##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|   |  | For the Fiscal Year Ended June 30, 2005                                                     
|Or
|  
|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 000-51445


Adams Respiratory Therapeutics, Inc.


(Exact name of Registrant as specified in its Charter)


|                         |  |                                     
|------------------------ |  | ------------------------------------
|Delaware                 |  | 75-2725552                          
|(State of incorporation) |  | (I.R.S. Employer Identification No.)

|                                                                                |  |                
|------------------------------------------------------------------------------- |  | ---------------
|425 Main Street
    Chester, New Jersey(Address of principal executive offices) |  | 07930(Zip Code)

(908) 879-1400


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Securities Exchange Act of 1934:


None


Securities registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934:


Common Stock, Par Value $0.01 Per Share


(Title of class)


o þ


o


o þ


o þ
















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TABLE OF CONTENTS


|                                                      |  |                                                                                                                      |   |      |    |  |  | 
|----------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | - | ---- | -- |  |  | 
|                                                      |  |                                                                                                                      |   | Page |   
|                                                      |  |                                                                                                                      |   |      |   
|PART I                                               
|Special Note Regarding Forward-looking
    Statements |  |                                                                                                                      | 1 |     
|                                                     
|Item 1.                                               |  | Business                                                                                                             |   |      | 1  | 
|                                                     
|Item 2.                                               |  | Properties                                                                                                           |   |      | 19 | 
|                                                     
|Item 3.                                               |  | Legal Proceedings                                                                                                    |   |      | 19 | 
|                                                     
|Item 4.                                               |  | Submission of Matters to a Vote of Security
    Holders                                                              |   |      | 19 | 
|                                                     
|                                                      |  |                                                                                                                      |   |      |    |  |  | 
|PART II                                              
|                                                     
|Item 5.                                               |  | Market For Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |   |      | 21 | 
|                                                     
|Item 6.                                               |  | Selected Financial Data                                                                                              |   |      | 23 | 
|                                                     
|Item 7.                                               |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |   |      | 25 | 
|                                                     
|Item 7A.                                              |  | Quantitative and Qualitative Disclosure
    About Market Risk                                                        |   |      | 55 | 
|                                                     
|Item 8.                                               |  | Financial Statements and Supplementary
    Data                                                                      |   |      | 56 | 
|                                                     
|Item 9.                                               |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |   |      | 56 | 
|                                                     
|Item 9A.                                              |  | Controls and Procedures                                                                                              |   |      | 56 | 
|                                                     
|Item 9B.                                              |  | Other Information                                                                                                    |   |      | 56 | 
|                                                     
|                                                      |  |                                                                                                                      |   |      |    |  |  | 
|PART III                                             
|                                                     
|Item 10.                                              |  | Directors and Executive Officers of the
    Registrant                                                               |   |      | 56 | 
|                                                     
|Item 11.                                              |  | Executive Compensation                                                                                               |   |      | 56 | 
|                                                     
|Item 12.                                              |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |   |      | 57 | 
|                                                     
|Item 13.                                              |  | Certain Relationships and Related
    Transactions                                                                   |   |      | 57 | 
|                                                     
|Item 14.                                              |  | Principal Accountant Fees and Services                                                                               |   |      | 57 | 
|                                                     
|                                                      |  |                                                                                                                      |   |      |    |  |  | 
|PART IV                                              
|                                                     
|Item 15.                                              |  | Exhibits and Financial Statement
    Schedules                                                                       |   |      | 57 | 
|EX-3.1: CERTIFICATE OF INCORPORATION                 
|EX-14: CODE OF BUSINESS CONDUCT AND ETHICS           
|EX-21: SUBSIDIARIES                                  
|EX-23: CONSENT OF ERNST & YOUNG LLP                  
|EX-31.1: CERTIFICATION                               
|EX-31.2: CERTIFICATION                               
|EX-32.1: CERTIFICATION                               
|EX-32.2: CERTIFICATION                               



A A




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PART I





SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS















|        |         
|------- | --------
|Item 1. | Business

Overview






1



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tm tm








2



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Market, Ranking And Other Data






tm tm


Recent Developments






3



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The Respiratory Therapeutics Market


Market Overview. tm tm




The Long-Acting Guaifenesin Market. tm tm


|                                                         |  |               |      | 
|-------------------------------------------------------- |  | ------------- | ---- | 
|                                                         |  | Estimated     |     
|                                                         |  | Number of     |     
|                                                         |  | Prescriptions |     
|                                                         |  |               |     
|                                                         |  | (In millions) |     
|Single-ingredient Guaifenesin                            |  |               | 10.5 | 
|Guaifenesin and Dextromethorphan HBr (Cough Suppressant) |  |               | 3.0  | 
|Guaifenesin and Pseudoephedrine HCl (Decongestant)       |  |               | 11.5 | 

tm tm


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The OTC Cough, Cold, Allergy, and Sinus Market.




Our Competitive Strengths


Mucinex SE is the Only Long-Acting, Single-Ingredient
Guaifenesin Product Available in the United States.


Strength of the Mucinex Brand.


|                   |       |               |                |  |                 |  |                |         |  |  |                |  |  |          |      |       |         |  |      |       |   |  |      |       |  
|------------------ | ----- | ------------- | -------------- |  | --------------- |  | -------------- | ------- |  |  | -------------- |  |  | -------- | ---- | ----- | ------- |  | ---- | ----- | - |  | ---- | ----- | -
|                   |       | Brand Rank(1) |                |  | Market Share(1) | 
|                   |       |               |                |  |                 | 
|                   |       | 52-Weeks      |                |  | 12-Weeks        |  |                | 4-Weeks |  |  | 52-Weeks       |  |  | 12-Weeks |      |       | 4-Weeks | 
|Brand              |       | Ended         |                |  | Ended           |  |                | Ended   |  |  | Ended          |  |  | Ended    |      |       | Ended   | 
|                   |       |               |                |  |                 |  |                |         |  |  |                |  |  |          |      |       |         | 
|Private label      |       |               |                |  |                 |  |                |         |  |  |                |  |  |          | 23.1 | %     |         |  | 26.1 | %     |   |  | 27.2 | %    
|Claritin®          |       |               | 1              |  |                 |  | 1              |         |  |  | 1              |  |  |          | 9.7  |       |         |  | 14.5 |       |   |  | 13.1 |      
|Tylenol®           |       |               | 2              |  |                 |  | 3              |         |  |  | 3              |  |  |          | 9.6  |       |         |  | 8.0  |       |   |  | 8.0  |      
|Vicks®             |       |               | 3              |  |                 |  | 5              |         |  |  | 6              |  |  |          | 9.2  |       |         |  | 5.8  |       |   |  | 5.6  |      
|Robitussin®        |       |               | 4              |  |                 |  | 7              |         |  |  | 7              |  |  |          | 7.4  |       |         |  | 5.5  |       |   |  | 5.0  |      
|Benadryl®          |       |               | 5              |  |                 |  | 2              |         |  |  | 2              |  |  |          | 5.8  |       |         |  | 8.8  |       |   |  | 9.9  |      
|Sudafed®           |       |               | 6              |  |                 |  | 6              |         |  |  | 4              |  |  |          | 5.7  |       |         |  | 5.5  |       |   |  | 5.8  |      
|Mucinex            |       |               | 7              |  |                 |  | 4              |         |  |  | 5              |  |  |          | 5.0  |       |         |  | 5.8  |       |   |  | 5.7  |      
|Theraflu®          |       |               | 8              |  |                 |  | 13             |         |  |  | 15             |  |  |          | 2.2  |       |         |  | 1.1  |       |   |  | 0.9  |      
|Alka Seltzer Plus® |       |               | 9              |  |                 |  | 12             |         |  |  | 10             |  |  |          | 2.1  |       |         |  | 1.3  |       |   |  | 1.4  |      
|Triaminic®         |       |               | 10             |  |                 |  | 10             |         |  |  | 11             |  |  |          | 2.0  |       |         |  | 1.3  |       |   |  | 1.2  |      
|Advil®             |       |               | 11             |  |                 |  | 9              |         |  |  | 9              |  |  |          | 2.0  |       |         |  | 1.7  |       |   |  | 1.8  |      
|Dimetapp®          |       |               | 12             |  |                 |  | 11             |         |  |  | 12             |  |  |          | 1.8  |       |         |  | 1.3  |       |   |  | 1.2  |      
|Others             |       |               | 13 through 166 |  |                 |  | 13 through 155 |         |  |  | 13 through 147 |  |  |          | 14.4 |       |         |  | 13.3 |       |   |  | 13.2 |      
|                   |       |               |                |  |                 |  |                |         |  |  |                |  |  |          |      |       |         | 
|                   | Total |               |                |  |                 |  |                |         |  |  |                |  |  |          |      | 100.0 | %       |  |      | 100.0 | % |  |      | 100.0 | %
|                   |       |               |                |  |                 |  |                |         |  |  |                |  |  |          |      |       |         | 






|    |                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes products sold in the OTC cough, cold, allergy, and
    sinus market and does not include other products marketed under
    these brand names.

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Our Patented Guaifenesin Delivery System Provides a Platform
for the Introduction of Additional Respiratory Products.


Integrated Effort in Both the Prescription and OTC
Marketplace.


Experienced Senior Management Team with Proven Ability to
Develop and Grow Brands.


Our Business Strategy






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continue to Switch Prescriptions for Long-Acting Guaifenesin
    into OTC Sales of Our Products. Based on data from IMS
    Health-NPAtm,
    during the 12-months ended June 30, 2003, an estimated
    10.5 million long-acting, single-ingredient guaifenesin
    prescriptions were written by physicians and dispensed by
    pharmacists. As a result of the FDAs removal of all
    competing long-acting, single-ingredient guaifenesin products
    from the U.S. market in December 2003, Mucinex SE is now
    the only long-acting guaifenesin product available in the United
    States. Despite the FDAs removal of the unapproved
    products from the market, physicians continue to write
    prescriptions for these products. In order to switch
    prescriptions for these guaifenesin products to physician
    recommenda-

6



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | tions for Mucinex SE and Mucinex DM, our 100-person internal
    professional sales force details our Mucinex products to the
    approximately 25,000 physicians who have traditionally written
    the majority of long-acting guaifenesin prescriptions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Expand the Market by Educating Healthcare Professionals about
    the Benefits of Long-Acting Guaifenesin. The prescription
    market for long-acting guaifenesin historically consisted
    primarily of generic products. As a result, physicians,
    pharmacists and other healthcare professionals were not
    regularly detailed about the benefits of long-acting
    guaifenesin. Our sales force seeks to educate these
    professionals as to the therapeutic value of long-acting
    guaifenesin in an effort to expand the market for our current
    and future products. We have also organized a panel of leading
    physicians specializing in respiratory care to study the use of
    long-acting guaifenesin products and to further establish the
    products as valuable therapeutic agents in the field.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Build the Mucinex Brand in the Consumer Market. While
    guaifenesin in short-acting (immediate-release) formulations is
    a common ingredient in numerous OTC cough, cold and sinus
    remedies, long-acting guaifenesin was available only by
    prescription until the FDAs approval of Mucinex SE as an
    OTC product. According to IRI, for the 52-week period ended
    August 7, 2005, the retail OTC market for cough, cold,
    allergy, and sinus remedies was approximately $2.8 billion.
    Our consumer advertising strategy is to educate consumers about
    the unique benefits of Mucinex and encourage consumers to try
    our products. We seek to position Mucinex as the preferred brand
    for relief from congestion due to excess mucus, a symptom common
    to most respiratory ailments. Our current advertising campaign
    features an animated character called Mr. Mucus
    and the tag-line Mucinex In, Mucus Out. We believe
    this campaign will expand consumer awareness of Mucinex and
    create a sustainable brand. A recent survey we sponsored
    demonstrates that after use of a Mucinex product, 82% of those
    surveyed indicate that they will definitely or probably purchase
    a Mucinex product again.
|
| |  | Launch New Products Under Our Existing Brands. We seek to
    capture a larger share of the OTC cough, cold, allergy, and
    sinus market by launching new products under our Mucinex and
    Humibid brands. Our first three line extensions are Mucinex DM,
    Mucinex D and Humibid, which incorporate our patented technology
    for long-acting guaifenesin. We intend to launch Mucinex D in
    second quarter of fiscal 2006, Humibid in the first-half of
    calendar 2006 and the maximum strength versions of our
    guaifenesin combination products in the second-half of calendar
    2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Develop Prescription Respiratory Products. We are
    currently considering a number of product candidates for the
    prescription market and recently in-licensed erdosteine, a
    regulator of mucus production. In addition, by applying our
    patented technology, we plan to develop products that combine
    long-acting guaifenesin with prescription active ingredients. We
    will use our existing professional sales force to market these
    products to physicians we currently target. Our product
    development expenses were approximately $7.4 million,
    $3.1 million and $4.5 million for the fiscal years
    ended June 30, 2005, 2004 and 2003, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Continue to In-License or Acquire Pharmaceutical Respiratory
    Products and Brands. We intend to expand our product
    portfolio by selectively in-licensing or acquiring prescription
    or OTC products in the respiratory market. We will focus on
    prescription products in the later stages of development and OTC
    brands that we believe can be expanded in the cough, cold,
    allergy, and sinus market. As part of this strategy, we acquired
    the Humibid brand, historically a strong brand in the
    long-acting prescription guaifenesin marketplace. We believe
    this brand will provide us with a platform from which to launch
    the maximum strength version of our products and to take
    advantage of the awareness the Humibid brand enjoys among
    physicians, pharmacists and other healthcare professionals. In
    addition, we are evaluating licensing respiratory prescription
    products available outside the United States and may seek FDA
    approval to introduce them in the U.S. market. In May 2005,
    we in-licensed erdosteine, which is currently approved for use
    in Europe, South Africa and Asia for treatment of respiratory
    infections, bronchitis and COPD. We expect to begin clinical      

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| |  |                                                                                                            
| |  | -----------------------------------------------------------------------------------------------------------
| |  | trials in fiscal year 2006, pending the filing of an
    investigational new drug application with the FDA.

Our Products


|                    |  |                    |                            |        |             |                 |               |           |  |   |       | 
|------------------- |  | ------------------ | -------------------------- | ------ | ----------- | --------------- | ------------- | --------- |  | - | ----- | 
|                    |  |                    |                            |        |             | 12-Months Ended |              
|                    |  |                    |                            | Fiscal |             |                 | June 30, 2005 |          
|Product             |  | Active Ingredients |                            |        | Launch Year |                 |               | Net Sales | 
|                    |  |                    |                            |        |             |                 |               |           | 
|                    |  |                    |                            |        |             | (In millions)   |              
|Mucinex SE          |  |                    | 600 mg guaifenesin         |        |             |                 | 2003          |           |  | $ | 117.4 | 
|Mucinex DM          |  |                    | 600 mg guaifenesin/        |        |             |                 |               |           |  |   |       | 
|                    |  |                    | 30 mg dextromethorphan HBr |        |             |                 | 2005          |           |  |   | 38.3  | 
|Mucinex D           |  |                    | 600 mg guaifenesin/        |        |             |                 |               |           |  |   |       | 
|                    |  |                    | 60 mg pseudoephedrine HCl  |        |             |                 | 2006          | *         |  |   |      | 
|Humibid             |  |                    | 1200 mg guaifenesin        |        |             |                 | 2006          | *         |  |   |      | 
|Maximum Strength DM |  |                    | 1200 mg guaifenesin/       |        |             |                 |               |           |  |   |       | 
|                    |  |                    | 60 mg dextromethorphan HBr |        |             |                 | 2007          | *         |  |   |      | 
|Maximum Strength D  |  |                    | 1200 mg guaifenesin/       |        |             |                 |               |           |  |   |       | 
|                    |  |                    | 120 mg pseudoephedrine HCl |        |             |                 | 2007          | *         |  |   |      | 






|  |                            
|- | ---------------------------
|* | Proposed fiscal launch year

Mucinex SE.


Mucinex DM.


Mucinex D.


Maximum Strength Guaifenesin Product Line. tm


8



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Other Products. tm tm tm


The FDAs Removal of Competing Products. tm tm


Product Pipeline.


Our Sales and Marketing Strategy




Professional Marketing. tm


9



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tm


Consumer Marketing.


Trade Sales and Distribution




|                        |  |                           |       |   |      |  |       |      |  |  |       |  
|----------------------- |  | ------------------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                        |  | Percentage of Gross Sales |      
|                        |  |                           |      
|Channel of Distribution |  | 2005                      |       |   | 2004 |  |       | 2003 | 
|                        |  |                           |       |   |      |  |       |      | 
|Wholesale Drug          |  |                           | 34.44 | % |      |  | 69.49 | %    |  |  | 89.83 | %
|Drug                    |  |                           | 32.54 |   |      |  | 18.70 |      |  |  | 6.59  |  
|Mass                    |  |                           | 19.03 |   |      |  | 6.96  |      |  |  | 1.82  |  
|Food                    |  |                           | 13.40 |   |      |  | 4.16  |      |  |  | 1.71  |  
|Other                   |  |                           | 0.59  |   |      |  | 0.68  |      |  |  | 0.05  |  

tm


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|                        |  |           |                   | 
|----------------------- |  | --------- | ----------------- | 
|Channel of Distribution |  | Customers |                  
|                        |  |           |                  
|Wholesale Drug          |  |           | AmerisourceBergen | 
|                        |  |           | Cardinal Health   | 
|                        |  |           | McKesson*         | 
|Drug                    |  |           | CVS*              | 
|                        |  |           | Brooks/Eckerd     | 
|                        |  |           | Rite Aid          | 
|                        |  |           | Walgreens*        | 
|Food                    |  |           | Albertsons        | 
|                        |  |           | Kroger            | 
|                        |  |           | Safeway           | 
|Mass                    |  |           | Kmart             | 
|                        |  |           | Target            | 
|                        |  |           | Wal-Mart*         | 






|  |                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------
|* | Represents customers who each accounted for greater than 10% of
    our gross sales for the fiscal year ended June 30, 2005.





|           |  |                              |       |  |      |  |       |                |  |  |       |  |  |      |       |  |                |  |       |  |  |  |       | 
|---------- |  | ---------------------------- | ----- |  | ---- |  | ----- | -------------- |  |  | ----- |  |  | ---- | ----- |  | -------------- |  | ----- |  |  |  | ----- | 
|           |  | ACV 52-Weeks Ended August 7, |      
|           |  |                              |      
|           |  | 2005                         |       |  | 2004 | 
|           |  |                              |       |  |      | 
|           |  | Drug                         |       |  | Food |  |       | Food/Drug/Mass |  |  | Drug  |  |  | Food |       |  | Food/Drug/Mass | 
|           |  |                              |       |  |      |  |       |                |  |  |       |  |  |      |       |  |                | 
|Mucinex SE |  |                              | 86.6% |  |      |  | 45.8% |                |  |  | 69.9% |  |  |      | 54.8% |  |                |  | 11.9% |  |  |  | 33.8% | 
|Mucinex DM |  |                              | 63.1% |  |      |  | 30.0% |                |  |  | 47.9% |  |  |      | 0.0%  |  |                |  | 0.0%  |  |  |  | 0.0%  | 



Segment and Geographic Information






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Government Regulation






| |                     
| | --------------------
| | FDA Approval Process





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | New Drug Applications. NDAs are the standard applications
    required for new drug products and require extensive original
    clinical data demonstrating the safety and efficacy of the
    product candidate. Typically, NDAs require three phases of human
    clinical trials. In Phase I, the product candidate is
    introduced into humans and tested for safety, dose ranges and
    pharmacokinetics. In Phase II, the product candidate is
    introduced into a slightly larger patient population to assess
    efficacy for specific indications, assess response rates
    tolerance, determine optimal dose, and identify safety risks and
    adverse effects. In Phase III, the product candidate is
    introduced in an expanded patient population at multiple
    geographically dispersed sites to further test for safety and
    clinical efficacy. In addition, prior to beginning the human
    clinical trial work required for either a NDA or
    Section 505(b)(2) NDA, an applicant must obtain approval to
    begin this clinical testing by submitting an Investigational New
    Drug application, or IND, to the FDA, which includes the results
    of preclinical animal studies.                                                                                                                                                                  
|
| |  | Abbreviated New Drug Applications. An ANDA is a type of
    application in which approval is based on a showing of
    sameness to an already approved drug product. ANDAs
    do not contain full reports of safety and effectiveness as
    required in NDAs but rather demonstrate that their proposed
    products are the same as reference products with
    regard to their conditions of use, active ingredients, route of
    administration, dosage form, strength, and labeling. ANDA
    applicants are also required to demonstrate the bioequivalence
    of their products to the reference product. Bioequivalence
    generally means that there is no significant difference in the
    rate and extent to which the active ingredients enter the
    blood-stream and become available at the site of drug action.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | 505(b)(2) Applications. If a proposed product represents
    a change from an already approved product, and therefore does
    not qualify for an ANDA, the applicant may be able to submit a
    Section 505(b)(2) NDA or 505(b)(2) application. A 505(b)(2)
    application is made pursuant to Section 505(b)(2) of the
    FDCA and is a NDA that relies on one or more investigations
    conducted by a party other than the applicant in connection with
    an existing approved product. The FDA has determined that
    505(b)(2) applications may be submitted for products that
    represent changes from approved products in conditions of use,
    active ingredients, route of administration, dosage form,
    strength, or bioavailability. A 505(b)(2) applicant must
    reference an approved product as well as the related safety data
    on which it proposes to rely. The applicant must also provide
    the FDA with any additional clinical data necessary to
    demonstrate the safety and effectiveness of the product with the
    proposed changes. Consequently, while an applicant avoids
    duplication of preclinical and certain clinical safety and
    efficacy studies through the use a 505(b)(2) application, the
    applicant is usually required to perform at least one additional
    human clinical study in support of the application.



12



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Approval of Our Existing Guaifenesin Products.


|                                                               |  |            |                |                |            |  |              |              |  |  |                | 
|-------------------------------------------------------------- |  | ---------- | -------------- | -------------- | ---------- |  | ------------ | ------------ |  |  | -------------- | 
|                                                               |  |            |                | 505(b)(2)      |            |  |             
|                                                               |  |            |                | Application or |            |  |             
|                                                               |  |            |                | Supplement     |            |  |             
|Product                                                        |  | IND Filing |                |                | Submission |  |              | FDA Approval | 
|                                                               |  |            |                |                |            |  |              |              | 
|Mucinex SE                                                     |  |            | June 1998      |                |            |  | June 2000    |              |  |  | July 2002      | 
|Humibid                                                        |  |            | June 1998      |                |            |  | August 2002  |              |  |  | December  2002 | 
|Mucinex DM                                                     |  |            | September 2000 |                |            |  | June 2003    |              |  |  | April 2004     | 
|Maximum strength guaifenesin/ dextromethorphan HBr combination |  |            | September 2000 |                |            |  | June 2003    |              |  |  | April 2004     | 
|Mucinex D                                                      |  |            | September 2000 |                |            |  | January 2003 |              |  |  | June 2004      | 
|Maximum strength guaifenesin/ pseudoephedrine HCl combination  |  |            | September 2000 |                |            |  | January 2003 |              |  |  | June 2004      | 



13



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##### Table of Contents











| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the warning letter recipients were required to cease
    manufacturing unapproved single-ingredient guaifenesin
    extended-release products no later than May 21, 2003;
|
| |  | no distribution (including distribution by secondary wholesalers
    or other distributors) could occur after October 23,
    2003; and                                  
|
| |  | no retail sales could occur after November 30, 2003.                                                                                                                     





| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | Effective Market Exclusivity for Long-Acting,
    Single-Ingredient Guaifenesin Products



14



---



##### Table of Contents





Other Regulation






Reimbursement






Manufacturing


The Cardinal Health Supply Agreement.


15



---



##### Table of Contents











Raw Material Sourcing Arrangements.




16



---



##### Table of Contents



Intellectual Property












A, A


tm


17



---



##### Table of Contents





tm tm tm tm


Competition








| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Pfizer, Inc. (Sudafed® and Benadryl®);                                                                                                                                                           
|
| |  | The Procter & Gamble Company (Dayquil® and
    Nyquil®);                                                                                                                                         
|
| |  | McNeil Consumer and Specialty Pharmaceuticals, a division of
    McNeil-PPC, Inc., which is an operating company of
    Johnson & Johnson (Tylenol Cold and Flu® and
    Motrin Cold and Sinus®);
|
| |  | Wyeth (Robitussin®, Dimetapp® and Advil Cold and
    Sinus®);                                                                                                                                    
|
| |  | Novartis Consumer Health, a division of Novartis AG
    (Theraflu® and Triaminic®);                                                                                                              
|
| |  | Schering-Plough Corp. (Claritin®, Coricidin® and
    Drixoral®); and                                                                                                                             
|
| |  | Bayer AG (Alka Seltzer Plus Cold® and Aleve Cold and
    Sinus®).                                                                                                                                



18



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##### Table of Contents







Employees




Access to Our Filings with the Securities and Exchange
Commission


www.adamsrt.com


www.sec.gov







|        |           
|------- | ----------
|Item 2. | Properties








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders





19



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##### Table of Contents













20



---



##### Table of Contents






PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market For Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Information and Holders






Dividends




Securities Authorized for Issuance Under Equity Compensation
Plans




|                                                           |  |                   |           |  |                  |            |      |                      |  |  |           | 
|---------------------------------------------------------- |  | ----------------- | --------- |  | ---------------- | ---------- | ---- | -------------------- |  |  | --------- | 
|                                                           |  |                   |           |  |                  | Number of  |     
|                                                           |  |                   |           |  |                  | Securities |     
|                                                           |  | Number of         |           |  | Weighted-        |            |      | Remaining Available  | 
|                                                           |  | Securities to be  |           |  | Average Exercise |            |      | for Future Issuance  | 
|                                                           |  | Issued Upon       |           |  | Price of         |            |      | Under Equity         | 
|                                                           |  | Exercise of       |           |  | Outstanding      |            |      | Compensation Plans   | 
|                                                           |  | Outstanding       |           |  | Options,         |            |      | (Excluding           | 
|                                                           |  | Options, Warrants |           |  | Warrants and     |            |      | Securities Reflected | 
|Plan Category                                              |  | and Rights        |           |  | Rights           |            |      | in Second Column)    | 
|                                                           |  |                   |           |  |                  |            |      |                      | 
|Equity compensation plans approved by security holders     |  |                   | 3,247,303 |  |                  | $          | 1.98 |                      |  |  | 2,737,802 | 
|Equity compensation plans not approved by security holders |  |                   |          |  |                  |            |     |                      |  |  |          | 
|Total                                                      |  |                   | 3,247,303 |  |                  | $          | 1.98 |                      |  |  | 2,737,802 | 

Use of Proceeds from Registered Securities




21



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##### Table of Contents







|                                     |  |            |           |                 |            |   |             |        |  |  |                 |  |  |   |             | 
|------------------------------------ |  | ---------- | --------- | --------------- | ---------- | - | ----------- | ------ |  |  | --------------- |  |  | - | ----------- | 
|                                     |  |            |           | Aggregate Price |            |   |             |        | 
|                                     |  | Shares     |           |                 | of Shares  |   |             | Shares |  |  | Aggregate Price | 
|                                     |  | Registered |           |                 | Registered |   |             | Sold   |  |  | of Shares Sold  | 
|                                     |  |            |           |                 |            |   |             |        |  |  |                 | 
|Adams Respiratory Therapeutics, Inc. |  |            | 6,889,500 |                 |            | $ | 117,121,500 |        |  |  | 6,889,500       |  |  | $ | 117,121,500 | 
|Selling Stockholders                 |  |            | 2,253,000 |                 |            | $ | 38,301,000  |        |  |  | 2,253,000       |  |  | $ | 38,301,000  | 





Recent Sales of Unregistered Securities




Issuances of Capital Stock.




Issuance of Former Series B Preferred Stock.






22



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##### Table of Contents



Stock Option Grants.







|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |         |       |   |   |         |       |  
|--------------------------------------------------- | ------- | ---------------------------------------- | -------- | ------ | ---- | - | ------- | ---- |  | - | ------- | ----- | - | ---- | ------- | ----- | - | - | ------- | ----- | -
|                                                    |         | Years Ended June 30,                     |         
|                                                    |         |                                          |         
|                                                    |         | 2005                                     |          |        | 2004 |   |         | 2003 |  |   | 2002    |       |   | 2001 |        
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|                                                    |         | (In thousands, except per share amounts) |         
|Statements of Operations Data                       |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |         |       |   |   |         |      
|Net sales                                           |         | $                                        | 160,210  |        |      | $ | 61,295  |      |  | $ | 14,038  |       |   | $    | 13,755  |       |   | $ | 9,996   |      
|Cost of goods sold                                  |         |                                          | 31,126   |        |      |   | 11,928  |      |  |   | 5,252   |       |   |      | 4,024   |       |   |   | 6,134   |      
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|Gross margin                                        |         |                                          | 129,084  |        |      |   | 49,367  |      |  |   | 8,786   |       |   |      | 9,731   |       |   |   | 3,862   |      
|Selling, marketing and administrative(1)            |         |                                          | 78,044   |        |      |   | 23,286  |      |  |   | 23,310  |       |   |      | 17,968  |       |   |   | 12,875  |      
|Product development                                 |         |                                          | 7,392    |        |      |   | 3,181   |      |  |   | 4,542   |       |   |      | 7,419   |       |   |   | 3,580   |      
|Interest expense                                    |         |                                          | 101      |        |      |   | 3,403   |      |  |   | 3,601   |       |   |      |        |       |   |   | 228     |      
|Interest income                                     |         |                                          | (890     | )      |      |   | (205    | )    |  |   | (29     | )     |   |      | (180    | )     |   |   |        |      
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|Income/(loss) before income taxes                   |         |                                          | 44,437   |        |      |   | 19,702  |      |  |   | (22,638 | )     |   |      | (15,476 | )     |   |   | (12,821 | )    
|Provision/(benefit) for income taxes                |         |                                          | 17,438   |        |      |   | (16,124 | )    |  |   |        |       |   |      |        |       |   |   |        |      
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|Net income/(loss)                                   |         |                                          | 26,999   |        |      |   | 35,826  |      |  |   | (22,638 | )     |   |      | (15,476 | )     |   |   | (12,821 | )    
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|Accretion of preferred stock                        |         |                                          | (202,566 | )      |      |   | (28,100 | )    |  |   | 8,204   |       |   |      | (7,619  | )     |   |   | (6,977  | )    
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|Dividend paid to preferred stockholders             |         |                                          | (30,033  | )      |      |   |        |      |  |   |        |       |   |      |        |       |   |   |        |      
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|Net (loss)/income applicable to common stockholders |         | $                                        | (205,600 | )      |      | $ | 7,726   |      |  | $ | (14,434 | )     |   | $    | (23,095 | )     |   | $ | (19,798 | )    
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|(Loss)/income per common share                      |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |         |       |   |   |         |      
|                                                    | Basic   |                                          | $        | (32.97 | )    |   | $       | 1.64 |  |   | $       | (4.66 | ) |      | $       | (7.47 | ) |   | $       | (8.08 | )
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|                                                    | Diluted |                                          | $        | (32.97 | )    |   | $       | 0.90 |  |   | $       | (4.66 | ) |      | $       | (7.47 | ) |   | $       | (8.08 | )
|                                                    |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |        
|Pro forma income per common share(2)                |         |                                          |          |        |      |   |         |      |  |   |         |       |   |      |         |       |   |   |         |      
|                                                    | Basic   |                                          | $        | 1.16   |      |   |         |      |  |   |         |       |   |      |         |       |   |   |         |       |  
|                                                    | Diluted |                                          | $        | 0.95   |      |   |         |      |  |   |         |       |   |      |         |       |   |   |         |       |  






|    |                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------
|(1) | Selling, marketing and administrative includes non-cash
    stock-based compensation expense as follows:

23



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| |  |                      |     |  |      |   |     |      |  |   |      |  |  |      |       |  |  |   |       | 
| |  | -------------------- | --- |  | ---- | - | --- | ---- |  | - | ---- |  |  | ---- | ----- |  |  | - | ----- | 
| |  | Years Ended June 30, |    
| |  |                      |    
| |  | 2005                 |     |  | 2004 |   |     | 2003 |  |   | 2002 |  |  | 2001 |      
| |  |                      |     |  |      |   |     |      |  |   |      |  |  |      |      
| |  | (In thousands)       |    
| |  | $                    | 477 |  |      | $ | 686 |      |  | $ | 880  |  |  | $    | 1,292 |  |  | $ | 1,256 | 



|    |                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Please see Note 1 to our financial statements for an
    explanation of the method used to compute pro forma earnings per
    common share, basic and diluted, and the number of shares used
    in computing per share amounts.

|                                       |  |                |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|-------------------------------------- |  | -------------- | -------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                       |  | At June 30,    |         
|                                       |  |                |         
|                                       |  | 2005           |          |   | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                       |  |                |          |   |      |   |         |      |  |   |         |   |  |      |        
|                                       |  | (In thousands) |         
|Balance Sheet Data                     |  |                |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Cash and cash equivalents              |  | $              | 24,655   |   |      | $ | 43,391  |      |  | $ | 9,405   |   |  | $    | 7,272   |   |  | $ | 1,507   |  
|Working capital                        |  |                | 32,736   |   |      |   | 47,151  |      |  |   | 5,230   |   |  |      | 6,766   |   |  |   | (3,155  | )
|Total assets                           |  |                | 63,840   |   |      |   | 71,035  |      |  |   | 20,382  |   |  |      | 17,350  |   |  |   | 9,784   |  
|Long-term liabilities                  |  |                | 2,281    |   |      |   | 2,731   |      |  |   | 14,873  |   |  |      |        |   |  |   |        |  
|Redeemable convertible preferred stock |  |                | 316,455  |   |      |   | 110,851 |      |  |   | 60,647  |   |  |      | 68,851  |   |  |   | 36,620  |  
|Accumulated deficit                    |  |                | (289,193 | ) |      |   | (68,626 | )    |  |   | (76,352 | ) |  |      | (61,918 | ) |  |   | (38,823 | )
|Total stockholders deficit            |  | $              | (273,625 | ) |      | $ | (56,997 | )    |  | $ | (64,169 | ) |  | $    | (56,517 | ) |  | $ | (34,721 | )

24



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

You should read the following discussion and analysis of our
financial condition and results of operations together with our
financial statements and related notes appearing elsewhere in
this 10-K. Some of the information contained in this
discussion and analysis or set forth elsewhere in
this 10-K, including information with respect to our plans
and strategy for our business and related financing, includes
forward-looking statements that involve risks and uncertainties.
You should review the section entitled Risk Factors
of this 10-K for a discussion of important factors that
could cause our actual results to differ materially from the
results described in or implied by the forward-looking
statements contained in the following discussion and
analysis.


Overview




Mucinex SE.


Mucinex DM.


Future Products.


Revenue Growth.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The FDAs removal of competitive long-acting,
    single-ingredient guaifenesin prescription products after
    November 2003. This removal resulted in Mucinex SEs
    status as the only long-acting, single-ingredient guaifenesin
    product available in the United States. Based on data from IMS
    Health 
    NPAtm,
    we estimate that, for the 12 months ended June 30, 2003,
    approximately 10.5 million prescriptions were filled for
    long-acting, single-ingredient guaifenesin products. After
    November 2003, we believe that a majority of prescriptions
    written for long-acting, single-ingredient guaifenesin resulted
    in OTC sales of our Mucinex SE product.
|
| |  | Our professional marketing efforts to physicians, pharmacists
    and other healthcare professionals. Our professional sales
    force targets high-prescribers of long-acting guaifenesin
    products and encourages them to recommend Mucinex SE and Mucinex
    DM to their patients. Our professional sales force also educates
    physicians, pharmacists and other healthcare professionals about
    the benefits of long-acting guaifenesin. In December 2004, we
    expanded our professional sales force from 50 to 100 sales
    representatives.                                                                                                                                          
|
| |  | Expansion of our trade sales department and trade development
    efforts. Our trade sales force calls on national and
    regional retail accounts and wholesale distribution companies.
    The primary focus of our trade sales force is to maximize our
    shelf presence at retail drug, food and mass merchandise stores
    to support the efforts of our professional sales representatives
    and consumer advertising                                                                                                                                                                                                                                                                        

25



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| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | campaign. Between December 2003 and June 2005, we grew our trade
    sales force from one to 10 professionals.                                                                                                                                                                                                                                                                      
|
| |  | Consumer advertising campaign. Prior to the FDAs
    approval of Mucinex SE as an OTC drug, long-acting guaifenesin
    and combination products were available only by prescription. We
    launched our consumer advertising campaign in November 2004, and
    our strategy is to educate customers about the unique benefits
    of Mucinex to encourage trial of our products.

Results of Operations.


Seasonality.


Future Growth.


Recent Developments.






Critical Accounting Policies and Estimates




26



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##### Table of Contents







Revenue Recognition.


Sales Returns and Allowances.




|                                                   |  |          |       |  |      |   |       | 
|-------------------------------------------------- |  | -------- | ----- |  | ---- | - | ----- | 
|                                                   |  | June 30, |      
|                                                   |  |          |      
|                                                   |  | 2005     |       |  | 2004 |  
|                                                   |  |          |       |  |      |  
|Product returns                                    |  | $        | 5,884 |  |      | $ | 3,622 | 
|Chargebacks                                        |  |          | 2,473 |  |      |   | 2,332 | 
|Rebates and other                                  |  |          | 1,590 |  |      |   | 1,000 | 
|                                                   |  |          |       |  |      |  
|Accrued returns, chargebacks, rebates and other(1) |  | $        | 9,947 |  |      | $ | 6,954 | 
|                                                   |  |          |       |  |      |  
|Cash discounts(2)                                  |  | $        | 170   |  |      | $ | 143   | 
|Trade promotions(2)                                |  | $        | 2,108 |  |      | $ | 988   | 






|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Accrued returns, chargebacks, rebates and other sales allowances
    are reported in total under current liabilities on the Balance
    Sheet.
|   
|(2) | Cash discounts and trade promotions are reported as valuation
    allowances against accounts receivable on the Balance Sheet.                

27



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|                                                               |  |         |        |       |            |   |                   |                  |  |   |        |  
|-------------------------------------------------------------- |  | ------- | ------ | ----- | ---------- | - | ----------------- | ---------------- |  | - | ------ | -
|                                                               |  |         |        | Other |            |   | Total Accrued     |                 
|                                                               |  |         |        | Sales |            |   | Returns and Other |                 
|                                                               |  | Returns |        |       | Allowances |   |                   | Sales Allowances | 
|                                                               |  |         |        |       |            |   |                   |                  | 
|Balance at June 30, 2003                                       |  |         | 3,000  |       |            |   | 649               |                  |  |   | 3,649  |  
|Provision made to sales during the period                      |  |         | 3,303  |       |            |   | 7,396             | (a)              |  |   | 10,699 |  
|Payments/credits                                               |  |         | (2,681 | )     |            |   | (4,713            | )(a)             |  |   | (7,394 | )
|                                                               |  |         |        |       |            |   |                   |                  | 
|Balance at June 30, 2004                                       |  |         | 3,622  |       |            |   | 3,332             |                  |  |   | 6,954  |  
|Assumed liability for Humibid returns                          |  |         | 3,000  |       |            |   |                  |                  |  |   | 3,000  |  
|Provision made to sales during the period                      |  |         | 486    |       |            |   | 6,648             |                  |  |   | 7,134  |  
|Provision/(benefit) related to sales made during prior periods |  |         | 1,217  |       |            |   | (1,045            | )                |  |   | 172    |  
|Payments/credits                                               |  |         | (2,441 | )     |            |   | (4,872            | )                |  |   | (7,313 | )
|                                                               |  |         |        |       |            |   |                   |                  | 
|Balance at June 30, 2005                                       |  | $       | 5,884  |       |            | $ | 4,063             |                  |  | $ | 9,947  |  
|                                                               |  |         |        |       |            |   |                   |                  | 






|    |  |                                                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Includes approximately $1.0 million related to a
    retroactive 32% price reduction that was announced and completed
    during fiscal year 2004.

Product Returns. tm


tm




28



---



##### Table of Contents





Chargebacks.






Rebates and Other Sales Allowances.


29



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##### Table of Contents





Cash Discounts.


Trade Promotions.


Cardinal Health Profit Share.






|                                                     |  |                     |      |   |                     |   |     | 
|---------------------------------------------------- |  | ------------------- | ---- | - | ------------------- | - | --- | 
|                                                     |  | Contract Year Ended |      |   | Contract Year Ended |  
|                                                     |  | March 31, 2005      |      |   | March 31, 2006      |  
|                                                     |  |                     |      |   |                     |  
|                                                     |  | (In millions)       |     
|Total profit share payments to Cardinal Health       |  | $                   | 13.4 |   |                     | $ | 3.4 | 
|Profit share earned by Cardinal Health  FY 2004(1)  |  |                     | 1.4  |   |                     |   |    | 
|Profit share earned by Cardinal Health  FY 2005(1)  |  |                     | 7.6  |   |                     |   | 1.9 | 
|Profit share included in ending inventory(2)         |  |                     | 0.5  |   |                     |   | 1.0 | 
|                                                     |  |                     |      |   |                     |  
|Excess profit share payments made to Cardinal Health |  |                     | 3.9  |   |                     |   | 0.5 | 
|                                                     |  |                     |      |   |                     |  
|Payments made by Cardinal                            |  |                     | (1.3 | ) |                     |   |    | 
|                                                     |  |                     |      |   |                     |  
|Balance due from Cardinal June 30, 2005(3)           |  | $                   | 2.6  |   |                     | $ | 0.5 | 
|                                                     |  |                     |      |   |                     |  






|    |                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Earned profit share is included in cost of goods sold. For the
    2005 contract year, the actual profit share amount was used. For
    the 2006 contract year, the estimated effective profit share was
    used to record the profit share earned for the fourth quarter of
    fiscal year 2005.
|   
|(2) | Amounts included in ending inventory at March 31, 2005 for
    2005 contract year and as of June 30, 2005 for 2006
    contract year.                                                                                                                                                              

30



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##### Table of Contents





|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(3) | Excess profit share payments are included in prepaid expenses
    and other assets at June 30, 2005.





Income Taxes. Accounting for Income Taxes.




Stock-Based Compensation. Accounting for
Stock-Based Compensation Accounting for Stock-Based
Compensation  Transition and Disclosure




Accretion of Preferred Stock.


31



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##### Table of Contents







Significant Factors, Assumptions and Methodologies Used in
Determining Fair Value.




| |   |                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------
| |  | Trailing 12 month sales;                                                                                  
|
| |  | Key milestones;                                                                                           
|
| |  | Comparable company and industry analysis;                                                                 
|
| |  | Third party preferred stock investments and the impact of those
    investments on the common stock value;
|
| |  | Third party offer to acquire the business; and                                                            
|
| |  | Anticipated initial public offering price per share and the
    timing of the initial public offering.    



Operating Expenses


Product Development.




32



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##### Table of Contents



Selling, Marketing and Administrative.










Results of Operations




| |                                                                                
| | -------------------------------------------------------------------------------
| | Fiscal Year Ended June 30, 2005 Compared to Fiscal
    Year Ended June 30, 2004

Net Sales. tm


tm tm




|               |  |                     |         |  |           |   |        |            |  |   |        |  
|-------------- |  | ------------------- | ------- |  | --------- | - | ------ | ---------- |  | - | ------ | -
|               |  | Year Ended June 30, |         |  |          
|               |  |                     |         |  | Increase/ |  
|Product        |  | 2005                |         |  | 2004      |   |        | (Decrease) | 
|               |  |                     |         |  |           |   |        |            | 
|               |  | (In thousands)      |        
|Mucinex SE     |  | $                   | 117,369 |  |           | $ | 52,863 |            |  | $ | 64,506 |  
|Mucinex DM     |  |                     | 38,278  |  |           |   |       |            |  |   | 38,278 |  
|Other products |  |                     | 4,563   |  |           |   | 8,432  |            |  |   | (3,869 | )
|               |  |                     |         |  |           |   |        |            | 
|Net Sales      |  | $                   | 160,210 |  |           | $ | 61,295 |            |  | $ | 98,915 |  
|               |  |                     |         |  |           |   |        |            | 

Cost of Goods Sold.


33



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Selling, Marketing and Administrative.




Product Development.


Interest Expense.


Interest Income.


Income Taxes.


34



---



##### Table of Contents





Accretion of Preferred Stock.


Dividend Paid to Preferred Stockholders.




| |                                                                                
| | -------------------------------------------------------------------------------
| | Fiscal Year Ended June 30, 2004 Compared to Fiscal
    Year Ended June 30, 2003

Net Sales.


Cost of Goods Sold.


Selling, Marketing and Administrative.


Product Development.


35



---



##### Table of Contents





Interest Expense.


Interest Income.


Income Taxes.


Accretion of Preferred Stock.


Liquidity and Capital Resources








36



---



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|                            |  |            |     | 
|--------------------------- |  | ---------- | --- | 
|                            |  | Mark-Up    |    
|Contract Year Ending        |  | Percentage |    
|                            |  |            |    
|March 31, 2005              |  |            | 75% | 
|March 31, 2006              |  |            | 50% | 
|March 31, 2007 through 2015 |  |            | 30% | 







37



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Cash Flows


Fiscal year ended June 30, 2005 compared to fiscal year
ended June 30, 2004.


tm




Fiscal Year ended June 30, 2004 compared to fiscal year
ended June 30, 2003.






38



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##### Table of Contents



Commitments and Contractual Obligations




|                                |       |                |       |           |        |   |       |           |  |   |           |       |  |         |       |       |  |   |       |       | 
|------------------------------- | ----- | -------------- | ----- | --------- | ------ | - | ----- | --------- |  | - | --------- | ----- |  | ------- | ----- | ----- |  | - | ----- | ----- | 
|                                |       |                |       | Less Than |        |   |       |           |  |   | More Than |      
|                                |       | Total          |       |           | 1 Year |   |       | 1-3 Years |  |   | 3-5 Years |       |  | 5 Years |      
|                                |       |                |       |           |        |   |       |           |  |   |           |       |  |         |      
|                                |       | (In thousands) |      
|Operating leases(1)             |       | $              | 5,853 |           |        | $ | 1,354 |           |  | $ | 1,512     |       |  | $       | 987   |       |  | $ | 2,000 |      
|Purchase obligations(2)         |       |                | 2,193 |           |        |   | 1,677 |           |  |   | 516       |       |  |         |      |       |  |   |      |      
|Cardinal Health profit share(3) |       |                | 3,000 |           |        |   |      |           |  |   | 3,000     |       |  |         |      |       |  |   |      |      
|Royalty payments(4)             |       |                | 4,650 |           |        |   | 550   |           |  |   | 1,100     |       |  |         | 1,000 |       |  |   | 2,000 |      
|Consulting payments(5)          |       |                | 783   |           |        |   | 783   |           |  |   |          |       |  |         |      |       |  |   |      |      
|                                |       |                |       |           |        |   |       |           |  |   |           |       |  |         |      
|                                | Total |                | $     | 16,479    |        |   | $     | 4,364     |  |   | $         | 6,128 |  |         | $     | 1,987 |  |   | $     | 4,000 | 
|                                |       |                |       |           |        |   |       |           |  |   |           |       |  |         |      






|    |                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes the minimum rental payments for our corporate office
    building in Chester, New Jersey, office equipment leases and
    automobile lease payments for the sales force.
|   
|(2) | Consists of commitments to purchase raw materials.                                                                                                                               
|   
|(3) | Represents minimum profit share commitments to Cardinal Health
    under the supply agreement.                                                                                   
|   
|(4) | Represents minimum royalty payments to CellTech and Cornerstone.                                                                                                                 
|   
|(5) | Includes payments for consulting arrangements primarily for
    validation projects.                                                                                             





tm tm tm


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tm tm tm










40



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Inflation




Off-Balance Sheet Arrangements




Recent Accounting Pronouncements


Share-Based Payment Accounting for Stock-Based Compensation


RISK FACTORS THAT MAY AFFECT RESULTS


Risks Relating to Our Business




| |                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend heavily on the success of our existing products,
    Mucinex SE and Mucinex DM, and the strength of the Mucinex
    brand. If we are unable to continue to successfully
    commercialize our two current products and build the Mucinex
    brand, our results of operations and future prospects will
    suffer.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We do not have our own manufacturing capability and rely
    on Cardinal Health to manufacture Mucinex SE and Mucinex DM
    at a single facility. Pursuant to our agreement with Cardinal
    Health, we have agreed to use Cardinal Health as the exclusive
    manufacturer of Mucinex SE and Mucinex DM, as well as additional
    products we develop. Currently, Cardinal Health is unable to
    manufacture enough product to meet the demand for Mucinex SE and
    Mucinex DM. If Cardinal Health continues to fail to meet our
    requirements, our results of operations may suffer.





41



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| |   |                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the possibility that third parties may not comply with the
    FDAs cGMP regulations, other regulatory requirements and
    quality assurance;                                
|
| |  | the possible breach of manufacturing agreements by third parties
    due to factors beyond our control; and                                                                    
|
| |  | the possibility of termination or nonrenewal of an agreement by
    a third party, based on their own business priorities, at a time
    that is costly or inconvenient for us.







| |                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We and Cardinal Health depend on a single supplier for
    guaifenesin, the active ingredient in our Mucinex product line,
    who has advised us that it cannot deliver the amount of
    guaifenesin we have requested in the near term, and our current
    supplier for dextromethorphan, the additional active ingredient
    in Mucinex DM, is exiting the business.



42



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| |                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We cannot ensure that the FDA will enforce removal from
    the market of the existing prescription long-acting guaifenesin
    combination products similar to Mucinex DM and Mucinex D, and we
    cannot ensure that products containing long-acting guaifenesin
    that are competitive with our products will not be introduced
    into the OTC market.





43



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| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our products and many of our product candidates rely on
    guaifenesin, which is an expectorant. If our competitors develop
    a superior expectorant, our products and our patented technology
    may be rendered obsolete.





| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend on a limited number of customers for a large
    portion of our sales and demands made by, or the loss of, one or
    more of these customers could significantly reduce our margins
    or sales and adversely affect our business and financial
    results.





| |                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We face substantial competition that may prevent us from
    maintaining or increasing market share for our existing products
    and gaining market acceptance of our future products. Our
    competitors may develop or commercialize products before or more
    successfully than us.





| |   |                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------
| |  | Pfizer, Inc. (Sudafed® and Benadryl®);                                                                                 
|
| |  | The Procter & Gamble Company (Dayquil® and
    Nyquil®);                                                               
|
| |  | McNeil PPC, Inc., an operating company of Johnson &
    Johnson (Tylenol Cold and Flu® and Motrin Cold and
    Sinus®);
|
| |  | Wyeth (Robitussin®, Dimetapp® and Advil Cold and
    Sinus®);                                                          
|
| |  | Novartis AG (Theraflu® and Triaminic®);                                                                                
|
| |  | Schering  Plough Corp. (Claritin®,
    Coricidin® and Drixoral®); and                                                 
|
| |  | Bayer AG (Alka Seltzer Plus Cold® and Aleve Cold and
    Sinus®).                                                      



44



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| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | We have generated net income for a short time and may not
    generate net income in the future.





| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | Adverse publicity associated with us or our products could
    have a material adverse effect on us.





| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | Product liability lawsuits could divert our resources,
    result in substantial liabilities and reduce the commercial
    potential of our products.



45



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| |                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we fail to obtain an adequate level of reimbursement
    for our products by Medicaid, our business may be adversely
    affected. Additionally, many state Medicaid programs do not
    cover the costs of our products and we cannot ensure that any
    Medicaid programs will continue to reimburse us for our
    products.







| |                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | Seasonal fluctuations in demand for our current Mucinex
    products may cause our operating results to vary significantly
    from quarter to quarter.



Risks Related to Product Development




| |                                                                                 
| | --------------------------------------------------------------------------------
| | We may not be successful in our efforts to expand our
    portfolio of products.





| |   |                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | developing and commercializing line extensions of Mucinex by
    combining long-acting guaifenesin with other ingredients to
    address various respiratory conditions;                 
|
| |  | developing and commercializing prescription products to address
    additional segments of the respiratory market using our platform
    technology for extended-release guaifenesin; and
|
| |  | acquiring or in-licensing additional technologies and additional
    pharmaceutical products or product candidates in the respiratory
    therapeutics market.                           



46



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| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We intend to conduct clinical trials on product candidates
    we develop or acquire in the future, which will be costly, take
    years to complete and may not ultimately be successful.





| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | our inability to obtain materials sufficient for use in
    preclinical studies and clinical trials;               
|
| |  | delays in patient enrollment and variability in the number and
    types of patients available for clinical trials;
|
| |  | difficulty in maintaining contact with patients after treatment,
    resulting in incomplete data;                 
|
| |  | inability to demonstrate effectiveness of product candidates
    during clinical trials;                           
|
| |  | unforeseen safety issues or side effects;                                                                          
|
| |  | governmental or regulatory delays and changes in regulatory
    requirements, policy and guidelines; or            
|
| |  | varying interpretation of data by the FDA.                                                                         



Regulatory Risks




| |                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Products approved for marketing remain subject to
    regulation. Complying with such regulation can be costly, and
    failure to comply could result in a loss of approvals or
    suspension of product sales.





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| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | suspend manufacturing operations;                                                     
|
| |  | change product formulations;                                                          
|
| |  | suspend the sale of products with non-complying specifications;                       
|
| |  | initiate product recalls; or                                                          
|
| |  | change product labeling, packaging or advertising or take other
    corrective action.







| |                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to obtain marketing approval for any of
    the products resulting from our development efforts and failure
    to obtain these approvals could materially harm our
    business.











| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The manufacture and packaging of pharmaceutical products
    such as our Mucinex product line are subject to the requirements
    of the FDA. If we or our third party manufacturers fail to
    satisfy these requirements, our product development and
    commercialization efforts may be materially harmed.



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our current products may cause mild side effects including
    upset stomach, nausea, vomiting, diarrhea, headache, dizziness,
    skin rash (including hives), constipation, and drowsiness. If we
    or others identify additional, more severe side effects
    associated with our current or future products, we may be
    required to withdraw our products from the market, perform
    lengthy additional clinical trials or change the labeling of our
    products, any of which would hinder or preclude our ability to
    generate revenues.





| |   |                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | regulatory authorities may withdraw their approvals;                                                                                                                                                           
|
| |  | we may be required to reformulate our products, conduct
    additional clinical trials, change the labeling of our products,
    or implement changes to obtain new approvals of
    manufacturers facilities;
|
| |  | we may recall the affected products from the market;                                                                                                                                                           
|
| |  | we may experience a significant drop in sales of the affected
    products;                                                                                                                                    
|
| |  | our reputation in the marketplace may suffer;                                                                                                                                                                  
|
| |  | we may become the target of lawsuits, including class action
    suits; and                                                                                                                                    
|
| |  | we may be required to withdraw our products from the market and
    not be able to re-introduce them into the market.                                                                                          





| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our products are subject to recalls even after receiving
    FDA regulatory clearance or approval. Recalls could harm our
    reputation and business.



49



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| |                                                                    
| | -------------------------------------------------------------------
| | Mucinex D may be subject to additional governmental
    regulation.



Risks Related to Managing Growth




| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend on our key personnel and if we are not able to
    retain them or recruit additional technical personnel, our
    business will suffer.









| |                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may undertake strategic acquisitions of technologies
    and products. Integration of such technologies and products will
    involve a variety of costs and we may never realize the
    anticipated benefits of such acquisitions.





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Risks Relating to Intellectual Property




| |                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If our patent position does not adequately protect our
    products and future products, others will be able to compete
    against us more directly, which may harm our business.







| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to protect the intellectual property
    rights related to our brands, our ability to compete effectively
    in the markets for our products could be negatively
    impacted.





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| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to protect the confidentiality of our
    trade secrets and proprietary information, our technology and
    information may be used by others to compete against us.





| |                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Legal proceedings or third party claims of intellectual
    property infringement may require us to spend time and money and
    could prevent us from developing or commercializing
    products.







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| |                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our existing U.S. patent was recently subject to a
    request for reexamination, which was granted by the USPTO upon
    appeal to the USPTO Director. If the USPTO invalidates our
    patent or substantially narrows the claims of our patent such
    that it no longer protects our products from competition, our
    business will be materially harmed.





Risks Relating to Future Financing Needs




| |                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may need additional financing, which may be difficult
    to obtain. Our failure to obtain necessary financing or doing so
    on unattractive terms could adversely affect our marketing and
    development programs and other operations.





| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the success of our commercialization of Mucinex SE and Mucinex
    DM and the costs associated with related marketing, promotional
    and sales efforts;
|
| |  | the timing of new product launches, product development and
    advancement of other product candidates into development;                                
|
| |  | potential acquisition or in-licensing of other products or
    technologies;                                                                             
|
| |  | the timing of, and the costs involved in, obtaining regulatory
    approvals;                                                                            
|
| |  | the cost of manufacturing activities, including raw material
    sourcing and regulatory compliance; and                                                 
|
| |  | the costs involved in establishing and protecting our patent,
    trademark and other intellectual property rights.                                      



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| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Our stock price is volatile; purchasers of our common
    stock could incur substantial losses.





| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | the regulatory status of potentially competitive products;                                           
|
| |  | regulatory developments;                                                                             
|
| |  | developments or disputes concerning patents or other proprietary
    rights;                         
|
| |  | our ability to manufacture products to commercial standards;                                         
|
| |  | public concern over our drugs;                                                                       
|
| |  | litigation;                                                                                          
|
| |  | the departure of key personnel;                                                                      
|
| |  | future sales of our common stock;                                                                    
|
| |  | variations in our financial results or those of companies that
    are perceived to be similar to us;
|
| |  | investors perceptions of us; and                                                                    
|
| |  | general economic, industry and market conditions.                                                    



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | If there are substantial sales of our common stock, our
    stock price could decline.







| |                                   
| | ----------------------------------
| | Risks Relating to Our Common Stock



| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | Our executive officers, directors and major stockholders
    have the ability to control all matters submitted to
    stockholders for approval.



54



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| |                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Provisions in our certificate of incorporation and under
    Delaware law may prevent or frustrate attempts by our
    stockholders to change our management and hinder efforts to
    acquire a controlling interest in us.





| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | a classified board of directors;                                                                                                             
|
| |  | limitations on the removal of directors;                                                                                                     
|
| |  | advance notice requirements for stockholder proposals and
    nominations;                                                                   
|
| |  | the inability of stockholders to act by written consent or to
    call special meetings; and                                                 
|
| |  | the ability of our board of directors to designate the terms of
    and issue new series of preferred stock without stockholder
    approval.

2 3 2 3









|         |                                                              
|-------- | -------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure About Market
    Risk





55



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures.


Changes in Internal Control Over Financial Reporting.







|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



www.adamsrt.com









|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



56



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|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Financial Statements and Schedules.




| |                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------
| | (1) The following financial statements of the Company and
    Report of Ernst & Young LLP are included in this report:

| |     |                                                                                                                                                  |  |     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
| |     | Report of Independent Registered Public Accounting Firm                                                                                          |  | F-2 
| |     | Balance Sheets as of June 30, 2005 and 2004                                                                                                      |  | F-3 
| |     | Statements of Operations for the years ended June 30, 2005,
    2004 and 2003                                                                    |  | F-4 
| |     | Statements of Redeemable Convertible Preferred Stock and
    Stockholders Equity (Deficit) for the years ended
    June 30, 2005, 2004 and 2003 |  | F-5 
| |     | Statements of Cash Flows for the years ended June 30, 2005,
    2004 and 2003                                                                    |  | F-6 
| |     | Notes to Financial Statements                                                                                                                    |  | F-7 
| | (2) | Schedule of Valuation and Qualifying Accounts                                                                                                    |  | F-28



| |             
| | ------------
| | (3) Exhibits



| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | The Exhibits listed in the Index of Exhibits appearing at
    pages 58 to 60 are included in this annual report.

Exhibits:




| |                         
| | ------------------------
| | See Item 15(a)(3) above.

Financial Statement Schedules:




| |                         
| | ------------------------
| | See Item 15(a)(2) above.

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Adams Respiratory Therapeutics, Inc.


Index to Financial Statements and Schedule


|                                                                                                                                                 |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Report of Independent Registered Public
    Accounting Firm                                                                                      |  | F-2 
|Balance Sheets as of June 30, 2005 and
    2004                                                                                                  |  | F-3 
|Statements of Operations for the years
    ended June 30, 2005, 2004 and 2003                                                                    |  | F-4 
|Statements of Redeemable Convertible
    Preferred Stock and Stockholders Equity (Deficit) for the
    years ended June 30, 2005, 2004 and 2003 |  | F-5 
|Statements of Cash Flows for the years
    ended June 30, 2005, 2004 and 2003                                                                    |  | F-6 
|Notes to Financial Statements                                                                                                                    |  | F-7 
|Schedule of Valuation and Qualifying
    Accounts                                                                                                |  | F-28

F-1



---



##### Table of Contents






Report of Independent Registered Public Accounting Firm














| |                          
| | -------------------------
| | /s/
    ERNST & YOUNG LLP







F-2



---



##### Table of Contents



Adams Respiratory Therapeutics, Inc.





Balance Sheets


(Amounts in thousands, except per share amounts)


|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |         |         |         |   |        | 
|-------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------------------------------------------------------------------------------------------- | -------- | ---- | ------- | ------- | ------- | - | ------ | 
|                                                                                                                           |                                                                                                                          | June 30,                   |                                                                                            
|                                                                                                                           |                                                                                                                          |                            |                                                                                            
|                                                                                                                           |                                                                                                                          | 2005                       |                                                                                             |          | 2004 |        
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|ASSETS                                                                                                                    
|Current assets:                                                                                                            |                                                                                                                          |                            |                                                                                             |          |      |         |         |        
|                                                                                                                           | Cash and cash equivalents                                                                                                |                            | $                                                                                           | 24,655   |      |         | $       | 43,391  |  
|                                                                                                                           | Accounts receivable, net of allowance for doubtful accounts of
    $166 and $203 at June 30, 2005 and 2004, respectively |                            |                                                                                             | 8,531    |      |         |         | 4,174   |  
|                                                                                                                           | Inventories, net                                                                                                         |                            |                                                                                             | 3,107    |      |         |         | 2,516   |  
|                                                                                                                           | Prepaid expenses and other assets                                                                                        |                            |                                                                                             | 4,727    |      |         |         | 1,183   |  
|                                                                                                                           | Income taxes receivable                                                                                                  |                            |                                                                                             | 4,990    |      |         |         |        |  
|                                                                                                                           | Deferred tax assets                                                                                                      |                            |                                                                                             | 5,455    |      |         |         | 10,337  |  
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Total current assets                                                                                                       |                                                                                                                          |                            | 51,465                                                                                      |          |      |         | 61,601  |        
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Property, plant and equipment, net of accumulated depreciation                                                             |                                                                                                                          |                            | 1,925                                                                                       |          |      |         | 516     |        
|Deferred tax assets                                                                                                        |                                                                                                                          |                            | 2,789                                                                                       |          |      |         | 6,456   |        
|Intangibles and other assets, net of accumulated amortization of
    $799 and $450 at June 30, 2005 and 2004, respectively |                                                                                                                          |                            | 7,661                                                                                       |          |      |         | 2,462   |        
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Total assets                                                                                                               |                                                                                                                          | $                          | 63,840                                                                                      |          |      | $       | 71,035  |        
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|                                                                                                                          
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                            
|Current liabilities:                                                                                                       |                                                                                                                          |                            |                                                                                             |          |      |         |         |        
|                                                                                                                           | Accounts payable                                                                                                         |                            | $                                                                                           | 5,206    |      |         | $       | 2,953   |  
|                                                                                                                           | Accrued compensation and related items                                                                                   |                            |                                                                                             | 866      |      |         |         | 1,745   |  
|                                                                                                                           | Accrued returns, chargebacks, rebates and other sales allowances                                                         |                            |                                                                                             | 9,947    |      |         |         | 6,954   |  
|                                                                                                                           | Income taxes payable                                                                                                     |                            |                                                                                             |         |      |         |         | 269     |  
|                                                                                                                           | Other current liabilities                                                                                                |                            |                                                                                             | 2,710    |      |         |         | 2,529   |  
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Total current liabilities                                                                                                  |                                                                                                                          |                            | 18,729                                                                                      |          |      |         | 14,450  |        
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Long-term liabilities:                                                                                                     |                                                                                                                          |                            |                                                                                             |          |      |         |         |        
|                                                                                                                           | Deferred gain on sale of plant assets                                                                                    |                            |                                                                                             | 1,478    |      |         |         | 1,647   |  
|                                                                                                                           | Accrued royalties                                                                                                        |                            |                                                                                             | 803      |      |         |         | 1,084   |  
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Total liabilities                                                                                                          |                                                                                                                          |                            | 21,010                                                                                      |          |      |         | 17,181  |        
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Redeemable convertible preferred stock:                                                                                    |                                                                                                                          |                            |                                                                                             |          |      |         |         |        
|                                                                                                                           |                                                                                                                          | Series A, $0.01 par value: |                                                                                             |          |      |         |         |         |   |       
|                                                                                                                           |                                                                                                                          |                            | Authorized shares  15,000                                                                  |          |      |         |         |         |   |        | 
|                                                                                                                           |                                                                                                                          |                            | Issued and outstanding shares  4,307 at June 30,
    2005 and 2004                         |          |      | 98,705  |         |         |   | 26,261 | 
|                                                                                                                           |                                                                                                                          | Series B, $0.01 par value: |                                                                                             |          |      |         |         |         |   |       
|                                                                                                                           |                                                                                                                          |                            | Authorized shares  20,000                                                                  |          |      |         |         |         |   |        | 
|                                                                                                                           |                                                                                                                          |                            | Issued and outstanding shares  6,328 and 5,661 at
    June 30, 2005 and 2004, respectively |          |      | 98,251  |         |         |   | 25,807 | 
|                                                                                                                           |                                                                                                                          | Series C, $0.01 par value: |                                                                                             |          |      |         |         |         |   |       
|                                                                                                                           |                                                                                                                          |                            | Authorized shares  15,000                                                                  |          |      |         |         |         |   |        | 
|                                                                                                                           |                                                                                                                          |                            | Issued and outstanding shares  4,849 at June 30,
    2005 and 2004, respectively           |          |      | 119,499 |         |         |   | 58,783 | 
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Total redeemable convertible preferred stock                                                                               |                                                                                                                          |                            | 316,455                                                                                     |          |      |         | 110,851 |        
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Stockholders deficit:                                                                                                     |                                                                                                                          |                            |                                                                                             |          |      |         |         |        
|                                                                                                                           | Common stock, Class A, $0.01 par value:                                                                                  |                            |                                                                                             |          |      |         |         |         |  
|                                                                                                                           |                                                                                                                          |                            | Authorized shares  100,000                                                                 |          |      |         |         |         |   |        | 
|                                                                                                                           |                                                                                                                          |                            | Issued and outstanding shares  8,737 and 5,210 at
    June 30, 2005 and 2004, respectively |          |      | 87      |         |         |   | 52     | 
|                                                                                                                           | Additional paid-in capital                                                                                               |                            |                                                                                             | 15,481   |      |         |         | 11,577  |  
|                                                                                                                           | Accumulated deficit                                                                                                      |                            |                                                                                             | (289,193 | )    |         |         | (68,626 | )
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Total stockholders deficit                                                                                                |                                                                                                                          |                            | (273,625                                                                                    | )        |      |         | (56,997 | )      
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        
|Total liabilities, redeemable convertible preferred stock and
    stockholders deficit                                    |                                                                                                                          | $                          | 63,840                                                                                      |          |      | $       | 71,035  |        
|                                                                                                                           |                                                                                                                          |                            |                                                                                             |          |      |        



F-3



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.





Statements of Operations


(Amounts in thousands, except per share amounts)


|                                                                                  |         |                     |          |        |      |   |         |       |  |   |         |       |  
|--------------------------------------------------------------------------------- | ------- | ------------------- | -------- | ------ | ---- | - | ------- | ----- |  | - | ------- | ----- | -
|                                                                                  |         | Year Ended June 30, |         
|                                                                                  |         |                     |         
|                                                                                  |         | 2005                |          |        | 2004 |   |         | 2003  | 
|                                                                                  |         |                     |          |        |      |   |         |       | 
|Net sales                                                                         |         | $                   | 160,210  |        |      | $ | 61,295  |       |  | $ | 14,038  |      
|Cost of goods sold                                                                |         |                     | 31,126   |        |      |   | 11,928  |       |  |   | 5,252   |      
|                                                                                  |         |                     |          |        |      |   |         |       | 
|Gross margin                                                                      |         |                     | 129,084  |        |      |   | 49,367  |       |  |   | 8,786   |      
|                                                                                  |         |                     |          |        |      |   |         |       | 
|Selling, marketing & administrative                                               |         |                     | 78,044   |        |      |   | 23,286  |       |  |   | 23,310  |      
|Product development                                                               |         |                     | 7,392    |        |      |   | 3,181   |       |  |   | 4,542   |      
|Interest expense                                                                  |         |                     | 101      |        |      |   | 3,403   |       |  |   | 3,601   |      
|Interest income                                                                   |         |                     | (890     | )      |      |   | (205    | )     |  |   | (29     | )    
|                                                                                  |         |                     |          |        |      |   |         |       | 
|                                                                                  |         |                     | 84,647   |        |      |   | 29,665  |       |  |   | 31,424  |      
|                                                                                  |         |                     |          |        |      |   |         |       | 
|Income/(loss) before income taxes                                                 |         |                     | 44,437   |        |      |   | 19,702  |       |  |   | (22,638 | )    
|Provision/(benefit) for income taxes                                              |         |                     | 17,438   |        |      |   | (16,124 | )     |  |   |        |      
|                                                                                  |         |                     |          |        |      |   |         |       | 
|Net income/(loss)                                                                 |         |                     | 26,999   |        |      |   | 35,826  |       |  |   | (22,638 | )    
|                                                                                  |         |                     |          |        |      |   |         |       | 
|Accretion of preferred stock                                                      |         |                     | (202,566 | )      |      |   | (28,100 | )     |  |   | 8,204   |      
|Dividend paid to preferred stockholders                                           |         |                     | (30,033  | )      |      |   |        |       |  |   |        |      
|                                                                                  |         |                     |          |        |      |   |         |       | 
|Net (loss)/income applicable to common stockholders                               |         | $                   | (205,600 | )      |      | $ | 7,726   |       |  | $ | (14,434 | )    
|                                                                                  |         |                     |          |        |      |   |         |       | 
|(Loss)/income per common share                                                    |         |                     |          |        |      |   |         |       |  |   |         |      
|                                                                                  | Basic   |                     | $        | (32.97 | )    |   | $       | 1.64  |  |   | $       | (4.66 | )
|                                                                                  | Diluted |                     | $        | (32.97 | )    |   | $       | 0.90  |  |   | $       | (4.66 | )
|Weighted-average of common shares used in (loss)/income per
    share calculation |         |                     |          |        |      |   |         |       |  |   |         |      
|                                                                                  | Basic   |                     |          | 6,236  |      |   |         | 4,699 |  |   |         | 3,098 |  
|                                                                                  | Diluted |                     |          | 6,236  |      |   |         | 8,629 |  |   |         | 3,098 |  
|Pro forma income per common share                                                 |         |                     |          |        |      |   |         |       |  |   |         |      
|                                                                                  | Basic   |                     | $        | 1.16   |      |   |         |       |  |   |         |       |  
|                                                                                  | Diluted |                     | $        | 0.95   |      |   |         |       |  |   |         |       |  
|Shares used in pro forma income per common share calculation                      |         |                     |          |        |      |   |         |       |  |   |         |      
|                                                                                  | Basic   |                     |          | 23,195 |      |   |         |       |  |   |         |       |  
|                                                                                  | Diluted |                     |          | 28,489 |      |   |         |       |  |   |         |       |  



F-4



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##### Table of Contents





Adams Respiratory Therapeutics, Inc.





Statements of Redeemable Convertible Preferred Stock and
Stockholders Equity (Deficit)


(Amounts in thousands)


|                                                                                                                   |  |                 |       |  |          |   |        |            |  |  |             |  |  |              |        |   |            |  |       |             |  |               |         |  |  |        |         |   |         |  |       |         |  |   |           |  |  |   |        |   |  |   |          |   |  |   |          |  
|------------------------------------------------------------------------------------------------------------------ |  | --------------- | ----- |  | -------- | - | ------ | ---------- |  |  | ----------- |  |  | ------------ | ------ | - | ---------- |  | ----- | ----------- |  | ------------- | ------- |  |  | ------ | ------- | - | ------- |  | ----- | ------- |  | - | --------- |  |  | - | ------ | - |  | - | -------- | - |  | - | -------- | -
|                                                                                                                   |  | Preferred Stock |       |  |          |   |        |            |  |  |             |  |  |              |       
|                                                                                                                   |  |                 |       |  | Total    |   |        |            |  |  |             |  |  |              |        |  
|                                                                                                                   |  |                 |       |  |          |   |        | Redeemable |  |  |             |  |  |              |        |   | Total      | 
|                                                                                                                   |  | Series A        |       |  | Series B |   |        | Series C   |  |  | Convertible |  |  | Common Stock |        |   | Additional |  |       |             |  | Stockholders |        
|                                                                                                                   |  |                 |       |  |          |   |        |            |  |  | Preferred   |  |  |              |        |   | Paid-In    |  |       | Accumulated |  |               | Equity/ | 
|                                                                                                                   |  | Shares          |       |  | Amount   |   |        | Shares     |  |  | Amount      |  |  | Shares       |        |   | Amount     |  |       | Stock       |  |               | Shares  |  |  | Amount |         |   | Capital |  |       | Deficit |  |   | (Deficit) | 
|                                                                                                                   |  |                 |       |  |          |   |        |            |  |  |             |  |  |              |        |   |            |  |       |             |  |               |         |  |  |        |         |   |         |  |       |         |  |   |           | 
|Balance as of June 30, 2002                                                                                        |  |                 | 4,307 |  |          | $ | 36,836 |            |  |  | 5,661       |  |  | $            | 32,015 |   |            |  |      |             |  | $             |        |  |  | $      | 68,851  |   |         |  | 3,090 |         |  | $ | 31        |  |  | $ | 5,370  |   |  | $ | (61,918  | ) |  | $ | (56,517  | )
|Issuance of common stock warrants and recognition of beneficial
    conversion feature related to bridge financing |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   | 2,981  |   |  |   |         |   |  |   | 2,981    |  
|Issuance of common stock warrants related to Series C Notes                                                        |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   | 2,888  |   |  |   |         |   |  |   | 2,888    |  
|Stock option compensation expense                                                                                  |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   | 880    |   |  |   |         |   |  |   | 880      |  
|Exercise of stock options                                                                                          |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  | 8     |         |  |   |          |  |  |   | 33     |   |  |   |         |   |  |   | 33       |  
|Exercise of warrants                                                                                               |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  | 2     |         |  |   |          |  |  |   |       |   |  |   |         |   |  |   |         |  
|Accretion of preferred stock                                                                                       |  |                 |      |  |          |   | (4,197 | )          |  |  |            |  |  |              | (4,007 | ) |            |  |      |             |  |               |        |  |  |        | (8,204  | ) |         |  |      |         |  |   |          |  |  |   |       |   |  |   | 8,204    |   |  |   | 8,204    |  
|Net loss                                                                                                           |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   |       |   |  |   | (22,638  | ) |  |   | (22,638  | )
|                                                                                                                   |  |                 |       |  |          |   |        |            |  |  |             |  |  |              |        |   |            |  |       |             |  |               |         |  |  |        |         |   |         |  |       |         |  |   |           | 
|Balance as of June 30, 2003                                                                                        |  |                 | 4,307 |  |          | $ | 32,639 |            |  |  | 5,661       |  |  | $            | 28,008 |   |            |  |      |             |  | $             |        |  |  | $      | 60,647  |   |         |  | 3,100 |         |  | $ | 31        |  |  | $ | 12,152 |   |  | $ | (76,352  | ) |  | $ | (64,169  | )
|Issuance of common stock warrants related to Series C Notes                                                        |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   | 811    |   |  |   |         |   |  |   | 811      |  
|Issuance of preferred stock, net                                                                                   |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  | 4,849 |             |  |               | 22,104  |  |  |        | 22,104  |   |         |  |      |         |  |   |          |  |  |   |       |   |  |   |         |   |  |   |         |  
|Reverse unamortized debt discount upon conversion of
    Series C preferred stock                                  |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   | (2,119 | ) |  |   |         |   |  |   | (2,119   | )
|Stock option compensation expense                                                                                  |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   | 686    |   |  |   |         |   |  |   | 686      |  
|Exercise of stock options                                                                                          |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  | 22    |         |  |   |          |  |  |   | 9      |   |  |   |         |   |  |   | 9        |  
|Exercise of warrants                                                                                               |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  | 2,088 |         |  |   | 21        |  |  |   | 38     |   |  |   |         |   |  |   | 59       |  
|Accretion of preferred stock                                                                                       |  |                 |      |  |          |   | (6,378 | )          |  |  |            |  |  |              | (2,201 | ) |            |  |      |             |  |               | 36,679  |  |  |        | 28,100  |   |         |  |      |         |  |   |          |  |  |   |       |   |  |   | (28,100  | ) |  |   | (28,100  | )
|Net income                                                                                                         |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   |       |   |  |   | 35,826   |   |  |   | 35,826   |  
|                                                                                                                   |  |                 |       |  |          |   |        |            |  |  |             |  |  |              |        |   |            |  |       |             |  |               |         |  |  |        |         |   |         |  |       |         |  |   |           | 
|Balance as of June 30, 2004                                                                                        |  |                 | 4,307 |  |          | $ | 26,261 |            |  |  | 5,661       |  |  | $            | 25,807 |   |            |  | 4,849 |             |  | $             | 58,783  |  |  | $      | 110,851 |   |         |  | 5,210 |         |  | $ | 52        |  |  | $ | 11,577 |   |  | $ | (68,626  | ) |  | $ | (56,997  | )
|Stock option compensation expense                                                                                  |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   | 477    |   |  |   |         |   |  |   | 477      |  
|Exercise of stock options                                                                                          |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  | 384   |         |  |   | 4         |  |  |   | 1,200  |   |  |   |         |   |  |   | 1,204    |  
|Exercise of warrants                                                                                               |  |                 |      |  |          |   |       |            |  |  | 667         |  |  |              | 3,038  |   |            |  |      |             |  |               |        |  |  |        | 3,038   |   |         |  | 3,143 |         |  |   | 31        |  |  |   | 1,164  |   |  |   |         |   |  |   | 1,195    |  
|Dividend                                                                                                           |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   |       |   |  |   | (45,000  | ) |  |   | (45,000  | )
|Tax benefit of stock options                                                                                       |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   | 1,063  |   |  |   |         |   |  |   | 1,063    |  
|Accretion of preferred stock                                                                                       |  |                 |      |  |          |   | 72,444 |            |  |  |            |  |  |              | 69,406 |   |            |  |      |             |  |               | 60,716  |  |  |        | 202,566 |   |         |  |      |         |  |   |          |  |  |   |       |   |  |   | (202,566 | ) |  |   | (202,566 | )
|Net income                                                                                                         |  |                 |      |  |          |   |       |            |  |  |            |  |  |              |       |   |            |  |      |             |  |               |        |  |  |        |        |   |         |  |      |         |  |   |          |  |  |   |       |   |  |   | 26,999   |   |  |   | 26,999   |  
|                                                                                                                   |  |                 |       |  |          |   |        |            |  |  |             |  |  |              |        |   |            |  |       |             |  |               |         |  |  |        |         |   |         |  |       |         |  |   |           | 
|Balance as of June 30, 2005                                                                                        |  |                 | 4,307 |  |          | $ | 98,705 |            |  |  | 6,328       |  |  | $            | 98,251 |   |            |  | 4,849 |             |  | $             | 119,499 |  |  | $      | 316,455 |   |         |  | 8,737 |         |  | $ | 87        |  |  | $ | 15,481 |   |  | $ | (289,193 | ) |  | $ | (273,625 | )
|                                                                                                                   |  |                 |       |  |          |   |        |            |  |  |             |  |  |              |        |   |            |  |       |             |  |               |         |  |  |        |         |   |         |  |       |         |  |   |           | 



F-5



---



##### Table of Contents



Adams Respiratory Therapeutics, Inc.





Statements of Cash Flows


(Amounts in thousands)


|                                                                                                       |  |                     |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------ |  | ------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                       |  | Year Ended June 30, |        
|                                                                                                       |  |                     |        
|                                                                                                       |  | 2005                |         |   | 2004 |   |         | 2003 | 
|                                                                                                       |  |                     |         |   |      |   |         |      | 
|Operating Activities                                                                                   |  |                     |         |   |      |   |         |      |  |   |         |  
|Net income/(loss)                                                                                      |  | $                   | 26,999  |   |      | $ | 35,826  |      |  | $ | (22,638 | )
|Adjustments to reconcile net income/(loss) to net cash provided
    by/(used in) operating activities: |  |                     |         |   |      |   |         |      |  |   |         |  
|Depreciation and amortization                                                                          |  |                     | 978     |   |      |   | 1,043   |      |  |   | 1,235   |  
|Stock option compensation expense                                                                      |  |                     | 477     |   |      |   | 686     |      |  |   | 880     |  
|Non-cash interest capitalized in note principal                                                        |  |                     |        |   |      |   | 969     |      |  |   |        |  
|Non-cash interest on convertible notes payable                                                         |  |                     |        |   |      |   | 1,406   |      |  |   | 174     |  
|Write off of intangible assets                                                                         |  |                     | 900     |   |      |   | 205     |      |  |   |        |  
|Non-cash interest on bridge loans                                                                      |  |                     |         |   |      |   |        |      |  |   | 2,981   |  
|Litigation settlement                                                                                  |  |                     |        |   |      |   | (2,000  | )    |  |   | 2,000   |  
|Loss/(gain) on sale of property, plant and equipment                                                   |  |                     | 9       |   |      |   | (78     | )    |  |   |        |  
|Loss on equipment write-off                                                                            |  |                     |        |   |      |   |        |      |  |   | 43      |  
|Deferred taxes                                                                                         |  |                     | 8,549   |   |      |   | (16,793 | )    |  |   |        |  
|Changes in operating assets and liabilities:                                                           |  |                     |         |   |      |   |         |      |  |   |         |  
|Accounts receivable                                                                                    |  |                     | (4,357  | ) |      |   | (1,541  | )    |  |   | (2,090  | )
|Inventories                                                                                            |  |                     | (591    | ) |      |   | (656    | )    |  |   | 1,441   |  
|Prepaid expenses and other current assets                                                              |  |                     | (3,544  | ) |      |   | (1,339  | )    |  |   | 310     |  
|Other assets                                                                                           |  |                     |        |   |      |   | 265     |      |  |   | (160    | )
|Accounts payable                                                                                       |  |                     | 2,253   |   |      |   | 2,319   |      |  |   | 11      |  
|Income taxes (receivable)/payable                                                                      |  |                     | (4,195  | ) |      |   | 269     |      |  |   |        |  
|Accrued expenses                                                                                       |  |                     | (1,679  | ) |      |   | 5,172   |      |  |   | 2,199   |  
|                                                                                                       |  |                     |         |   |      |   |         |      | 
|Net cash provided by/(used in) operating activities                                                    |  |                     | 25,799  |   |      |   | 25,753  |      |  |   | (13,614 | )
|Investing Activities                                                                                   |  |                     |         |   |      |   |         |      |  |   |         |  
|Purchases of property, plant and equipment                                                             |  |                     | (1,731  | ) |      |   | (530    | )    |  |   | (402    | )
|Proceeds from disposal of property, plant and equipment                                                |  |                     | 33      |   |      |   | 5,580   |      |  |   |        |  
|Purchases of intangibles                                                                               |  |                     | (2,100  | ) |      |   | (1,250  | )    |  |   |        |  
|                                                                                                       |  |                     |         |   |      |   |         |      | 
|Net cash (used in)/provided by investing activities                                                    |  |                     | (3,798  | ) |      |   | 3,800   |      |  |   | (402    | )
|Financing Activities                                                                                   |  |                     |         |   |      |   |         |      |  |   |         |  
|Payments on equipment loan and line of credit                                                          |  |                     |        |   |      |   | (271    | )    |  |   | (170    | )
|Proceeds from issuance of convertible notes payable and bridge
    loan                                |  |                     |        |   |      |   | 4,636   |      |  |   | 16,286  |  
|Proceeds from exercise of warrants                                                                     |  |                     | 4,233   |   |      |   | 59      |      |  |   |        |  
|Proceeds from exercise of stock options                                                                |  |                     | 1,204   |   |      |   | 9       |      |  |   | 33      |  
|Payments of initial public offering costs                                                              |  |                     | (1,174  | ) |      |   |        |      |  |   |        |  
|Dividend payments                                                                                      |  |                     | (45,000 | ) |      |   |        |      |  |   |        |  
|                                                                                                       |  |                     |         |   |      |   |         |      | 
|Net cash (used in)/provided by financing activities                                                    |  |                     | (40,737 | ) |      |   | 4,433   |      |  |   | 16,149  |  
|Net (decrease)/increase in cash and cash equivalents                                                   |  |                     | (18,736 | ) |      |   | 33,986  |      |  |   | 2,133   |  
|Cash and cash equivalents at beginning of year                                                         |  |                     | 43,391  |   |      |   | 9,405   |      |  |   | 7,272   |  
|                                                                                                       |  |                     |         |   |      |   |         |      | 
|Cash and cash equivalents at end of year                                                               |  | $                   | 24,655  |   |      | $ | 43,391  |      |  | $ | 9,405   |  
|                                                                                                       |  |                     |         |   |      |   |         |      | 
|Supplemental Disclosure of Cash Flow Information                                                       |  |                     |         |   |      |   |         |      |  |   |         |  
|Cash paid during the year for interest                                                                 |  | $                   |        |   |      | $ | 917     |      |  | $ | 93      |  
|Cash paid during the year for income taxes                                                             |  | $                   | 13,084  |   |      | $ | 400     |      |  | $ |        |  



F-6



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.





Notes to Financial Statements


($ in thousands, except per share amounts)




|   |                                                                        
|-- | -----------------------------------------------------------------------
|1. | Nature of Operations and Summary of Significant Accounting
    Policies



| |                     
| | --------------------
| | Nature of Operations





| |                      
| | ---------------------
| | Basis of Presentation





| |                 
| | ----------------
| | Use of Estimates





| |                                 
| | --------------------------------
| | Derivative Financial Instruments





| |                 
| | ----------------
| | Cash Equivalents





| |                    
| | -------------------
| | Accounts Receivable



F-7



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)




| |            
| | -----------
| | Inventories



|                               |  |          |       |   |      |   |       |  
|------------------------------ |  | -------- | ----- | - | ---- | - | ----- | -
|                               |  | June 30, |      
|                               |  |          |      
|                               |  | 2005     |       |   | 2004 |  
|                               |  |          |       |   |      |  
|Finished goods                 |  | $        | 3,136 |   |      | $ | 2,588 |  
|Less: reserve for obsolescence |  |          | (29   | ) |      |   | (72   | )
|                               |  |          |       |   |      |  
|                               |  | $        | 3,107 |   |      | $ | 2,516 |  
|                               |  |          |       |   |      |  





| |                              
| | -----------------------------
| | Property, Plant and Equipment

|                               |                                |          |       |       |      |   |     |      |  
|------------------------------ | ------------------------------ | -------- | ----- | ----- | ---- | - | --- | ---- | -
|                               |                                | June 30, |      
|                               |                                |          |      
|                               |                                | 2005     |       |       | 2004 |  
|                               |                                |          |       |       |      |  
|Property, plant and equipment: |                                |          |       |       |      |   |     |     
|                               | Machinery and equipment        |          | $     | 386   |      |   | $   | 22   |  
|                               | Leasehold improvements         |          |       | 830   |      |   |     | 235  |  
|                               | Furniture and fixtures         |          |       | 1,176 |      |   |     | 538  |  
|                               |                                |          |       |       |      |  
|                               |                                |          | 2,392 |       |      |   | 795 |     
|                               | Less: accumulated depreciation |          |       | (467  | )    |   |     | (279 | )
|                               |                                |          |       |       |      |  
|                               |                                | $        | 1,925 |       |      | $ | 516 |     
|                               |                                |          |       |       |      |  







| |                             
| | ----------------------------
| | Intangibles and Other Assets



Accounting for the Impairment or
Disposal of Long-


F-8



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)


Lived Assets.




tm tm tm


tm tm tm






F-9



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)






|            |  |   |       | 
|----------- |  | - | ----- | 
|Fiscal 2006 |  | $ | 836   | 
|Fiscal 2007 |  |   | 745   | 
|Fiscal 2008 |  |   | 736   | 
|Fiscal 2009 |  |   | 736   | 
|Fiscal 2010 |  |   | 579   | 
|Thereafter  |  |   | 2,332 | 
|            |  |   |      
|            |  | $ | 5,964 | 
|            |  |   |      



| |             
| | ------------
| | Income Taxes

Accounting for Income Taxes.




| |                    
| | -------------------
| | Revenue Recognition





| |                             
| | ----------------------------
| | Sales Returns and Allowances



F-10



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)














| |                                         
| | ----------------------------------------
| | Cardinal Health Profit Share Arrangement



F-11



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)










| |            
| | -----------
| | Advertising





| |                            
| | ---------------------------
| | Shipping and Handling Costs





| |                                
| | -------------------------------
| | Discretionary Performance Bonus





| |                    
| | -------------------
| | Product Development



F-12



---



##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)




| |                             
| | ----------------------------
| | Accretion of Preferred Stock





| |                             
| | ----------------------------
| | Concentration of Credit Risk



|                                 |  |                     |     |  |      |  |     |      |  |  |     | 
|-------------------------------- |  | ------------------- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                                 |  | Year Ended June 30, |    
|                                 |  |                     |    
|                                 |  | 2005                |     |  | 2004 |  |     | 2003 | 
|                                 |  |                     |     |  |      |  |     |      | 
|Wholesaler  A                   |  |                     | 14% |  |      |  | 24% |      |  |  | 24% | 
|Wholesaler  B                   |  |                     | 7%  |  |      |  | 20% |      |  |  | 32% | 
|Wholesaler  C                   |  |                     | 7%  |  |      |  | 20% |      |  |  | 26% | 
|Major retailer  A               |  |                     | 14% |  |      |  | 6%  |      |  |  | 2%  | 
|Major retailer  B               |  |                     | 11% |  |      |  | 6%  |      |  |  | 0%  | 
|Major retailer/mass merchandiser |  |                     | 16% |  |      |  | 7%  |      |  |  | 2%  | 



| |                                        
| | ---------------------------------------
| | Accounting for Stock-Based Compensation

Accounting for Stock-Based
Compensation Accounting for Stock-Based Compensation 
Transition and Disclosure




F-13



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)






| |                               
| | ------------------------------
| | Income/(Loss) per Common Share



|                                                    |               |          |           |   |        |   |           |           |      |   |           |   |       |  
|--------------------------------------------------- | ------------- | -------- | --------- | - | ------ | - | --------- | --------- | ---- | - | --------- | - | ----- | -
|                                                    |               | June 30, |          
|                                                    |               |          |          
|                                                    |               | 2005     |           |   | 2004   |   |           | 2003      |     
|                                                    |               |          |           |   |        |   |           |           |     
|Net income/(loss)                                   |               | $        | 26,999    |   |        | $ | 35,826    |           |      | $ | (22,638   | )
|Accretion of preferred stock                        |               |          | (202,566  | ) |        |   | (28,100   | )         |      |   | 8,204     |  
|Dividend paid to preferred stockholders             |               |          | (30,033   | ) |        |   |          |           |      |   |          |  
|                                                    |               |          |           |   |        |   |           |           |     
|Net (loss)/income applicable to common stockholders |               | $        | (205,600  | ) |        | $ | 7,726     |           |      | $ | (14,434   | )
|                                                    |               |          |           |   |        |   |           |           |     
|Average shares outstanding  basic                  |               |          | 6,236,342 |   |        |   | 4,698,787 |           |      |   | 3,098,424 |  
|                                                    | Warrants      |          |           |  |        |   |           | 2,790,164 |      |   |           |  |      
|                                                    | Stock options |          |           |  |        |   |           | 1,140,128 |      |   |           |  |      
|                                                    |               |          |           |   |        |   |           |           |     
|Average shares outstanding  diluted                |               |          | 6,236,342 |   |        |   | 8,629,079 |           |      |   | 3,098,424 |  
|                                                    |               |          |           |   |        |   |           |           |     
|(Loss)/income per common share:                     |               |          |           |   |        |   |           |           |      |   |           |  
|                                                    |               | Basic    |           | $ | (32.97 | ) |           | $         | 1.64 |   |           | $ | (4.66 | )
|                                                    |               | Diluted  |           | $ | (32.97 | ) |           | $         | 0.90 |   |           | $ | (4.66 | )



|                                   |  |          |           |  |      |  |           |      |  |  |            | 
|---------------------------------- |  | -------- | --------- |  | ---- |  | --------- | ---- |  |  | ---------- | 
|                                   |  | June 30, |          
|                                   |  |          |          
|                                   |  | 2005     |           |  | 2004 |  |           | 2003 | 
|                                   |  |          |           |  |      |  |           |      | 
|Series C convertible secured notes |  |          |          |  |      |  |          |      |  |  | 3,619,578  | 
|Warrants                           |  |          | 2,713,022 |  |      |  | 1,333,594 |      |  |  | 5,280,572  | 
|Stock options                      |  |          | 2,702,615 |  |      |  | 955,347   |      |  |  | 1,298,075  | 
|                                   |  |          |           |  |      |  |           |      | 
|                                   |  |          | 5,415,637 |  |      |  | 2,288,941 |      |  |  | 10,198,225 | 
|                                   |  |          |           |  |      |  |           |      | 

F-14



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)




|                                                                                                                 |               |               |            |           |      | 
|---------------------------------------------------------------------------------------------------------------- | ------------- | ------------- | ---------- | --------- | ---- | 
|                                                                                                                 |               | June 30, 2005 |           
|                                                                                                                 |               |               |           
|Net income, as reported                                                                                          |               | $             | 26,999     |          
|Weighted-average common shares outstanding                                                                       |               |               | 6,236,342  |          
|Weighted-average common shares outstanding assuming conversion
    of all redeemable convertible preferred stock |               |               | 16,958,298 |          
|                                                                                                                 |               |               |           
|Weighted-average common shares outstanding  basic,
    pro forma                                                |               |               | 23,194,640 |          
|                                                                                                                 |               |               |           
|                                                                                                                 | Warrants      |               |            | 2,713,022 |     
|                                                                                                                 | Stock options |               |            | 2,581,520 |     
|                                                                                                                 |               |               |           
|Weighted-average common shares outstanding  diluted,
    pro forma                                              |               |               | 28,489,182 |          
|                                                                                                                 |               |               |           
|Pro forma income per common share                                                                                |               |               |            |          
|                                                                                                                 |               | Basic         |            | $         | 1.16 | 
|                                                                                                                 |               | Diluted       |            | $         | 0.95 | 





| |                                          
| | -----------------------------------------
| | Recently Issued Accounting Pronouncements

Share-Based Payment Accounting for Stock-Based
Compensation,




|   |             
|-- | ------------
|2. | Benefit Plan





|   |                          
|-- | -------------------------
|3. | Convertible Notes Payable



F-15



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)






Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios Application
of Issue 98-5 to Certain Convertible Instruments


|                                                 |  |                |         |   |              |   |        |             |  |   |         |  
|------------------------------------------------ |  | -------------- | ------- | - | ------------ | - | ------ | ----------- |  | - | ------- | -
|                                                 |  | Series C Notes |         |   | Bridge Notes |   |        | Total Notes | 
|                                                 |  |                |         |   |              |   |        |             | 
|Proceeds from Notes Issuance in fiscal 2003      |  | $              | 11,286  |   |              | $ | 5,000  |             |  | $ | 16,286  |  
|Accrued interest on Bridge Notes                 |  |                |        |   |              |   | 213    |             |  |   | 213     |  
|                                                 |  |                |         |   |              |   |        |             | 
|Subtotal                                         |  |                | 11,286  |   |              |   | 5,213  |             |  |   | 16,499  |  
|Reclass Bridge Notes                             |  |                | 5,213   |   |              |   | (5,213 | )           |  |   |        |  
|                                                 |  |                |         |   |              |   |        |             | 
|Gross Note balance                               |  |                | 16,499  |   |              |   |       |             |  |   | 16,499  |  
|Less value assigned to warrants and BCF          |  |                | (2,888  | ) |              |   | (2,981 | )           |  |   | (5,869  | )
|Amortization of debt discount (interest expense) |  |                | 174     |   |              |   | 2,981  |             |  |   | 3,155   |  
|                                                 |  |                |         |   |              |   |        |             | 
|Balance of Notes as of June 30, 2003             |  |                | 13,785  |   |              |   |       |             |  |   | 13,785  |  
|Proceeds from Note Issuance in fiscal 2004       |  |                | 4,636   |   |              |   |       |             |  |   | 4,636   |  
|Less value assigned to warrants and BCF          |  |                | (811    | ) |              |   |       |             |  |   | (811    | )
|Amortization of debt discount (interest expense) |  |                | 1,406   |   |              |   |       |             |  |   | 1,406   |  
|                                                 |  |                |         |   |              |   |        |             | 
|Subtotal                                         |  |                | 19,016  |   |              |   |       |             |  |   | 19,016  |  
|Accrued interest                                 |  |                | 969     |   |              |   |       |             |  |   | 969     |  
|Unamortized discount                             |  |                | 2,119   |   |              |   |       |             |  |   | 2,119   |  
|Conversion of Notes to Series C                  |  |                | (22,104 | ) |              |   |       |             |  |   | (22,104 | )
|                                                 |  |                |         |   |              |   |        |             | 
|Ending balance of Notes as of June 30, 2004      |  | $              |        |   |              | $ |       |             |  | $ |        |  
|                                                 |  |                |         |   |              |   |        |             | 



F-16



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)




|   |                                       
|-- | --------------------------------------
|4. | Redeemable Convertible Preferred Stock





















F-17



---



##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)








|         |       |                |        |        |             |   |        |        | 
|-------- | ----- | -------------- | ------ | ------ | ----------- | - | ------ | ------ | 
|         |       | Aggregate      |        |        | Liquidation |  
|         |       | Purchase Price |        |        | Value       |  
|         |       |                |        |        |             |  
|Series C |       | $              | 22,104 |        |             | $ | 44,208 |       
|Series A |       |                | 26,261 |        |             |   | 26,261 |       
|Series B |       |                | 28,844 |        |             |   | 28,844 |       
|         |       |                |        |        |             |  
|         | Total |                | $      | 77,209 |             |   | $      | 99,313 | 
|         |       |                |        |        |             |  



|                              |  |          |        |   |          |   |        |          |  |   |         | 
|----------------------------- |  | -------- | ------ | - | -------- | - | ------ | -------- |  | - | ------- | 
|                              |  | Series A |        |   | Series B |   |        | Series C | 
|                              |  |          |        |   |          |   |        |          | 
|Balance at June 30, 2002      |  | $        | 36,836 |   |          | $ | 32,015 |          |  | $ |        | 
|                              |  |          |        |   |          |   |        |          | 
|Adjustment to fair value      |  |          | (4,416 | ) |          |   | (4,415 | )        |  |   |        | 
|Accretion of issuance costs   |  |          | 219    |   |          |   | 408    |          |  |   |        | 
|                              |  |          |        |   |          |   |        |          | 
|Balance at June 30, 2003      |  |          | 32,639 |   |          |   | 28,008 |          |  |   |        | 
|                              |  |          |        |   |          |   |        |          | 
|Issued, net of issuance costs |  |          |       |   |          |   |       |          |  |   | 22,104  | 
|Adjustment to fair value      |  |          | (6,584 | ) |          |   | (2,585 | )        |  |   | 36,679  | 
|Accretion of issuance costs   |  |          | 206    |   |          |   | 384    |          |  |   |        | 
|                              |  |          |        |   |          |   |        |          | 
|Balance at June 30, 2004      |  |          | 26,261 |   |          |   | 25,807 |          |  |   | 58,783  | 
|                              |  |          |        |   |          |   |        |          | 
|Exercise of warrants          |  |          |       |   |          |   | 3,038  |          |  |   |        | 
|Adjustment to fair value      |  |          | 72,444 |   |          |   | 69,406 |          |  |   | 60,716  | 
|                              |  |          |        |   |          |   |        |          | 
|Balance at June 30, 2005      |  | $        | 98,705 |   |          | $ | 98,251 |          |  | $ | 119,499 | 
|                              |  |          |        |   |          |   |        |          | 



|   |                               
|-- | ------------------------------
|5. | Stockholders Equity (Deficit)



| |                        
| | -----------------------
| | Stock Compensation Plan





F-18



---



##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)










|                                                     |  |          |      |   |      |   |      |      |  |   |      |  
|---------------------------------------------------- |  | -------- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                                     |  | June 30, |     
|                                                     |  |          |     
|                                                     |  | 2005     |      |   | 2004 |   |      | 2003 | 
|                                                     |  |          |      |   |      |   |      |      | 
|Expected life of the option (in years)               |  |          | 6    |   |      |   | 6    |      |  |   | 6    |  
|Risk-free interest rate                              |  |          | 3.4  | % |      |   | 3.4  | %    |  |   | 3.0  | %
|Volatility                                           |  |          | 0    | % |      |   | 0    | %    |  |   | 0    | %
|Expected dividend yield                              |  |          | 0    | % |      |   | 0    | %    |  |   | 0    | %
|Weighted-average fair value of stock options granted |  | $        | 1.14 |   |      | $ | 0.14 |      |  | $ | 0.94 |  





|                                     |           |        |           |           |       |   |      |      | 
|------------------------------------ | --------- | ------ | --------- | --------- | ----- | - | ---- | ---- | 
|                                     |           |        |           | Weighted- |      
|                                     |           |        |           | Average   |      
|                                     |           |        |           | Exercise  |      
|                                     |           | Shares |           |           | Price |  
|                                     |           |        |           |           |       |  
|Options outstanding at June 30, 2002 |           |        | 1,250,240 |           |       | $ | 4.16 |     
|                                     | Granted   |        |           | 108,270   |       |   |      | 5.58 | 
|                                     | Canceled  |        |           | (53,503   | )     |   |      | 4.42 | 
|                                     | Exercised |        |           | (8,201    | )     |   |      | 4.13 | 
|                                     |           |        |           |           |       |  
|Options outstanding at June 30, 2003 |           |        | 1,296,806 |           |       |   | 4.27 |     
|                                     | Granted   |        |           | 2,081,760 |       |   |      | 0.71 | 
|                                     | Canceled  |        |           | (133,148  | )     |   |      | 3.68 | 
|                                     | Exercised |        |           | (21,833   | )     |   |      | 0.40 | 
|                                     |           |        |           |           |       |  
|Options outstanding at June 30, 2004 |           |        | 3,223,585 |           |       |   | 1.23 |     
|                                     | Granted   |        |           | 486,311   |       |   |      | 6.56 | 
|                                     | Canceled  |        |           | (78,496   | )     |   |      | 2.26 | 
|                                     | Exercised |        |           | (384,097  | )     |   |      | 3.16 | 
|                                     |           |        |           |           |       |  
|Options outstanding at June 30, 2005 |           |        | 3,247,303 |           |       | $ | 1.68 |     
|                                     |           |        |           |           |       |  



F-19



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)




|               |  |             |           |                  |                |  |     |             |  |  |           | 
|-------------- |  | ----------- | --------- | ---------------- | -------------- |  | --- | ----------- |  |  | --------- | 
|               |  |             |           | Weighted-Average |                |  |    
|               |  |             |           | Years Remaining  |                |  |    
|               |  | Number      |           |                  | on Contractual |  |     | Number      | 
|Exercise Price |  | Outstanding |           |                  | Life           |  |     | Exercisable | 
|               |  |             |           |                  |                |  |     |             | 
|$ 0.40         |  |             | 2,007,362 |                  |                |  | 5.9 |             |  |  | 1,236,992 | 
|$ 1.42         |  |             | 449,105   |                  |                |  | 8.6 |             |  |  | 126,296   | 
|$ 2.22         |  |             | 89,505    |                  |                |  | 8.8 |             |  |  | 17,901    | 
|$ 3.02         |  |             | 138,645   |                  |                |  | 9.1 |             |  |  | 3,159     | 
|$ 4.13         |  |             | 219,322   |                  |                |  | 5.0 |             |  |  | 219,322   | 
|$ 4.56         |  |             | 3,817     |                  |                |  | 6.6 |             |  |  | 3,124     | 
|$ 5.01         |  |             | 210,776   |                  |                |  | 9.3 |             |  |  | 1,755     | 
|$ 5.70         |  |             | 7,676     |                  |                |  | 7.2 |             |  |  | 7,676     | 
|$11.40         |  |             | 121,095   |                  |                |  | 9.6 |             |  |  |          | 
|               |  |             |           |                  |                |  |     |             | 
|               |  |             | 3,247,303 |                  |                |  |     |             |  |  | 1,616,225 | 
|               |  |             |           |                  |                |  |     |             | 



|              |  |                |       |  |           |  |         |          |  |   |              |                |              |   |   |  |  |   |      | 
|------------- |  | -------------- | ----- |  | --------- |  | ------- | -------- |  | - | ------------ | -------------- | ------------ | - | - |  |  | - | ---- | 
|              |  | Estimated Fair |       |  |           |  |         |          |  |   | Compensation |               
|              |  | Market Value   |       |  |           |  |         |          |  |   | Expense per  |               
|              |  | of Underlying  |       |  | Number of |  |         |          |  |   |              | Share Based on |             
|              |  | Common         |       |  | Options   |  |         | Exercise |  |   | Intrinsic    |                | Minimum      |  
|Date of Grant |  | Stock          |       |  | Granted   |  |         | Price    |  |   | Value        |                | Value Method |  
|              |  |                |       |  |           |  |         |          |  |   |              |                |              |  
|July 2004     |  | $              | 3.02  |  |           |  | 15,795  |          |  | $ | 3.02         |                |              | $ |  |  |  | $ | 0.57 | 
|October 2004  |  | $              | 5.01  |  |           |  | 337,135 |          |  | $ | 5.01         |                |              | $ |  |  |  | $ | 0.94 | 
|January 2005  |  | $              | 11.40 |  |           |  | 133,381 |          |  | $ | 11.40        |                |              | $ |  |  |  | $ | 2.11 | 





| |   |                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------
| |  | Trailing 12 month sales;                                                                                  
|
| |  | Key milestones;                                                                                           
|
| |  | Comparable company and industry analysis;                                                                 
|
| |  | Third party preferred stock investments and the impact of those
    investments on the common stock value;
|
| |  | Third party offer to purchase the business; and                                                           
|
| |  | Anticipated initial public offering price per share and the
    timing of the initial public offering.    



F-20



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In July of 2004 and October of 2004, the Company granted 15,795
    and 337,135 options with fair values of $3.02 and $5.01 per
    share, respectively. The Company received information from an
    outside firm that indicated OTC products generally trade at 2.8
    to 3.0 times trailing 12 month net sales. Therefore, the
    Company assumed the Companys enterprise value was
    approximately three times trailing 12 month net sales.
    Additionally, the Company included a private company lack of
    liquidity discount of 15% to 20%, which the Company believes to
    be consistent with current initial public offering discounts.                                                                                                                                                                                                                                                                                                                                  
|
| |  | At January of 2005, the Company granted 133,381 options at a
    deemed fair value of $11.40 per share. The Companys
    sales activity had increased significantly due to the consumer
    advertising campaign that was launched in November 2004 and was
    expected to continue at higher rates. As such, the trailing
    12 month sales methodology did not adequately capture the
    new sales trend at January of 2005. Around that time, the
    Company received a non-binding letter from another company to
    acquire the business, however, the Company did not pursue the
    offer. Simultaneously, the Company was beginning initial public
    offering discussions and based upon discussions with financial
    advisors who rely on comparable company trading multiples and
    market conditions, the Company determined it was worth
    $11.40 per share, which was within the range of the
    non-binding letter and its initial public offering expectations.





| |         
| | --------
| | Warrants



|             |       |             |         |         |          |   |      |  | 
|------------ | ----- | ----------- | ------- | ------- | -------- | - | ---- |  | 
|             |       | Outstanding |         |         | Exercise |  
|             |       | Warrants    |         |         | Price    |  
|             |       |             |         |         |          |  
|Common Stock |       |             | 3,711   |         |          | $ | 0.03 | 
|Common Stock |       |             | 133,986 |         |          | $ | 4.13 | 
|Series B     |       |             | 265,768 |         |          | $ | 4.56 | 
|             |       |             |         |         |          |  
|             | Total |             |         | 403,465 |          |   |      |  | 
|             |       |             |         |         |          |  





|   |             
|-- | ------------
|6. | Income Taxes





F-21



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)






|                          |         |          |        |       |      |   |         |         |   |   |   |   | 
|------------------------- | ------- | -------- | ------ | ----- | ---- | - | ------- | ------- | - | - | - | - | 
|                          |         | June 30,
|                          |         |         
|                          |         | 2005     |        |       | 2004 |   |         | 2003   
|                          |         |          |        |       |      |   |         |        
|Current provision:        |         |          |        |       |      |   |         |         |   |   |   |  
|                          | Federal |          | $      | 6,743 |      |   | $       | 519     |   |   | $ |  | 
|                          | State   |          |        | 2,146 |      |   |         | 150     |   |   |   |  | 
|Deferred:                 |         |          |        |       |      |   |         |         |   |   |   |  
|                          | Federal |          |        | 7,767 |      |   |         | (15,014 | ) |   |   |  | 
|                          | State   |          |        | 782   |      |   |         | (1,779  | ) |   |   |  | 
|                          |         |          |        |       |      |   |         |         |  
|Total provision/(benefit) |         | $        | 17,438 |       |      | $ | (16,124 | )       |   | $ |  |  
|                          |         |          |        |       |      |   |         |         |  



|                                           |  |          |      |   |      |  |        |      |  |  |       |   
|------------------------------------------ |  | -------- | ---- | - | ---- |  | ------ | ---- |  |  | ----- | --
|                                           |  | June 30, |     
|                                           |  |          |     
|                                           |  | 2005     |      |   | 2004 |  |        | 2003 | 
|                                           |  |          |      |   |      |  |        |      | 
|Provision at Federal statutory rate        |  |          | 35.0 | % |      |  | 35.0   | %    |  |  | (35.0 | )%
|State income taxes, net of Federal benefit |  |          | 4.3  |   |      |  | (5.4   | )    |  |  |      |   
|Research credit                            |  |          | (0.4 | ) |      |  | (0.7   | )    |  |  | (0.9  | ) 
|Change in valuation allowance              |  |          |     |   |      |  | (113.8 | )    |  |  | 30.5  |   
|Debt discount                              |  |          |     |   |      |  | 2.0    |      |  |  | 4.6   |   
|Incentive stock options                    |  |          | 0.3  |   |      |  | 0.7    |      |  |  | 0.7   |   
|Other                                      |  |          |     |   |      |  | 0.4    |      |  |  | 0.1   |   
|                                           |  |          |      |   |      |  |        |      | 
|Effective tax rate                         |  |          | 39.2 | % |      |  | (81.8  | )%   |  |  | 0     | % 
|                                           |  |          |      |   |      |  |        |      | 

F-22



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)




|                                   |                                       |                                         |       |        |       |   |        |       |        | 
|---------------------------------- | ------------------------------------- | --------------------------------------- | ----- | ------ | ----- | - | ------ | ----- | ------ | 
|                                   |                                       | June 30,                                |      
|                                   |                                       |                                         |      
|                                   |                                       | 2005                                    |       |        | 2004  |  
|                                   |                                       |                                         |       |        |       |  
|Deferred tax assets  current:     |                                       |                                         |       |        |       |   |        |      
|                                   | Net operating loss carryforwards      |                                         | $     | 1,733  |       |   | $      | 6,900 |       
|                                   | Sales reserves                        |                                         |       | 3,782  |       |   |        | 3,052 |       
|                                   | Other                                 |                                         |       | (60    | )     |   |        | 385   |       
|                                   |                                       |                                         |       |        |       |  
|                                   |                                       | Total deferred tax assets  current     |       |        | 5,455 |   |        |       | 10,337 | 
|                                   |                                       |                                         |       |        |       |  
|Deferred tax assets  non-current: |                                       |                                         |       |        |       |   |        |      
|                                   | Net operating loss carryforwards      |                                         |       | 595    |       |   |        | 2,870 |       
|                                   | Deferred gain on sale of plant assets |                                         |       | 606    |       |   |        | 649   |       
|                                   | Research credit                       |                                         |       | 341    |       |   |        | 1,393 |       
|                                   | AMT credit                            |                                         |       |       |       |   |        | 519   |       
|                                   | Nonqualified stock options            |                                         |       | 882    |       |   |        | 899   |       
|                                   | Returns                               |                                         |       | 1,230  |       |   |        |      |       
|                                   | Intangibles                           |                                         |       | (1,199 | )     |   |        |      |       
|                                   | Other                                 |                                         |       | 334    |       |   |        | 126   |       
|                                   |                                       |                                         |       |        |       |  
|                                   |                                       | Total deferred tax assets  non-current |       |        | 2,789 |   |        |       | 6,456  | 
|                                   |                                       |                                         |       |        |       |  
|Total net deferred tax assets      |                                       | $                                       | 8,244 |        |       | $ | 16,793 |      
|                                   |                                       |                                         |       |        |       |  





|   |                              
|-- | -----------------------------
|7. | Commitments and Contingencies





|            |  |   |       | 
|----------- |  | - | ----- | 
|Fiscal 2006 |  | $ | 1,354 | 
|Fiscal 2007 |  |   | 976   | 
|Fiscal 2008 |  |   | 536   | 
|Fiscal 2009 |  |   | 498   | 
|Fiscal 2010 |  |   | 489   | 
|Thereafter  |  |   | 2,000 | 
|            |  |   |      
|            |  | $ | 5,853 | 
|            |  |   |      





F-23



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)








tm tm tm tm




F-24



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)




tm tm








|   |                                    
|-- | -----------------------------------
|8. | Working Capital and Equipment Loans



F-25



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)






|   |                                
|-- | -------------------------------
|9. | Sale of Manufacturing Operation





|    |         
|--- | --------
|10. | Dividend





|    |                  
|--- | -----------------
|11. | Subsequent Events



F-26



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##### Table of Contents



Adams Respiratory Therapeutics, Inc.


Notes to Financial Statements  (Continued)


($ in thousands, except per share amounts)




|    |                  
|--- | -----------------
|12. | Quarterly Results

|                                                    |  |               |         |   |                |   |        |               |  |   |                |   |  |      |        |   |      |   |         |      |  |   |        |   |  |   |         |   |  |   |         |  
|--------------------------------------------------- |  | ------------- | ------- | - | -------------- | - | ------ | ------------- |  | - | -------------- | - |  | ---- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                    |  | First Quarter |         |   | Second Quarter |   |        | Third Quarter |  |   | Fourth Quarter |  
|                                                    |  |               |         |   |                |   |        |               |  |   |                |  
|                                                    |  | 2005          |         |   | 2004           |   |        | 2005          |  |   | 2004           |   |  | 2005 |        |   | 2004 |   |         | 2005 |  |   | 2004   |  
|                                                    |  |               |         |   |                |   |        |               |  |   |                |   |  |      |        |   |      |   |         |      |  |   |        |  
|                                                    |  | (Unaudited)   |        
|Net Sales                                           |  | $             | 25,923  |   |                | $ | 5,851  |               |  | $ | 36,098         |   |  | $    | 21,223 |   |      | $ | 59,038  |      |  | $ | 21,899 |   |  | $ | 39,151  |   |  | $ | 12,322  |  
|Cost of goods sold                                  |  |               | 6,211   |   |                |   | 1,631  |               |  |   | 7,139          |   |  |      | 3,418  |   |      |   | 11,326  |      |  |   | 3,376  |   |  |   | 6,450   |   |  |   | 3,503   |  
|                                                    |  |               |         |   |                |   |        |               |  |   |                |   |  |      |        |   |      |   |         |      |  |   |        |  
|Gross profit                                        |  |               | 19,712  |   |                |   | 4,220  |               |  |   | 28,959         |   |  |      | 17,805 |   |      |   | 47,712  |      |  |   | 18,523 |   |  |   | 32,701  |   |  |   | 8,819   |  
|Selling, marketing and administrative               |  |               | 7,831   |   |                |   | 4,580  |               |  |   | 22,937         |   |  |      | 5,254  |   |      |   | 21,903  |      |  |   | 7,027  |   |  |   | 25,373  |   |  |   | 6,425   |  
|Product development                                 |  |               | 1,475   |   |                |   | 726    |               |  |   | 1,584          |   |  |      | 993    |   |      |   | 1,459   |      |  |   | 659    |   |  |   | 2,874   |   |  |   | 803     |  
|Interest expense                                    |  |               | 28      |   |                |   | 775    |               |  |   | 24             |   |  |      | 807    |   |      |   | 25      |      |  |   | 832    |   |  |   | 24      |   |  |   | 989     |  
|Interest income                                     |  |               | (137    | ) |                |   | (27    | )             |  |   | (157           | ) |  |      | (25    | ) |      |   | (225    | )    |  |   | (49    | ) |  |   | (371    | ) |  |   | (104    | )
|                                                    |  |               |         |   |                |   |        |               |  |   |                |   |  |      |        |   |      |   |         |      |  |   |        |  
|Income/(loss) before income taxes                   |  |               | 10,515  |   |                |   | (1,834 | )             |  |   | 4,571          |   |  |      | 10,776 |   |      |   | 24,550  |      |  |   | 10,054 |   |  |   | 4,801   |   |  |   | 706     |  
|Provision/(benefit) for income taxes                |  |               | 4,080   |   |                |   |       |               |  |   | 1,778          |   |  |      |       |   |      |   | 9,756   |      |  |   |       |   |  |   | 1,824   |   |  |   | (16,124 | )
|                                                    |  |               |         |   |                |   |        |               |  |   |                |   |  |      |        |   |      |   |         |      |  |   |        |  
|Net income/(loss)                                   |  |               | 6,435   |   |                |   | (1,834 | )             |  |   | 2,793          |   |  |      | 10,776 |   |      |   | 14,794  |      |  |   | 10,054 |   |  |   | 2,977   |   |  |   | 16,830  |  
|Accretion of preferred stock                        |  |               | (62,789 | ) |                |   | (4,576 | )             |  |   | (62,789        | ) |  |      | (4,575 | ) |      |   | (24,999 | )    |  |   | (9,555 | ) |  |   | (51,989 | ) |  |   | (9,394  | )
|                                                    |  |               |         |   |                |   |        |               |  |   |                |   |  |      |        |   |      |   |         |      |  |   |        |  
|Dividend paid to preferred stockholders             |  |               |        |   |                |   |       |               |  |   |               |   |  |      |       |   |      |   |        |      |  |   |       |   |  |   | (30,033 | ) |  |   |        |  
|                                                    |  |               |         |   |                |   |        |               |  |   |                |   |  |      |        |   |      |   |         |      |  |   |        |  
|Net (loss)/income applicable to common stockholders |  | $             | (56,354 | ) |                | $ | (6,410 | )             |  | $ | (59,996        | ) |  | $    | 6,201  |   |      | $ | (10,205 | )    |  | $ | 499    |   |  | $ | (79,045 | ) |  | $ | 7,436   |  
|                                                    |  |               |         |   |                |   |        |               |  |   |                |   |  |      |        |   |      |   |         |      |  |   |        |  
|(Loss)/income per common share  diluted            |  | $             | (9.77   | ) |                | $ | (1.95  | )             |  | $ | (10.00         | ) |  | $    | 0.68   |   |      | $ | (1.67   | )    |  | $ | 0.05   |   |  | $ | (11.20  | ) |  | $ | 0.77    |  
|Proforma income per common share  diluted          |  | $             | 0.24    |   |                | $ | (0.09  | )             |  | $ | 0.10           |   |  | $    | 0.41   |   |      | $ | 0.52    |      |  | $ | 0.38   |   |  | $ | 0.10    |   |  | $ | 0.63    |  

F-27



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##### Table of Contents



Schedule II





Adams Respiratory Therapeutics, Inc.


Valuation and Qualifying Accounts


($ in thousands)




|                                            |  |                                   |     |   |           |   |        |             |  |   |                     |   |  |   |         |  
|------------------------------------------- |  | --------------------------------- | --- | - | --------- | - | ------ | ----------- |  | - | ------------------- | - |  | - | ------- | -
|                                            |  | Allowance for Accounts Receivable |     |   |          
|                                            |  |                                   |     |   |          
|                                            |  | Reserve for                       |     |   | Reserve   |   |        | Reserve for |  |   | Valuation           |  
|                                            |  | Doubtful                          |     |   | for Cash  |   |        | Trade       |  |   | Allowance for       |  
|                                            |  | Accounts                          |     |   | Discounts |   |        | Promotions  |  |   | Deferred Tax Assets |  
|                                            |  |                                   |     |   |           |   |        |             |  |   |                     |  
|For the year ended June 30, 2003:           |  |                                   |     |   |           |   |        |             |  |   |                     |   |  |   |         |  
|Balance at the beginning of the year        |  |                                   | 37  |   |           |   | 9      |             |  |   |                    |   |  |   | 17,391  |  
|Additions: Charged to costs and expenses(1) |  |                                   | 9   |   |           |   | 385    |             |  |   |                    |   |  |   | 7,727   |  
|Deductions from reserves                    |  |                                   | (11 | ) |           |   | (345   | )           |  |   |                    |   |  |   |        |  
|                                            |  |                                   |     |   |           |   |        |             |  |   |                     |  
|Balance at the end of period                |  |                                   | 35  |   |           |   | 49     |             |  |   |                    |   |  |   | 25,118  |  
|                                            |  |                                   |     |   |           |   |        |             |  |   |                     |  
|For the year ended June 30, 2004:           |  |                                   |     |   |           |   |        |             |  |   |                     |   |  |   |         |  
|Balance at the beginning of the year        |  |                                   | 35  |   |           |   | 49     |             |  |   |                    |   |  |   | 25,118  |  
|Additions: Charged to costs and expenses(1) |  |                                   | 182 |   |           |   | 1,526  |             |  |   | 1,155               |   |  |   |        |  
|Deductions from reserves                    |  |                                   | (14 | ) |           |   | (1,432 | )           |  |   | (167                | ) |  |   | (25,118 | )
|                                            |  |                                   |     |   |           |   |        |             |  |   |                     |  
|Balance at the end of period                |  |                                   | 203 |   |           |   | 143    |             |  |   | 988                 |   |  |   |        |  
|                                            |  |                                   |     |   |           |   |        |             |  |   |                     |  
|For year ended June 30, 2005:               |  |                                   |     |   |           |   |        |             |  |   |                     |   |  |   |         |  
|Balance at the beginning of the year        |  |                                   | 203 |   |           |   | 143    |             |  |   | 988                 |   |  |   |        |  
|Additions: Charged to costs and expenses(1) |  |                                   | (4  | ) |           |   | 3,441  |             |  |   | 5,998               |   |  |   |        |  
|Deductions from reserves                    |  |                                   | (33 | ) |           |   | (3,414 | )           |  |   | (4,878              | ) |  |   |        |  
|                                            |  |                                   |     |   |           |   |        |             |  |   |                     |  
|Balance at the end of period                |  | $                                 | 166 |   |           | $ | 170    |             |  | $ | 2,108               |   |  | $ |        |  
|                                            |  |                                   |     |   |           |   |        |             |  |   |                     |  






|    |                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------
|(1) | Charges related to cash discounts and trade promotions are
    reflected as reductions of sales to customers.

F-28



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##### Table of Contents



SIGNATURES






| |                                     
| | ------------------------------------
| | ADAMS RESPIRATORY THERAPEUTICS, INC.



| |  |                         
| |  | ------------------------
| |  | /s/ Michael J. Valentino

| |                             
| | ----------------------------
| |                             
| | By: Michael J. Valentino    
| | Its: Chief Executive Officer



|                                                         |  |                                                                              |  |                    |  | 
|-------------------------------------------------------- |  | ---------------------------------------------------------------------------- |  | ------------------ |  | 
|Name                                                     |  | Title                                                                        |  | Date              
|                                                         |  |                                                                              |  |                   
|                                                        
|/s/ Michael J.
    ValentinoMichael
    J. Valentino     |  | Chief Executive Officer and Director
    (principal executive officer)       |  | September 27, 2005
|                                                        
|/s/ David P. BeckerDavid
    P. Becker                   |  | Chief Financial Officer
    (principal financial and
    accounting officer) |  | September 27, 2005
|                                                        
|/s/ John Q.
    Adams, Sr.John
    Q. Adams, Sr.         |  | Director                                                                     |  | September 27, 2005
|                                                        
|/s/ Steven A. ElmsSteven
    A. Elms                     |  | Director                                                                     |  | September 27, 2005
|                                                        
|/s/ Joan P. NeuschelerJoan
    P. Neuscheler             |  | Director                                                                     |  | September 27, 2005
|                                                        
|/s/ Donald J.
    LiebentrittDonald
    J. Liebentritt   |  | Director                                                                     |  | September 27, 2005
|                                                        
|/s/ Harold F. OberkfellHarold
    F. Oberkfell           |  | Director                                                                     |  | September 27, 2005
|                                                        
|/s/ William C. PateWilliam
    C. Pate                   |  | Director                                                                     |  | September 27, 2005
|                                                        
|/s/ Andrew N.
    Schiff, M.D.Andrew
    N. Schiff, M.D. |  | Director                                                                     |  | September 27, 2005

58



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##### Table of Contents



EXHIBIT INDEX


|        |    |     |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | -- | --- |  | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |  |            
|Number  |    |     |  | Description
|        |    |     |  |            
|        | 2  | .1  |  |            |  | Agreement of Merger between Adams Respiratory Therapeutics, Inc.
    and Adams Merger Sub, Inc. dated June 1, 2005, filed as
    Exhibit 2.1 to the Companys Registration Statement on
    Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                     
|       
|        | 3  | .1* |  |            |  | Certificate of Incorporation of Adams Respiratory Therapeutics,
    Inc., as amended.                                                                                                                                                                                                                                                                                                                                                                                             
|       
|        | 3  | .2  |  |            |  | Bylaws of Adams Respiratory Therapeutics, Inc., filed as
    Exhibit 3.2 to the Companys Registration Statement on
    Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                                                                                         
|       
|        | 4  | .1  |  |            |  | Specimen Stock Certificate of Adams Respiratory Therapeutics,
    Inc.s Common Stock, par value $0.01 per share, filed
    as Exhibit 4.1 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                       
|       
|        | 4  | .2  |  |            |  | Reference is made to Exhibits 3.1 and 3.2.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       
|        | 4  | .3  |  |            |  | Amended and Restated Registration Rights Agreement, dated
    July 9, 2001, by and between Adams Laboratories, Inc. and
    certain stockholders, filed as Exhibit 4.3 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                       
|       
|        | 4  | .4  |  |            |  | Series C Preferred Stock Registration Rights Agreement,
    dated May 19, 2003, between Adams Laboratories, Inc. and
    Tullis-Dickerson Capital Focus III, L.P., TD Origen Capital
    Fund, L.P., TD Lighthouse Capital Fund, L.P., EGI-Fund (02-04)
    Investors, LLC and Perseus-Soros Biopharmaceutical Fund, LP,
    filed as Exhibit 4.4 to the Companys Registration
    Statement on Form S-1 (Registration No. 333-123585),
    and incorporated herein by reference.
|       
|        | 10 | .1  |  |            |  | Lease Agreement dated April 1, 2004 between Adams
    Laboratories, Inc. and William J. Adams, Jr. for Adams
    Respiratory Therapeutics, Inc.s office in Chester, New
    Jersey, filed as Exhibit 10.1 to the Companys
    Registration Statement on Form S-1 (Registration
    No. 333-123585), and incorporated herein by reference.                                                                                                                                       
|       
|        | 10 | .2 |  |            |  | Asset Purchase Agreement dated March 24, 2004 between Adams
    Laboratories, Inc. and Cardinal Health PTS, LLC, filed as
    Exhibit 10.2 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                       
|       
|        | 10 | .3 |  |            |  | Exclusive Distribution Agreement dated April 1, 2004
    between Adams Laboratories, Inc. and Cardinal Health PTS, LLC,
    filed as Exhibit 10.3 to the Companys Registration
    Statement on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                
|       
|        | 10 | .4 |  |            |  | Supply Agreement dated April 1, 2004 between Cardinal
    Health PTS, LLC and Adams Laboratories, Inc., filed as
    Exhibit 10.4 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                                
|       
|        | 10 | .5  |  |            |  | Commercial Services Agreement dated April 1, 2004 between
    Cardinal Health PTS, LLC and Adams Laboratories, Inc., filed as
    Exhibit 10.5 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                   
|       
|        | 10 | .6 |  |            |  | 1999 Long-Term Incentive Plan, filed as Exhibit 10.6 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                                                                                                         
|       
|        | 10 | .7 |  |            |  | Form of Award under the 1999 Long-Term Incentive Plan, filed as
    Exhibit 10.7 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                                                                                 
|       
|        | 10 | .8  |  |            |  | Adams Respiratory Therapeutics, Inc. Director Compensation Plan,
    filed as Exhibit 10.8 to the Companys Registration
    Statement on Form S-1 (Registration No. 333-123585),
    and incorporated herein by reference.                                                                                                                                                                                                                                                       
|       
|        | 10 | .9  |  |            |  | Form of Awards under Adams Respiratory Therapeutics, Inc.
    Director Compensation Plan, filed as Exhibit 10.9 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                                              

59



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##### Table of Contents



|        |     |      |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | --- | ---- |  | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |      |  |            
|Number  |     |      |  | Description
|        |     |      |  |            
|        | 10  | .10 |  |            |  | Adams Laboratories, Inc. Retirement Savings Plan, filed as
    Exhibit 10.10 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                                                                          
|       
|        | 10  | .11 |  |            |  | Employment Agreement with Michael J. Valentino dated
    August 7, 2003, filed as Exhibit 10.11 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                                   
|       
|        | 10  | .12 |  |            |  | Income Security Agreement with David P. Becker dated
    September 22, 2004, filed as Exhibit 10.12 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                               
|       
|        | 10  | .13 |  |            |  | Income Security Agreement with John Thievon dated
    September 22, 2004, filed as Exhibit 10.13 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                                  
|       
|        | 10  | .14 |  |            |  | Income Security Agreement with Robert Casale dated
    September 22, 2004, filed as Exhibit 10.14 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                                 
|       
|        | 10  | .15 |  |            |  | Income Security Agreement with Walter E. Riehemann dated
    September 22, 2004, filed as Exhibit 10.15 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                           
|       
|        | 10  | .16 |  |            |  | Income Security Agreement with Helmut H. Albrecht dated
    October 1, 2004, filed as Exhibit 10.16 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                               
|       
|        | 10  | .17 |  |            |  | Income Security Agreement with Susan Witham dated
    October 4, 2004, filed as Exhibit 10.17 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                                                                                                     
|       
|        | 10  | .18  |  |            |  | Form of Indemnity Agreement between Adams Respiratory
    Therapeutics, Inc. and Directors and Certain Officers, filed as
    Exhibit 10.18 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                           
|       
|        | 10  | .19  |  |            |  | Sublease Agreement and Lessor Consent dated April 1, 2004
    between Adams Laboratories, Inc., Cardinal Health PTS, LLC and
    The Estate of James Campbell, Deceased for Adams Respiratory
    Therapeutics, Inc.s development and customer service
    operations in Ft. Worth, Texas, filed as Exhibit 10.19
    to the Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.
|       
|        | 10  | .20  |  |            |  | Settlement Agreement dated January 14, 2005 by and among
    Adams Laboratories, Inc., Carolina Pharmaceuticals, Inc. and
    Cornerstone Biopharma, Inc. , filed as Exhibit 10.20 to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-123585), and incorporated herein by
    reference.                                                                                                                                
|       
|        | 10  | .21 |  |            |  | Adams Respiratory Therapeutics, Inc. 2005 Incentive Plan, filed
    as Exhibit 10.21 to the Companys Registration
    Statement on Form S-1 (Registration No. 333-123585),
    and incorporated herein by reference.                                                                                                                                                                                                                                  
|       
|        | 10  | .22 |  |            |  | Form of Restricted Stock Award under Adams Respiratory
    Therapeutics, Inc. 2005 Incentive Plan, filed as
    Exhibit 10.22 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                         
|       
|        | 10  | .23 |  |            |  | Form of Incentive Stock Option Award under Adams Respiratory
    Therapeutics, Inc. 2005 Incentive Plan, filed as
    Exhibit 10.23 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                                   
|       
|        | 10  | .24 |  |            |  | Form of Non-Statutory Stock Option Award under Adams Respiratory
    Therapeutics, Inc. 2005 Incentive Plan, filed as
    Exhibit 10.24 to the Companys Registration Statement
    on Form S-1 (Registration No. 333-123585), and
    incorporated herein by reference.                                                                                                                                                                               
|       
|        | 14* |      |  |            |  | Code of Business Conduct and Ethics.                                                                                                                                                                                                                                                                                                                                                                                                                   
|       
|        | 21* |      |  |            |  | Subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       
|        | 23* |      |  |            |  | Consent of Ernst & Young LLP.                                                                                                                                                                                                                                                                                                                                                                                                                          

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##### Table of Contents



|        |    |     |  |             |  |                                                                                                                                                               
|------- | -- | --- |  | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |  |            
|Number  |    |     |  | Description
|        |    |     |  |            
|        | 31 | .1* |  |            |  | Certification of the Chief Executive Officer of Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                
|       
|        | 31 | .2* |  |            |  | Certification of the Chief Financial Officer of Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                
|        | 32 | .1* |  |            |  | Certification of the Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350, As Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.
|       
|        | 32 | .2* |  |            |  | Certification of the Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350, As Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.






|  |                               
|- | ------------------------------
|* | Filed with this Annual Report.



|  |                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Portions of the exhibit have been omitted pursuant to a request
    for confidential treatment. The confidential portions have been
    filed with the SEC.
| 
| | Management compensation contract or plan.                                                                                                                  

61