Equibles

10-Q

AYTU BIOPHARMA, INC (AYTU)

10-Q 2026-02-03 For: 2025-12-31
View Original
Added on April 10, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2025

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission File Number: 001-38247

aytu20231231_10qimg001.jpg

AYTU BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

Delaware 47-0883144
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
--- ---
7900 East Union Avenue, Suite 920 , Denver, Colorado 80237 (720) 437-6580
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(Address of principal executive offices and zip code) (Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 per share AYTU The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of January 31, 2026, the registrant had 10,733,208 of common stock outstanding.

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AYTU BIOPHARMA, INC.

FORM 10-Q

TABLE OF CONTENTS

Page
Cautionary Information Regarding Forward-Looking Statements 3
PART I - FINANCIAL INFORMATION 4
Item 1. Financial Statements 4
Unaudited Consolidated Balance Sheets 4
Unaudited Consolidated Statements of Operations 5
Unaudited Consolidated Statements of Stockholders’ Equity 6
Unaudited Consolidated Statements of Cash Flows 7
Notes to the Unaudited Consolidated Financial Statements 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31
Item 3. Quantitative and Qualitative Disclosures About Market Risk 38
Item 4. Controls and Procedures 38
PART II - OTHER INFORMATION 39
Item 1. Legal Proceedings 39
Item 1A. Risk Factors 39
Item 5. Other Information 39
Item 6. Exhibits 39
SIGNATURES 40

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CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Report on Form 10‑Q (“Form 10-Q” or “this report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this report, including statements regarding our regulatory events, future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are generally written in the future tense and/or are preceded by words such as “may,” “will,” “should,” “forecast,” “could,” “expect,” “suggest,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “potential,” or similar words, or the negatives of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, without limitation: our anticipated future cash position; the planned expanded commercialization of our products and the potential future commercialization of our product candidates; our anticipated future growth rates; anticipated sales increases; anticipated net revenue increases; amounts of certain future expenses and cost of goods sold; our plans to acquire additional assets or dispose of assets, anticipated increases or decreases to operating expenses, and selling, general, and administrative expenses; and future events under our current and potential future collaborations.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including without limitation the risks described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10‑K for the year ended June 30, 2025 (“2025 Form 10-K”), and in the reports we file with the United States Securities and Exchange Commission (“SEC”). These risks are not exhaustive. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements should not be relied upon as predictions of future events. We can provide no assurance that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. We assume no obligation to update or supplement forward-looking statements, except as may be required under applicable law.

This Form 10-Q may refer to registered trademarks that we currently own or license, such as Aytu, Aytu BioPharma, Aytu RxConnect, Neos Therapeutics and EXXUA, which are protected under applicable intellectual property laws and are our property or the property of our subsidiaries. This Form 10-Q also contains trademarks, service marks, copyrights and trade names of other companies, which are the property of their respective owners. Solely for convenience, our trademarks and tradenames referred to in this Form 10-Q may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradenames. We obtained statistical data, market and product data, and forecasts used throughout this Form 10-Q from market research, publicly available information and industry publications.

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PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AYTU BIOPHARMA, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

June 30,
2025
ASSETS **** ****
Current assets:
Cash and cash equivalents 30,025 $ 30,952
Accounts receivable, net 30,923 31,155
Inventories 8,656 11,434
Prepaid expenses and other current assets 6,637 5,638
Total current assets 76,241 79,179
Non-current assets:
Property and equipment, net 484 532
Operating lease right-of-use assets 959 1,061
Intangible assets, net 43,578 42,201
Other non-current assets 738 1,204
Total non-current assets 45,759 44,998
Total assets 122,000 $ 124,177
LIABILITIES AND STOCKHOLDERS’ EQUITY **** ****
Current liabilities:
Accounts payable 14,259 $ 10,601
Accrued liabilities 40,156 38,164
Revolving credit facility 9,075 9,063
Current portion of debt 1,857 1,857
Other current liabilities 216 3,379
Total current liabilities 65,563 63,064
Non-current liabilities:
Debt, net of current portion 9,998 10,895
Derivative warrant liabilities 27,337 26,334
Other non-current liabilities 4,901 4,918
Total non-current liabilities 42,236 42,147
Commitments and contingencies (note 13)
Stockholders’ equity:
Preferred stock, par value 0.0001; 50,000,000 shares authorized; no shares issued or outstanding — —
Common stock, par value 0.0001; 200,000,000 shares authorized; 10,733,208 and 8,976,913 shares issued and outstanding, respectively 1 1
Additional paid-in capital 356,354 352,500
Accumulated deficit (342,154 ) (333,535 )
Total stockholders’ equity 14,201 18,966
Total liabilities and stockholders’ equity 122,000 $ 124,177

All values are in US Dollars.

The accompanying notes to the unaudited consolidated financial statements are an integral part of this statement.

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AYTU BIOPHARMA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 2025 2024
Net revenue $ 15,165 $ 16,221 $ 29,053 $ 32,795
Cost of goods sold 5,541 5,435 10,243 10,024
Gross profit 9,624 10,786 18,810 22,771
Operating expenses:
Selling and marketing 5,998 5,272 11,320 10,931
General and administrative 5,070 4,449 9,994 9,574
Research and development — 522 — 948
Amortization of intangible assets 526 921 970 1,842
Restructuring costs — 1,317 — 2,101
Total operating expenses 11,594 12,481 22,284 25,396
Loss from operations (1,970 ) (1,695 ) (3,474 ) (2,625 )
Other income, net 190 140 391 682
Interest expense (560 ) (1,079 ) (1,076 ) (2,073 )
Derivative warrant liabilities (loss) gain (8,244 ) 3,016 (4,460 ) 5,896
(Loss) income from continuing operations before income tax expense (10,584 ) 382 (8,619 ) 1,880 ****
Income tax benefit (expense) — 283 — (122 )
Net (loss) income from continuing operations (10,584 ) 665 (8,619 ) 1,758 ****
Net income from discontinued operations, net of tax — 123 — 504
Net (loss) income $ (10,584 ) $ 788 $ (8,619 ) $ 2,262 ****
Basic weighted-average common shares outstanding (note 17) 10,036,359 6,132,060 9,738,716 6,100,204
Diluted weighted-average common shares outstanding (note 17) 10,036,359 8,485,112 9,738,716 8,782,794
Net (loss) income per share (note 17):
Basic - continuing operations $ (1.05 ) $ 0.11 $ (0.89 ) $ 0.29
Diluted - continuing operations $ (1.05 ) $ (0.28 ) $ (0.89 ) $ (0.47 )
Basic - discontinued operations, net of tax $ — $ 0.02 $ — $ 0.08
Diluted - discontinued operations, net of tax $ — $ 0.01 $ — $ 0.06
Basic - net (loss) income $ (1.05 ) $ 0.13 $ (0.89 ) $ 0.37
Diluted - net loss $ (1.05 ) $ (0.26 ) $ (0.89 ) $ (0.41 )

The accompanying notes to the unaudited consolidated financial statements are an integral part of this statement.

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AYTU BIOPHARMA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Additional **** Total
Common Stock Paid-in Accumulated Stockholders’
Shares Amount Capital Deficit Equity
Balances, June 30, 2025 8,976,913 $ 1 $ 352,500 $ (333,535 ) $ 18,966
Stock-based compensation expense — — 114 — 114
Issuance of common stock from exercise of warrants 935,000 — 2,126 — 2,126
Net income — — — 1,965 1,965
Balances, September 30, 2025 9,911,913 1 354,740 (331,570 ) 23,171
Stock-based compensation expense 271,295 — 283 — 283
Issuance of common stock from exercise of warrants 550,000 — 1,331 — 1,331
Net loss — — — (10,584 ) (10,584 )
Balances, December 31, 2025 10,733,208 $ 1 $ 356,354 $ (342,154 ) $ 14,201
Additional **** Total
--- --- --- --- --- --- --- --- --- --- --- ---
Common Stock Paid-in Accumulated Stockholders’
Shares Amount Capital Deficit Equity
Balances, June 30, 2024 5,972,638 $ 1 $ 347,688 $ (319,973 ) $ 27,716
Stock-based compensation expense 564 — 173 — 173
Issuance of common stock from exercise of warrants 176,000 — 463 — 463
Net income — — — 1,474 1,474
Balances, September 30, 2024 6,149,202 1 348,324 (318,499 ) 29,826
Stock-based compensation expense 20,479 — 151 — 151
Net income — — — 788 788
Balances, December 31, 2024 6,169,681 $ 1 $ 348,475 $ (317,711 ) $ 30,765

The accompanying notes to the unaudited consolidated financial statements are an integral part of this statement.

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AYTU BIOPHARMA, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended
December 31,
2025 2024
Cash flows from operating activities:
Net (loss) income $ (8,619 ) $ 2,262
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 1,688 2,626
Stock-based compensation expense 397 324
Derivative warrant liabilities loss (gain) 4,460 (5,896 )
Amortization of debt discount and issuance costs 58 55
Inventory write-down 1,113 95
Other non-cash adjustments — (389 )
Non-cash adjustments from discontinued operations — 254
Changes in operating assets and liabilities:
Accounts receivable, net 232 (1,794 )
Inventories 1,665 961
Prepaid expenses and other current assets (999 ) (679 )
Accounts payable 658 1,329
Accrued liabilities 1,819 2,341
Other operating assets and liabilities, net 585 306
Changes in operating assets and liabilities from discontinued operations — (80 )
Net cash provided by operating activities 3,057 1,715 ****
Cash flows from investing activities:
Cash received from sales of fixed assets — 668
Cash payments for fixed asset purchases (17 ) (142 )
Net cash (used in) provided by investing activities (17 ) 526 ****
Cash flows from financing activities:
Net proceeds received from revolving credit facility 12 1,617
Payment made to fixed payment arrangements (3,050 ) (2,537 )
Payments made to borrowings (929 ) (929 )
Net cash used in financing activities (3,967 ) (1,849 )
Net change in cash and cash equivalents (927 ) 392
Cash and cash equivalents at beginning of period 30,952 20,006
Cash and cash equivalents at end of period $ 30,025 $ 20,398
Supplemental disclosure of cash flow information: **** ****
Cash paid for interest $ 962 $ 752
Cash paid for income taxes $ 201 $ 1,419
Non-cash investing and financing activities:
Change in acquired intangible asset accruals $ 3,000 $ —
Other non-cash investing and financing activities $ — $ 483

The accompanying notes to the unaudited consolidated financial statements are an integral part of this statement.

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AYTU BIOPHARMA, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Nature of Business and Financial Condition

Aytu BioPharma, Inc. (“Aytu,” the “Company,” “we,” “us,” or “our”), is a pharmaceutical company focused on advancing innovative medicines for complex central nervous system (“CNS”) diseases to improve the quality of life for patients. The Company was originally incorporated as Rosewind Corporation on August 9, 2002, in the state of Colorado and was re-incorporated as Aytu BioScience, Inc. in the state of Delaware on June 8, 2015. In *March 2021,*the Company changed its name to Aytu BioPharma, Inc.

The Company’s strategy is to become a leading pharmaceutical company that improves the lives of patients. The Company uses a focused approach of in-licensing, acquiring, developing and commercializing novel prescription therapeutics in order to continue building its portfolio of revenue-generating products and leveraging its commercial team’s expertise to build leading brands within large therapeutic markets. In  June 2025, the Company entered into an Exclusive Commercialization Agreement (the “Commercialization Agreement”) with Fabre-Kramer Holdings, Inc. (“Fabre-Kramer”) to commercialize EXXUA (gepirone) extended-release tablets (“EXXUA”) in the United States. Gepirone is a new chemical entity and EXXUA is a novel first-in-class selective serotonin 5HT1a receptor agonist approved by the United States Food and Drug Administration (“FDA”) for the treatment of major depressive disorder (“MDD”) in adults. The Company successfully launched EXXUA in the second quarter of fiscal 2026 as the centerpiece of its commercial efforts.

In addition, the Company will continue to commercialize innovative prescription products that primarily address CNS conditions, including attention deficit hyperactivity disorder (“ADHD”). The Company is focusing its efforts on accelerating the growth of its commercial business and achieving positive operating cash flows. To achieve these goals, the Company indefinitely suspended active development of its clinical development programs and has wound down and divested unprofitable operations.

In the first quarter of fiscal 2025 the Company completed the previously announced wind down of its Consumer Health business and on July 31, 2024, the Company entered into a definitive agreement to divest its Consumer Health business. The accounting requirements for reporting the Consumer Health business as a discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, the Company’s unaudited consolidated financial statements for all periods presented reflect the Consumer Health business as a discontinued operation, and the Company determined that its continuing operations now operate in a single operating and reportable segment (see Note 20 - Discontinued Operations and the Segment Information section within Note 2 - Summary of Significant Accounting Policies for further detail).

The Company’s business from continuing operations is focused on the commercialization of its prescription pharmaceutical products sold primarily through third party wholesalers, distributors and pharmacies and which primarily consists of three product portfolios. The first consists of EXXUA for the treatment of MDD, the second consists of products for the treatment of ADHD (the “ADHD Portfolio”) and the third consists of a line of legacy products (the “Pediatric Portfolio”). The Company contracts with contract manufacturing organizations (“CMOs”) for the manufacture and testing of all of its products.

The Company has entered into two international exclusive collaboration, distribution and supply agreements to commercialize certain of the Company’s ADHD products. The first agreement is with Medomie Pharma Ltd (“Medomie”), a privately owned pharmaceutical company, which will commercialize the ADHD products in Israel and the Palestinian Authority. The second agreement is with Lupin Pharma Canada Ltd (“Lupin”), a subsidiary of global pharmaceutical company Lupin Limited, which will commercialize the ADHD products in Canada. The Company will supply the ADHD products to Medomie and Lupin based on forecasts and provide various product commercialization, regulatory and quality assurance resources. Medomie and Lupin are responsible for seeking local regulatory approvals and marketing authorizations for the ADHD products, which is expected to occur over the next 18 to 24 months.

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Note 2 - Summary of Significant Accounting Policies

Principals of Consolidation

The Company’s unaudited consolidated financial statements and notes thereto include the accounts of its wholly owned subsidiaries Aytu Therapeutics, LLC and Neos Therapeutics, Inc. (“Neos”) and their respective wholly owned subsidiaries, as well as Innovus Pharmaceuticals, Inc. (“Innovus”) and its wholly owned subsidiaries prior to the divestiture of Innovus on July 31, 2024. All significant inter-company balances and transactions have been eliminated in consolidation.

Basis of Presentation

The unaudited consolidated financial statements and notes thereto contained in this Form 10-Q represent the financial statements of the Company and its wholly owned subsidiaries and have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and disclosures normally included in the complete financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2025 Form 10-K, which included all disclosures required by U.S. GAAP. In the opinion of management, these unaudited consolidated financial statements and notes thereto contain all adjustments necessary for the fair statement of the financial position of the Company and the results of operations and cash flows for the interim periods presented. The consolidated balance sheet as of  June 30, 2025, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The results of operations for the period ended December 31, 2025, are not necessarily indicative of expected operating results for the full year or any future period.

Use of Estimates

The preparation of financial statements and footnotes requires the use of management estimates, judgments and assumptions. Actual results may differ from estimates. In the accompanying unaudited consolidated financial statements and notes thereto, estimates are used for, but not limited to, stock-based compensation; revenue recognition, determination of variable consideration for accruals of chargebacks, administrative fees and rebates, government rebates, returns and other allowances; allowance for credit losses; inventory impairment; determination of right-of-use (“ROU”) assets and lease liabilities; valuation of financial instruments, warrants and derivative warrant liabilities, intangible assets, and long-lived assets; purchase price allocations and the depreciable lives of long-lived assets; accruals for contingent liabilities; and determination of the income tax provision, deferred taxes and valuation allowance. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. The Company periodically evaluates estimates used in the preparation of the financial statements for reasonableness.

Prior Period Reclassification

Certain prior year amounts in the Company’s unaudited consolidated financial statements and the notes thereto have been reclassified to conform to the current year presentation. These reclassifications did not impact operating results for the three and six months ended December 31, 2025 , and 2024, or cash flows for the six months ended December 31, 2025, and 2024, or the Company’s financial position as of December 31, 2025, or June 30, 2025.

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Segment Information

Operating segments are identified as components that engage in business activities from which it may earn revenues and incur expenses and for which discrete information is available and regularly reviewed by the Company’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and to assess performance. Operating segments are aggregated for reporting purposes when the operating segments are identified as similar in accordance with the basic principles and aggregation criteria in the accounting standards. After the previously announced successful wind down and divestiture of the Consumer Health business in the first quarter of fiscal 2025, the Company determined that its continuing operations operate in a single operating and reportable segment. The Company’s CODM is its Chief Executive Officer, who manages operations and regularly reviews the financial information of the Company’s continuing operations as a single operating segment for the purposes of allocating resources and evaluating its financial performance. The results of the Consumer Health business have been reported as discontinued operations (see Note 20 - Discontinued Operations for further detail).

The CODM reviews net income or loss as a measure of segment profit or loss in assessing performance and allocating resources. Segment revenues, expenses and profit or loss is reported on the unaudited consolidated statements of operations, with particular emphasis on net revenue by product portfolio (see Note 3 - Revenue for net revenue disaggregated by product portfolio). Additionally, the measure of segment assets is reported on the Company’s unaudited balance sheet as total assets, with particular emphasis on the Company’s available liquidity and working capital, including its cash and cash equivalents, accounts receivables, net, inventories and current liabilities. As of December 31, 2025, and  June 30, 2025, all long-lived assets were domiciled within the United States.

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”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 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 a Black-Scholes option pricing model or Monte Carlo simulation model at issuance and for each reporting period when applicable.

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. In July 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (the “TCJA”), allowing for accelerated tax deductions for qualified property and research expenditures, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in calendar year 2025 and others implemented through calendar year 2027. None of the provisions are expected to impact the realizability of the Company’s deferred tax assets and liabilities on the unaudited consolidated balance sheets as of December 31, 2025, and  June 30, 2025. However, because the OBBBA is a wide-reaching law, the Company is currently assessing its potential impact on its business, financial condition, results of operations and future plans, and the Company plans to provide an update in future SEC filings once this assessment is complete. Other than the OBBBA, there have been no changes in tax law affecting the tax provision during the three and six months ended December 31, 2025.

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For both the three and six months ended December 31, 2025, there was zero income tax expense from continuing operations, which was an effective tax rate of zero. This was primarily driven by operating losses and favorable deductions from tax law changes coupled with existing valuation allowances.

For the three and six months ended December 31, 2024, the Company recorded an income tax benefit of $0.3 million from continuing operations, which represented an effective tax rate of negative 74.1% and the Company recorded income tax expense of $0.1 million from continuing operations, which represented an effective tax rate of 6.5%, respectively. These effective tax rates were primarily driven by the limitations on losses as a result of Section 382 of the Internal Revenue Code changes in ownership coupled with existing valuation allowances, the divestiture of the Company’s Consumer Health business that occurred during the first quarter of fiscal 2025 and changes to its first quarter of fiscal 2025 projections, which resulted in an income tax benefit for the second quarter of fiscal 2025.

An ownership change has limited the Company’s ability to offset, post-change, United States federal taxable income. Section 382 of the IRC 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. Previous acquisitions, financing transactions, and equity ownership changes in the past five years have caused a significant limitation on the Company’s ability to use the change in control net operating loss carryovers. The ownership changes result in increased future tax liability and are a driver of the change from a zero percent effective tax rate.

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date. A valuation allowance is recorded to reduce the net deferred tax asset when it is more likely than not that some portion or all of its deferred tax asset will not be utilized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained upon an examination. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the unaudited consolidated statements of operations.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 require public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the impact the adoption of ASU 2024-03 may have on the Company’s consolidated financial statements and disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”), to provide guidance on how business entities should recognize, measure, and present government grants received. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years. Early adoption is permitted, and the amendments may be applied using a modified prospective, modified retrospective, or full retrospective adoption. The Company is currently evaluating the impact the adoption of ASU 2025-10 may have on the Company’s consolidated financial statements and disclosures.

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In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”), which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with U.S. GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.Early adoption is permitted, and the amendments may be applied prospectively or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the impact the adoption of ASU 2025-11 may have on the Company’s consolidated financial statements and disclosures.

As of  December 31, 2025, and through the filing of this report, no other accounting guidance applicable to the Company has been issued and not yet adopted in fiscal 2026 that would have a material effect on the Company’s unaudited consolidated financial statements and related disclosures. For a complete set of the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s 2025 Form 10-K.

Note 3 - Revenue

Net revenue from continuing operations primarily consists of sales of prescription pharmaceutical products from EXXUA, the ADHD Portfolio and the Pediatric Portfolio, principally to a limited number of wholesalers, distributors and pharmacies in the United States. Net revenue is recognized at the point in time that control of the product transfers to the customer, which typically aligns with shipping terms (i.e., upon delivery), generally “free-on-board” destination when shipped domestically within the United States, consistent with contractual terms.

Savings offers, rebates, and wholesaler chargebacks reflect the terms of underlying agreements, which may vary. Accordingly, actual amounts will depend on the mix of sales by product and contracting entity. Future returns may not follow historical trends. The Company’s periodic adjustments of its estimates are subject to time delays between the initial product sale, and the ultimate reporting and settlement of deductions. In fiscal 2025, the Company entered into negotiations with a vendor related to certain variable interest accruals that reduce revenue for the Company’s ADHD Portfolio. As a result of these negotiations, the Company and the vendor agreed to a reduction to the liability purportedly owed by the Company of $3.3 million, which resulted in a decrease in the estimated variable consideration accrual, and a related increase in net revenue of $3.3 million in the first quarter of fiscal 2025.

Net Revenue by Product Portfolio

Net revenue disaggregated by product portfolio for the three and six months ended December 31, 2025, and 2024, were as follows:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 2025 2024
(in thousands)
EXXUA $ 241 $ — $ 241 $ —
ADHD Portfolio 13,216 13,816 26,372 29,080
Pediatric Portfolio 1,689 2,400 2,404 3,693
Other 19 5 36 22
Total net revenue $ 15,165 $ 16,221 $ 29,053 $ 32,795

Other includes net revenue from various discontinued or deprioritized products. The Consumer Health business was divested in the first quarter of fiscal 2025 and is reported within discontinued operations (see Note 20 - Discontinued Operations).

Net Revenue by Geographic Location

The Company’s net revenue is predominately within the United States, with insignificant international sales.

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Note 4 - Inventories

Inventories consist of raw materials, work in process and finished goods, and are recorded at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company periodically reviews the composition of its inventories to identify obsolete, slow-moving or otherwise unsaleable items. In the event that such items are identified and there are no alternate uses for the inventory, the Company will record a charge to reduce the value of the inventory to net realizable value in the period first recognized. The Company incurred inventory write-downs primarily as a result of unsalable and slow-moving products of $0.8 million and less than $0.1 million for the three months ended December 31, 2025, and 2024, respectively, and $1.1 million and $0.1 million for the six months ended December 31, 2025, and 2024, respectively.

Inventories consist of the following:

December 31, June 30,
2025 2025
(in thousands)
Raw materials $ 1,210 $ 1,115
Work in process 1,816 1,381
Finished goods 5,630 8,938
Inventories $ 8,656 $ 11,434

Note 5 - Property and Equipment

Property and equipment are recorded at cost and depreciated on a straight-line basis over the assets’ estimated economic life. Leasehold improvements are amortized over the shorter of the estimated economic life or remaining lease term. Depreciation and amortization expense from property and equipment was less than $0.1 million for both the three months ended December 31, 2025, and 2024, and $0.1 million for both the six months ended December 31, 2025, and 2024.

Property and equipment, net, consist of the following:

December 31, June 30,
2025 2025
(in thousands)
Manufacturing and lab equipment $ 826 $ 808
Office equipment, furniture and other 262 274
Leasehold improvements 164 164
Property and equipment, gross 1,252 1,246
Less: accumulated depreciation and amortization (768 ) (714 )
Property and equipment, net $ 484 $ 532

Note 6 - Leases

The Company’s operating leases are for its offices, and these leases have original lease periods expiring between 2029 and 2030. Most leases include option provisions under which the parties may extend the lease term. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. The Company has no finance leases.

In June 2024, the Company entered into a forward-starting operating lease agreement to lease office space in Berwyn, Pennsylvania from the owner of the office space that the Company was renting that same space under a sublease arrangement. The Company determined that it was an operating lease, and that lease commencement occurred in July 2024. The initial lease termination date is July 31, 2030, and under the lease agreement the Company has one five-year renewal option to extend the lease through *July 2035.*The Company has elected to utilize the practical expedient to not separate lease and non-lease components upon recognition and variable lease payments will be expensed as incurred. The Company recorded an operating lease ROU asset of $0.5 million and a lease liability of $0.5 million at lease commencement. The ROU asset and lease liability was recorded at present value using an incremental borrowing rate of 12.3%.

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In May 2023, the Company entered into an operating lease agreement to relocate its principal office from Englewood, Colorado to Denver, Colorado. The initial lease termination date is March 31, 2029, and under the lease agreement the Company has one five-year renewal option to extend the lease through March 2034. Undiscounted minimum monthly rent payments average approximately $15,500 over the initial term of the lease and variable lease payments are expensed as incurred.

The components of lease costs from continuing operations are as follows:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 2025 2024 Statement of Operations Classification
(in thousands)
Lease cost:
Operating lease cost $ 85 $ 143 $ 169 $ 265 Operating expenses
Short-term lease cost 2 86 5 177 Operating expenses
Total lease cost $ 87 $ 229 $ 174 $ 442

Supplemental balance sheet information related to leases is as follows:

December 31, June 30,
2025 2025 Balance Sheet Classification
(in thousands)
Assets:
Non-current: operating leases $ 959 $ 1,061 Operating lease right-of-use assets
Liabilities:
Current: operating leases $ 198 $ 137 Other current liabilities
Non-current: operating leases 973 985 Other non-current liabilities
Total lease liabilities $ 1,171 $ 1,122

The remaining weighted-average lease term and discount rate used are as follows:

December 31, June 30,
2025 2025
Weighted-average remaining lease term (years):
Operating lease right-of-use assets 4.0 4.3
Weighted-average discount rate:
Operating lease right-of-use assets 11.4 % 11.3 %

The Company had operating net cash used by operating leases of less than $0.1 million and $0.6 million for the six months ended December 31, 2025, and 2024, respectively, primarily due to rent payments.

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As of December 31, 2025, the Company’s estimated future minimum lease payments are as follows:

Estimated Future Minimum Lease Payments
(in thousands)
2026 (remaining 6 months) $ 163
2027 331
2028 386
2029 358
2030 230
2031 20
Total lease payments 1,488
Less: imputed interest (317 )
Total lease liabilities $ 1,171

Note 7 - Intangible Assets

A summary of the Company’s intangible assets, all of which are definite-lived intangible assets, as of December 31, 2025, and June 30, 2025, is as follows:

December 31, 2025
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Average Remaining Life
(in thousands) (in years)
Product technology rights $ 22,200 $ (6,245 ) $ 15,955 12.2
Technology rights 30,200 (8,495 ) 21,705 12.2
Commercialization rights 6,000 (82 ) 5,918 4.7
Total intangible assets $ 58,400 $ (14,822 ) $ 43,578 11.2
June 30, 2025
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Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Average Remaining Life
(in thousands) (in years)
Product technology rights ^(1)^ $ 22,200 $ (5,592 ) $ 16,608 12.7
Technology rights 30,200 (7,607 ) 22,593 12.7
Commercialization rights ^(2)^ 3,000 — 3,000 N/A
Total intangible assets $ 55,400 $ (13,199 ) $ 42,201 12.7
^(1)^ In June 2025, the Company recorded an impairment to its product technology rights intangible asset of $8.3 million. Accordingly, $19.1 million of gross carrying amount and $10.8 million of related accumulated amortization have been removed from this table as of June 30, 2025.
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^(2)^ The commercialization rights intangible asset was not considered placed into service until the launch of EXXUA, which the Company successfully completed in the second fiscal quarter of 2026.

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Gross carrying amounts are net of any impairment charges from prior periods. An intangible asset with zero net carrying amount at the end of a reporting period is not presented in the table of a future reporting period. Certain of the Company’s amortizable intangible assets include renewal options, extending the expected life of the asset. Renewal periods generally range between approximately 1 to 20 years depending on the license, patent or other agreement. Renewals are accounted for when they are reasonably assured. Intangible assets are amortized using the straight-line method over the estimated useful lives.

Amortization expense of intangible assets from continuing operations included in the unaudited consolidated statements of operations for the three and six months ended December 31, 2025, and 2024, are set forth in the below table:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 2025 2024
(in thousands)
Statement of operations classification:
Cost of goods sold $ 326 $ 327 $ 653 $ 654
Operating expenses 526 921 970 1,842
Total amortization of intangible assets expense $ 852 $ 1,248 $ 1,623 $ 2,496

As of December 31, 2025, the Company’s estimated future amortization expense is as follows:

Estimated Future Amortization Expense
(in thousands)
2026 (remaining 6 months) $ 2,174
2027 4,349
2028 4,349
2029 4,349
2030 4,349
2031 3,301
Thereafter 20,707
Total future amortization expense $ 43,578

Product Technology Rights

The product technology rights are related to the rights to production, supply and distribution agreements of various products.

ADHD Portfolio

The Company has developed product technology rights related to the production and sale of certain ADHD products. The formulations for the ADHD products are protected by patented technology. The estimated remaining economic life of these proprietary product technology rights is 12.2 years.

Pediatric Portfolio

The Company acquired and assumed all rights and obligations pursuant to supply and license agreements and various assignment and release agreements. As a result of the Company’s shifted focus of its commercial efforts on EXXUA the Company recorded a full impairment of these intangible assets, which resulted in impairment expense of $8.3 million being recognized in the fourth quarter of fiscal 2025. Please refer to Note 12 - Fair Value Measurements for further discussion on the fair value measurement of intangible assets.

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Technology Rights

TRRP Proprietary Technology

The Company has time release resin particle (“TRRP”) proprietary technology, which is a proprietary drug delivery technology protected by the Company as a trade secret that allows the Company to modify the drug release characteristics of each of its respective products. The TRRP technology underlines each of the ADHD Portfolio core products and can potentially be used in future product development initiatives as well. The estimated remaining economic life of these proprietary technology rights is 12.2 years.

Commercialization Rights

As part of the Commercialization Agreement for the exclusive commercialization rights of EXXUA in the United States, the Company capitalizes to the carrying value of intangible assets any contingent payments made that are considered a part of the Commercialization Agreement’s total consideration and which are not within the scope of derivative guidance once the contingencies related to these payments are resolved. When the Company capitalizes any future contingent payments to the carrying value of the commercialization rights intangible asset once the contingencies related to any contingent payments are resolved, the Company will adjust the carrying value of the commercialization rights intangible asset on a cumulative catch-up basis as if any additional capitalized amount had been capitalized on the same date that the intangible asset was placed in service. Refer to Note 13 - Commitments and Contingencies for further information about contingencies related to the Commercialization Agreement.

The Company capitalized $3.0 million in the fourth quarter of fiscal 2025 upon the execution of the Commercialization Agreement and capitalized an additional $3.0 million upon the successful launch of EXXUA in the second quarter of fiscal 2026. The commercialization rights were considered placed service upon the launch of EXXUA in the second quarter of fiscal 2026 and will be amortized on a straight-line basis over the estimated useful life of the asset, which is currently estimated to be through September 2030.

Note 8 - Accrued Liabilities

Accrued liabilities consist of the following:

December 31, June 30,
2025 2025
(in thousands)
Accrued savings offers $ 17,481 $ 16,092
Accrued program liabilities 6,299 5,678
Return reserve 6,066 6,811
Accrued customer and product related fees 5,096 4,556
Accrued employee compensation 2,291 3,132
Other accrued liabilities 2,923 1,895
Total accrued liabilities $ 40,156 $ 38,164

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Accrued savings offers represent programs for the Company’s patients covered under commercial payor plans in which the cost of a prescription to such patients is discounted.  Accrued program liabilities include government and commercial rebates. The return reserve represents the Company’s accrual for estimated product returns. Accrued customer and product related fees include accrued expenses and deductions for rebates, wholesaler chargebacks and fees, and other product-related fees and deductions such as royalties for Pediatric Portfolio products, accrued distributor fees, and Medicaid liabilities. Accrued employee compensation includes sales commissions, paid time off earned, accrued payroll and accrued bonus. Other accrued liabilities consist of various other accruals, none of which individually or in the aggregate represent greater than five percent of total liabilities.

Note 9 - Other Liabilities

Other liabilities consist of the following:

December 31, June 30,
2025 2025
(in thousands)
Employee retention credit ^(1)^ $ 3,759 $ 3,759
Operating lease liabilities ^(2)^ 1,171 1,122
Other ^(3)^ 187 193
Fixed payment arrangements ^(4)^ — 3,223
Total other liabilities 5,117 8,297
Less: current portion of other liabilities (216 ) (3,379 )
Total non-current portion of other liabilities $ 4,901 $ 4,918
^(1)^ The $3.8 million Employee Retention Credit (“ERC”) accrual in other non-current liabilities as of December 31, 2025, represents the proceeds the Company received from the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) program during the first quarter of fiscal 2024. When management determines it has reasonable assurance that the Company has substantially met all eligibility requirements of the ERC and following any adjustments from its regulatory audit or upon further clarifications from the IRC, the ERC accrual shall be recognized as a benefit in other income, net in the unaudited consolidated statement of operations.
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^(2)^ The Company has entered into various operating lease agreements for certain of its offices. Please see Note 6 - Leases for further detail.
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^(3)^ Other consists of taxes payable, deferred cost related to the Company’s technology transfer, and various other accruals, none of which individually or in the aggregate represent greater than five percent of total liabilities.
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^(4)^ Fixed payment arrangements represent obligations related to the acquisition of products. As of *September 30, 2025,*the Company had no remaining accrued amount recorded related to fixed payment arrangements.
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Note 10 - Revolving Credit Facility

On June 20, 2025, the Company and certain of its subsidiaries entered into an Amendment No. 6 to Loan and Security Agreement (the “Eclipse Amendment No. 6”) to the loan and security agreement dated October 2, 2019, as amended by Amendment No. 1, dated *March 19, 2021;*Amendment No. 2, dated *January 26, 2022;*Amendment No. 3, dated *June 1, 2022;*Amendment No. 4 dated *March 24, 2023;*and Amendment No. 5 dated *June 12, 2024 (*together the “Eclipse Agreement”), with Eclipse Business Capital LLC (“Eclipse”), as agent, and the lenders party thereto (agent and such lenders, collectively, the “Eclipse Lender”). Under the Eclipse Agreement, the Company has two loan agreements, a term loan (the “Eclipse Term Loan”), which is described further in Note 11 - Debt, and a revolving credit facility (the “Eclipse Revolving Loan”).

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The Eclipse Revolving Loan has a potential maximum borrowing base of $14.5 million at an interest rate of the secured overnight financing rate as administered by the SOFR Administrator (the “SOFR”) plus 4.5%, which was temporarily increased by Eclipse Amendment No. 6. pursuant to a $1.5 million incremental advance at an interest rate of the SOFR plus 5.5% (the “Eclipse Incremental Advance”), with repayment and permanent reduction of the Eclipse Incremental Advance commencing on August 1, 2025, and continuing on the first day of each calendar month thereafter, in an amount equal to $125,000 per month, until the Eclipse Incremental Advance has been reduced to $0. In addition, the Company is required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of the Eclipse Revolving Loan remains subject to a borrowing base and reserve, and availability blockage requirements. The maturity date, as amended, is June 12, 2029, and the effective interest rate of the Eclipse Revolving Loan and the Eclipse Incremental Advance was 8.5% and 9.5%, respectively, as of December 31, 2025, and there was $0.9 million of the Eclipse Incremental Advance remaining.

In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i) 2.0% of the Eclipse Revolving Loan commitment if such event occurs on or before *June 12, 2026, (*ii) 1.0% of the Eclipse Revolving Loan commitment if such event occurs after *June 12, 2026,*but on or before June 12, 2027, and (iii) 0.5% of the Eclipse Revolving Loan commitment if such event occurs after *June 12, 2027,*but on or before June 12, 2029. The Company may also be required to pay an early termination fee related to the Eclipse Term Loan as further described in Note 11 - Debt. The Company may permanently terminate the Eclipse Agreement upon written notice to Eclipse.

The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the Eclipse Agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants and restrict the Company’s ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make asset sales without the prior written consent of Eclipse. A failure to comply with these covenants could permit Eclipse to declare the Company’s obligations under the Eclipse Agreement, together with accrued interest and fees, to be immediately due and payable, plus any applicable additional amounts relating to a prepayment or termination, as described above. As of December 31, 2025, the Company was in compliance with the covenants under the Eclipse Agreement. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as defined further in the Eclipse Agreement.

As of December 31, 2025, there was $0.2 million of unamortized debt issuance costs related to the Eclipse Revolving Loan, which will be amortized straight-line over the term of the loan. Total interest expense on the Eclipse Revolving Loan, including amortization of deferred financing costs, was $0.1 million and less than $0.1 million for the three months ended December 31, 2025, and 2024, respectively, and $0.2 million and $0.1 million for the six months ended December 31, 2025, and 2024, respectively. The outstanding amount drawn on the Eclipse Revolving Loan was $9.1 million as of both  December 31, 2025, and June 30, 2025. The unused Eclipse Revolving Loan amount as of December 31, 2025, was $5.2 million.

Note 11 - Debt

On June 20, 2025, the Company and certain of its subsidiaries entered into Eclipse Amendment No. 6, which provided for among other things, an increase in the Eclipse Term Loan principal amount to $13.0 million on the closing date of the Eclipse Amendment No. 6 and an extension of the maturity date of the Eclipse Term Loan to *June 12, 2029,*as well as certain amendments to the Eclipse Revolving Loan described further in Note 10 - Revolving Credit Facility.

The Eclipse Term Loan incurs interest at a rate of the SOFR plus 7.0%, with a four-year term maturing, as amended, on *June 12, 2029,*and a straight-line loan amortization period of seven years, which would provide for a loan balance at the end of the four-year term of $5.6 million to be repaid on the maturity date of June 12, 2029. The Company used proceeds from the Eclipse Term Loan and a portion of the proceeds from the exercise of warrants to repay a $15.0 million term loan in full, which resulted in the Company recording a loss on extinguishment of debt of $0.6 million in the fourth quarter of fiscal 2024.

In the event that, for any reason, all or any portion of the Eclipse Agreement is terminated prior to the scheduled maturity date, in addition to the payment of all outstanding principal and unpaid accrued interest, the Company is required to pay a fee equal to (i) 3.0% of the Eclipse Term Loan if such event occurs on or before *June 12, 2026, (*ii) 2.0% of the Eclipse Term Loan if such event occurs after *June 12, 2026,*but on or before *June 12, 2027, (*iii) 1.0% of the Eclipse Term Loan if such event occurs after *June 12, 2027,*but on or before June 12, 2028, and (iv) 0.5% of the Eclipse Term Loan if such event occurs after *June 12, 2028,*but on or before June 12, 2029. The Company may also be required to pay an early termination fee related to the Eclipse Revolving Loan as further described in Note 10 - Revolving Credit Facility. The Company may permanently terminate the Eclipse Agreement upon written notice to Eclipse. The Company’s obligations under the Eclipse Agreement are secured by substantially all of the Company’s assets, as further defined in the Eclipse Agreement.

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The Eclipse Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the Eclipse Agreement, including covenants and restrictions that, among other things, require the Company to satisfy certain capital expenditure limitations and other financial covenants and restricts the Company’s ability to incur liens, incur additional indebtedness, make certain dividends and distributions with respect to equity securities, engage in mergers and acquisitions or make certain asset sales without the prior written consent of the Eclipse Lender. A failure to comply with these covenants could permit the Eclipse Lender to declare the Company’s obligations under the agreement, together with accrued interest and fees, to be immediately due and payable, plus any applicable additional amounts relating to a prepayment or termination, as described above. As of December 31, 2025, the Company was in compliance with the covenants under the Eclipse Agreement.

As of December 31, 2025, there was $0.2 million of unamortized debt discount and debt issuance costs related to the Eclipse Term Loan, which will be amortized over the term of the loan. Total interest expense on the Eclipse Term Loan, including debt discount and issuance costs amortization, was $0.4 million for both of the three months ended December 31, 2025, and 2024, and $0.7 million and $0.8 million for the six months ended December 31, 2025, and 2024, respectively. The effective interest rate on the Eclipse Term Loan was 11.2% as of December 31, 2025.

Debt consists of the following:

December 31, June 30,
2025 2025
(in thousands)
Term loan principal amount $ 12,071 $ 13,000
Unamortized debt discount and issuance costs (216 ) (248 )
Total debt 11,855 12,752
Less: current portion of debt (1,857 ) (1,857 )
Total debt, net of current portion $ 9,998 $ 10,895

As of December 31, 2025, the Company’s future Eclipse Term Loan principal payments are as follows:

Future Principal Payments
(in thousands)
2026 (remaining 6 months) $ 928
2027 1,857
2028 1,857
2029 7,429
Total future principal payments 12,071
Less: unamortized debt discount and issuance costs (216 )
Less: current portion of debt (1,857 )
Total debt, net of current portion $ 9,998

Note 12 - Fair Value Measurements

The Company determines the fair value of financial and non-financial assets using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value as follows:

● Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities
● Level 2: Inputs that include quoted prices for similar assets and liabilities in active or inactive markets or that are observable for the asset or liability either directly or indirectly; and
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● Level 3: Unobservable inputs that are supported by little or no market activity.
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The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative warrant liabilities and current and non-current debt. The carrying amounts of certain short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. Current and non-current debt are reported at their amortized costs on the Company’s unaudited consolidated balance sheets. The remaining financial instruments are reported on the Company’s unaudited consolidated balance sheets at amounts that approximate current fair values. The Company’s carrying value of its consolidated amounts of cash and cash equivalents approximate their fair value as of  December 31, 2025, and June 30, 2025, and are categorized within level 1 of the U.S. GAAP fair value hierarchy. The Company’s policy is to recognize transfers in and/or out of fair value hierarchy as of the date in which the event or change in circumstances caused the transfer. There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.

Recurring Fair Value Measurements

The Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of  December 31, 2025, and June 30, 2025, by level within the fair value hierarchy as follows:

Fair Value at Fair Value Measurements at December 31, 2025
December 31, 2025 (Level 1) (Level 2) (Level 3)
(in thousands)
Liabilities:
Derivative warrant liabilities $ 27,337 $ — $ — $ 27,337
Total $ 27,337 $ — $ — $ 27,337
Fair Value at Fair Value Measurements at June 30, 2025
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June 30, 2025 (Level 1) (Level 2) (Level 3)
(in thousands)
Liabilities:
Derivative warrant liabilities $ 26,334 $ — $ — $ 26,334
Total $ 26,334 $ — $ — $ 26,334

Summary of Level 3 Input Changes

A summary of changes to those fair value measures using Level 3 inputs is as follows:

Derivative
Warrant Liabilities
(in thousands)
Balance as of June 30, 2025 $ 26,334
Settlements ^(1)^ (3,457 )
Included in earnings 4,460
Balance as of December 31, 2025 $ 27,337
^(1)^ Relates to the exercise of 1,485,000 prefunded warrants during the six months ended December 31, 2025, which were liability classified and exercised at a price of $0.0001 per share.
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Significant Assumptions

The valuation methodologies and key assumptions used for the mark to market fair value measurements of derivative warrant liabilities as of December 31, 2025, are as follows:

June 2023 Tranche A Warrants Warrants Other ^(1)^
Monte Carlo & Black-Scholes Black-Scholes
Aytu closing stock price $ 2.60 $ 2.60
Equivalent term (years) 2.4 1.1-1.7
Expected volatility 72.8% 73.6%-82.7%
Risk-free rate 3.5% 3.5%
Dividend yield 0.0% 0.0%
^(1)^ Includes all liability classified warrants and prefunded warrants except the June 2023 Tranche A Warrants (see Note 16 - Warrants for further information).
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Note 13 - Commitments and Contingencies

EXXUA Exclusive Commercialization Agreement

On June 5, 2025, the Company entered into the Commercialization Agreement with Fabre-Kramer, pursuant to which the Company acquired certain rights and obligations in connection with the commercialization of EXXUA in the United States. As consideration for the Commercialization Agreement, the Company made an upfront cash payment of $3.0 million to Fabre-Kramer in June 2025, which was capitalized as a definite-lived intangible asset (see Note 7 - Intangible Assets for further detail). The Company has agreed to make a second $3.0 million payment in the third quarter of fiscal 2027 (the “Second Payment”), which is 45 days from the one-year anniversary of the first product launch of EXXUA in the United States. The Second Payment may be increased to $5.0 million if first year EXXUA net revenue meets or exceeds $35.0 million. Additionally, the Company has agreed to pay Fabre-Kramer certain milestone payments ranging from $5.0 million to over $100.0 million per year based on sales milestones after a certain level of net revenue are achieved with a threshold of $100.0 million in net revenue and the Company will pay 10% of net revenue exceeding $1.0 billion. The Company has also agreed to pay royalty fees throughout the term of the Commercialization Agreement based on the Company’s net revenue of EXXUA as follows: (i) initially 28% of net revenue and increasing to 39% if net revenue exceeds $300.0 million in any year during the term until such net revenue reaches a reduced royalty trigger; and (ii) after reaching such royalty trigger, 24.5% and increasing to 35.5% if net revenue exceeds $300.0 million in any year during the term. The Company will also pay a supply price of 3% of net revenue less its cost of goods sold, increasing to 4% of net revenue if annual net revenue exceeds $300.0 million. The Commercialization Agreement also contains customary clauses for pharmaceutical commercialization agreements, including, among others, post-marketing obligations, regulatory matters, and indemnification.

The Commercialization Agreement can be terminated at any time upon mutual agreement between the Company and Fabre-Kramer. Either party can terminate the Commercialization Agreement at any time upon written notice for a material default or breach if the material default or breach is not cured within (1) 90 days after written notice or (2) in the case of a breach that cannot be cured within 90 days, within a reasonable period not exceeding 120 days after written notice. Additionally, either party can terminate the Commercialization Agreement at any time upon writing notice if (1) either party withdraws EXXUA from the market in the United States for safety reasons or (2)(i) the FDA materially restricts the indications for EXXUA, or (ii) federal or state pricing controls are imposed that would result in obvious or substantial loss of sales for EXXUA.

Pediatric Portfolio

The Company has the exclusive right to distribute and sell certain legacy products in the United States from agreements signed by the Company. The initial term of the agreement was 20 years. The Company pays Tris a royalty equal to 23.5% of net revenue from one of the products.

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Legal Matters

Granules Paragraph IV

On  October 31, 2024, the Company received a Paragraph IV Certification Notice Letter (the “Notice Letter”) from Granules Pharmaceuticals, Inc. (“Granules”), stating that it intends to market a generic version of Adzenys XR-ODT® (amphetamine) extended-release orally disintegrating tablets (“Adzenys”) before the expiration of all patents currently listed in the FDA’s publication of approved drug products with therapeutic equivalence evaluations (the “Orange Book”). The Notice Letter stated that Granules’ abbreviated new drug application (“ANDA”) for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. On December 11, 2024, the Company filed a patent infringement lawsuit against Granules, which triggered a stay precluding the FDA from approving Granules’ ANDA for a generic version of Adzenys for up to 30 months or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first. On January 7, 2025, Granules submitted an answer to the complaint. On June 27, 2025, the Court entered a Stipulation And Order Regarding Infringement finding that the submission of Granules’ ANDA infringed multiple claims in each of the Company’s asserted patents. On October 28, 2025, the case was reassigned to visiting judge, Judge Jennifer Choe-Groves of the United States Court of International Trade. The case is ongoing. The trial date has been moved to January 11, 2027. The Company plans to continue vigorously enforcing its intellectual property rights related to Adzenys.

Revive Investing

The Company had been named as a nominal plaintiff in a lawsuit by two shareholders against Armistice Capital Master Fund, Ltd (“Armistice”), entitled Revive Investing, LLC. et al v. Armistice Master Fund, Ltd. et al, Case 1:20-cv-02849-CMA-TPO, in the United States District Court for the District of Colorado, contending that Armistice was liable for short swing trading profits in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, for certain trades it made in Company stock in 2019 and 2020 and must disgorge those profits to the Company. That matter proceeded to trial before a jury, which on January 29, 2025, returned a verdict finding no liability. On March 6, 2025, the plaintiffs filed an appeal in the United States Court of Appeals for the Tenth Circuit. As with the original case, regardless of the outcome, this case will not have a materially adverse effect upon the Company’s financial condition, results of operations, or cash flows.

Note 14 - Stockholders’ Equity

The Company has 50.0 million shares of preferred stock authorized with a par value of $0.0001 per share and no preferred shares issued and outstanding. The Company has 200.0 million shares of common stock authorized with a par value of $0.0001 per share and as of December 31, 2025, the Company had 10,733,208 shares of common stock issued and outstanding. As of December 31, 2025, included in common stock outstanding are 223,092 shares of unvested restricted stock issued to directors and employees.

On September 26, 2024, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024. This shelf registration statement covers the offering, issuance and sale by the Company of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants, rights and units (the “2024 Shelf”). Through the filing date of this report, $100.0 million remains available under the 2024 Shelf. This availability is subject to the SEC’s “baby shelf” limitation as set forth in SEC Instruction I.B.6 limitation to the Form S-3.

In June 2025, the Company raised gross proceeds of $16.6 million from the issuance of (i) 2,806,688 shares of its common stock, at a public offering price of $1.50 (the “June 2025 Common Stock”), and 8,233,332 prefunded warrants at a public offering price of $1.4999 to purchase 8,233,332 shares of its common stock at an exercise price of $0.0001 per share (the “June 2025 Prefunded Warrants”). The Company received $14.8 million in proceeds net of underwriting commissions and offering expenses and intends to use the net proceeds from the offering for working capital, general corporate purposes and the commercialization EXXUA. See Note 16 - Warrants for further detail.

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Note 15 - Equity Incentive Plan

2023 Equity Incentive Plan

On May 18, 2023, the Company’s stockholders approved the adoption of the Aytu BioPharma, Inc. 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”), which replaced all previous plans. For the 2023 Equity Incentive Plan, the stockholders approved (a) 200,000 new shares; (b) 87,155 shares “rolled over” to the 2023 Equity Incentive Plan from plans replaced by the 2023 Equity Incentive Plan; and (c) any shares that are returned to the Company under plans replaced by the 2023 Equity Incentive Plan to be added to the 2023 Equity Incentive Plan. On May 21, 2025, the Company’s stockholders approved an amendment (the “Plan Amendment”) to the 2023 Equity Incentive Plan. The Plan Amendment increased the number of shares reserved for issuance under the 2023 Equity Incentive Plan by 300,000 shares to bring the total number of shares reserved for issuance under the 2023 Equity Incentive Plan to 500,000 shares, not including unissued shares from available awards under prior plans or any returned shares. The Plan Amendment became effective immediately upon approval by the Company’s stockholders and the Company registered the 300,000 shares pursuant to a registration statement on Form S-8 filed with the SEC on September 23, 2025. With the approval of the 2023 Equity Incentive Plan, no additional awards will be granted under any previous plans. All outstanding awards previously granted under previous stock incentive plans will remain outstanding and subject to the terms of the plans.

Stock options granted under the 2023 Equity Incentive Plan and previous plans typically have contractual terms of 10 years or less from the grant date and a vesting period ranging from one to four years. The restricted stock and restricted stock units granted under the 2023 Equity Incentive Plan typically have a vesting period of three to four years and restricted stock, and restricted stock units granted from previous plans typically have a vesting period ranging from four to 10 years and four years, respectively. As of December 31, 2025, the Company had 132,314 shares available for grant under the 2023 Equity Incentive Plan.

Stock Options

Stock option activity during the six months ended December 31, 2025, is as follows:

**** Weighted
**** Average
**** Weighted Remaining
Number of Average Contractual
Options Exercise Price Life in Years
Outstanding at June 30, 2025 211,618 $ 4.51 8.3
Forfeited/cancelled (1,382 ) $ 1.81 —
Expired (4,818 ) $ 9.68 —
Outstanding at December 31, 2025 205,418 $ 4.41 7.9
Exercisable at December 31, 2025 138,042 $ 5.67 7.5

During the six months ended  December 31, 2025, the Company did not grant any stock options. As of  December 31, 2025, there was $0.1 million of total unrecognized compensation cost related to non-vested stock options granted by the Company, which is expected to be recognized over a weighted-average period of 1.6 years.

Restricted Stock

Restricted stock activity under the 2023 Equity Incentive Plan during the three months ended December 31, 2025, is as follows:

**** Weighted
**** Average Grant
Number of Date Fair
Shares Value
Unvested at June 30, 2025 32,912 $ 69.81
Granted 276,295 $ 1.92
Vested (81,119 ) $ 1.97
Forfeited/cancelled (5,000 ) $ 1.90
Unvested at December 31, 2025 223,088 $ 11.92

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During the six months ended  December 31, 2025, the Company granted 276,295 shares of restricted stock under the Company's 2023 Equity Incentive Plan with a weighted average grant date fair value of $1.92 per share. As of  December 31, 2025, there was $0.9 million of total unrecognized compensation costs related to non-vested restricted stock granted under the 2023 Equity Incentive Plan, which is expected to be recognized over a weighted-average period of 2.4 years.

As of  December 31, 2025, there were four shares of unvested restricted stock that were granted outside of equity compensation plans approved by security holders, which had $0.1 million of total unrecognized compensation costs and is expected to be recognized over a weighted-average period of 0.5 years.

Restricted Stock Units

There were no remaining unvested restricted stock units as of June 30, 2025, and the Company did not grant any restricted stock units during both the six months December 31, 2025, and 2024.

Stock-Based Compensation Expense

Stock-based compensation expense related to the fair value of stock options, restricted stock and restricted stock units were included in the unaudited consolidated statements of operations as set forth in the below table:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 2025 2024
(in thousands)
Cost of goods sold $ — $ — $ — $ 1
Research and development — 1 — 3
Selling and marketing 8 14 12 46
General and administrative 275 136 385 274
Total stock-based compensation expense $ 283 $ 151 $ 397 $ 324

Note 16 - Warrants

The Company has engaged in several different types of equity financings throughout its history, some of which have resulted in the Company issuing warrants and prefunded warrants. Equity classified warrants are valued using a Black-Scholes option pricing model at issuance and are not remeasured. The Company had no remaining equity classified warrants outstanding as of December 31, 2025. Liability classified warrants are carried at fair value using either the Black-Scholes option pricing model or the Monte Carlo simulation model. Changes in the fair value of liability classified warrants in subsequent periods are recorded as a gain or loss on remeasurement and reported as a component of cash flows from operations. Outstanding warrants that are classified as derivative warrant liabilities in the unaudited consolidated balance sheets are marked to market at each reporting period, with the change in fair value recorded as a gain or loss on remeasurement and reported as a component of cash flows from operations. (see Note 12 - Fair Value Measurements for further detail).

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The number of warrants and prefunded warrants outstanding as of  December 31, 2025, all of which are liability classified, is as follows:

Remaining
Number Exercise Contractual
Description Outstanding Price Life in Years ^(6)^ Type
January 2022 Warrants ^(1)^ 122,092 $ 8.60 1.1 Warrant
March 2022 Warrants ^(1)^ 333,300 $ 26.00 1.7 Warrant
August 2022 Warrants ^(1)^ 1,191,811 $ 2.32 1.6 Warrant
June 2023 Tranche A Warrants ^(2)^ 2,173,912 $ 1.59 2.5 Warrant
June 2023 Tranche B Prefunded Warrants ^(3)^ 1,630,434 $ 0.0001 N/A Prefunded Warrant
June 2023 Prefunded Warrants ^(4)^ 430,217 $ 0.0001 N/A Prefunded Warrant
June 2025 Prefunded Warrants ^(5)^ 6,748,332 $ 0.0001 N/A Prefunded Warrant
Total outstanding 12,630,098
^(1)^ Each of these warrants is exercisable at any time for one share of the Company’s common stock on a one-for-one basis under the terms of the agreements between the Company and the investors.
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^(2)^ In June 2023, the Company issued these tranche A warrants to purchase 2,173,912 shares of common stock (the “June 2023 Tranche A Warrants”), which may be exercised on a one-for-one basis at any time subject to certain limitations as defined in the agreements between the Company and the investors, for either shares of common stock at an exercise price of $1.59 per share or for prefunded warrants at an exercise price of $1.5899 per prefunded warrant to purchase common stock at a future exercise price of $0.0001 per share. The June 2023 Tranche A Warrants will expire upon the earlier of June 2028 or 30 days following the closing price of the Company’s common stock equaling 200% of the exercise price ($3.18 per share) for at least 40 consecutive trading days.
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^(3)^ In June 2024, certain warrants were exercised, generating proceeds of $3.5 million, into 367,478 shares of common stock and 1,806,434 prefunded warrants to purchase shares of common stock with an exercise price of $0.0001 per share (the “June 2023 Tranche B Prefunded Warrants”), and may be exercised at any time subject to certain limitations as defined in the agreements between the Company and the investors on a one-for-one basis. The June 2023 Tranche B Prefunded Warrants had a fair value of approximately $5.1 million at issuance and are classified as derivative warrant liabilities. In the first quarter of fiscal 2025 176,000 of the  June 2023 Tranche B Prefunded Warrants were exercised to 176,000 shares of common stock.
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^(4)^ Each of these prefunded warrants is exercisable at any time for one share of the Company’s common stock on a one-for-one basis under the terms of the agreements between the Company and the investors.
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^(5)^ In June 2025, the Company raised gross proceeds of $16.6 million from the issuance of the June 2025 Common Stock and the June 2025 Prefunded Warrants. The June 2025 Prefunded Warrants may be exercised on a one-for-one basis at any time subject to certain limitations as defined in the agreements between the Company and the investors. The June 2025 Prefunded Warrants had a fair value of approximately $12.3 million at issuance and are classified as derivative warrant liabilities. There was $1.3 million of issuance costs allocated to the June 2025 Prefunded Warrants. See Note 12 - Fair Value Measurements and Note 14 - Stockholders’ Equity for further detail.
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^(6)^ All of the Company’s prefunded warrants do not have an expiration date.
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A summary of warrant activity, excluding prefunded warrants, during the six months ended  December 31, 2025, is as follows:

**** Weighted-
**** Average
**** Weighted- Remaining
Number of Average Contractual
Warrants Exercise Price Life in Years
Outstanding June 30, 2025 ^(1)^ 3,836,686 $ 4.76 2.6
Equity classified warrants expired (15,571 ) N/A N/A
Outstanding December 31, 2025 ^(2)^ 3,821,115 $ 4.17 2.1
^(1)^ The number of warrants, excluding prefunded warrants, outstanding as of June 30, 2025, is comprised of 3,821,115 liability classified warrants and 15,571 equity classified warrants.
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^(2)^ The number of warrants, excluding prefunded warrants, outstanding as of December 31, 2025, is comprised of 3,821,115 liability classified warrants and zero equity classified warrants.
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A summary of prefunded warrant activity during the six months ended  December 31, 2025, is as follows:

Number of Weighted-
Prefunded Average
Warrants Exercise Price
Outstanding June 30, 2025 10,293,983 $ 0.0001
Prefunded warrants exercised ^(1)^ (1,485,000 ) $ 0.0001
Outstanding December 31, 2025 8,808,983 $ 0.0001
^(1)^ During the six months ended December 31, 2025, a total of 1,485,000 of the  June 2025 Prefunded Warrants were exercised to 1,485,000 shares of common stock. See Note 12 - Fair Value Measurementsfor further detail.
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Note 17 - Earnings Per Share

Basic net income or loss per share is calculated by dividing net income or loss available to common stockholders by the basic weighted-average number of common shares outstanding for the respective period. Diluted net income or loss per share is calculated by dividing adjusted net income or loss by the diluted weighted-average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist of warrants to purchase common stock that are either liability classified or equity classified, stock options, unvested restricted stock and unvested restricted stock units (see Note 15 - Equity Incentive Plan and Note 16 - Warrants for further detail). If the Company’s adjusted numerator for net income from continuing operations divided by the diluted weighted-average number of common shares outstanding for each potentially dilutive security was greater than the net income from continuing operations per share, then the Company did not include those common equivalent shares in the computation of diluted net income or loss from continuing operations per share; diluted net income or loss from discontinued operations, net of tax; or diluted net income or loss per share because the effect would have been anti-dilutive.

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The following is a reconciliation of the numerator and the denominator used in the basic per share calculations:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 2025 2024
(in thousands, except share and per share data)
BASIC **** ****
Numerators:
Net (loss) income from continuing operations $ (10,584 ) $ 665 $ (8,619 ) $ 1,758
Net income from discontinued operations, net of tax — 123 — 504
Net (loss) income $ (10,584 ) $ 788 $ (8,619 ) $ 2,262
Denominator:
Basic weighted-average common shares outstanding 10,036,359 6,132,060 9,738,716 6,100,204
Basic per share calculations:
Net (loss) income per share from continuing operations $ (1.05 ) $ 0.11 $ (0.89 ) $ 0.29
Net income per share from discontinued operations, net of tax $ — $ 0.02 $ — $ 0.08
Net (loss) income per share $ (1.05 ) $ 0.13 $ (0.89 ) $ 0.37

The following is a reconciliation of the numerator and the denominator used in the diluted per share calculations:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 2025 2024
(in thousands, except share and per share data)
DILUTED **** **** **** ****
Numerators:
Adjusted numerator - net loss from continuing operations ^(1)^ $ (10,584 ) $ (2,351 ) $ (8,619 ) $ (4,138 )
Net income from discontinued operations, net of tax — 123 — 504
Net loss $ (10,584 ) $ (2,228 ) $ (8,619 ) $ (3,634 )
Denominator:
Basic weighted-average common shares outstanding 10,036,359 6,132,060 9,738,716 6,100,204
Dilutive effect of warrants to purchase common stock — 2,342,087 — 2,669,216
Dilutive effect of unvested restricted stock and restricted stock units — 10,965 — 13,374
Diluted weighted-average common shares outstanding 10,036,359 8,485,112 9,738,716 8,782,794
Diluted per share calculations:
Net loss per share from continuing operations $ (1.05 ) $ (0.28 ) $ (0.89 ) $ (0.47 )
Net income per share from discontinued operations, net of tax $ — $ 0.01 $ — $ 0.06
Net loss per share $ (1.05 ) $ (0.26 ) $ (0.89 ) $ (0.41 )
^(1)^ The net (loss) income from continuing operations numerator has been adjusted to remove a gain of $3.0 million and $5.9 million for the three and six months ended December 31, 2024, respectively, due to the changes in fair value of certain warrant liabilities.
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The following table sets forth securities that could be considered anti-dilutive, and therefore are excluded from the calculation of diluted weighted-average common shares outstanding and related per share calculations:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 2025 2024
Warrants to purchase common stock - liability classified (note 16) 12,630,098 3,539,679 12,630,098 3,212,550
Warrants to purchase common stock - equity classified (note 16) — 18,114 — 18,114
Weighted-average of warrants exercised to common stock (note 16) 466,284 — 713,175 —
Outstanding stock options (note 15) 205,418 221,392 205,418 221,392
Unvested restricted stock (note 15) 223,092 25,291 223,092 22,882
Unvested restricted stock units (note 15) — 512 — 565
Total anti-dilutive securities 13,524,892 3,804,988 13,771,783 3,475,503

Note 18 - License Agreements

Teva

On December 21, 2018, the Company and Teva Pharmaceuticals USA, Inc. (“Teva”) entered into an agreement granting Teva a non-exclusive license to certain patents owned by Neos by which Teva has the right to manufacture and market its generic version of one of the Company’s ADHD products under an abbreviated new drug application (“ANDA”) filed by Teva beginning on July 1, 2026, or earlier under certain circumstances. The ANDA was approved by the FDA on June 19, 2020.

Actavis

On October 17, 2017, the Company entered into an agreement granting Actavis Laboratories FL, Inc. (“Actavis”) (which is now owned by Teva Pharmaceutical Industries Limited) a non-exclusive license to certain patents owned by the Company by which Actavis has the right to manufacture and market its generic version of one of the Company’s ADHD products under its ANDA beginning on September 1, 2025. The ANDA was approved by the FDA on June 22, 2023. Teva launched a generic version of this ADHD product late in the second quarter of fiscal 2026.

Note 19 - Restructuring Costs

As part of the Company’s previously announced restructuring activities related to the wind down and divestiture of the Consumer Health business and the closure of the Grand Prairie, Texas manufacturing site, the Company has incurred expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee benefit costs as well as other direct separation benefit costs, right of use asset impairment charges, fixed asset and other asset impairment charges, accelerated depreciation of fixed assets, contract termination costs, and inventory write-downs. Severance and employee benefit costs primarily relate to cash severance. Restructuring costs associated with the Consumer Health business are recorded within the net income from discontinued operations, net of tax in the unaudited consolidated financial statement of operations (see Note 20 - Discontinued Operations).

The expense associated with the closure of the Grand Prairie, Texas manufacturing site such as severance and employee benefits and exit and disposal activities are included in restructuring costs in the unaudited consolidated statements of operations. There were no inventory write-downs associated with this closure. The Company incurred costs associated with exit and disposal activities related to its previously announced operational realignment and related costs of zero and $1.3 million for the three months ended December 31, 2025, and 2024, respectively, and zero and $2.1 million for the six months ended December 31, 2025, and 2024, respectively. The Company does not expect to incur additional significant restructuring costs.

Note 20 - Discontinued Operations

On July 31, 2024, after the wind down of operations, the Company entered into a definitive agreement to divest its Consumer Health business to a private, e-commerce focused company. The divested business encompassed the established e-commerce platform, certain inventory and associated consumer brands, intellectual property, external workforce and contracts, and provided for the Company to receive contingent consideration payments on certain future sales of former Consumer Health business products.

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The accounting requirements for reporting the Consumer Health business as a discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, the accompanying unaudited consolidated financial statements for all periods presented reflect this business as a discontinued operation. There were no assets or liabilities classified as discontinued operations on the accompanying unaudited consolidated balance sheets as of  December 31, 2025, and June 30, 2025. The Company elected to record the contingent consideration portion of the arrangement when the consideration was determined to be realizable and, therefore, the Company did not record a contingent consideration asset at the transaction date.

There was no income from discontinued operations for the three and six months ended  December 31, 2025. The key components of income from discontinued operations, net of tax for the three and six months ended December 31, 2024, were as follows:

Three Months Ended Six Months Ended
December 31, 2024 December 31, 2024
(in thousands)
Net revenue $ — $ 717
Cost of goods sold — (358 )
Selling and marketing — (155 )
General and administrative — (7 )
Recognized contingent consideration 175 587
Loss on divestiture — (254 )
Income from discontinued operations before income taxes 175 530
Income tax expense (52 ) (26 )
Net income from discontinued operations, net of tax $ 123 $ 504

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with the Company’s 2025 Form 10-K. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. For additional information regarding these risks and uncertainties, please see the risk factors included in the Company’s 2025 Form 10-K, and in Part II, Item 1A of this Form 10-Q.

Objective

The purpose of the Management’s Discussion and Analysis (the “MD&A”) is to present information that management believes is relevant to an assessment and understanding of our results of operations for the three and six months ended December 31, 2025, our cash flows for the six months ended December 31, 2025, and our financial condition as of December 31, 2025. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and notes thereto.

Overview

We are a pharmaceutical company focused on advancing innovative medicines for complex CNS system diseases to improve the quality of life for patients. Our strategy is to become a leading pharmaceutical company that improves the lives of patients. We use a focused approach of in-licensing, acquiring, developing and commercializing novel prescription therapeutics in order to continue building our portfolio of revenue-generating products and leveraging our commercial team’s expertise to build leading brands within large therapeutic markets. In June 2025, we entered into the Commercialization Agreement with Fabre-Kramer to commercialize EXXUA in the United States. Gepirone is a new chemical entity and EXXUA is a novel first-in-class selective serotonin 5HT1a receptor agonist and is approved by the FDA for the treatment of MDD in adults.

EXXUA has been extensively studied in over 5,000 patients and represents a new class of therapeutics to compete in the over $22 billion United States prescription MDD market. We believe EXXUA can become a very important treatment option for the estimated 21 million Americans affected by MDD. Over 340 million antidepressant prescriptions were written in 2024 in the United States, yet significant unmet needs remain considering the unacceptable side effects associated with current therapeutics. Importantly, we believe that EXXUA is the only antidepressant acting on serotonin receptors that does not carry a label warning about the risk of sexual dysfunction. The mechanism of the antidepressant effect of EXXUA is believed to be related to its modulation of serotonin activity and, specifically, its exclusive and strong binding affinity for 5HT1a receptors, which are key regulators of mood and emotion. EXXUA is not a Selective Serotonin Reuptake Inhibitors (“SSRI”) or a Serotonin-Norepinephrine Reuptake Inhibitors (“SNRI”) and has no reuptake inhibition activity. EXXUA also exhibits no significant adverse effects on weight, blood pressure, heart rate or liver function. We successfully launched EXXUA in the second quarter of fiscal 2026 as the centerpiece of our commercial efforts. It is our expectation that EXXUA has the potential to serve as a major growth catalyst for us.

In addition, we will continue to commercialize innovative prescription products that address other CNS conditions, including ADHD. We are focusing our efforts on accelerating the growth of our commercial business and achieving positive operating cash flows. To achieve these goals, we indefinitely suspended active development of our clinical development programs and have wound down and divested unprofitable operations. In the first quarter of fiscal 2025 we completed the previously announced wind down and divestiture of our Consumer Health business and now operate our business as a single operating and reporting segment. The accounting requirements for reporting the Consumer Health business as a discontinued operation were met when the wind down and divestiture was completed on July 31, 2024. Accordingly, our unaudited consolidated financial statements for all periods presented reflect the Consumer Health business as a discontinued operation.

Our business from continuing operations is focused on the commercialization of our prescription pharmaceutical products sold primarily through third party wholesalers, distributors and pharmacies and which primarily consists of three product portfolios. The first consists of EXXUA for the treatment of MDD; the second, the ADHD Portfolio, consists of products for the treatment of ADHD; and the third, the Pediatric Portfolio, consists of a line of legacy products. We contract with CMOs for the manufacture and testing of all of our products.

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We have entered into two international exclusive collaboration, distribution and supply agreements to commercialize certain of our ADHD products. The first agreement is with Medomie, a privately owned pharmaceutical company, which will commercialize the ADHD products in Israel and the Palestinian Authority. The second agreement is with Lupin, a subsidiary of global pharmaceutical company Lupin Limited, which will commercialize the ADHD products in Canada. We will supply the ADHD products to Medomie and Lupin based on forecasts and provide various product commercialization, regulatory and quality assurance resources. Medomie and Lupin are responsible for seeking local regulatory approvals and marketing authorizations for the ADHD products, which is expected to occur over the next 18 to 24 months.

In light of our own business activities and external developments in the biotechnology and biopharmaceutical industries, Aytu management and our Board of Directors regularly reviews our performance, prospects and risks such as the potential impact to our business resulting from our competitive landscape (i.e., entry of generic competitors, payor pressures, new branded entrants, etc.). These reviews have included consideration of potential partnerships, collaborations, and other strategic transactions such as acquisitions or divestitures of programs or technology to enhance stockholder value. Aytu management and our Board expect to continue to evaluate potential strategic transactions and business combinations.

Business Environment

We continue to experience inflationary pressures and economic uncertainty caused by global geopolitical factors, trade wars and tariffs, and our industry is currently encountering supply chain disruptions related to the sourcing of raw materials, increased costs of materials as result of tariffs, energy, logistics and labor for a number of reasons, including ongoing geopolitical events. It is possible that trade wars and economic or political policies could adversely affect some of our markets and suppliers, economic and financial markets, costs and availability of energy and materials, or cause further supply chain disruptions. Inflationary pressures, increased costs and supply chain disruptions could be significant across the business throughout fiscal 2026 and into fiscal 2027. Understanding these risks, we have not experienced stock outages for our ADHD products since the launch of those products.

In October 2024, we received the Notice Letter from Granules, stating that it intends to market a generic version of Adzenys before the expiration of all patents currently listed in the Orange Book. The Notice Letter stated that Granules’ ANDA for the generic version of Adzenys contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic version of Adzenys. We timely filed a patent infringement lawsuit on December 11, 2024, against Granules to trigger a stay precluding the FDA from approving Granules’ ANDA for a generic version of Adzenys for up to 30 months or entry of judgment holding the patents invalid, unenforceable, or not infringed, whichever occurs first. On January 7, 2025, Granules submitted an answer to the complaint. On June 27, 2025, the Court entered a Stipulation And Order Regarding Infringement finding that the submission of Granules’ ANDA infringed multiple claims in each of our asserted patents. On October 28, 2025, the case was reassigned to visiting judge, Judge Jennifer Choe-Groves of the United States Court of International Trade. The case is ongoing. The trial date has been moved to January 11, 2027. We plan to continue vigorously enforcing our intellectual property rights related to Adzenys.

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Results of Operations

The results of operations for the three and six months ended December 31, 2025, compared to the three and six months ended December 31, 2024, is as follows:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 Change 2025 2024 Change
(in thousands)
Net revenue $ 15,165 $ 16,221 $ (1,056 ) $ 29,053 $ 32,795 $ (3,742 )
Cost of goods sold 5,541 5,435 106 10,243 10,024 219
Gross profit 9,624 10,786 (1,162 ) 18,810 22,771 (3,961 )
Operating expenses:
Selling and marketing 5,998 5,272 726 11,320 10,931 389
General and administrative 5,070 4,449 621 9,994 9,574 420
Research and development — 522 (522 ) — 948 (948 )
Amortization of intangible assets 526 921 (395 ) 970 1,842 (872 )
Restructuring costs — 1,317 (1,317 ) — 2,101 (2,101 )
Total operating expenses 11,594 12,481 (887 ) 22,284 25,396 (3,112 )
Loss from operations (1,970 ) (1,695 ) (275 ) (3,474 ) (2,625 ) (849 )
Other income, net 190 140 50 391 682 (291 )
Interest expense (560 ) (1,079 ) 519 (1,076 ) (2,073 ) 997
Derivative warrant liabilities (loss) gain (8,244 ) 3,016 (11,260 ) (4,460 ) 5,896 (10,356 )
(Loss) income from continuing operations before income tax expense (10,584 ) 382 (10,966 ) (8,619 ) 1,880 **** (10,499 )
Income tax benefit (expense) — 283 (283 ) — (122 ) 122
Net (loss) income from continuing operations (10,584 ) 665 (11,249 ) (8,619 ) 1,758 **** (10,377 )
Net income from discontinued operations, net of tax — 123 (123 ) — 504 (504 )
Net (loss) income $ (10,584 ) $ 788 $ (11,372 ) $ (8,619 ) $ 2,262 **** $ (10,881 )

Net Revenue by Product Portfolio

Net revenue disaggregated by product portfolios for the three and six months ended December 31, 2025, compared to the three and six months ended December 31, 2024, is as follows:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 Change 2025 2024 Change
(in thousands)
EXXUA $ 241 $ — $ 241 $ 241 $ — $ 241
ADHD Portfolio 13,216 13,816 (600 ) 26,372 29,080 (2,708 )
Pediatric Portfolio 1,689 2,400 (711 ) 2,404 3,693 (1,289 )
Other 19 5 14 36 22 14
Total net revenue $ 15,165 $ 16,221 $ (1,056 ) $ 29,053 $ 32,795 $ (3,742 )

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During the three months ended December 31, 2025, net revenue decreased by $1.1 million, or 7%, compared to the same period ended December 31, 2024, primarily due to a broader deemphasis in marketing towards the ADHD Portfolio and the Pediatric Portfolio as our marketing efforts have shifted towards EXXUA, which is now the centerpiece of our commercial efforts. These decreases were partially offset by a $0.2 million increase related to the successful new product launch of EXXUA in the second quarter of fiscal 2026.

During the six months ended December 31, 2025, net revenue decreased by $3.7 million, or 11%, compared to the same period ended December 31, 2024, primarily due to a $3.3 million increase in net revenue in the first quarter of fiscal 2025 related to a decrease in estimated variable consideration as a result of successful negotiations with a vendor.

Gross Profit

Gross profit and gross profit percentage for the three and six months ended December 31, 2025, compared to the three and six months ended December 31, 2024, is as follows:

Three Months Ended Six Months Ended
December 31, December 31,
2025 2024 Change 2025 2024 Change
(in thousands, except gross profit percentage)
Gross profit $ 9,624 $ 10,786 $ (1,162 ) $ 18,810 $ 22,771 $ (3,961 )
Gross profit percentage 63 % 66 % (3 )% 65 % 69 % (5 )%

During the three months ended December 31, 2025, gross profit decreased by $1.2 million, or 11%, compared to the same period ended December 31, 2024. Gross profit percentage was 63% for the three months ended December 31, 2025, compared to 66% for the same period ended December 31, 2024. The decrease in gross profit percentage is primarily related to a $1.1 million decrease in net revenue driven by a broader deemphasis in marketing towards the ADHD Portfolio and the Pediatric Portfolio as our marketing efforts have shifted towards EXXUA and a $0.8 million inventory write-down recorded to cost of goods sold primarily resulting from a shift from our Adzenys branded products to the Adzenys generic products.

During the six months ended December 31, 2025, gross profit decreased by $4.0 million, or 17%, compared to the same period ended December 31, 2024. Gross profit percentage was 65% for the six months ended December 31, 2025, compared to 69% for the same period ended December 31, 2024. This decrease in gross profit percentage is primarily related to a $3.3 million increase in net revenue in the first quarter of fiscal 2025 related to a decrease in estimated variable consideration as a result of successful negotiations with a vendor as well as a $1.1 million inventory write-down recorded to cost of goods sold primarily resulting from a shift from our Adzenys branded products to the Adzenys generic products.

Selling and Marketing

During the three and six months ended December 31, 2025, selling and marketing expense increased by $0.7 million, or 14% and $0.4 million, or 4% compared to the same periods ended December 31, 2024, primarily driven by increases in labor, service costs and EXXUA launch costs.

General and Administrative

During the three and six months ended December 31, 2025, general and administrative expense increased by $0.6 million, or 14% and $0.4 million, or 4% compared to the same periods ended December 31, 2024, primarily driven by increases in labor, service costs and EXXUA launch costs, partially offset by improved operational efficiencies such as reduced facilities expense.

Research and Development

During the three and six months ended December 31, 2025, there was no research and development expense compared to $0.5 million and $0.9 million for the same periods ended December 31, 2024, respectively, primarily driven by our previously announced suspension of our development programs to focus on our commercial operations resulting in a decrease in research and development spending.

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Amortization of Intangible Assets

During the three and six months ended December 31, 2025, amortization expense of intangible assets, excluding amounts included in cost of goods sold, decreased by $0.4 million, or 43% and $0.9 million, or 47% compared to the same periods ended December 31, 2024, respectively, primarily due to impairments of certain intangible assets recorded in fiscal 2025, partially offset by increased amortization expense from new intangible assets placed into service upon the launch of EXXUA in the second quarter of fiscal 2026.

Restructuring Costs

During the three and six months ended December 31, 2025, we incurred zero restructuring costs compared to $1.3 million and $2.1 million during the same periods ended December 31, 2024, respectively. Restructuring costs during the first half of fiscal 2025 related to our previously announced operational realignment and related costs, which was completed during fiscal 2025.

Other Income, Net

During the three and six months ended December 31, 2025, other income, net was relatively consistent compared to the same periods ended December 31, 2024.

Interest Expense

During the three and six months ended December 31, 2025, interest expense decreased by $0.5 million, or 48% and $1.0 million, or 48% compared to the same periods ended December 31, 2024, respectively, primarily due to the paydown of our fixed payment arrangements.

Derivative Warrant Liabilities (Loss) Gain

The fair value of derivative warrant liabilities is calculated using either the Black-Scholes option pricing model or the Monte Carlo simulation model and is revalued at each reporting period, and changes are reflected through income or expense. For the three and six months ended December 31, 2025, we recognized a loss of $8.2 million and $4.5 million, respectively, from the fair value adjustment primarily driven by an increase in our stock price during the three and six months ended December 31, 2025, partially offset by gains from the exercise of liability classified warrants. For the three and six months ended December 31, 2024, we recognized a gain of $3.0 million and $5.9 million, respectively, from the fair value adjustment primarily driven by a decrease in our stock price during the three and six months ended December 31, 2024.

Income Tax Benefit (Expense)

For both the three and six months ended December 31, 2025, there was zero income tax expense from continuing operations, which was an effective tax rate of zero. This was primarily driven by operating losses and favorable deductions from tax law changes coupled with existing valuation allowances.

For the three and six months ended December 31, 2024, we recorded an income tax benefit of $0.3 million from continuing operations, which represented an effective tax rate of negative 74.1% and we recorded income tax expense of $0.1 million from continuing operations, which represented an effective tax rate of 6.5%, respectively. These effective tax rates were primarily driven by the limitations on losses as a result of Section 382 of the Internal Revenue Code changes in ownership coupled with existing valuation allowances, the divestiture of our Consumer Health business that occurred during the first quarter of fiscal 2025 and changes to our first quarter of fiscal 2025 projections, which resulted in an income tax benefit for the second quarter of fiscal 2025.

Net Income from Discontinued Operations, Net of Tax

Net income from discontinued operations, net of tax is related to the wind down and divestiture of our Consumer Health business that was completed in the first quarter of fiscal 2025. See Part I, Item 1, Note 20 – Discontinued Operations of this Form 10-Q for further detail.

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Liquidity and Capital Resources

Sources of Liquidity

We have obligations related to our loan agreements, milestone payments for licensed products, and manufacturing purchase commitments. We finance our operations through a combination of sales of our common stock and warrants, borrowings under our revolving credit facility and from cash generated from operations.

Shelf Registrations

On September 26, 2024, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 15, 2024. This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $100.0 million of our common stock, preferred stock, debt securities, warrants, rights and units (the “2024 Shelf”). Through the filing date of this Annual Report, $100.0 million remains available under the 2024 Shelf. This availability is subject to the SEC’s “baby shelf” limitation as set forth in SEC Instruction I.B.6 limitation to the Form S-3.

Equity Financing

We have engaged in several different types of equity financings throughout our history. Most recently in June 2025, we raised gross proceeds of $16.6 million from the issuance of (i) 2,806,688 shares of our common stock, at a public offering price of $1.50 and 8,233,332 prefunded warrants at a public offering price of $1.4999 to purchase 8,233,332 shares of our common stock at an exercise price of $0.0001 per share. We received $14.8 million in proceeds net of underwriting commissions and offering expenses and intend to use the net proceeds from the offering for working capital, general corporate purposes and to enable us to exclusively commercialize EXXUA.

In June 2024, the June 2023 Tranche B Warrants to purchase 2,173,912 shares of our common stock at an exercise price of $1.59 were exercised, generating proceeds of $3.5 million. The June Tranche B Warrants were converted into 367,478 shares of our common stock and 1,806,434 prefunded warrants to purchase shares of our common stock with an exercise price of $0.0001 per share. We used a portion of these proceeds as part of a $15.0 million term loan repayment made in June of 2024. For further information on our equity financings and related warrants outstanding, please refer to Note 14 - Stockholders’ Equity and Note 16 - Warrants in Part I, Item 1 of this Form 10-Q.

Eclipse Agreement

Under our Eclipse Agreement, we have two loan agreements, the Eclipse Term Loan and the Eclipse Revolving Loan. The Eclipse Term Loan consists of an outstanding principal amount of $13.0 million on the closing date of the Eclipse Amendment No. 6, at an interest rate of the SOFR plus 7.0%, with a four-year term and a straight-line loan amortization period of seven years, which would provide for a loan balance at the end of the four-year term of $5.6 million to be repaid on the June 12, 2029, maturity date, as amended. In June 2024, we used the initial proceeds from the Eclipse Term Loan and a portion of the proceeds from the warrant exercises described above to repay in full a $15.0 million term loan. The Eclipse Revolving Loan has a potential maximum borrowing base of $14.5 million at an interest rate of the SOFR plus 4.5%, which was temporarily increased pursuant to the $1.5 million Eclipse Incremental Advance, with repayment and permanent reduction of the Eclipse Incremental Advance commencing on August 1, 2025, and continuing on the first day of each calendar month thereafter, in an amount equal to $125,000 per month, until the Eclipse Incremental Advance has been reduced to $0. In addition, we are required to pay an unused line fee of 0.5% of the average unused portion of the maximum Eclipse Revolving Loan amount during the immediately preceding month. The ability to make borrowings and obtain advances of the Eclipse Revolving Loan remains subject to a borrowing base and reserve, and availability blockage requirements and the maturity date, as amended, is June 12, 2029. Please refer to Note 10 - Revolving Credit Facility and Note 11 - Debt in Part I, Item 1 of this Form 10-Q for further information.

Cash Flows

The following table shows cash flows for the six months ended December 31, 2025, and 2024:

Six Months Ended December 31, ****
2025 2024 Change
(in thousands)
Net cash provided by operating activities $ 3,057 $ 1,715 $ 1,342
Net cash (used in) provided by investing activities $ (17 ) $ 526 $ (543 )
Net cash used in financing activities $ (3,967 ) $ (1,849 ) $ (2,118 )

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Net Cash Provided by Operating Activities

During the six months ended December 31, 2025, net cash provided by operating activities totaled $3.1 million, which was primarily the result of an increase in accounts payable and accrued liabilities and a decrease in inventories, partially offset by negative cash earnings (net loss of $8.6 million partially offset by non-cash derivative warrant liabilities adjustment, depreciation and amortization, stock-based compensation expense, and inventory write-down) and a decrease in prepaid expenses and other current assets.

During the six months ended December 31, 2024, net cash provided by operating activities totaled $1.7 million, which was primarily the result of an increase in accounts payable and accrued liabilities and a decrease in inventories, partially offset by increases in accounts receivable, prepaid expenses and other current assets and cash used in operations (net income of $2.3 million offset primarily by non-cash depreciation, amortization and accretion, stock compensation expense and derivative warrant liabilities adjustment).

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities was nominal during the six months ended December 31, 2025. Net cash provided by investing activities for the six months ended December 31, 2024, was driven by cash received from the sale of fixed assets, partially offset by cash payments for fixed asset purchases.

Net Cash Used in Financing Activities

Net cash used in financing activities of $4.0 million during the six months ended December 31, 2025, was primarily due to $3.1 million of payments for fixed payment arrangements and $0.9 million of payments made against the principal balance of our Eclipse Term Loan.

Net cash used in financing activities of $1.8 million during the six months ended December 31, 2024, was primarily due to payments made to fixed payment arrangements and payments made on borrowings, partially offset by net proceeds received from our Eclipse Revolving Loan.

Contractual Obligations, Commitments and Contingencies

As a result of our acquisitions, exclusive commercialization agreement, and licensing agreements, we are contractually and contingently obliged to pay, when due, various fixed and contingent milestone payments. See Note 13- Commitments and Contingencies in Part I, Item 1 of this Form 10-Q for further information.

In May 2022, we entered into an agreement with Tris to terminate the License, Development, Manufacturing and Supply Agreement dated November 2, 2018, related to Tuzistra (the “Tuzistra License Agreement”). Pursuant to such termination we accrued a settlement liability, which was paid in full during the first quarter of fiscal 2026.

Upon closing of the acquisition of a line of prescription pediatric products from Cerecor, Inc. in October 2019, we assumed payment obligations that required us to make fixed and product milestone payments. As of December 31, 2025, we had no remaining fixed payment arrangement accruals recorded in our unaudited consolidated balance sheet.

In connection with our suspension of active development of AR101 (enzastaurin) (“AR101”), we engaged in negotiations with EnzCo, LLC (“EnzCo”) and Rumpus VEDS LLC, (“Rumpus VEDS”), Rumpus Therapeutics LLC, (“Rumpus Therapeutics”) and Rumpus Vascular LLC, (“Rumpus Vascular” and, together with Rumpus VEDS and Rumpus Therapeutics, “Rumpus”) for the repurchase of AR101. In the first quarter of fiscal 2026, we reached terms with Rumpus and EnzCo whereby for mutual consideration and releases, we transferred all of ours and Rumpus’ rights, title and interest in AR101 to EnzCo, which extinguished and terminated all of our obligations and Rumpus’ obligations under the April 21, 2021, asset purchase agreement by and between us and Rumpus (the “Rumpus Asset Purchase Agreement”). There is no other relationship between us, EnzCo or Rumpus other than as contracting parties to terminate the Rumpus Asset Purchase Agreement, and there are no penalties or remaining obligations for us for terminating the Rumpus Asset Purchase Agreement.

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Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a detailed discussion about our critical accounting estimates, refer to our 2025 Form 10-K.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2025, at reasonable assurance levels, in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Accordingly, we believe that the financial statements presented in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented herein.

Inherent Limitations on Effectiveness of Internal Controls over Financial Reporting

Our management team, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple errors or mistakes. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEDINGS

From time to time, we become involved in or are threatened with legal disputes arising from our business and operations in the normal course of business. Most of these disputes are not likely to have a material effect on our business, financial condition, or operations. There were no new material legal proceedings that were initiated or terminated during the period covered by this report and there have been no material developments in the material proceedings identified in Part I, Item 3 in our 2025 Form 10-K. For a description of our material pending legal proceedings, see Note 13 - Commitments and Contingencies of the notes to the unaudited consolidated financial statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by reference. As of the filing of this report, no legal proceedings are pending against us that we believe individually or collectively are likely to have a materially adverse effect upon our financial condition, results of operations, or cash flows.

ITEM 1A. RISK FACTORS

Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects, financial condition, and results of operations, and you should carefully consider them. There have not been any material changes to our risk factors from those reported in our 2025 Form 10-K.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the quarter ended  December 31, 2025, none of our directors or executive officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as those terms are defined in Item 408 of Regulation S-K).

ITEM 6. EXHIBITS

Exhibit No. Description
31.1* Certificate of the Chief Executive Officer of Aytu BioPharma, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certificate of the Chief Financial Officer of Aytu BioPharma, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1** Certificate of the Chief Executive Officer and the Chief Financial Officer of Aytu BioPharma, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS* XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* Inline XBRL Taxonomy Schema Linkbase Document.
101.CAL* Inline XBRL Taxonomy Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Labels Linkbase Document.
101.PRE* Inline XBRL Taxonomy Presentation Linkbase Document.
104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*    Filed herewith.

**  Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AYTU BIOPHARMA, INC.
Date: February 3, 2026 By: /s/ Joshua R. Disbrow
Joshua R. Disbrow
Chief Executive Officer
(Principal Executive Officer)
Date: February 3, 2026 By: /s/ Ryan J. Selhorn
Ryan J. Selhorn
Chief Financial Officer
(Principal Financial and Accounting Officer)

40

ex_892739.htm

Exhibit 31.1

AYTU BIOPHARMA, INC.

Certification by Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Joshua R. Disbrow, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Aytu BioPharma, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have:
--- ---
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities particularly during the period in which this report is being prepared;
--- ---
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
--- ---
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
--- ---
a) All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
--- ---
Date: February 3, 2026
--- --- ---
By: /s/ Joshua R. Disbrow
Joshua R. Disbrow
Chief Executive Officer
(Principal Executive Officer)

ex_892740.htm

Exhibit 31.2

AYTU BIOPHARMA, INC.

Certification by Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Ryan J. Selhorn, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Aytu BioPharma, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have:
--- ---
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities particularly during the period in which this report is being prepared;
--- ---
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
--- ---
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
--- ---
a) All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
--- ---
Date: February 3, 2026
--- --- ---
By: /s/ Ryan J. Selhorn
Ryan J. Selhorn
Chief Financial Officer
(Principal Financial and Accounting Officer)

ex_892741.htm

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S. C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Joshua R. Disbrow, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10‑Q of Aytu BioPharma, Inc. for the fiscal quarter ended December 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10‑Q fairly presents, in all material respects, the financial condition and results of operations of Aytu BioPharma, Inc.

Date: February 3, 2026
By: /s/ Joshua R. Disbrow
Joshua R. Disbrow
Chief Executive Officer
(Principal Executive Officer)

I, Ryan J. Selhorn, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10‑Q of Aytu BioPharma, Inc. for the fiscal quarter ended December 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10‑Q fairly presents, in all material respects, the financial condition and results of operations of Aytu BioPharma, Inc.

Date: February 3, 2026
By: /s/ Ryan J. Selhorn
Ryan J. Selhorn
Chief Financial Officer
(Principal Financial and Accounting Officer)

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