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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2009
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number: 001-32360
 AKORN, INC.
  LOUISIANA
    
    72-0717400(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 1925 W. Field Court, Suite 300, Lake Forest, Illinois 60045
 Registrants telephone number, including area code: (847) 279-6100
 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, No Par Value
    
    The NASDAQ Stock Market LLC
 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer: o
    
    Accelerated filer: þ
    
    Non-accelerated filer: o
    
    Smaller reporting company: o(Do not check if a smaller reporting company)
 o þ




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##### 



Forward-Looking Statements and Factors Affecting Future Results
  
    
    Our ability to continue to comply with all of the requirements of the Food and Drug
Administration, including current Good Manufacturing Practices regulations;
    
    Our ability to generate cash from operations sufficient to meet our working capital
requirements;
    
    Our ability to obtain additional funding or financing to operate and grow our business;
    
    The effects of federal, state and other governmental regulation on our business;
    
    Our success in developing, manufacturing, acquiring and marketing new products;
    
    The success of our strategic partnerships for the development and marketing of new
products;
    
    Our ability to bring new products to market and the effects of sales of such products on
our financial results;
    
    The effects of competition from generic pharmaceuticals and from other pharmaceutical
companies;
    
    Availability of raw materials needed to produce our products; and
    
    Other factors referred to in this Form 10-K and our other Securities and Exchange
Commission filings.
   2




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FORM 10-K TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    4Item 1A.
    
    Risk Factors
    
    
    10Item 1B.
    
    Unresolved Staff Comments
    
    
    17Item 2.
    
    Properties
    
    
    17Item 3.
    
    Legal Proceedings
    
    
    17Item 4.
    
    (Reserved)
    
    
    17PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    18Item 6.
    
    Selected Financial Data
    
    
    20Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    33Item 8.
    
    Financial Statements and Supplementary Data
    
    
    33Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    59Item 9A.
    
    Controls and Procedures
    
    
    59Item 9B.
    
    Other Information
    
    
    59PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    60Item 11.
    
    Executive Compensation
    
    
    60Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    60Item 13.
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    60Item 14.
    
    Principal Accounting Fees and Services
    
    
    60PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    61
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PART I
 
 Item 1.
    
    Business
    Ophthalmic Segment.
 Hospital Drugs & Injectables Segment.
 Biologics & Vaccines Segment.
 Contract Services Segment.
 Manufacturing.
 Sales and Marketing.
  4




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Research and Development.
     Business Development.
    5




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Patents, Trademarks and Proprietary Rights.
 6




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Employee Relations.
 Competition.
     Suppliers and Customers.
   
    
    AmerisourceBergen Corporation (AmerisourceBergen)
    
    Cardinal Health, Inc. (Cardinal); and
    
    McKesson Drug Company (McKesson).
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##### Table of Contents



2009
    
    
    2008
    
    
    2007Gross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    GrossGross
    
    
    Net
    
    
    Accounts
    
    
    Gross
    
    
    Net
    
    
    Accounts
    
    
    Gross
    
    
    Net
    
    
    AccountsSales
    
    
    Revenue
    
    
    Receivable
    
    
    Sales
    
    
    Revenue
    
    
    Receivable
    
    
    Sales
    
    
    Revenue
    
    
    ReceivableAmerisourceBergen
    
    
    25
    %
    
    
    21
    %
    
    
    44
    %
    
    
    16
    %
    
    
    12
    %
    
    
    7
    %
    
    
    22
    %
    
    
    17
    %
    
    
    36
    %Cardinal
    
    
    21
    %
    
    
    19
    %
    
    
    21
    %
    
    
    23
    %
    
    
    19
    %
    
    
    41
    %
    
    
    25
    %
    
    
    21
    %
    
    
    25
    %McKesson
    
    
    16
    %
    
    
    14
    %
    
    
    6
    %
    
    
    10
    %
    
    
    14
    %
    
    
    6
    %
    
    
    20
    %
    
    
    15
    %
    
    
    8
    %
  Backorders.
 Government Regulation.
   8




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Product Recalls.
 DEA Regulation.
 Environment
 Foreign Sales
 Seasonality
 Government Contracts
 Available Information http://www.sec.gov. www.akorn.com,
 9




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Item 1A.
    
    Risk Factors.
 We have experienced recent operating losses, working capital deficiencies and negative cash flows
from operations, and these losses and deficiencies may continue in the future.
   Availability under our Credit Agreement may be restricted if we fail to meet our covenant
requirements.
  We will likely need to obtain additional capital to continue to grow our business.
  10




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Unstable market and economic conditions may have serious adverse consequences on our business.
  We depend on a small number of distributors, the loss of any of which could have a material adverse
effect.
  Our growth depends on our ability to timely develop additional pharmaceutical products and
manufacturing capabilities.
  We have entered into several strategic business alliances which may not result in marketable
products.
  Our growth and profitability is dependent on our ability to successfully market and distribute new
products through various distribution channels.
  Our success depends on the development of generic and off-patent pharmaceutical products, which are
particularly susceptible to competition, substitution policies and reimbursement policies.
  11




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We can be subject to legal proceedings against us, which may prove costly and time-consuming even
if without merit.
  Our revenues depend on sale of products manufactured by third parties, which we cannot control.
  Certain of our directors are subject to conflicts of interest.
 .
 We depend on key executive officers and must continue to attract and retain key personnel in order
to compete successfully.
  12




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Through stock ownership, his position on our board of directors, and his loans to us, Dr. John
Kapoor has substantial influence over our business strategies and policies.
  We are subject to extensive government regulations that increase our costs and could subject us to
fines, prevent us from selling our products or prevent us from operating our facilities.
  We are subject to regulation by the FDA.
 We must obtain approval from the FDA for each pharmaceutical product that we market which
requires a regulatory submission.
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We and our third-party manufacturers are subject to periodic inspection by the FDA to assure
regulatory compliance regarding the manufacturing, distribution, and promotion of pharmaceutical
products.
 If the FDA changes its regulatory position, it could force us to delay or suspend our
manufacturing, distribution or sales of certain products.
  We are subject to extensive DEA regulation, which could result in our being fined or otherwise
penalized.
 We may implement product recalls and could be exposed to significant product liability claims; we
may have to pay significant amounts to those harmed and may suffer from adverse publicity as a
result.
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The FDA may authorize sales of some prescription pharmaceuticals on a non-prescription basis, which
would reduce the profitability of our prescription products.
  Our industry is very competitive. Additionally, changes in technology could render our products
obsolete.
  Many of the raw materials and components used in our products come from a single source.
  Our patents and proprietary rights may not adequately protect our products and processes.
  Concentrated ownership of our common stock and our registration of shares for public sale creates a
risk of sudden changes in our share price.
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Exercise of warrants and options may have a substantial dilutive effect on our common stock.
  Changes to the market value of our outstanding warrants may negatively impact or create volatility
in our reported net income.
   We may issue preferred stock and the terms of such preferred stock may reduce the value of our
common stock.
  We experience significant quarterly fluctuation of our results of operations, which may increase
the volatility of our stock price.
  Penny Stock rules may make buying or selling our common stock difficult.
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The requirements of being a public company may strain our resources and distract management.
  
 Item 1B.
    
    Unresolved Staff Comments.
  
 Item 2.
    
    Properties.
       
 Item 3.
    
    Legal Proceedings.
    
 Item 4.
    
    Reserved.
 17




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
  High
    
    LowYear Ending December 31, 20101st Quarter (through March 10, 2010)
    
    $
    1.89
    
    
    $
    1.27Year Ended December 31, 20094th Quarter
    
    $
    2.00
    
    
    $
    1.223rd Quarter
    
    
    1.75
    
    
    
    0.922nd Quarter
    
    
    1.29
    
    
    
    0.731st Quarter
    
    
    2.69
    
    
    
    0.86Year Ended December 31, 20084th Quarter
    
    $
    5.22
    
    
    $
    1.113rd Quarter
    
    
    5.63
    
    
    
    3.142nd Quarter
    
    
    5.24
    
    
    
    3.261st Quarter
    
    
    8.19
    
    
    
    4.37
     EQUITY COMPENSATION PLANS
 Equity Compensation Plans Approved by Stockholders
  18




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Number of securitiesNumber of
    
    
    
    
    
    
    remaining availablesecurities to be
    
    
    
    
    
    
    for future issuanceissued upon
    
    
    Weighted-average
    
    
    under equityexercise of
    
    
    exercise price of
    
    
    compensation plansoutstanding
    
    
    outstanding
    
    
    (excludingoptions, warrants
    
    
    options, warrants
    
    
    securities reflectedPlan Category
    
    and rights
    
    
    and rights
    
    
    in the first column)Equity Compensation plans approved by security holders:2003 Plan
    
    
    10,000
    
    
    $
    2.61
    
    
    
    2003 Amended Plan
    
    
    5,147,068
    
    
    $
    1.48
    
    
    
    5,149,417Total
    
    
    5,157,068
    
    
    $
    1.49
    
    
    
    5,149,417
 19




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Item 6.
    
    Selected Financial Data
  Years Ended December 31,(In thousands, except per share data)
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Revenues
    
    $
    75,891
    
    
    $
    93,598
    
    
    $
    52,895
    
    
    $
    71,250
    
    
    $
    44,484Gross profit
    
    
    15,672
    
    
    
    26,592
    
    
    
    11,400
    
    
    
    26,880
    
    
    
    14,944Operating loss
    
    
    (19,512
    )
    
    
    (7,183
    )
    
    
    (19,815
    )
    
    
    (4,905
    )
    
    
    (7,479
    )Interest and other non-operating income (expense)
    
    
    (5,792
    )
    
    
    (752
    )
    
    
    650
    
    
    
    (1,055
    )
    
    
    (1,113
    )Pretax loss
    
    
    (25,304
    )
    
    
    (7,935
    )
    
    
    (19,165
    )
    
    
    (5,960
    )
    
    
    (8,592
    )Income tax provision
    
    
    2
    
    
    
    4
    
    
    
    3
    
    
    
    3
    
    
    
    17Net loss
    
    
    (25,306
    )
    
    
    (7,939
    )
    
    
    (19,168
    )
    
    
    (5,963
    )
    
    
    (8,609
    )Preferred stock dividends and adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (843
    )
    
    
    (4,082
    )Net loss available to common stockholders
    
    $
    (25,306
    )
    
    $
    (7,939
    )
    
    $
    (19,168
    )
    
    $
    (6,806
    )
    
    $
    (12,691
    )Weighted average shares outstanding:Basic
    
    
    90,253
    
    
    
    89,209
    
    
    
    87,286
    
    
    
    73,988
    
    
    
    26,095Diluted
    
    
    90,253
    
    
    
    89,209
    
    
    
    87,286
    
    
    
    73,988
    
    
    
    26,095PER SHAREEquity
    
    $
    0.43
    
    
    $
    0.69
    
    
    $
    0.74
    
    
    $
    0.95
    
    
    $
    1.57Net loss:Basic
    
    
    (0.28
    )
    
    
    (0.09
    )
    
    
    (0.22
    )
    
    
    (0.09
    )
    
    
    (0.49
    )Diluted
    
    
    (0.28
    )
    
    
    (0.09
    )
    
    
    (0.22
    )
    
    
    (0.09
    )
    
    
    (0.49
    )Share Price: High
    
    
    2.69
    
    
    
    8.19
    
    
    
    8.00
    
    
    
    6.61
    
    
    
    4.91Low
    
    
    0.73
    
    
    
    1.11
    
    
    
    5.00
    
    
    
    3.01
    
    
    
    2.17BALANCE SHEET DATACurrent assets
    
    $
    26,069
    
    
    $
    40,746
    
    
    $
    45,722
    
    
    $
    39,654
    
    
    $
    15,694Net property, plant & equipment
    
    
    31,473
    
    
    
    34,223
    
    
    
    32,262
    
    
    
    33,486
    
    
    
    31,071Total assets
    
    
    68,759
    
    
    
    82,329
    
    
    
    86,966
    
    
    
    82,083
    
    
    
    57,095Current liabilities, including debt in default
    
    
    21,666
    
    
    
    18,103
    
    
    
    21,000
    
    
    
    10,253
    
    
    
    15,460Long-term obligations, less current installments
    
    
    8,456
    
    
    
    2,783
    
    
    
    1,308
    
    
    
    1,516
    
    
    
    602Shareholders equity
    
    
    38,637
    
    
    
    61,443
    
    
    
    64,658
    
    
    
    70,314
    
    
    
    41,033CASH FLOW DATACash provided by (used in) operating activities
    
    $
    (1,038
    )
    
    $
    (5,420
    )
    
    $
    (24,891
    )
    
    $
    2,509
    
    
    $
    (148
    )Cash used in investing activities
    
    
    (1,397
    )
    
    
    (3,787
    )
    
    
    (2,184
    )
    
    
    (4,377
    )
    
    
    (1,857
    )Cash provided by (used in) financing activities
    
    
    2,989
    
    
    
    2,322
    
    
    
    13,205
    
    
    
    22,895
    
    
    
    (1,314
    )Increase/(decrease) in cash and cash equivalents
    
    
    554
    
    
    
    (6,885
    )
    
    
    (13,870
    )
    
    
    21,027
    
    
    
    (3,319
    )
 20




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 OVERVIEW
  
    
    Ophthalmic sales of diagnostic and therapeutic ophthalmic drugs
    
    Hospital Drugs & Injectables sales of diagnostic and therapeutic injectables and
other hospital drugs
    
    Biologics & Vaccines sales of vaccines purchased from outside sources
    
    Contract Services sales of various drugs that we manufacture for others to distribute
under their own brands
     RESULTS OF OPERATIONS
 Segment Reporting Disclosures about Segments of an Enterprise and Related Information
  21




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2009
    
    
    2008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    RevenueRevenues:Ophthalmic
    
    $
    20,169
    
    
    
    26.6
    %
    
    $
    20,447
    
    
    
    21.8
    %
    
    $
    18,545
    
    
    
    35.1
    %Hospital drugs & injectables
    
    
    16,456
    
    
    
    21.7
    %
    
    
    19,627
    
    
    
    21.0
    %
    
    
    19,475
    
    
    
    36.8
    %Biologics & vaccines
    
    
    31,111
    
    
    
    41.0
    %
    
    
    44,602
    
    
    
    47.7
    %
    
    
    7,522
    
    
    
    14.2
    %Contract services
    
    
    8,155
    
    
    
    10.7
    %
    
    
    8,922
    
    
    
    9.5
    %
    
    
    7,353
    
    
    
    13.9
    %Total revenues
    
    
    75,891
    
    
    
    100.0
    %
    
    
    93,598
    
    
    
    100.0
    %
    
    
    52,895
    
    
    
    100.0
    %Gross profit:Ophthalmic
    
    
    5,135
    
    
    
    6.8
    %
    
    
    5,752
    
    
    
    6.1
    %
    
    
    3,784
    
    
    
    7.2
    %Hospital drugs & injectables
    
    
    2,744
    
    
    
    3.6
    %
    
    
    5,049
    
    
    
    5.4
    %
    
    
    4,991
    
    
    
    9.4
    %Biologics & vaccines
    
    
    6,489
    
    
    
    8.6
    %
    
    
    13,210
    
    
    
    14.1
    %
    
    
    745
    
    
    
    1.4
    %Contract services
    
    
    1,304
    
    
    
    1.7
    %
    
    
    2,581
    
    
    
    2.8
    %
    
    
    1,880
    
    
    
    3.6
    %Total gross profit
    
    
    15,672
    
    
    
    20.7
    %
    
    
    26,592
    
    
    
    28.4
    %
    
    
    11,400
    
    
    
    21.6
    %Operating expenses:Selling, general & administrative
expenses
    
    
    22,843
    
    
    
    30.1
    %
    
    
    25,620
    
    
    
    27.4
    %
    
    
    21,861
    
    
    
    41.3
    %Supply agreement termination expense
    
    
    5,929
    
    
    
    7.8
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    
    %Amortization & write-down of
intangibles
    
    
    1,648
    
    
    
    2.2
    %
    
    
    1,354
    
    
    
    1.4
    %
    
    
    1,504
    
    
    
    2.8
    %Research and development expenses
    
    
    4,764
    
    
    
    6.3
    %
    
    
    6,801
    
    
    
    7.3
    %
    
    
    7,850
    
    
    
    14.8
    %Operating loss
    
    ($
    19,512
    )
    
    
    -25.7
    %
    
    ($
    7,183
    )
    
    
    -7.7
    %
    
    ($
    19,815
    )
    
    
    -37.5
    %Net loss
    
    ($
    25,306
    )
    
    
    -33.3
    %
    
    ($
    7,939
    )
    
    
    -8.5
    %
    
    ($
    19,168
    )
    
    
    -36.2
    %
 COMPARISON OF TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008
  ®
   22




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COMPARISON OF TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007
 ®
  ®
  23




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FINANCIAL CONDITION AND LIQUIDITY
 Overview
      Credit Facility
 Debt Balance Sheet Classification of Borrowings
Outstanding under Revolving Credit Agreements that Include both a Subjective
 24




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Acceleration Clause and a Lock-Box Arrangement)
         25




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Derivatives and Headging Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys
Own Stock
   Subordinated Debt
  26




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Other Indebtedness
  Preferred Stock and Warrants
 Series B Preferred Stock and Warrants
   Other Warrants
   27




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# of
    
    
    Exercise
    
    
    Fair ValuesWarrants
    
    
    Price per
    
    
    At Grant
    
    
    As ofGranted To:
    
    Warrant Identification
    
    Grant Date
    
    Granted
    
    
    Share
    
    
    Dates
    
    
    12/31/09EJ Funds
    
    Modification Warrant
    
    April 13, 2009
    
    
    1,939,639
    
    
    $
    1.11
    
    
    $
    1,358,000
    
    
    $
    2,425,000Kapoor Trust
    
    Reimbursement Warrant
    
    April 13, 2009
    
    
    1,501,933
    
    
    $
    1.11
    
    
    
    1,051,000
    
    
    
    1,877,000EJ Funds
    
    Credit Facility Warrant 1
    
    August 17, 2009
    
    
    1,650,806
    
    
    $
    1.16
    
    
    
    1,238,000
    
    
    
    2,096,000Kapoor Trust
    
    Subordinated Note Warrant 2
    
    August 17, 2009
    
    
    2,099,935
    
    
    $
    1.16
    
    
    
    1,575,000
    
    
    
    2,667,0007,192,313
    
    
    
    
    
    
    $
    5,222,000
    
    
    $
    9,065,000
 
 1
    
    Credit Facility Warrant refers to warrants granted to EJ Funds in connection with
modification to the Credit Facility to increase the total loan commitment from $5,650,000 to
$10,000,000.2
    
    Subordinated Note Warrant refers to warrants granted to the Kapoor Trust in connection
with refinancing the Subordinated Note to extend its term for an additional five years and
increase the principal from $5,000,000 to $5,853,267 to include accrued interest through the
refinancing date. CONTRACTUAL OBLIGATIONS
      28




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2015Description
    
    Total
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    and beyondCurrent and Long Term-Debt
    
    
    8,853
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,853
    
    
    
    Leases
    
    
    11,588
    
    
    
    1,781
    
    
    
    1,800
    
    
    
    1,317
    
    
    
    1,224
    
    
    
    1,243
    
    
    
    4,223Strategic Partners  Contingent Payments 1
    
    
    2,483
    
    
    
    2,158
    
    
    
    200
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    Total:
    
    
    22,924
    
    
    
    6,939
    
    
    
    2,000
    
    
    
    1,442
    
    
    
    1,224
    
    
    
    7,096
    
    
    
    4,223
 
 1
    
    Note the Strategic Partner Payments are estimates which assume that various
contingencies and market opportunities occur in 2010 and beyond. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 Net Income (Loss)Gross
    
    
    
    
    
    
    Per Share
    
    
    Per Share(In thousands, except per share amounts)
    
    Revenues
    
    
    Profit
    
    
    Amount
    
    
    Basic
    
    
    DilutedYear Ended December 31, 2009:4th Quarter
    
    $
    18,180
    
    
    $
    5,958
    
    
    $
    (2,564
    )
    
    $
    (0.02
    )
    
    $
    (0.02
    )3rd Quarter
    
    
    19,371
    
    
    
    2,685
    
    
    
    (5,101
    )
    
    
    (0.06
    )
    
    
    (0.06
    )2nd Quarter
    
    
    16,300
    
    
    
    1,667
    
    
    
    (6,950
    )
    
    
    (0.08
    )
    
    
    (0.08
    )1st Quarter
    
    
    22,040
    
    
    
    5,362
    
    
    
    (10,691
    )
    
    
    (0.12
    )
    
    
    (0.12
    )Year Ended December 31, 2008:4th Quarter
    
    $
    26,036
    
    
    $
    8,112
    
    
    $
    (1,977
    )
    
    $
    (0.02
    )
    
    $
    (0.02
    )3rd Quarter
    
    
    31,874
    
    
    
    9,906
    
    
    
    2,401
    
    
    
    0.03
    
    
    
    0.032nd Quarter
    
    
    21,229
    
    
    
    4,827
    
    
    
    (2,819
    )
    
    
    (0.03
    )
    
    
    (0.03
    )1st Quarter
    
    
    14,459
    
    
    
    3,747
    
    
    
    (5,544
    )
    
    
    (0.06
    )
    
    
    (0.06
    )
 CRITICAL ACCOUNTING POLICIES
 Revenue Recognition
  Allowance for Chargebacks and Rebates
  29




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Allowance for Product Returns
 ®
 30




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##### Table of Contents



Allowance for Doubtful Accounts
   Allowance for Slow-Moving Inventory
    Warranty Liability
  Income Taxes
  Intangibles
  31




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##### Table of Contents



Stock-Based Compensation
  RECENT ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurement and Disclosures Fair Value Measurements
 Consolidation Non-Controlling Interests in Consolidated Financial Statements an amendment of ARB No. 51).
 Business Combinations Business
Combinations
 Intangibles, Goodwill and Other Determination of the Useful Life of Intangible Assets
 Financial Instruments
 Subsequent Events Subsequent Events
 FASB Accounting Standards Codification The FASB Accounting Standards Codification
 32




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##### Table of Contents



tem 7A. Quantitative and Qualitative Disclosures about Market Risk
    
 Item 8. Financial Statements and Supplementary Data
   Reports of Independent Registered Public Accounting Firms
    
    
    34Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    37Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    38Consolidated Statements of Shareholders Equity for the years ended December 31, 2009, 2008 and 2007
    
    
    39Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    40Notes to Consolidated Financial Statements
    
    
    41
 33




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Report of Independent Registered Public Accounting Firm
       
 34




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
 35




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Report of Independent Registered Public Accounting Firm
         
 36




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##### Table of Contents



AKORN, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In Thousands, Except Share Data)
 December 31,2009
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    1,617
    
    
    $
    1,063Trade accounts receivable, net
    
    
    9,225
    
    
    
    6,529Other receivable
    
    
    833
    
    
    
    1,221Inventories, net
    
    
    13,167
    
    
    
    30,163Prepaid expenses and other current assets
    
    
    1,227
    
    
    
    1,770TOTAL CURRENT ASSETS
    
    
    26,069
    
    
    
    40,746PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    31,473
    
    
    
    34,223OTHER LONG-TERM ASSETSIntangibles, net
    
    
    4,619
    
    
    
    6,017Deferred financing costs, net
    
    
    3,800
    
    
    
    272Other
    
    
    2,798
    
    
    
    1,071TOTAL OTHER LONG-TERM ASSETS
    
    
    11,217
    
    
    
    7,360TOTAL ASSETS
    
    $
    68,759
    
    
    $
    82,329LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESTrade accounts payable
    
    $
    3,286
    
    
    $
    8,795Accrued compensation
    
    
    1,091
    
    
    
    1,070Accrued expenses and other liabilities
    
    
    3,724
    
    
    
    2,906Short term subordinated debt  related party
    
    
    
    
    
    
    5,332Revolving line of credit  related party
    
    
    3,000
    
    
    
    Warrants liability  related party
    
    
    9,065
    
    
    
    Supply agreement termination costs
    
    
    1,500
    
    
    
    TOTAL CURRENT LIABILITIES
    
    
    21,666
    
    
    
    18,103LONG-TERM LIABILITIESLease incentive obligation
    
    
    1,304
    
    
    
    1,484Product warranty liability
    
    
    1,299
    
    
    
    1,299Subordinated debt  related party
    
    
    5,853
    
    
    
    TOTAL LONG-TERM LIABILITIES
    
    
    8,456
    
    
    
    2,783TOTAL LIABILITIES
    
    
    30,122
    
    
    
    20,886SHAREHOLDERS EQUITYCommon stock, no par value  150,000,000
shares authorized; 90,389,597 and
90,072,662 shares issued and outstanding at
December 31, 2009 and 2008, respectively
    
    
    174,027
    
    
    
    170,617Warrants to acquire common stock
    
    
    1,821
    
    
    
    2,731Accumulated deficit
    
    
    (137,211
    )
    
    
    (111,905
    )TOTAL SHAREHOLDERS EQUITY
    
    
    38,637
    
    
    
    61,443TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    68,759
    
    
    $
    82,329
  37




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AKORN, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In Thousands, Except Per Share Data)
 Year      ended December 31,2009
    
    
    2008
    
    
    2007REVENUES
    
    $
    75,891
    
    
    $
    93,598
    
    
    $
    52,895Cost of sales
    
    
    60,219
    
    
    
    67,006
    
    
    
    41,495GROSS PROFIT
    
    
    15,672
    
    
    
    26,592
    
    
    
    11,400Selling, general and administrative expenses
    
    
    22,843
    
    
    
    25,620
    
    
    
    21,861Supply agreement termination expenses
    
    
    5,929
    
    
    
    
    
    
    
    Amortization of intangibles
    
    
    1,648
    
    
    
    1,354
    
    
    
    1,504Research and development expenses
    
    
    4,764
    
    
    
    6,801
    
    
    
    7,850TOTAL OPERATING EXPENSES
    
    
    35,184
    
    
    
    33,775
    
    
    
    31,215OPERATING LOSS
    
    
    (19,512
    )
    
    
    (7,183
    )
    
    
    (19,815
    )Write-off and amortization of deferred financing costs
    
    
    (2,013
    )
    
    
    
    
    
    
    Interest income (expense), net
    
    
    (1,516
    )
    
    
    (870
    )
    
    
    649Equity in earnings of unconsolidated joint venture
    
    
    1,580
    
    
    
    295
    
    
    
    Change in fair value of warrants liability
    
    
    (3,843
    )
    
    
    
    
    
    
    Other income/(expense)
    
    
    
    
    
    
    (177
    )
    
    
    1LOSS BEFORE INCOME TAXES
    
    
    (25,304
    )
    
    
    (7,935
    )
    
    
    (19,165
    )Income tax provision
    
    
    2
    
    
    
    4
    
    
    
    3NET LOSS
    
    $
    (25,306
    )
    
    $
    (7,939
    )
    
    $
    (19,168
    )NET LOSS PER COMMON SHARE:BASIC
    
    $
    (0.28
    )
    
    $
    (0.09
    )
    
    $
    (0.22
    )DILUTED
    
    $
    (0.28
    )
    
    $
    (0.09
    )
    
    $
    (0.22
    )SHARES USED IN COMPUTING NET LOSS PER COMMON SHARE:BASIC
    
    
    90,253
    
    
    
    89,209
    
    
    
    87,286DILUTED
    
    
    90,253
    
    
    
    89,209
    
    
    
    87,286
  38




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##### Table of Contents



AKORN, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
 (In Thousands)
 Warrants
    
    
    RetainedCommon Stock
    
    
    to acquire
    
    
    EarningsAdditional Paid-In-Capital
    
    
    Common
    
    
    (AccumulatedShares
    
    
    Amount
    
    
    Stock
    
    
    Deficit)
    
    
    TotalBALANCES AT DECEMBER 31, 2006
    
    
    85,991
    
    
    $
    150,250
    
    
    $
    4,862
    
    
    $
    (84,798
    )
    
    $
    70,314Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,168
    )
    
    
    (19,168
    )Exercise of warrants into common stock
    
    
    1,306
    
    
    
    4,574
    
    
    
    (2,067
    )
    
    
    
    
    
    
    2,507Net proceeds from issuance of common stock
    
    
    1,000
    
    
    
    6,994
    
    
    
    
    
    
    
    
    
    
    
    6,994Exercise of stock options
    
    
    457
    
    
    
    1,054
    
    
    
    
    
    
    
    
    
    
    
    1,054Employee stock purchase plan issuances
    
    
    32
    
    
    
    218
    
    
    
    
    
    
    
    
    
    
    
    218Amortization of deferred compensation related to restricted stock awards
    
    
    
    
    
    
    589
    
    
    
    
    
    
    
    
    
    
    
    589Restricted stock awards vested, net of amounts withheld for payment of employee tax liability
    
    
    115
    
    
    
    (445
    )
    
    
    
    
    
    
    
    
    
    
    (445
    )Stock-based compensation expense
    
    
    
    
    
    
    2,595
    
    
    
    
    
    
    
    
    
    
    
    2,595BALANCES AT DECEMBER 31, 2007
    
    
    88,901
    
    
    $
    165,829
    
    
    $
    2,795
    
    
    $
    (103,966
    )
    
    
    64,658Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,939
    )
    
    
    (7,939
    )Exercise of warrants into common stock
    
    
    50
    
    
    
    101
    
    
    
    (64
    )
    
    
    
    
    
    
    37Exercise of stock options
    
    
    1,012
    
    
    
    2,198
    
    
    
    
    
    
    
    
    
    
    
    2,198Employee stock purchase plan issuances
    
    
    44
    
    
    
    217
    
    
    
    
    
    
    
    
    
    
    
    217Amortization of deferred compensation related to restricted stock awards
    
    
    66
    
    
    
    745
    
    
    
    
    
    
    
    
    
    
    
    745Restricted stock awards vested, net of amounts withheld for payment of employee tax liability
    
    
    
    
    
    
    (158
    )
    
    
    
    
    
    
    
    
    
    
    (158
    )Stock-based compensation expense
    
    
    
    
    
    
    1,685
    
    
    
    
    
    
    
    
    
    
    
    1,685BALANCES AT DECEMBER 31, 2008
    
    
    90,073
    
    
    $
    170,617
    
    
    $
    2,731
    
    
    $
    (111,905
    )
    
    $
    61,443Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,306
    )
    
    
    (25,306
    )Exercise of stock options
    
    
    2
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Employee stock purchase plan issuances
    
    
    169
    
    
    
    213
    
    
    
    
    
    
    
    
    
    
    
    213Amortization of deferred compensation related to restricted stock awards
    
    
    146
    
    
    
    318
    
    
    
    
    
    
    
    
    
    
    
    318Restricted stock awards vested, net of amounts withheld for payment of employee tax liability
    
    
    
    
    
    
    (78
    )
    
    
    
    
    
    
    
    
    
    
    (78
    )Stock-based compensation expense
    
    
    
    
    
    
    2,044
    
    
    
    
    
    
    
    
    
    
    
    2,044Expiration of stock warrants
    
    
    
    
    
    
    910
    
    
    
    (910
    )
    
    
    
    
    
    
    BALANCES AT DECEMBER 31, 2009
    
    
    90,390
    
    
    $
    174,027
    
    
    $
    1,821
    
    
    $
    (137,211
    )
    
    $
    38,637
  39




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##### Table of Contents



AKORN, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In Thousands)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007OPERATING ACTIVITIESNet loss
    
    $
    (25,306
    )
    
    $
    (7,939
    )
    
    $
    (19,168
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    5,453
    
    
    
    4,551
    
    
    
    4,512Write-off and Amortization of deferred financing fees
    
    
    2,013
    
    
    
    
    
    
    
    Non-cash stock compensation expense
    
    
    2,362
    
    
    
    2,430
    
    
    
    3,184Non-cash supply agreement termination expense
    
    
    1,051
    
    
    
    
    
    
    
    Non-cash change in fair value of warrants liability
    
    
    3,843
    
    
    
    
    
    
    
    Gain on disposal of assets
    
    
    
    
    
    
    (25
    )
    
    
    Equity in earnings of unconsolidated joint venture
    
    
    (1,580
    )
    
    
    (295
    )
    
    
    Changes in operating assets and liabilities:Trade accounts receivable
    
    
    (2,696
    )
    
    
    (2,417
    )
    
    
    669Inventories
    
    
    16,996
    
    
    
    932
    
    
    
    (19,361
    )Prepaid expenses and other current assets
    
    
    (345
    )
    
    
    (201
    )
    
    
    (1,139
    )Other long-term assets
    
    
    
    
    
    
    1,090
    
    
    
    Supply agreement termination liabilities
    
    
    1,500
    
    
    
    
    
    
    
    Trade accounts payable
    
    
    (5,509
    )
    
    
    (5,275
    )
    
    
    9,351Royalty liability
    
    
    (56
    )
    
    
    57
    
    
    
    (1,505
    )Accrued expenses and other liabilities
    
    
    1,236
    
    
    
    1,672
    
    
    
    (1,434
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (1,038
    )
    
    
    (5,420
    )
    
    
    (24,891
    )INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (1,147
    )
    
    
    (3,354
    )
    
    
    (1,784
    )Investment in unconsolidated joint venture
    
    
    
    
    
    
    (507
    )
    
    
    Purchase of product licensing rights
    
    
    (250
    )
    
    
    
    
    
    
    (400
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    74
    
    
    
    NET CASH USED IN INVESTING ACTIVITIES
    
    
    (1,397
    )
    
    
    (3,787
    )
    
    
    (2,184
    )FINANCING ACTIVITIESRepayments of long-term debt
    
    
    
    
    
    
    (208
    )
    
    
    (394
    )Restricted cash for revolving credit agreement
    
    
    
    
    
    
    1,250
    
    
    
    (1,250
    )Proceeds (repayments) from revolving line of credit
    
    
    3,000
    
    
    
    (4,521
    )
    
    
    4,521Loan origination fees  new revolving line of credit & subordinated note
    
    
    (1,370
    )
    
    
    (272
    )
    
    
    Net proceeds from common stock and warrant offering
    
    
    
    
    
    
    
    
    
    
    6,994Proceeds from exercise of stock warrants
    
    
    
    
    
    
    37
    
    
    
    2,507Proceeds from subordinated debt  related party
    
    
    
    
    
    
    5,000
    
    
    
    Proceeds under stock option and stock purchase plans
    
    
    1,359
    
    
    
    1,036
    
    
    
    827NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    2,989
    
    
    
    2,322
    
    
    
    13,205INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    554
    
    
    
    (6,885
    )
    
    
    (13,870
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    1,063
    
    
    
    7,948
    
    
    
    21,818CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    1,617
    
    
    $
    1,063
    
    
    $
    7,948
  40




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##### Table of Contents



AKORN, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note A  Business and Basis of Presentation
 Business:
 Note B  Summary of Significant Accounting Policies
 Consolidation:
  Use of Estimates:
 Revenue Recognition:
   Freight:
 Cash and Cash Equivalents:
 Accounts Receivable:
 41




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##### Table of Contents



Chargebacks and Rebates:
    Sales Returns:
 42




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##### Table of Contents



®
 Doubtful Accounts:
  Inventories:
   Intangibles:
  Year ending
    
    AmortizationDecember 31,
    
    Expense2010
    
    $
    1,4972011
    
    
    1,0232012
    
    
    1,0232013
    
    
    5332014
    
    
    289
 Property, Plant and Equipment:
 43




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##### Table of Contents



Asset category
    
    Depreciable LifeBuildings
    
    30 yearsLeasehold
improvements
    
    10 yearsFurniture
and
equipment
    
    10 yearsAutomobiles
    
    5 years
 Net Loss Per Common Share:
 Income Taxes:
 Fair Value of Financial Instruments:
 Warrants: Derivatives and Hedging, Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Companys Own Stock
 Fair Value Measurement and Disclosures
   Expected Volatility
    
    
    79.5
    %Expected Life (in years)
    
    
    4.3  4.6Risk-free interest rate
    
    
    2.3
    %Dividend yield
    
    
    
  # of
    
    
    Exercise
    
    
    Fair ValuesWarrants
    
    
    Price per
    
    
    At Grant
    
    
    As ofGranted To:
    
    Warrant Identification
    
    
    Grant Date
    
    
    Granted
    
    
    Share
    
    
    Dates
    
    
    12/31/09EJ Funds
    
    Modification Warrant
    
    April 13, 2009
    
    
    1,939,639
    
    
    $
    1.11
    
    
    $
    1,358,000
    
    
    $
    2,425,000Kapoor Trust
    
    Reimbursement Warrant
    
    April 13, 2009
    
    
    1,501,933
    
    
    $
    1.11
    
    
    
    1,051,000
    
    
    
    1,877,000EJ Funds
    
    Credit Facility Warrant 1
    
    August 17, 2009
    
    
    1,650,806
    
    
    $
    1.16
    
    
    
    1,238,000
    
    
    
    2,096,000Kapoor Trust
    
    Subordinated Note Warrant 2
    
    August 17, 2009
    
    
    2,099,935
    
    
    $
    1.16
    
    
    
    1,575,000
    
    
    
    2,667,0007,192,313
    
    
    
    
    
    
    $
    5,222,000
    
    
    $
    9,065,000
 
 1
    
    Credit Facility Warrant refers to warrants granted to EJ Funds in connection with
modification to the Credit Facility to increase the total loan commitment from $5,650,000 to
$10,000,000.2
    
    Subordinated Note Warrant refers to warrants granted to the Kapoor Trust in connection
with refinancing the Subordinated Note to extend its term for an additional five years and
increase the principal from $5,000,000 to $5,853,267 to include accrued interest through the
refinancing date. 44




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##### Table of Contents



Stock-Based Compensation:
 Warranty Liability:
 Reclassifications:
 Note C  Allowance for Customer Deductions
  Doubtful Accounts
    
    
    ReturnsYears Ended December 31,
    
    
    Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Balance at beginning of year
    
    $
    22
    
    
    $
    5
    
    
    $
    3
    
    
    $
    2,539
    
    
    $
    1,153
    
    
    $
    2,437Provision (recovery)
    
    
    (18
    )
    
    
    17
    
    
    
    (8
    )
    
    
    4,806
    
    
    
    3,159
    
    
    
    610(Charges) credits
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    (4,153
    )
    
    
    (1,773
    )
    
    
    (1,894
    )Balance at end of year
    
    $
    4
    
    
    $
    22
    
    
    $
    5
    
    
    $
    3,192
    
    
    $
    2,539
    
    
    $
    1,153
 Discounts
    
    
    Chargebacks and RebatesYears Ended December 31,
    
    
    Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Balance at beginning of year
    
    $
    322
    
    
    $
    357
    
    
    $
    236
    
    
    $
    9,311
    
    
    $
    11,690
    
    
    $
    8,370Provision
    
    
    1,752
    
    
    
    1,926
    
    
    
    1,306
    
    
    
    29,820
    
    
    
    31,330
    
    
    
    31,971Charges
    
    
    (1,738
    )
    
    
    (1,961
    )
    
    
    (1,185
    )
    
    
    (35,897
    )
    
    
    (33,709
    )
    
    
    (28,651
    )Balance at end of year
    
    $
    336
    
    
    $
    322
    
    
    $
    357
    
    
    $
    3,234
    
    
    $
    9,311
    
    
    $
    11,690
 Note D  Inventories
  December 31,2009
    
    
    2008Finished goods
    
    $
    4,229
    
    
    $
    21,000Work in process
    
    
    1,887
    
    
    
    1,802Raw materials and supplies
    
    
    7,051
    
    
    
    7,361$
    13,167
    
    
    $
    30,163
  Years Ended December 31,2009
    
    
    2008
    
    
    2007Balance at beginning of year
    
    $
    1,179
    
    
    $
    1,260
    
    
    $
    510Provision
    
    
    1,936
    
    
    
    765
    
    
    
    1,449Charges
    
    
    (1,335
    )
    
    
    (846
    )
    
    
    (699
    )Balance at end of year
    
    $
    1,780
    
    
    $
    1,179
    
    
    $
    1,260
 45




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##### Table of Contents



Note E  Property, Plant and Equipment
  2009
    
    
    2008Land
    
    $
    396
    
    
    $
    396Buildings and leasehold improvements
    
    
    20,070
    
    
    
    19,607Furniture and equipment
    
    
    46,854
    
    
    
    46,29767,320
    
    
    
    66,300Accumulated depreciation
    
    
    (36,171
    )
    
    
    ( 32,710
    )31,149
    
    
    
    33,590Construction in progress
    
    
    324
    
    
    
    633$
    31,473
    
    
    $
    34,223
 Note F  Financing Arrangements
 Mortgage Payable
  Credit Facility
 Debt Balance Sheet
Classification of Borrowing under Revolving Credit Agreements that Include both a Subjective
Acceleration Clause and a Lock-box Arrangement),
    46




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47




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##### Table of Contents



Subordinated Note Payable
   Note G  Common Stock
   Note H  Leasing Arrangements
    Year ending December 31,2010
    
    
    1,7812011
    
    
    1,8002012
    
    
    1,3172013
    
    
    1,2242014
    
    
    1,2432015 and thereafter
    
    
    4,223Total
    
    $
    11,588
 48




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##### Table of Contents



Note I  Stock Options, Employee Stock Purchase Plan and Restricted Stock
  Compensation  Stock Compensation Share Based Payment
    49




---



##### Table of Contents



2009
    
    2008
    
    2007Expected Volatility
    
    
    78%  81
    %
    
    
    43%  69
    %
    
    
    43%  47
    %Expected Life (in years)
    
    
    3.9
    
    
    
    4.0
    
    
    
    3.6  4.0Riskfree interest rate
    
    
    1.8%  2.5
    %
    
    
    2.2%  3.2
    %
    
    
    3.8%  4.8
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    Fair value per stock option
    
    
    $0.79
    
    
    
    $1.66
    
    
    
    $2.51
  Weighted AverageNumber of
    
    Weighted
    
    RemainingShares
    
    Average
    
    Contractual Term
    
    Aggregate(in thousands)
    
    Exercise Price
    
    (Years)
    
    Intrinsic ValueOutstanding at January 1, 2007
    
    
    3,155
    
    
    $
    3.22Granted
    
    
    2,268
    
    
    
    6.34Exercised
    
    
    (457
    )
    
    
    2.31Forfeited
    
    
    (247
    )
    
    
    5.61Outstanding at December 31, 2007
    
    
    4,719
    
    
    
    4.69Granted
    
    
    289
    
    
    
    3.92Exercised
    
    
    (1,012
    )
    
    
    2.17Forfeited
    
    
    (313
    )
    
    
    6.11Outstanding at December 31, 2008
    
    
    3,684
    
    
    
    5.20Granted (1)
    
    
    5,110
    
    
    
    1.37Exercised
    
    
    (2
    )
    
    
    1.60Forfeited (2)
    
    
    (3,635
    )
    
    
    5.09Outstanding at December 31, 2009
    
    
    5,157
    
    
    
    1.49
    
    
    
    4.58
    
    
    $
    2,140,500Exercisable at December 31, 2009
    
    
    955
    
    
    
    1.86
    
    
    
    4.23
    
    
    $
    404,000
 
 (1)
    
    Option Granted for 2009 include 1,637,652 options granted at $1.60 per share on
November 19, 2009 pursuant to the Option Exchange Program.(2)
    
    Options Forfeited include 1,637,652 out-of-the-money options surrendered on November
19, 2009 in exchange for new shares under the Option Exchange Program.     50




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##### Table of Contents



Number of Shares
    
    Weighted Average(in thousands)
    
    Grant Date Fair ValueNonvested at January 1, 2007
    
    
    350
    
    
    
    5.05Granted
    
    
    
    
    
    
    Vested
    
    
    (175
    )
    
    
    5.05Canceled
    
    
    
    
    
    
    Nonvested at December 31, 2007
    
    
    175
    
    
    
    5.05Granted
    
    
    50
    
    
    
    7.34Vested
    
    
    (100
    )
    
    
    5.34Canceled
    
    
    
    
    
    
    Nonvested at December 31, 2008
    
    
    125
    
    
    $
    5.74Granted
    
    
    185
    
    
    
    1.59Vested
    
    
    (202
    )
    
    
    3.55Canceled
    
    
    
    
    
    
    Nonvested at December 31, 2009
    
    
    108
    
    
    $
    2.73
 Note J  Income Taxes
  Current
    
    
    Deferred
    
    
    TotalYear ended December 31, 2009Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    2
    
    
    
    
    
    
    
    2$
    2
    
    
    $
    
    
    
    $
    2Year ended December 31, 2008Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    4
    
    
    
    
    
    
    
    4$
    4
    
    
    $
    
    
    
    $
    4Year ended December 31, 2007Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    3
    
    
    
    
    
    
    
    3$
    3
    
    
    $
    
    
    
    $
    3
  Years Ended December 31,2009
    
    
    2008
    
    
    2007Computed expected tax expense (benefit)
    
    $
    (8,604
    )
    
    $
    (2,699
    )
    
    $
    (6,517
    )Change in income taxes resulting from:State income taxes, net of federal income tax
    
    
    (1,217
    )
    
    
    (383
    )
    
    
    (924
    )Other permanent differences
    
    
    1,207
    
    
    
    76
    
    
    
    (691
    )Valuation allowance change
    
    
    8,616
    
    
    
    3,010
    
    
    
    8,135Income tax expense (benefit)
    
    $
    2
    
    
    $
    4
    
    
    $
    3
  December 31,
    
    
    December 31,2009
    
    
    2008Deferred tax assets:Net operating loss carry forward
    
    $
    35,618
    
    
    $
    25,345Stock-based compensation
    
    
    1,439
    
    
    
    2,430Other items, current
    
    
    3,371
    
    
    
    3,944Other items, long-term
    
    
    1,649
    
    
    
    1,429Total deferred tax assets
    
    
    42,077
    
    
    
    33,148Deferred tax liabilities:Property, plant and equipment, net
    
    
    (2,124
    )
    
    
    (1,811
    )Net deferred tax asset
    
    
    39,953
    
    
    
    31,337Valuation allowance
    
    
    (39,953
    )
    
    
    (31,337
    )Net deferred taxes
    
    $
    
    
    
    $
    
 51




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##### Table of Contents



Note K  Retirement Plan
  Note L  Segment Information
  -
    
    Ophthalmic-
    
    Hospital Drugs & Injectables-
    
    Biologics & Vaccines-
    
    Contract Services
  Segment Reporting Disclosures about Segments of an Enterprise
and Related Information
  Years ended December 31,2009
    
    
    2008
    
    
    2007REVENUESOphthalmic
    
    $
    20,169
    
    
    $
    20,447
    
    
    $
    18,545Hospital Drugs & Injectables
    
    
    16,456
    
    
    
    19,627
    
    
    
    19,475Biologics & Vaccines
    
    
    31,111
    
    
    
    44,602
    
    
    
    7,522Contract Services
    
    
    8,155
    
    
    
    8,922
    
    
    
    7,353Total revenues
    
    $
    75,891
    
    
    $
    93,598
    
    
    $
    52,895GROSS PROFITOphthalmic
    
    $
    5,135
    
    
    $
    5,752
    
    
    $
    3,784Hospital Drugs & Injectables
    
    
    2,744
    
    
    
    5,049
    
    
    
    4,991Biologics & Vaccines
    
    
    6,489
    
    
    
    13,210
    
    
    
    745Contract Services
    
    
    1,304
    
    
    
    2,581
    
    
    
    1,880Total gross profit
    
    $
    15,672
    
    
    $
    26,592
    
    
    $
    11,400
  52




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##### Table of Contents



Note M  Commitments and Contingencies
         53




---



##### Table of Contents



Year ending December 31,
    
    Minimum Payments2010
    
    $2,1582011
    
    2002012
    
    125
  Note N  Supplemental Cash Flow Information (in thousands)
 Year ended December 31,2009
    
    
    2008
    
    
    2007Leasehold improvements funded by lessor
    
    $
    
    
    
    $
    1,768
    
    
    $
    Assets acquired through capital lease
    
    
    
    
    
    
    85
    
    
    
    Interest and taxes paid:Interest paid
    
    
    931
    
    
    
    633
    
    
    
    72Income taxes paid
    
    
    3
    
    
    
    4
    
    
    
    5
 Note O  Recent Accounting Pronouncements
 Fair Value Measurement and Disclosures Fair Value Measurements
 Consolidation Non-Controlling Interests in Consolidated Financial Statements an amendment of ARB No. 51)
 Business Combinations Business Combinations
 Intangibles, Goodwill and Other Determination of the Useful Life of Intangible Assets
 54




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##### Table of Contents



Financial Instruments,
 Subsequent Events Subsequent Events
 FASB Accounting Standards
Codification The FASB Accounting Standards Codification
 Note P  Business Alliances
     55




---



##### Table of Contents



Note Q  Customer and Supplier Concentration
   2009
    
    2008
    
    2007Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    
    
    
    GrossGross
    
    Net
    
    Accounts
    
    Gross
    
    Net
    
    Accounts
    
    Gross
    
    Net
    
    AccountsSales
    
    Revenue
    
    Receivable
    
    Sales
    
    Revenue
    
    Receivable
    
    Sales
    
    Revenue
    
    ReceivableAmerisource
    
    
    25
    %
    
    
    21
    %
    
    
    44
    %
    
    
    16
    %
    
    
    12
    %
    
    
    7
    %
    
    
    22
    %
    
    
    17
    %
    
    
    36
    %Cardinal
    
    
    21
    %
    
    
    19
    %
    
    
    21
    %
    
    
    23
    %
    
    
    19
    %
    
    
    41
    %
    
    
    25
    %
    
    
    21
    %
    
    
    25
    %McKesson
    
    
    16
    %
    
    
    14
    %
    
    
    6
    %
    
    
    10
    %
    
    
    14
    %
    
    
    6
    %
    
    
    20
    %
    
    
    15
    %
    
    
    8
    %
   Note R  Related Party Transactions
    56




---



##### Table of Contents



Note S  Severance Charges
   Note T  Subsequent Events
   57




---



##### Table of Contents



Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A.
    
    Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
  Attestation Report of the Registered Public Accounting Firm
  Changes in Internal Control Over Financial Reporting
  
 Item 9B.
    
    Other Information.
  58




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##### Table of Contents



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance.
 Code of Ethics
   
 Item 11.
    
    Executive Compensation.
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13.
    
    Certain Relationships and Related Transactions and Director Independence.
  
 Item 14.
    
    Principal Accounting Fees and Services.
  59




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##### Table of Contents



PART IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
 (a)
    
    (1) Financial Statements. The consolidated financial statements listed on the index to Item 8
of this Annual Report on Form 10-K are filed as a part of this Annual Report.(2)Financial Statement Schedules.All financial statement schedules have been omitted since
the information is either not applicable or required or is included in the financial
statements or notes thereof.(3)Exhibits. Those exhibits marked with a (*) refer to exhibits filed herewith. The other
exhibits are incorporated herein by reference, as indicated in the following list. Those
exhibits marked with a () refer to management contracts or compensatory plans or
arrangements. Portions of the exhibits marked with a (Ω) are the subject of a Confidential
Treatment Request under 17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2.
 Exhibit No.
    
    Description3.1
    
    Restated Articles of Incorporation of Akorn, Inc. dated September 16, 2004, incorporated by reference
to Exhibit 3.1 to Akorn, Inc.s Registration Statement on Form S-1 filed on September 21, 2004
(Commission file No. 333-119168).3.2
    
    Amended and Restated By-laws of Akorn, Inc., incorporated by reference to Exhibit 3.2 to Akorn, Inc.s
Registration Statement on Form S-1 filed on June 14, 2005 (Commission file No. 333-119168).3.3
    
    Amendment to Bylaws of Akorn, Inc., incorporated by reference to Exhibit 3.1 to Akorn, Inc.s report
on Form 8-K filed on March 31, 2006 (Commission file No. 001-32360).3.4
    
    Amendment to Bylaws of Akorn, Inc., incorporated by reference to Exhibit 3.1 to Akorn, Inc.s report
on Form 8-K filed on December 14, 2006 (Commission file No. 001-32360).3.5
    
    Amendment to Bylaws of Akorn, Inc., incorporated by reference to Exhibit 3.1 to Akorn, Inc.s report
on Form 8-K filed on April 16, 2007.3.6
    
    Certificate of Amendment to the Bylaws of Akorn, Inc., dated June 18, 2009, incorporated by reference
to Exhibit 3.1 to our report on Form 8-K filed on June 24, 2009.4.1
    
    First Amendment dated October 7, 2003 to Registration Rights Agreement dated July 12, 2001 between
Akorn, Inc. and The John N. Kapoor Trust dated 9/20/89, incorporated by reference to Exhibit 4.1 to
Akorn, Inc.s report on Form 8-K filed on October 24, 2003 (Commission file No. 000-13976).4.2
    
    Form of Warrant Certificate, incorporated by reference to Exhibit 4.2 to Akorn, Inc.s report on Form
8-K filed on October 24, 2003 (Commission file No. 000-13976).4.3
    
    Form of Warrant Agreement dated October 7, 2003 between Akorn, Inc. and certain investors,
incorporated by reference to Exhibit 4.3 to Akorn, Inc.s report on Form 8-K filed on October 24, 2003
(Commission file No. 000-13976).4.9
    
    Registration Rights Agreement dated October 7, 2003 among Akorn, Inc. and certain investors,
incorporated by reference to Exhibit 4.9 to Akorn, Inc.s report on Form 8-K filed on October 24, 2003
(Commission file No. 000-13976).4.10
    
    Form of Subscription Agreement between Akorn, Inc. and certain investors, incorporated by reference to
Exhibit 4.1 to Akorn, Inc.s report on Form 8-K filed on August 24, 2004 (Commission file No.
000-13976).4.11
    
    Form of Common Stock Purchase Warrant between Akorn, Inc. and certain investors, incorporated by
reference to Exhibit 4.2 to Akorn, Inc.s report on Form 8-K filed on August 24, 2004 (Commission file
No. 000-13976).4.13
    
    Stock Registration Rights Agreement dated November 15, 1990 between Akorn, Inc. and The John N. Kapoor
Trust dated 9/20/89, incorporated by reference to Exhibit 4.12 to Akorn, Inc.s Registration Statement
on Form S-1 filed on September 21, 2004 (Commission file No. 333-119168).4.14
    
    Stock Purchase Agreement dated November 15, 1990 between Akorn, Inc. and The John N. Kapoor Trust
dated 9/20/89, incorporated by reference to Exhibit 4.13 to Akorn, Inc.s Registration Statement on
Form S-1 filed on September 21, 2004 (Commission file No. 333-119168).4.15
    
    Form of Securities Purchase Agreement dated March 1, 2006, between Akorn, Inc. and certain investors
incorporated by reference to Exhibit 4.1 to Akorn, Inc.s report on Form 8-K filed on March 7, 2006.
 60




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##### Table of Contents



Exhibit No.
    
    Description4.16
    
    Form of Warrant issued in connection with the Securities Purchase Agreement dated March 1, 2006
incorporated by reference to Exhibit 4.2 to Akorn, Inc.s report on Form 8-K filed March 7, 2006. (All
warrants are dated March 8, 2006. Please see Exhibit 99.1 of Akorn, Inc.s report on Form 8-K filed
March 14, 2006, which is hereby incorporated by reference, for a schedule setting forth the other
material details for each of the warrants.)4.17
    
    Securities Purchase Agreement dated September 13, 2006, between Akorn, Inc. and Serum Institute of
India, incorporated by reference to Exhibit 4.1 to Akorn Inc.s report on Form 8-K filed September 14,
2006.4.18
    
    Securities Purchase Agreement dated November 14, 2007, between Akorn, Inc. and Serum Institute of
India Ltd., incorporated by reference to Exhibit 4.1 to Akorn, Inc.s report on Form 8-K filed on
November 20, 2007.4.19
    
    Akorn, Inc. Common Stock Purchase Warrant, dated April 13, 2009, in favor of EJ Funds LP, incorporated
by reference to Exhibit 4.1 of Akorn, Inc.s report on Form 8-K filed on April 17, 2009.4.20
    
    Modification, Warrant and Investor Rights Agreement, dated April 13, 2009, among Akorn, Inc., Akorn
(New Jersey), Inc., and EJ Funds LP, incorporated by reference to Exhibit 4.2 to Akorn, Inc.s report
on Form 8-K filed on April 17, 2009.4.21
    
    Akorn, Inc. Common Stock Purchase Warrant, dated April 15, 2009, in favor of John N. Kapoor Trust
dated 9/20/89, incorporated by reference to Exhibit 4.1 to Akorn, Inc.s report on Form 8-K filed on
April 21, 2009.4.22
    
    Common Stock Purchase Warrant dated August 17, 2009, in favor of EJ Funds LP. (Incorporated by
reference to Exhibit 10.2 of a Form 8-K filed on August 21, 2009.)4.23
    
    Common Stock Purchase Warrant dated August 17, 2009, in favor of John N. Kapoor Trust Dated 9/20/89.
(Incorporated by reference to Exhibit 10.4 of a Form 8-K filed on August 21, 2009.)4.24
    
    Offer to Exchange Certain Outstanding Stock Options For New Stock Options dated October 21, 2009,
incorporated by reference to Exhibit (a)(1)(a) to the tender offer statement on Schedule TO-I filed on
October 21, 2009.10.1
    
    Amended and Restated Akorn, Inc. 1988 Incentive Compensation Program, incorporated by reference to
Exhibit 10.2 to Akorn, Inc.s Registration Statement on Form S-1 filed on September 21, 2004
(Commission file No. 333-119168).10.3
    
    Letter of Commitment to Akorn, Inc. from John. N. Kapoor dated April 17, 2001, incorporated by
reference to Exhibit 10.4 to Akorn, Inc.s report on Form 8-K filed on April 25, 2001 (Commission file
No. 000-13976).10.4
    
    Convertible Bridge Loan and Warrant Agreement dated as of July 12, 2001, by and between Akorn, Inc.
and The John N. Kapoor Trust dated 9/20/89, incorporated by reference to Exhibit 10.1 to Akorn, Inc.s
report on Form 8-K filed on July 26, 2001 (Commission file No. 000-13976).10.5
    
    The Tranche A Common Stock Purchase Warrant, dated July 12, 2001, incorporated by reference to Exhibit
10.2 to Akorn, Inc.s report on Form 8-K filed on July 26, 2001 (Commission file No. 000-13976).10.6
    
    The Tranche B Common Stock Purchase Warrant, dated July 12, 2001, incorporated by reference to Exhibit
10.3 to Akorn, Inc.s report on Form 8-K filed on July 26, 2001 (Commission file No. 000-13976).10.7
    
    Registration Rights Agreement dated July 12, 2001, by and between Akorn, Inc. and The John N. Kapoor
Trust dated 9/20/89, incorporated by reference to Exhibit 10.4 to Akorn, Inc.s report on Form 8-K
filed on July 26, 2001 (Commission file No. 000-13976).10.11
    
    Supply Agreement dated January 4, 2002, by and between Akorn, Inc. and Novadaq Technologies, Inc.,
incorporated by reference to Exhibit 10.22 to Akorn, Inc.s report on Form 10-K for fiscal year ended
December 31, 2001 filed on April 16, 2002 (Commission file No. 000-13976).10.16
    
    Indemnification Agreement dated May 15, 2003 by and between Akorn, Inc. and Arthur S. Przybyl,
incorporated by reference to Exhibit 10.42 to Akorn, Inc.s report on Form 10-K for the fiscal year
ended December 31, 2002, filed on May 21, 2003 (Commission file No. 000-13976).10.17
    
    Form of Indemnity Agreement dated October 7, 2003 between Akorn, Inc. and each of its directors,
incorporated by reference to Exhibit 10.1 to Akorn, Inc.s report on Form 10-Q for quarter ended
September 30, 2003, filed on November 19, 2003 (Commission file No. 000-13976).10.19
    
    Limited Waiver Letter dated October 7, 2003 from The John N. Kapoor Trust dated 9/20/89, incorporated
by reference to Exhibit 10.34 to Akorn, Inc.s Registration Statement on Form S-1 filed on September
21, 2004 (Commission file No. 333-119168).
 61




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##### Table of Contents



Exhibit No.
    
    Description10.20
    
    Form of Acknowledgment of Subordination dated October 7, 2003 between Akorn, Inc. and The John N.
Kapoor Trust dated 9/20/89, incorporated by reference to Exhibit 10.6 to Akorn, Inc.s report on Form
10-Q for quarter ended September 30, 2003, filed on November 19, 2003 (Commission file No. 000-13976).10.21
    
    Form of Subordination and Intercreditor Agreement dated October 7, 2003 among Akorn, Inc., Akorn (New
Jersey), Inc., Bank of America and The John N. Kapoor Trust dated 9/20/89, incorporated by reference
to Exhibit 10.8 to Akorn, Inc.s report on Form 10-Q for quarter ended September 30, 2003, filed on
November 19, 2003 (Commission file No. 000-13976).10.22
    
    Akorn, Inc. 2003 Stock Option Plan, incorporated by reference to Exhibit 10.35 to Akorn, Inc.s report
on Form 10-K for the fiscal year ended December 31, 2003, filed on March 30, 2004 (Commission file No.
000-13976).10.23
    
    Form of Akorn, Inc. Non-Qualified Stock Option Agreement, incorporated by reference to Exhibit 10.36
to Akorn, Inc.s report on Form 10-K for the fiscal year ended December 31, 2003, filed on March 30,
2004 (Commission file No. 000-13976).10.24
    
    Form of Akorn, Inc. Incentive Stock Option Agreement, incorporated by reference to Exhibit 10.37 to
Akorn, Inc.s report on Form 10-K for the fiscal year ended December 31, 2003, filed on March 30, 2004
(Commission file No. 000-13976).10.25
    
    Offer letter dated June 1, 2004 from Akorn, Inc. to Jeffrey A. Whitnell, incorporated by reference to
Exhibit 10.42 to Akorn, Inc.s report on Form 10-K for the fiscal year ended December 31, 2004, filed
March 31, 2005 (Commission file No. 001-32360).10.26
    
    Engagement Letter dated August 5, 2004 between Leerink Swann & Company and Akorn, Inc., incorporated
by reference to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed on August 24, 2004 (Commission
file No. 000-13976).10.27
    
    Waiver and Consent dated August 23, 2004, among Bank of America National Association, the financial
institutions party thereto, Akorn, Inc. and Akorn (New Jersey), Inc., incorporated by reference to
Exhibit 10.2 to Akorn, Inc.s report on Form 8-K filed on August 24, 2004 (Commission file No.
000-13976).10.30
    
    Limited Liability Company Agreement dated September 22, 2004 between Akorn, Inc. and Strides Arcolab
Limited, incorporated by reference to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed on
September 27, 2004 (Commission file No. 000-13976).10.31
    
    OEM Agreement dated September 22, 2004 between Akorn-Strides, LLC and Strides, incorporated by
reference to Exhibit 10.2 to Akorn, Inc.s report on Form 8-K filed on September 27, 2004 (Commission
file No. 000-13976).10.32
    
    Sales and Marketing Agreement dated September 22, 2004 between Akorn, Inc. and Akorn-Strides, LLC,
incorporated by reference to Exhibit 10.3 to Akorn, Inc.s report on Form 8-K filed on September 27,
2004 (Commission file No. 000-13976).10.33
    
    Promissory Note dated September 22, 2004 executed by Akorn-Strides, LLC for the benefit of Akorn,
Inc., incorporated by reference to Exhibit 10.4 to Akorn, Inc.s report on Form 8-K filed on September
27, 2004 (Commission file No. 000-13976).10.34
    
    Capital Contribution Agreement dated September 22, 2004 executed by Strides Arcolab Limited for the
benefit of Akorn-Strides, LLC, incorporated by reference to Exhibit 10.5 to Akorn, Inc.s report on
Form 8-K filed on September 27, 2004 (Commission file No. 000-13976).10.37
    
    License and Supply Agreement November, 11 2004, between Hameln Pharmaceuticals Gmbh and Akorn, Inc.
incorporated by reference to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed on November 17,
2004 (Commission file No. 000-13976).10.38
    
    Offer letter dated November 15, 2004, from Akorn, Inc. to Jeffrey A. Whitnell, for position of Senior
Vice President incorporated by reference to Exhibit 10.58 to Akorn, Inc.s report on Form 10-K filed
on March 31, 2005 (Commission file No. 001-32360).10.39
    
    Amended and Restated Akorn, Inc. 2003 Stock Option Plan incorporated by reference to Exhibit 10.59 to
Akorn, Inc.s report on Form 10-K filed on March 31, 2005 (Commission file No. 000-13976).10.40
    
    Amended and Restated Employee Stock Purchase Plan incorporated by reference to Exhibit 10.58 to Akorn,
Inc.s Registration Statement on Form S-1 filed May 10, 2005.10.42
    
    Solicitation/Contract/Order for Commercial Items issued by the HHS to Akorn, Inc. on December 30, 2005,
incorporated by reference to Exhibit 10.54 to Akorn,
Inc.s report on  Form 10-K filed on March 30, 2006 (Commission file No. 000-13976).10.43
    
    Executive Employment Agreement dated April 24, 2006 between Akorn, Inc., and Arthur S. Przybyl
incorporated by reference to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed April 28, 2006 (Commission file No. 001-32360).
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Exhibit No.
    
    Description10.44W
    
    Executive Bonus Agreement dated April 27, 2006 between Akorn, Inc., and Arthur S. Przybyl incorporated
by reference to Exhibit 10.2 to Akorn, Inc.s report on Form 8-K filed April 28, 2006 (Commission file
No. 001-32360).10.45W
    
    Executive Bonus Agreement dated April 27, 2006 between Akorn, Inc., and Jeffrey A. Whitnell
incorporated by reference to Exhibit 10.3 to Akorn, Inc.s report on Form 8-K filed April 28, 2006
(Commission file No. 001-32360).10.46
    
    Akorn, Inc. Director Compensation Agreement dated October 26, 2006, incorporated by reference to
Exhibit 10.2 to Akorn, Inc.s report on Form 10-Q filed November 9, 2006 (Commission file No.
001-32360).10.47W
    
    Development and Exclusive Distribution Agreement dated November 7, 2006 between Akorn, Inc. and Serum
Institute of India, Ltd. incorporated by reference to Exhibit 10.1 to Akorn Inc.s report on Form 8-K
filed November 14, 2006 (Commission file No. 001-32360).10.48W
    
    Development Funding Agreement dated November 7, 2006 between Akorn, Inc. and Serum Institute of India,
Ltd. incorporated by reference to Exhibit 10.2 to Akorn Inc.s report on Form 8-K filed November 14,
2006 (Commission file No. 001-32360).10.49
    
    First Amendment to OEM Agreement dated December 8, 2004 between Akorn-Strides, LLC and Strides Arcolab
Limited incorporated by reference to Exhibit 10.2 to Akorn Inc.s report on Form 8-K filed December
12, 2006 (Commission file No. 001-32360).10.50
    
    Second Amendment to OEM Agreement dated December 31, 2004 between Akorn-Strides, LLC and Strides
Arcolab Limited incorporated by reference to Exhibit 10.3 to Akorn Inc.s report on Form 8-K filed
December 12, 2006 (Commission file No. 001-32360).10.51W
    
    Third Amendment to OEM Agreement dated October 26, 2005 between Akorn-Strides, LLC and Strides Arcolab
Limited incorporated by reference to Exhibit 10.4 to Akorn Inc.s report on Form 8-K filed December
12, 2006 (Commission file No. 001-32360).10.52
    
    Fourth Amendment to OEM Agreement dated February 1, 2006 between Akorn-Strides, LLC and Strides
Arcolab Limited incorporated by reference to Exhibit 10.5 to Akorn Inc.s report on Form 8-K filed
December 12, 2006 (Commission file No. 001-32360).10.53W
    
    Fifth Amendment to OEM Agreement dated November 28, 2006 between Akorn-Strides, LLC and Strides
Arcolab Limited incorporated by reference to Exhibit 10.1 to Akorn Inc.s report on Form 8-K filed
December 12, 2006 (Commission file No. 001-32360).10.54
    
    Office Lease dated December 21, 2006, between Akorn, Inc. and Duke Realty Limited Partnership
incorporated by reference to Exhibit 10.1 to Akorn Inc.s report on Form 8-K filed December 28, 2006
(Commission file No. 001-32360).10.55
    
    Amendment to Credit Agreement dated March 5, 2007 between Akorn, Inc., Bank of America, the financial
institutions party thereto and Akorn (New Jersey), Inc. incorporated by reference to Exhibit 10.1 to
Akorn Inc.s report on Form 8-K filed March 6, 2006 (Commission file No. 001-32360).10.56
    
    Addendum 1 to License and Supply Agreement dated November, 11 2004, between Hameln Pharmaceuticals
Gmbh and Akorn, Inc. incorporated by reference to Exhibit 10.74 to Akorn, Inc.s report on Form 10-K
filed March 16, 2007 (Commission file No. 001-32360).10.57W
    
    Exclusive Distribution Agreement dated March 22, 2007 between Akorn, Inc. and the University of
Massachusetts, as represented by the Massachusetts Biological Laboratories incorporated by reference
to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed March 30, 2007.10.58W
    
    2007 Management Bonus Objectives incorporated by reference to Exhibit 10.1 to Akorn, Inc.s report on
Form 8-K filed April 23, 2007.10.59
    
    Industrial Building Lease dated October 23, 2007 between Akorn, Inc. and CV II Gurnee LLC incorporated
by reference to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed October 29, 2007.10.60W
    
    Exclusive Memorandum of Understanding dated October 24, 2007 between Serum Institute of India Ltd. and
Akorn, Inc., incorporated by reference to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed on
October 30, 2007.10.61
    
    First Amendment to Sales and Marketing Agreement dated September 28, 2007, by and among Akorn-Strides,
LLC, and Akorn, Inc., incorporated by reference to Exhibit 10.2 to Akorn, Inc.s report on Form 10-Q
filed November 8, 2007.
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Exhibit No.
    
    Description10.62
    
    Sixth Amendment to OEM Agreement dated September 28, 2007 between Akorn-Strides, LLC and Strides
Arcolab Limited, incorporated by reference to Exhibit 10.3 to Akorn, Inc.s report on Form 10-Q filed
November 8, 2007.10.63W
    
    Binding Term Sheet dated July 3, 2008, by and between Akorn, Inc. and Massachusetts Biologic
Laboratories of the University of Massachusetts Medical School, incorporated by reference to Exhibit
10.1 to Akorn, Inc.s report on Form 8-K filed on July 11, 2008.10.64W
    
    Amendment to Exclusive Distribution Agreement dated July 3, 2008, by and between Akorn, Inc. and
Massachusetts Biologic Laboratories of the University of Massachusetts Medical School, incorporated by
reference to Exhibit 10.1 to Akorn, Inc.s report on Form 8-K filed on July 18, 2008.10.65
    
    Mutual Release dated July 3, 2008, by and between Akorn, Inc. and Massachusetts Biologic Laboratories
of the University of Massachusetts Medical School, incorporated by reference to Exhibit 10.2 to Akorn,
Inc.s report on Form 8-K filed on July 18, 2008.10.66
    
    Subordinated Promissory Note dated July 28, 2008, issued by Akorn, Inc. to The John N. Kapoor Trust
Dated September 20, 1989, in the principal amount of $5,000,000, incorporated by reference to Exhibit
10.1 to Akorn, Inc.s report on Form 8-K filed on August 1, 2008.10.67
    
    Subordination and Intercreditor Agreement dated July 28, 2008, by and among Akorn, Inc., The John N.
Kapoor Trust Dated September 20, 1989, LaSalle Bank National Association, as administrative agent for
all senior lenders party to the senior credit agreement, and Akorn (New Jersey), Inc., incorporated by
reference to Exhibit 10.2 to Akorn, Inc.s report on Form 8-K filed on August 1, 2008.10.68W
    
    Second Amendment to Exclusive Distribution Agreement dated July 30, 2008, by and between, Akorn, Inc.
and Massachusetts Biologic Laboratories of the University of Massachusetts Medical School,
incorporated by reference to Exhibit 10.9 to Akorn, Inc.s quarterly report on Form 10-Q filed August
8, 2008.10.69W
    
    Third Amendment to Exclusive Distribution Agreement dated August 1, 2008, by and between, Akorn, Inc.
and Massachusetts Biologic Laboratories of the University of Massachusetts Medical School,
incorporated by reference to Exhibit 10.10 to Akorn, Inc.s quarterly report on Form 10-Q filed August
8, 2008.10.70
    
    Commitment Letter dated November 2, 2008, by and between Akorn, Inc. and General Electric Capital
Corporation, incorporated by reference to Exhibit 10.1 to Akorn Inc.s report on Form 8-K filed on
November 5, 2008.10.71
    
    Credit Agreement dated January 7, 2009, by and between Akorn, Inc., Akorn (New Jersey), Inc. and
General Electric Capital Corporation, incorporated by reference to Exhibit 10.1 to Akorn Inc.s report
on Form 8-K filed on January 9, 2009.10.72W
    
    Letter Agreement dated March 27, 2009 between Akorn, Inc. and Massachusetts Biologic Laboratories of
the University of Massachusetts Medical School, incorporated by reference to Exhibit 10.72 on Akorn
Inc.s annual report on Form 10-K for the year ended December 31, 2008, filed on March 16, 2009.10.73
    
    Memorandum of Agreement, dated March 31, 2009, among EJ Funds LP, Akorn Inc., and Akorn (New Jersey),
Inc., incorporated by reference to Exhibit 10.1 to Akorn Inc.s report on Form 8-K filed on April 6,
2009.10.74
    
    Assignment, dated March 31, 2009, among General Electric Capital Corporation, EJ Funds LP, Akorn,
Inc., and Akorn (New Jersey), Inc., incorporated by reference to Exhibit 10.2 to Akorn Inc.s report
on Form 8-K filed on April 6, 2009.10.75
    
    Reimbursement and Warrant Agreement, dated April 15, 2009, among Akorn, Inc. Akorn (New Jersey), Inc.,
John N. Kapoor Trust dated 09/20/89, and EJ Funds LP, incorporated by reference to Exhibit 10.1 to
Akorn Inc.s report on Form 8-K filed on April 21, 2009.10.76
    
    Settlement Agreement, dated April 15, 2009, between Akorn, Inc. and Massachusetts Biologic
Laboratories of the University of Massachusetts Medical School, incorporated by reference to
Exhibit 10.2 to Akorn Inc.s report on Form 8-K filed on April 21, 2009.10.77
    
    Fourth Amendment to Exclusive Distribution Agreement, dated April 15, 2009, between Akorn, Inc. and
Massachusetts Biologic Laboratories of the University of Massachusetts Medical School, incorporated by
reference to Exhibit 10.2 to Akorn Inc.s report on Form 8-K filed on April 21, 2009.10.78
    
    Amended and Restated Credit Agreement dated August 17, 2009, by and among the Company, Akorn (New
Jersey), Inc., a wholly owned subsidiary of the Company, other persons party thereto that are
designated as credit parties, EJ Funds LP, and the other financial institution from time to time party
thereto, incorporated by reference to Exhibit 10.1 of a Form 8-K filed on August 21, 2009.
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##### Table of Contents



Exhibit No.
    
    Description10.79
    
    Amended and Restated Subordinated Note dated August 17, 2009, made by the Company and Akorn (New
Jersey), Inc., in favor of John N. Kapoor Trust Dated 9/20/89, incorporated by reference to Exhibit
10.3 of a Form 8-K filed on August 21, 2009.10.80
    
    Registration Rights Agreement made and entered into as of August 17, 2009 by and among the Company,
John N. Kapoor Trust Dated 9/20/89 and EJ Funds LP, incorporated by reference to Exhibit 10.5 of a
Form 8-K filed on August 21, 2009.10.81
    
    Amended and Restated Subordination Agreement dated as of August 17, 2009 by and among John N. Kapoor
Trust Dated 9/20/89, the Company, Akorn (New Jersey), Inc. and EJ Funds LP, incorporated by reference
to Exhibit 10.6 of a Form 8-K filed on August 21, 2009.10.82
    
    Amended and Restated Akorn, Inc. 2003 Stock Option Plan, as amended,
incorporated by reference to Exhibit 10.1 to our report on Form 8-K filed on
August 20, 2009.10.83
    
    Form of Amendment to Executive Consulting Agreement between Akorn, Inc. and
Raj Rai, dated December 8, 2009, incorporated by reference to Exhibit 10.1
to our report on Form 8-K filed on December 22, 2009.10.84*
    
    Form of First Amendment to $10,000,000 Credit Facility, Amended and Restated
Credit Agreement by and among Akorn, Inc. and Akorn (New Jersey), Inc., as
Borrowers and EJ Funds, LP, as Lender.10.85
    
    Securities Purchase Agreement dated March 10, 2010, between Akorn, Inc.
and Serum Institute of India Ltd, incorporated by reference to Exhibit 10.1 to
our report on Form 8-K filed on March 16, 2010.10.86
    
    Warrant, dated March 10, 2010, granted by Akorn, Inc. to Serum Institute of
India Ltd, incorporated by reference to Exhibit 4.1 to our report on Form 8-K
filed on March 16, 2010.21.1
    
    Subsidiaries of Akorn, Inc., incorporated by reference to Exhibit 21.1 to
Akorn, Inc.s Pre-effective Amendment to Registration Statement on Form S-1
filed October 13, 2004 (Commission file No. 333-119168).23.1*
    
    Consent of Independent Registered Public Accounting Firm23.2*
    
    Consent of Independent Registered Public Accounting Firm31.1*
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).31.2*
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).32.1*
    
    Certification of the Chief Executive Officer pursuant to 18 USC Section 1350.32.2*
    
    Certification of the Chief Financial Officer pursuant to 18 USC Section 1350.
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SIGNATURES
  AKORN, INC.By:
    /s/ RAJAT RAIRajat RaiInterim Chief Executive Officer   Signature
    
    Title
    
    Date/s/ RAJAT RAI

Rajat Rai
    
    Interim Chief Executive Officer
    
    March 16, 2010/s/ TIMOTHY A. DICK

Timothy A. Dick
    
    Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
    
    March 16, 2010/s/ JOHN N. KAPOOR, PH.D.

John N. Kapoor, Ph.D.
    
    Director, Chairman of the Board
    
    March 16, 2010/s/ JERRY N. ELLIS

Jerry N. Ellis
    
    Director
    
    March 16, 2010/s/ RONALD M. JOHNSON

Ronald M. Johnson
    
    Director
    
    March 16, 2010/s/ STEVEN J. MEYER

Steven J. Meyer
    
    Director
    
    March 16, 2010/s/ BRIAN TAMBI

Brian Tambi
    
    Director
    
    March 16, 2010/s/ RANDALL J. WALL

Randall J. Wall
    
    Director
    
    March 16, 2010/s/ ALAN WEINSTEIN

Alan Weinstein
    
    Director
    
    March 16, 2010
 66