##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED September 30, 2008
 o
    
    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: 001-32360
 AKORN, INC.
 (Exact Name of Registrant as Specified in its Charter)
 LOUISIANA
    
    72-0717400(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)1925 W FIELD CT STE 300LAKE FOREST, ILLINOIS
    
    60045(Address of Principal Executive Offices)
    
    (Zip Code)
 (847) 279-6100
(Registrants telephone number, including area code)
 2500 MILLBROOK DRIVE, BUFFALO GROVE, ILLINOIS 60089
(Former name, former address and former fiscal year, if changed since last report)
  Yes þ No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
  Yes o No þ




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##### 



PagePART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsCondensed Consolidated Balance Sheets-September 30, 2008 and
December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations-Three and nine
months ended September 30, 2008 and 2007
    
    
    4Condensed Consolidated Statement of Shareholders Equity- Nine
months ended September 30, 2008 and 2007
    
    
    5Condensed Consolidated Statements of Cash Flows- Nine months
ended September 30, 2008 and 2007
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    17ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21ITEM 4. Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    23ITEM 1A. Risk Factors
    
    
    23ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23ITEM 3. Defaults Upon Senior Securities
    
    
    23ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    23ITEM 5. Other Information
    
    
    23ITEM 6. Exhibits
    
    
    24EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 AKORN, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 IN THOUSANDS, EXCEPT SHARE DATA
 SEPTEMBER 30,
    
    
    DECEMBER 31,2008
    
    
    2007(UNAUDITED)
    
    
    (AUDITED)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    90
    
    
    $
    7,948Restricted cash for revolving credit agreement
    
    
    3,300
    
    
    
    1,250Trade accounts receivable, net
    
    
    15,732
    
    
    
    4,112Inventories
    
    
    28,433
    
    
    
    31,095Prepaid expenses and other current assets
    
    
    1,027
    
    
    
    1,317TOTAL CURRENT ASSETS
    
    
    48,582
    
    
    
    45,722PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    34,476
    
    
    
    32,262OTHER LONG-TERM ASSETSIntangibles, net
    
    
    6,355
    
    
    
    7,721Other
    
    
    850
    
    
    
    1,261TOTAL OTHER LONG-TERM ASSETS
    
    
    7,205
    
    
    
    8,982TOTAL ASSETS
    
    $
    90,263
    
    
    $
    86,966LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESRevolving line of credit
    
    $
    10,248
    
    
    $
    4,521Mortgage payable
    
    
    
    
    
    
    208Short term subordinated debt
    
    
    5,135
    
    
    
    Trade accounts payable
    
    
    7,419
    
    
    
    14,070Accrued compensation
    
    
    1,275
    
    
    
    895Accrued expenses and other liabilities
    
    
    2,137
    
    
    
    1,306TOTAL CURRENT LIABILITIES
    
    
    26,214
    
    
    
    21,000LONG-TERM LIABILITIESLease incentive obligation
    
    
    1,597
    
    
    
    Product warranty liability
    
    
    1,299
    
    
    
    1,308TOTAL LONG-TERM LIABILITIES
    
    
    2,896
    
    
    
    1,308TOTAL LIABILITIES
    
    
    29,110
    
    
    
    22,308SHAREHOLDERS EQUITYCommon stock, no par value  150,000,000
shares authorized; 89,264,506 and 88,900,588
shares issued and outstanding at September
30, 2008 and December 31, 2007, respectively
    
    
    168,350
    
    
    
    165,829Warrants to acquire common stock
    
    
    2,731
    
    
    
    2,795Accumulated deficit
    
    
    (109,928
    )
    
    
    (103,966
    )TOTAL SHAREHOLDERS EQUITY
    
    
    61,153
    
    
    
    64,658TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    90,263
    
    
    $
    86,966
  3




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##### Table of Contents



AKORN, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 IN THOUSANDS, EXCEPT PER SHARE DATA
 (UNAUDITED)
 THREE MONTHS ENDED
    
    
    NINE MONTHS ENDEDSEPTEMBER 30,
    
    
    SEPTEMBER 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    31,874
    
    
    $
    15,814
    
    
    $
    67,562
    
    
    $
    39,187Cost of sales
    
    
    21,968
    
    
    
    12,846
    
    
    
    49,082
    
    
    
    30,844GROSS PROFIT
    
    
    9,906
    
    
    
    2,968
    
    
    
    18,480
    
    
    
    8,343Selling, general and administrative expenses
    
    
    6,199
    
    
    
    5,362
    
    
    
    18,370
    
    
    
    15,793Amortization of intangibles
    
    
    339
    
    
    
    338
    
    
    
    1,016
    
    
    
    1,015Research and development expenses
    
    
    1,143
    
    
    
    2,135
    
    
    
    4,744
    
    
    
    6,307TOTAL OPERATING EXPENSES
    
    
    7,681
    
    
    
    7,835
    
    
    
    24,130
    
    
    
    23,115OPERATING INCOME (LOSS)
    
    
    2,225
    
    
    
    (4,867
    )
    
    
    (5,650
    )
    
    
    (14,772
    )Interest income (expense), net
    
    
    (295
    )
    
    
    140
    
    
    
    (579
    )
    
    
    568Equity in earnings of unconsolidated joint venture
    
    
    447
    
    
    
    
    
    
    
    447
    
    
    
    Other income (expense)
    
    
    24
    
    
    
    
    
    
    
    (177
    )
    
    
    1INCOME (LOSS) BEFORE INCOME TAXES
    
    
    2,401
    
    
    
    (4,727
    )
    
    
    (5,959
    )
    
    
    (14,203
    )Income tax provision
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    1NET INCOME (LOSS)
    
    $
    2,401
    
    
    $
    (4,727
    )
    
    $
    (5,962
    )
    
    $
    (14,204
    )NET INCOME (LOSS) PER SHARE:BASIC
    
    $
    0.03
    
    
    $
    (0.05
    )
    
    $
    (0.07
    )
    
    $
    (0.16
    )DILUTED
    
    $
    0.03
    
    
    $
    (0.05
    )
    
    $
    (0.07
    )
    
    $
    (0.16
    )SHARES USED IN COMPUTING INCOME (LOSS) PER SHARE:BASIC
    
    
    89,250
    
    
    
    87,651
    
    
    
    89,169
    
    
    
    86,971DILUTED
    
    
    90,065
    
    
    
    87,651
    
    
    
    89,169
    
    
    
    86,971
  4




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AKORN, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
 UNAUDITED
 (In Thousands)
 Nine Months Ended September 30, 2008
 Warrants toacquireCommon Stock
    
    
    Common
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Stock
    
    
    Deficit
    
    
    TotalBALANCES AT DECEMBER 31, 2007
    
    
    88,901
    
    
    $
    165,829
    
    
    $
    2,795
    
    
    $
    (103,966
    )
    
    $
    64,658Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,962
    )
    
    
    (5,962
    )Exercise of warrants into common stock
    
    
    50
    
    
    
    101
    
    
    
    (64
    )
    
    
    
    
    
    
    37Exercise of stock options
    
    
    217
    
    
    
    608
    
    
    
    
    
    
    
    
    
    
    
    608Employee stock purchase plan issuances
    
    
    31
    
    
    
    149
    
    
    
    
    
    
    
    
    
    
    
    149Amortization of deferred compensation
related to restricted stock awards
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    
    
    
    
    492Restricted stock awards vested net of
amounts withheld for payment of
employee tax liability
    
    
    66
    
    
    
    (158
    )
    
    
    
    
    
    
    
    
    
    
    (158
    )Stock-based compensation expense
    
    
    
    
    
    
    1,329
    
    
    
    
    
    
    
    
    
    
    
    1,329BALANCES AT SEPTEMBER 30, 2008
    
    
    89,265
    
    
    $
    168,350
    
    
    $
    2,731
    
    
    $
    (109,928
    )
    
    $
    61,153
 Nine Months Ended September 30, 2007
 Warrants toacquireCommon Stock
    
    
    Common
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Stock
    
    
    Deficit
    
    
    TotalBALANCES AT DECEMBER 31, 2006
    
    
    85,991
    
    
    $
    150,250
    
    
    $
    4,862
    
    
    $
    (84,798
    )
    
    $
    70,314Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,204
    )
    
    
    (14,204
    )Exercise of warrants into common stock
    
    
    1,305
    
    
    
    4,574
    
    
    
    (2,067
    )
    
    
    
    
    
    
    2,507Exercise of stock options
    
    
    293
    
    
    
    853
    
    
    
    
    
    
    
    
    
    
    
    853Employee stock purchase plan issuances
    
    
    26
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    171Amortization of deferred compensation
related to restricted stock awards
    
    
    
    
    
    
    479
    
    
    
    
    
    
    
    
    
    
    
    479Restricted stock awards vested net of
amounts withheld for payment of
employee tax liability
    
    
    115
    
    
    
    (445
    )
    
    
    
    
    
    
    
    
    
    
    (445
    )Stock-based compensation expense
    
    
    
    
    
    
    2,005
    
    
    
    
    
    
    
    
    
    
    
    2,005BALANCES AT SEPTEMBER 30, 2007
    
    
    87,730
    
    
    $
    157,887
    
    
    $
    2,795
    
    
    $
    (99,002
    )
    
    $
    61,680
 5




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AKORN, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 IN THOUSANDS (UNAUDITED)
  NINE MONTHSENDED SEPTEMBER 302008
    
    
    2007OPERATING ACTIVITIESNet loss
    
    $
    (5,962
    )
    
    $
    (14,204
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    3,348
    
    
    
    3,273Non-cash stock compensation expense
    
    
    1,821
    
    
    
    2,484Gain on disposal of assets
    
    
    (25
    )
    
    
    Equity in earnings of unconsolidated joint venture
    
    
    (447
    )
    
    
    Changes in operating assets and liabilities:Trade accounts receivable
    
    
    (11,620
    )
    
    
    (864
    )Inventories
    
    
    2,662
    
    
    
    (8,015
    )Prepaid expenses and other current assets
    
    
    252
    
    
    
    (275
    )Other long-term assets
    
    
    1,246
    
    
    
    Trade accounts payable
    
    
    (6,651
    )
    
    
    7,319Accrued expenses and other liabilities
    
    
    1,081
    
    
    
    (2,599
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (14,295
    )
    
    
    (12,881
    )INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (2,742
    )
    
    
    (1,420
    )Purchase of intangible assets
    
    
    
    
    
    
    (50
    )Proceeds from sale of fixed assets
    
    
    74
    
    
    
    NET CASH USED IN INVESTING ACTIVITIES
    
    
    (2,668
    )
    
    
    (1,470
    )FINANCING ACTIVITIESRepayment of long-term debt
    
    
    (208
    )
    
    
    (293
    )Restricted cash for revolving credit agreement
    
    
    (2,050
    )
    
    
    Proceeds from line of credit
    
    
    5,727
    
    
    
    Proceeds from warrants exercised
    
    
    37
    
    
    
    2,507Proceeds from subordinated note
    
    
    5,000
    
    
    
    Proceeds under stock option and stock purchase plans
    
    
    599
    
    
    
    579NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    9,105
    
    
    
    2,793DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (7,858
    )
    
    
    (11,558
    )Cash and cash equivalents at beginning of period
    
    
    7,948
    
    
    
    21,818CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    90
    
    
    $
    10,260SUPPLEMENTAL DISCLOSURESLeasehold improvements funded by lessor
    
    $
    1,768
    
    
    $
    Assets acquired through capital lease
    
    $
    85
    
    
    $
    Amount paid for interest
    
    $
    534
    
    
    $
    43Amount paid for income taxes
    
    $
    3
    
    
    $
    3
 6




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NOTE A  BUSINESS AND BASIS OF PRESENTATION
 Business:
 Basis of Presentation
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Use of Estimates:
 Chargebacks:
  7




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Sales Returns:
  NOTE C  STOCK BASED COMPENSATION
     THREE MONTHS
    
    THREE MONTHSENDED
    
    ENDEDSEPTEMBER 30, 2008
    
    SEPTEMBER 30, 2007Expected volatility
    
    
    48
    %
    
    
    43
    %Expected life (in years)
    
    
    4.0
    
    
    
    4.0Risk-free interest rate
    
    
    3.1
    %
    
    
    4.4
    %Dividend yield
    
    
    
    
    
    
    Fair value per stock option
    
    $
    1.79
    
    
    $
    2.76Forfeiture rate
    
    
    10
    %
    
    
    10
    %
 8




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Weighted AverageNumber of
    
    Weighted
    
    Remaining
    
    AggregateShares
    
    Average
    
    Contractual Term
    
    Intrinsic Value(in thousands)
    
    Exercise Price
    
    (Years)
    
    (in thousands)Outstanding at January 1, 2008
    
    
    4,719
    
    
    $
    4.69Granted
    
    
    196
    
    
    
    4.62Exercised
    
    
    (217
    )
    
    
    2.81Forfeited
    
    
    (308
    )
    
    
    6.11Outstanding at September 30, 2008
    
    
    4,390
    
    
    $
    4.68
    
    
    
    2.30
    
    
    $
    4,232Exercisable at September 30, 2008
    
    
    2,945
    
    
    $
    4.08
    
    
    
    1.79
    
    
    $
    4,020
    Number of Shares
    
    Weighted Average(in thousands)
    
    Grant Date Fair ValueNonvested at December 31, 2007
    
    
    175
    
    
    $
    5.05Granted
    
    
    50
    
    
    
    7.34Vested
    
    
    (100
    )
    
    
    5.34Nonvested at September 30, 2008
    
    
    125
    
    
    $
    5.74
 NOTE D  REVENUE RECOGNITION
    NOTE E  ACCOUNTS RECEIVABLE ALLOWANCES
  9




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SEPTEMBER 30,
    
    
    DECEMBER 31,2008
    
    
    2007Gross accounts receivable
    
    $
    28,334
    
    
    $
    17,317Less:Allowance for doubtful accounts
    
    
    (13
    )
    
    
    (5
    )Returns reserve
    
    
    (1,683
    )
    
    
    (1,153
    )Discount and allowances reserve
    
    
    (507
    )
    
    
    (357
    )Chargeback and rebates reserves
    
    
    (10,399
    )
    
    
    (11,690
    )Net trade accounts receivable
    
    $
    15,732
    
    
    $
    4,112
     NOTE F  INVENTORIES
  SEPTEMBER 30,
    
    
    DECEMBER 31,2008
    
    
    2007Finished goods
    
    $
    19,167
    
    
    $
    20,804Work in process
    
    
    2,010
    
    
    
    2,173Raw materials and supplies
    
    
    7,256
    
    
    
    8,118$
    28,433
    
    
    $
    31,095
  10




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NOTE G  PROPERTY, PLANT AND EQUIPMENT
  SEPTEMBER 30,
    
    
    DECEMBER 31,2008
    
    
    2007Land
    
    $
    396
    
    
    $
    396Buildings and leasehold improvements
    
    
    20,451
    
    
    
    18,236Furniture and equipment
    
    
    39,447
    
    
    
    39,085Sub-total
    
    
    60,294
    
    
    
    57,717Accumulated depreciation
    
    
    (31,927
    )
    
    
    (31,645
    )28,367
    
    
    
    26,072Construction in progress
    
    
    6,109
    
    
    
    6,190Property, Plant, & Equipment, net
    
    $
    34,476
    
    
    $
    32,262
   NOTE H  FINANCING ARRANGEMENTS
 Mortgage Payable
  Credit Facility
  11




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Subordinated Note Payable
  NOTE I  COMMON STOCK ISSUANCE
  NOTE J  EARNINGS PER COMMON SHARE
   12




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THREE MONTHS ENDED SEPTEMBER 30,
    
    
    NINE MONTHS ENDED SEPTEMBER 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Basic Shares
    
    
    89,250
    
    
    
    87,651
    
    
    
    89,169
    
    
    
    86,971Effect of Dilutive Securities:Warrants
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    Options
    
    
    698
    
    
    
    
    
    
    
    
    
    
    
    Fully Diluted Shares
    
    
    90,065
    
    
    
    87,651
    
    
    
    89,169
    
    
    
    86,971
 NOTE K  INDUSTRY SEGMENT INFORMATION
   THREE MONTHS ENDED SEPTEMBER 30,
    
    
    NINE MONTHS ENDED SEPTEMBER 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUESOphthalmic
    
    $
    5,121
    
    
    $
    5,001
    
    
    $
    15,362
    
    
    $
    13,111Hospital Drugs & Injectables
    
    
    6,293
    
    
    
    4,627
    
    
    
    16,226
    
    
    
    15,248Biologics & Vaccines
    
    
    17,879
    
    
    
    4,733
    
    
    
    29,698
    
    
    
    4,733Contract Services
    
    
    2,581
    
    
    
    1,453
    
    
    
    6,276
    
    
    
    6,095Total revenues
    
    $
    31,874
    
    
    $
    15,814
    
    
    $
    67,562
    
    
    $
    39,187GROSS PROFITOphthalmic
    
    $
    1,553
    
    
    $
    1,123
    
    
    $
    4,363
    
    
    $
    2,445Hospital Drugs & Injectables
    
    
    2,384
    
    
    
    1,425
    
    
    
    4,813
    
    
    
    4.411Biologics & Vaccines
    
    
    5,290
    
    
    
    
    
    
    
    7,444
    
    
    
    Contract Services
    
    
    679
    
    
    
    420
    
    
    
    1,860
    
    
    
    1,487Total gross profit
    
    
    9,906
    
    
    
    2,968
    
    
    
    18,480
    
    
    
    8,343Operating expenses
    
    
    7,681
    
    
    
    7,835
    
    
    
    24,130
    
    
    
    23,115Operating income/(loss)
    
    
    2,225
    
    
    
    (4,867
    )
    
    
    (5,650
    )
    
    
    (14,772
    )Interest & other income (expense)
    
    
    (271
    )
    
    
    140
    
    
    
    (756
    )
    
    
    569Equity in earnings of unconsolidated joint venture
    
    
    447
    
    
    
    
    
    
    
    447
    
    
    
    Income/(loss) before income taxes
    
    $
    2,401
    
    
    $
    (4,727
    )
    
    $
    (5,959
    )
    
    $
    (14,203
    )
  NOTE L  COMMITMENTS AND CONTINGENCIES
  13




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NOTE M  CUSTOMER AND SUPPLIER CONCENTRATION
   14




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NOTE N  RECENT ACCOUNTING PRONOUNCEMENTS
    Determination of the Useful Life of
Intangible Assets. Goodwill and Other Intangible Assets Business Combinations,
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NOTE O  UNCONSOLIDATED JOINT VENTURE
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Item 2.
 AKORN, INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS AND FACTORS AFFECTING FUTURE RESULTS
  
    
    Our ability to comply with all of the requirements of the U.S. Food and Drug
Administration (FDA), including current Good Manufacturing Practices regulations;
    
    Our ability to avoid defaults under debt covenants;
    
    Our ability to obtain regulatory approvals for products manufactured in our new
lyophilization facility;
    
    Our ability to generate cash from operations sufficient to meet our working capital
requirements;
    
    The effects of federal, state and other governmental regulation on our business;
    
    Our success in developing, manufacturing, acquiring and marketing new products;
    
    The success of our strategic partnerships for the development and marketing of new
products;
    
    Our ability to bring new products to market and the effects of sales of such products on
our financial results;
    
    The effects of competition from generic pharmaceuticals and from other pharmaceutical
companies;
    
    Availability of raw materials needed to produce our products; and
    
    Other factors referred to in this Form 10-Q, our Form 10-K and our other Securities and
Exchange Commission (SEC) filings.
 RESULTS OF OPERATIONS
 THREE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO 2007
  THREE MONTHS ENDED SEPTEMBER 30,2008
    
    
    2007Ophthalmic segment
    
    $
    5,121
    
    
    $
    5,001Hospital Drugs & Injectables segment
    
    
    6,293
    
    
    
    4,627Biologics & Vaccines segment
    
    
    17,879
    
    
    
    4,733Contract Services segment
    
    
    2,581
    
    
    
    1,453Total revenues
    
    $
    31,874
    
    
    $
    15,814
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NINE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO 2007
  NINE MONTHS ENDED SEPTEMBER 302008
    
    
    2007Ophthalmic segment
    
    $
    15,362
    
    
    $
    13,111Hospital Drugs & Injectables segment
    
    
    16,226
    
    
    
    15,248Biologics & Vaccines segment
    
    
    29,698
    
    
    
    4,733Contract Services segment
    
    
    6,276
    
    
    
    6,095Total revenues
    
    $
    67,562
    
    
    $
    39,187
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FINANCIAL CONDITION AND LIQUIDITY
 Overview
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Facility Expansion
   CONTRACTUAL OBLIGATIONS
  CRITICAL ACCOUNTING POLICIES
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RECENT ACCOUNTING PRONOUNCEMENTS
    Determination of the Useful Life of
Intangible Assets. Goodwill and Other Intangible Assets Business Combinations,
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
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Changes in Internal Control Over Financial Reporting
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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
  Exhibit No.
    
    Description(3.1)
    
    Restated Articles of Incorporation of Akorn, Inc. dated September 16, 2004, incorporated by reference to
Exhibit 3.1 to Akorn, Inc.s Registration Statement on Form S-1 filed on September 21, 2004.(3.2)
    
    Amended and Restated Bylaws of Akorn, Inc., incorporated by reference to Exhibit 3.2 to Akorn, Inc.s
Registration Statement on Form S-1 filed on June 14, 2005.(3.3)
    
    Amendment to Bylaws of Akorn, Inc., incorporated by reference to Exhibit 3.1 to Akorn, Inc.s report on Form
8-K filed on March 31, 2006 (Commission file No. 001-32360).(3.4)
    
    Amendment to Bylaws of Akorn, Inc., incorporated by reference to Exhibit 3.1 to Akorn, Inc.s report on Form
8-K filed on December 14, 2006 (Commission file No. 001-32360).(3.5)
    
    Amendment to Bylaws of Akorn, Inc., incorporated by reference to Exhibit 3.1 to Akorn, Inc.s report on Form
8-K filed on April 16, 2007 (Commission file No. 001-32360).(4.1)
    
    Form of Securities Purchase Agreement dated March 1, 2006, between Akorn, Inc. and certain investors,
incorporated by reference to Exhibit 4.1 to Akorn, Inc.s report on Form 8-K filed on March 7, 2006
(Commission file No. 001-32360).(4.2)
    
    Form of Warrant issued in connection with the Securities Purchase Agreement dated March 1, 2006, incorporated
by reference to Exhibit 4.2 to Akorn, Inc.s report on Form 8-K filed on March 7, 2006. (Commission file No.
001-32360). (All warrants are dated March 8, 2006. Please see Exhibit 99.1 to Akorn, Inc.s report on Form
8-K filed on March 14, 2006, which is hereby incorporated by reference, for a schedule setting forth the
other material details for each of the warrants.)(4.3)
    
    Securities Purchase Agreement dated September 13, 2006, between Akorn, Inc. and Serum Institute of India,
incorporated by reference to Exhibit 4.1 to Akorn Inc.s report on Form 8-K filed on September 14, 2006
(Commission file No. 001-32360).(4.4)
    
    Securities Purchase Agreement dated November 14, 2007, between Akorn, Inc. and Serum Institute of India Ltd.,
incorporated by reference to Exhibit 4.1 to Akorn, Inc.s report on Form 8-K filed on November 20, 2007
(Commission file No. 001-32360).(10.1)^
    
    Binding Term Sheet dated July 3, 2008, by and between Akorn, Inc. and Massachusetts Biologic Laboratories of
the University of Massachusetts Medical School, incorporated by reference to Exhibit 10.1 to Akorn, Inc.s
report on Form 8-K filed on July 11, 2008.(10.2)^
    
    Amendment to Exclusive Distribution Agreement dated July 3, 2008, by and between Akorn, Inc. and
Massachusetts Biologic Laboratories of the University of Massachusetts Medical School, incorporated by
reference to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed on July 18, 2008.(10.3)
    
    Mutual Release dated July 3, 2008, by and between Akorn, Inc. and Massachusetts Biologic Laboratories of the
University of Massachusetts Medical School, incorporated by reference to Exhibit 10.2 to Akorn, Inc.s report
on Form 8-K filed on July 18, 2008.(10.4)
    
    Subordinated Promissory Note dated July 28, 2008, issued by Akorn, Inc. to The John N. Kapoor Trust Dated
September 20, 1989, in the principal amount of $5,000,000, incorporated by reference to Exhibit 10.1 to
Akorn, Inc.s report on Form 8-K filed on August 1, 2008.
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Exhibit No.
    
    Description(10.5)
    
    Subordination and Intercreditor Agreement dated July 28, 2008, by and among Akorn, Inc., The John N. Kapoor
Trust Dated September 20, 1989, LaSalle Bank National Association, as administrative agent for all senior
lenders party to the senior credit agreement, and Akorn (New Jersey), Inc., incorporated by reference to
Exhibit 10.2 to Akorn, Inc.s report on Form 8-K filed on August 1, 2008.(10.6)
    
    Consent to Credit Agreement dated July 28, 2008, by and among Akorn, Inc., LaSalle Bank National Association,
as administrative agent, the financial institutions party thereto and Akorn (New Jersey), Inc., incorporated
by reference to Exhibit 10.3 to Akorn, Inc.s report on Form 8-K filed on August 1, 2008.(10.7)^
    
    Second Amendment to Exclusive Distribution Agreement dated July 30, 2008, by and between, Akorn, Inc. and
Massachusetts Biologic Laboratories of the University of Massachusetts Medical School.(10.8)^
    
    Third Amendment to Exclusive Distribution Agreement dated August 1, 2008, by and between, Akorn, Inc. and
Massachusetts Biologic Laboratories of the University of Massachusetts Medical School.(10.9)
    
    Commitment Letter dated November 2, 2008, by and between Akorn, Inc. and General Electric Capital
Corporation, incorporated by reference to Exhibit 10.1 to Akorn Inc.s report on Form 8-K filed on November
5, 2008.(31.1)*
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.(31.2)*
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.(32.1)*
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002.(32.2)*
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002.
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SIGNATURES
  AKORN, INC./s/ JEFFREY A. WHITNELLJeffrey A. WhitnellSr. Vice President, Chief Financial Officer
(Duly Authorized and Principal Financial Officer)  26