make these payments is an event of default under the AD Pharma Amended Agreement. The AD Pharma Amended Agreement, requires the NDA for LTX-03 be accepted by the FDA by February 28, 2022 or AD Pharma has the option to terminate the AD Pharma Amended Agreement and take ownership of the LIMITx intellectual property. Should AD Pharma choose not to exercise this option to terminate and the NDA for LTX-03 is subsequently accepted by the FDA, such option expires. AD Pharma does have the right to terminate the AD Pharma Amended Agreement anytime for “convenience on 30 days prior written notice”. AD Pharma retains commercialization rights from which Acura will receive stepped royalties on sales and potential sales related milestones. AD Pharma also has a license to the Limitx patents for LTX-02 (oxycodone/acetaminophen) and LTX-09 (alprazolam) which are not subject to any development agreement or responsibilities by Acura. Upon commercialization of the licensed products, Acura receives stepped royalties on sales and is eligible for certain sales related milestones. We also granted authority to MainPointe Pharmaceuticals, LLC (MainPointe) to assign to AD Pharma the option and the right to add, as an Option Product to the Nexafed® Agreement, a Nexafed® 12-hour dosage (an extended-release pseudoephedrine hydrochloride product utilizing the IMPEDE® Technology in 120mg dosage strength), and the Option Product exercise price of $500 thousand was waived if the exercise of the option occurred by June 28, 2024 (five years from the effective date of the AD Pharma Agreement), however effective with the October 2020 amendment to the AD Pharma Agreement, this option and right was rescinded. In March 2017, we granted MainPointe an exclusive license to our IMPEDE ® Technology to commercialize our Nexafed® and Nexafed® Sinus Pressure + Pain Products in the United States and Canada. On January 1, 2020, MainPointe assigned to AD Pharma, with Acura’s consent, all of its right, title and interest in the MainPointe Agreement between MainPointe and Acura; which was rescinded by AD Pharma in October 2020.

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2021

NOTE 8 – RELATED PARTY TRANSACTIONS

In July 2017, we completed a $4.0 million private placement with Mr. Schutte, consisting of 8,912,655 units (“Units”) of the Company, at a price of $0.4488 per Unit (the “Transaction”). Each Unit consists of one share of common stock and a warrant to purchase one fifth (0.2) of a share of common stock. The issue price of the Units was equal to 85% of the average last sale price of our common stock for the five trading days prior to completion of the Transaction. The warrants are immediately exercisable for 1,782,532 common shares at a price of $0.528 per share (which equals the average last sale price of the Company’s common stock for the five trading days prior to completion of the Transaction) and expire five years after issuance (subject to earlier expiration in event of certain acquisitions). We have assigned a relative fair value of $495 thousand to the warrants out of the total $4.0 million proceeds from the private placement transaction and have accounted these warrants as equity.

As part of the closing of the Transaction, the Company and Essex Woodlands Health Ventures V, L.P. (“Essex”) and Galen Partners III, L.P. (“Galen”) amended and restated the existing Voting Agreement including such parties to provide for Mr. Schutte to join as a party (as so amended, the “Second Amended and Restated Voting Agreement”). The Second Amended and Restated Voting Agreement provides that our Board of Directors shall remain comprised of no more than seven members (subject to certain exceptions), (i) one of whom is the Company’s Chief Executive Officer, (ii) three of whom are independent under Nasdaq standards, and (iii) one of whom shall be designated by each of Essex, Galen and Mr. Schutte, and the parties to such agreement would vote for such persons. The right of each of Essex, Galen and Mr. Schutte to designate one director to our Board will continue as long as he or it and their affiliates collectively hold at least 600,000 shares of our common stock (including warrants exercisable for such shares). Immanuel Thangaraj is the designee of Essex. Mr. Schutte has not designated a director as of the date of filing of this Report on Form 10-Q. Galen had not designated a director and lost that right in December 2017 when it disposed of its shares of common stock in the Company. Once such shareholder no longer holds such securities, the additional forfeited seat would become a seat for an independent director to thereafter be nominated to the Board of Directors from time to time by the then current directors and as applicable, to be elected by the directors to fill the vacancy created by the forfeited seat or submitted to the vote of shareholders at the Company’s next annual meeting. An independent director has not been named to fill the seat forfeited by Galen.

MainPointe Pharmaceuticals LLC

Mr. Schutte is the principal owner of MainPointe Pharmaceuticals LLC, a Kentucky limited liability company (“MainPointe”). In March 2017, we granted MainPointe an exclusive license to our Impede Technology to commercialize our Nexafed® and Nexafed® Sinus Pressure + Pain Products in the United States and Canada for an upfront licensing fee of $2.5 million. The Company is receiving a 7.5% royalty on sales of licensed products. MainPointe also has options to expand the territory and products covered for additional sums. Included in the reported royalty revenue for the three months ended June 30, 2021 and 2020 is $0 thousand and $3 thousand, respectively of royalty revenue from MainPointe. Included in the reported royalty revenue for the six months ended June 30, 2021 and 2020 is $2 thousand and $6 thousand, respectively of royalty revenue from MainPointe. (See Note 2). On January 1, 2020, MainPointe assigned to AD Pharma, with Acura’s consent, all of its right, title and interest in the MainPointe Agreement between MainPointe and Acura; which was rescinded by AD Pharma in October 2020.

Loans with Mr. John Schutte

At December 31, 2018, we had borrowed an aggregate of $4.35 million from Mr. Schutte, a related-party. During the period January 1, 2019 through June 27, 2019 we borrowed an aggregate of $650 thousand from Mr. Schutte. On June 28, 2019 we borrowed an additional $725 thousand from Mr. Schutte, bringing the aggregate principal of the loans and accrued interest to $6.0 million, and consolidated the loans into a single promissory note with a fixed interest rate of 7.5%, maturity date of July 1, 2023, granted conversion rights of principal and interest into shares of our common stock at a price of $0.16 per share, issued a warrant for 10.0 million common shares having an exercise price of $0.01 per share, and granted a security interest in all of the Company’s assets, which includes our intellectual property. The principal amount of the note is convertible into 37.5 million shares of our common stock. The $6.0 million convertible debt, the common stock purchase warrant and the security agreement were all assigned and transferred by Mr. Schutte to AD Pharma on June 28, 2019.

On June 9, 2021, we received notice of conversion from AD Pharma for the $6.0 million Promissory Note and approximately $877 thousand of accrued but unpaid interest. The principal and interest were converted into 42,984,375 shares of the Company’s common stock. Effective with this conversion, the Promissory Note is retired and the Company is working with AD Pharma, LLC to release their security interest in all the Company’s assets. AD Pharma directly owns approximately 66% of our common stock at June 30, 2021.

AD Pharma Agreement covering LTX-03

On June 28, 2019 we entered into a License, Development and Commercialization Agreement, as amended in October 2020 and in July 2021 (the “AD Pharma Amended Agreement”), with Abuse Deterrent Pharma, LLC (“AD Pharma”), a special purpose company representing a consortium of investors for the completion of development of LTX-03 (hydrocodone bitartrate with acetaminophen) immediate-release tablets utilizing Acura’s patented LIMITx™ technology which addresses the consequences of excess oral administration of opioid tablets, the most prevalent route of opioid overdose and abuse. The AD Pharma Amended Agreement grants AD Pharma exclusive commercialization rights in the United States to LTX-03 as well as LTX-02 (oxycodone/acetaminophen) and LTX-09 (alprazolam). The AD Pharma Amended Agreement required AD Pharma to pay us a monthly license payment of $350 thousand for a period from inception up to April 2020 at which time the payment became $200 thousand per month and ended on July 31, 2021, and to reimburse us all our outside development costs for LTX-03. On each of July 1, 2021, July 8, 2021, and August 4, 2021 we received from AD Pharma the $200 thousand payment for the February 2021, March 2021, and April 2021 license fees, respectively. AD Pharma is delinquent in remitting monthly license payments for May, 2021 thru July, 2021 which aggregates to $0.6 million, and approximately $97 thousand of reimbursable LTX-03 development expenses. Failure to make these payments is an event of default under the AD Pharma Amended Agreement.

The AD Pharma Amended Agreement, requires the NDA for LTX-03 be accepted by the FDA by February 28, 2022 or AD Pharma has the option to terminate the AD Pharma Amended Agreement and take ownership of the LIMITx intellectual property. Should AD Pharma choose not to exercise this option to terminate and the NDA for LTX-03 is subsequently accepted by the FDA, such option expires. AD Pharma does have the right to terminate the AD Pharma Amended Agreement anytime for “convenience on 30 days prior written notice”. AD Pharma retains commercialization rights from which Acura will receive stepped royalties on sales and potential sales related milestones. AD Pharma also has a license to the Limitx patents for LTX-02 (oxycodone/acetaminophen) and LTX-09 (alprazolam) which are not subject to any development agreement or responsibilities by Acura. Upon commercialization of the licensed products, Acura receives stepped royalties on sales and is eligible for certain sales related milestones.

We also granted authority to MainPointe Pharmaceuticals, LLC (MainPointe) to assign to AD Pharma the option and the right to add, as an Option Product to the Nexafed® Agreement, a Nexafed® 12-hour dosage (an extended-release pseudoephedrine hydrochloride product utilizing the IMPEDE® Technology in 120mg dosage strength), and the Option Product exercise price of $500 thousand was waived if the exercise of the option occurred by June 28, 2024 (five years from the effective date of the AD Pharma Agreement), however effective with the October 2020 amendment to the AD Pharma Agreement, this option and right was rescinded. In March 2017, we granted MainPointe an exclusive license to our IMPEDE ® Technology to commercialize our Nexafed® and Nexafed® Sinus Pressure + Pain Products in the United States and Canada. On January 1, 2020, MainPointe assigned to AD Pharma, with Acura’s consent, all of its right, title and interest in the MainPointe Agreement between MainPointe and Acura; which was rescinded by AD Pharma in October 2020.