<SEC-DOCUMENT>0001193125-11-139731.txt : 20110513 <SEC-HEADER>0001193125-11-139731.hdr.sgml : 20110513 <ACCEPTANCE-DATETIME>20110513171645 ACCESSION NUMBER: 0001193125-11-139731 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20110331 FILED AS OF DATE: 20110513 DATE AS OF CHANGE: 20110513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Sagent Pharmaceuticals, Inc. CENTRAL INDEX KEY: 0001369786 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-35144 FILM NUMBER: 11842141 BUSINESS ADDRESS: STREET 1: 1901 NORTH ROSELLE ROAD, SUITE 700 CITY: SCHAUMBURG STATE: IL ZIP: 60195 BUSINESS PHONE: 847-908-1604 MAIL ADDRESS: STREET 1: 1901 NORTH ROSELLE ROAD, SUITE 700 CITY: SCHAUMBURG STATE: IL ZIP: 60195 FORMER COMPANY: FORMER CONFORMED NAME: Sagent Holding Co. DATE OF NAME CHANGE: 20090529 FORMER COMPANY: FORMER CONFORMED NAME: NHS PHARMACEUTICALS DATE OF NAME CHANGE: 20060720 </SEC-HEADER> <DOCUMENT> <TYPE>10-Q <SEQUENCE>1 <FILENAME>d10q.htm <DESCRIPTION>FORM 10-Q <TEXT> <HTML><HEAD> <TITLE>Form 10-Q</TITLE> </HEAD> <BODY BGCOLOR="WHITE"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="5"><B>UNITED STATES </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="5"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>WASHINGTON, D.C. 20549 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="5"><B>FORM 10-Q </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>(Mark One) </B></FONT></P> <P STYLE="font-size:3px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="3"><B></B><FONT STYLE="font-family:Times New Roman" SIZE="3"><FONT STYLE="FONT-FAMILY:WINGDINGS">x</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="3"><B></B></FONT> <B></B></FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="3"><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>For the quarterly period ended March 31, 2011 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>OR </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="3"><B></B><FONT STYLE="font-family:Times New Roman" SIZE="3"><FONT STYLE="FONT-FAMILY:WINGDINGS">¨</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="3"><B></B></FONT> <B></B></FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="3"><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>For the transition period from to </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Commission file number 1-35144 </B></FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="5"><B>Sagent Pharmaceuticals, Inc. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">(Exact name of registrant as specified in its charter) </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="50%"></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD WIDTH="48%"></TD></TR> <TR> <TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Delaware</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>98-0536317</B></FONT></TD></TR> <TR> <TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">(State or other jurisdiction of</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">incorporation or organization)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">(I.R.S. Employer</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">Identification No.)</FONT></P></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>1901 N. Roselle Road, Suite 700</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Schaumburg, Illinois</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>60195</B></FONT></TD></TR> <TR> <TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">(Address of principal executive offices)</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">(Zip Code)</FONT></TD></TR></TABLE> <P STYLE="margin-top:3px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">Registrant’s telephone number, including area code:<B> (847) 908-1600 </B> </FONT></P> <P STYLE="margin-top:3px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">(Former name, former address and former fiscal year, if changed since last report) </FONT></P> <P STYLE="margin-top:3px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Arial" SIZE="2">Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">¨</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT> No <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">x</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Arial" SIZE="2">Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">¨</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT> No <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">¨</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Arial" SIZE="2">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="19%"></TD> <TD VALIGN="bottom" WIDTH="1%"></TD> <TD WIDTH="14%"></TD> <TD VALIGN="bottom" WIDTH="1%"></TD> <TD WIDTH="42%"></TD> <TD VALIGN="bottom" WIDTH="1%"></TD> <TD WIDTH="22%"></TD></TR> <TR> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Large accelerated filer <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">¨</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Accelerated filer <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">¨</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top" NOWRAP ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">Non-accelerated filer <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">x</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">(Do not check if a smaller reporting company)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">Smaller reporting company <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">¨</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Arial" SIZE="2">Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">¨</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT> No <FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">x</FONT></FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Arial" SIZE="2">At April 30, 2011, there were 27,828,217 shares of the registrant’s common stock outstanding. </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">Sagent Pharmaceuticals, Inc. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><A NAME="toc"></A>Table of Contents </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="7%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD WIDTH="86%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="right" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="1">Page No.</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">PART I –</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">FINANCIAL INFORMATION</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Item 1.</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Financial Statements</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_1">Condensed Consolidated Balance Sheets at March 31, 2011 and December 31, 2010</A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_2">Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010</A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_3">Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010</A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">3</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_4">Notes to Condensed Consolidated Financial Statements</A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Item 2.</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_5">Management’s Discussion and Analysis of Financial Condition and Results of Operations</A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">14</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Item 3.</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_6">Quantitative and Qualitative Disclosures about Market Risk</A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">21</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Item 4.</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_7">Controls and Procedures</A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">21</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">PART II –</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">OTHER INFORMATION</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Item 1.</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_8">Legal Proceedings </A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">22</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Item 1A.</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_9">Risk Factors </A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">22</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="2"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Item 2.</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_10">Unregistered Sales of Equity Securities and Use of Proceeds </A></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">22</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Item 6.</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_11">Exhibits </A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">23</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8" COLSPAN="3"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><A HREF="#tx186765_12">Signature </A></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">24</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">In this report, “Sagent,” “we,” “us” and “our” refers to Sagent Pharmaceuticals, Inc. and subsidiaries, and “Common Stock” refers to Sagent’s common stock. </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>PART I – FINANCIAL INFORMATION </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Item 1. Financial Statements </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_1"></A>Sagent Pharmaceuticals, Inc. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Condensed Consolidated Balance Sheets </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>(in thousands, except share amounts) </I></B></FONT></P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="78%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>December 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>(Unaudited)</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD COLSPAN="2" VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1"><B>Assets</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD COLSPAN="5" VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Current assets:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Cash and cash equivalents</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">32,416 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">34,376 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Restricted cash and cash equivalents</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">87 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">208 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Accounts receivable, net of chargebacks and other deductions</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">19,916 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">18,939 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Inventories, net</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">31,439 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">30,567 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Prepaid expenses and other current assets</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">6,650 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">5,309 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Due from related party</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">407 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">868 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Note receivable</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">120 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">120 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Deferred income taxes</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">6 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">6 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Total current assets</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">91,041 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">90,393 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Restricted cash and cash equivalents</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">100 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">100 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Property, plant, and equipment, net</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">737 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">785 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Investment in joint ventures</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">23,384 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">24,466 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Deferred financing costs, net</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">822 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">232 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Intangible assets, net</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">2,579 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">2,613 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Total assets</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">118,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">118,589 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1"><B>Liabilities, preferred stock and stockholders’ equity</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Current liabilities:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Accounts payable</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">14,914 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">24,449 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Due to related party</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">1,908 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">2,494 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Accrued profit sharing</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">3,693 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">3,717 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Accrued liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">4,262 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">4,800 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Preferred stock warrants</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">1,886 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">1,432 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Current portion of long-term debt</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">4,773 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Notes payable</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">18,738 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">20,726 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Total current liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">50,174 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">57,618 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Long term liabilities:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Long-term debt</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">10,227 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Deferred income taxes</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">6 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">6 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Other long-term liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">600 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Total liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">61,007 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">57,624 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Preferred stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="text-indent:1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Series A preferred stock—$0.00001 par value; 113,000,000 authorized and outstanding at March 31, 2011 and December 31, 2010 (liquidation preference $113,000)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">113,000 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">113,000 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="text-indent:1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Series B preferred stock—$0.00001 par value; 39,136,052 authorized and 32,714,284 outstanding at March 31, 2011 and December 31, 2010 (liquidation preference $45,800)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">44,774 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">44,774 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Total preferred stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">157,774 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">157,774 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Stockholders’ equity (deficit):</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="text-indent:1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Common stock—$0.000008 par value; 23,539,769 and 23,539,769 authorized and 2,220,569 and 2,054,467 outstanding at March 31, 2011 and December 31, 2010, respectively</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Additional paid-in capital</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">3,136 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">2,318 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Accumulated other comprehensive income</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">1,529 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">1,285 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Accumulated deficit</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">(104,783) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">(100,412) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Total stockholders’ equity (deficit)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">(100,118) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">(96,809) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="1">Total liabilities, preferred stock and stockholders’ equity (deficit)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">118,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="1">118,589 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="1"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="1"><I>See accompanying notes to condensed consolidated financial statements. </I></FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">1 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B><A NAME="tx186765_2"></A>Sagent Pharmaceuticals, Inc. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>Condensed Consolidated Statements of Operations </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>(in thousands, except per share amounts) </I></B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>(Unaudited) </I></B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="82%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net revenue</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">30,344 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8,644 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Cost of sales</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">25,755 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8,351 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Gross profit</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,589 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">293 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Operating expenses:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Product development</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,357 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,794 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Selling, general and administrative</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,975 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,166 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Equity in net loss of joint ventures</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">673 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">435 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total operating expenses</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8,005 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,395 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Loss from operations</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3,416) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,102) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Interest income and other</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">19 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Interest expense and other</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(520) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(239) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Change in fair value of preferred stock warrants</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(454) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Loss before income taxes</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Provision for income taxes</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="text-indent:1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss per common share:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:4.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Basic</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(2.09) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3.90) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:4.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Diluted</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(2.09) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3.90) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="text-indent:1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Weighted-average of shares used to compute net loss per common share:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:4.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Basic</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,088 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,884 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:4.80em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Diluted</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,088 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,884 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><I>See accompanying notes to condensed consolidated financial statements. </I></FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">2 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B><A NAME="tx186765_3"></A>Sagent Pharmaceuticals, Inc. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>Condensed Consolidated Statements of Cash Flows </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>(in thousands) </I></B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>(Unaudited) </I></B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="82%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="8"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>Cash flows from operating activities</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD COLSPAN="5" VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Adjustments to reconcile net loss to net cash used in operating activities:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD COLSPAN="5" VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Depreciation</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">54 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">69 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Amortization</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">149 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">265 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Stock-based compensation</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">490 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">183 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">(Increase) decrease in restricted stock repurchase liability</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">13 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Equity in net loss of joint ventures</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">673 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">435 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Change in fair value of preferred stock warrants</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">454 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Changes in operating assets and liabilities:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD COLSPAN="5" VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accounts receivable, net</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(977) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(1,482) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Inventories, net</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(872) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,455 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Prepaid expenses and other current assets</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(1,341) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(810) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Due from related party</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">461 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accounts payable and other accrued liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(10,916) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(9,204) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net cash used in operating activities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(16,196) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(13,413) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="8"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>Cash flows from investing activities</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD COLSPAN="5" VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Capital expenditures</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(6) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(8) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Return (funding) of principal balance of restricted cash</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">121 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(135) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Investments in unconsolidated joint ventures</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(17) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(97) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Return of capital from unconsolidated joint venture</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">670 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Purchase of product rights</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(70) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(157) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net cash provided by (used in) investing activities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">698 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(397) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="8"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>Cash flows from financing activities</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD COLSPAN="5" VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">(Reduction in) addition to short-term notes payable</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(1,988) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">3,461 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Proceeds from issuance of long-term debt</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">15,000 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Proceeds from issuance of preferred stock, net of issuance costs</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">9,690 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Proceeds from issuance of common stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">561 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">9 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Payment of deferred financing costs</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(35) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net cash provided by financing activities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">13,538 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">13,160 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net decrease in cash and cash equivalents</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(1,960) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(650) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Cash and cash equivalents, at beginning of period</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">34,376 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,731 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Cash and cash equivalents, at end of period</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">32,416 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,081 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><I>See accompanying notes to condensed consolidated financial statements </I></FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">3 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_4"></A>Sagent Pharmaceuticals, Inc. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Notes to Condensed Consolidated Financial Statements </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>(in thousands, except for share and per share information) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>(Unaudited) </B></FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 1. Summary of significant accounting policies: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Reincorporation: </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We completed our initial public offering (“IPO”) on April 26, 2011. In connection with our IPO, we incorporated (the “Reincorporation”) in Delaware as Sagent Pharmaceuticals, Inc., (“Sagent” or the “Company”). Prior to this reincorporation, we were a Cayman Islands company, and our corporate name was Sagent Holding Co. (“Sagent Holding”). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">In connection with our IPO and concurrent with our Reincorporation in Delaware, the holders of our preferred stock exchanged each of their outstanding shares of preferred stock for 0.12759 shares of our common stock. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Basis of Presentation: </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Our interim condensed consolidated financial statements are unaudited. We prepared the condensed consolidated financial statements following rules for interim reporting as prescribed by the U.S. Securities and Exchange Commission (“SEC”). As permitted under those rules, we have condensed or omitted a number of footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). It is management’s opinion that these financial statements include all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of our financial position, operating results and cash flows. Operating results for any interim period are not necessarily indicative of future or annual results. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">You should read these statements in conjunction with our consolidated financial statements and related notes for the year ended December 31, 2010, included in our IPO prospectus filed with the SEC on April 21, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Principles of Consolidation: </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The condensed consolidated financial statements include Sagent as well as our wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. We account for our investment in Kanghong Sagent (Chengdu) Pharmaceutical Corporation Limited (“KSP”) and Sagent Strides LLC using the equity method of accounting, as our interest in each entity provides for joint financial and operational control. Operating results of our KSP equity method investment are reported on a one-month lag. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 2. Reverse stock split: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">All common share and per share amounts in the condensed consolidated financial statements and notes thereto have been restated to reflect a reverse stock split effective on April 26, 2011, whereby every 7.8378 shares of common stock, including the shares of preferred stock that were converted to common stock on April 26, 2011, were combined into one share of common stock. Immediately prior to the consummation of our IPO, but following the reverse stock split, the number of authorized shares was increased to 105 million, with par value of $0.01 per share, consisting of 100 million shares of common stock and 5 million shares of undesignated preferred stock. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">4 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 3. Inventories: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Inventories at March 31, 2011 and December 31, 2010 were as follows: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="46%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="10" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>March 31, 2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="10" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>December 31, 2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Approved</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Pending<BR>regulatory<BR>approval</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Inventory</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Approved</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Pending<BR>regulatory<BR>approval</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Inventory</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Finished goods</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">32,565 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">32,565 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">31,151 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">31,151 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Raw materials</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">262 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">262 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">262 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">262 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Inventory reserve</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(1,388) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(1,388) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(846) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(846) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">31,177 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">262 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">31,439 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">30,305 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">262 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">30,567 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">In March 2011, we initiated a voluntary recall of all lots of our amiodarone delivered in a pre-filled syringe due to reports of incompatibility of certain needleless I.V. sets with the product. We increased our inventory reserve by $318 in the three months ended March 31, 2011 related to this recall. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 4. Intangible assets: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Intangible assets at March 31, 2011 and December 31, 2010 were as follows: </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="46%"></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="10" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>March 31, 2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="10" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>December 31, 2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Gross<BR>carrying<BR>amount</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Accumulated<BR>amortization</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Intangible<BR>assets, net</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Gross<BR>carrying<BR>amount</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Accumulated<BR>amortization</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Intangible<BR>assets, net</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Product licensing rights</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,688 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(772) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">916 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,618 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(668) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">950 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Product development rights</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">3,351 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(772) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,579 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">3,281 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(668) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,613 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Movements in intangible assets were due to the following: </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="60%" BORDER="0"> <TR> <TD WIDTH="63%"></TD> <TD VALIGN="bottom" WIDTH="12%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="12%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Product<BR>licensing rights</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Product<BR>development<BR>rights</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>December 31, 2010</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> 950 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top" NOWRAP> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Acquisition of product rights</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">70 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top" NOWRAP> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Amortization of product rights</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(104) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="5"></TD> <TD HEIGHT="5" COLSPAN="4"></TD> <TD HEIGHT="5" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>March 31, 2011</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">916 </FONT></TD> <TD NOWRAP VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,663 </FONT></TD> <TD NOWRAP VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The weighted-average period prior to the next extension or renewal for the five products comprising our product licensing rights intangible asset was 41 months at March 31, 2011. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">5 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We currently estimate amortization expense over each of the next five years as follows: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0"> <TR> <TD WIDTH="81%"></TD> <TD VALIGN="bottom" WIDTH="14%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">For the year ending:</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Amortization<BR>expense</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">March 31, 2012</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,990</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">March 31, 2013</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">301</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">March 31, 2014</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">122</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">March 31, 2015</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">102</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">March 31, 2016</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">64</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 5. Investment in KSP: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Changes in our investment in KSP during the three months ended March 31, 2011 were as follows: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="50%" BORDER="0"> <TR> <TD WIDTH="84%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Investment in KSP at January 1, 2011</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> 23,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Equity in net loss of KSP</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(1,033) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Currency translation adjustment</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">244 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Investment in KSP at March 31, 2011</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">22,874 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Condensed statement of operations information of KSP is presented below. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="75%" BORDER="0"> <TR> <TD WIDTH="70%"></TD> <TD VALIGN="bottom" WIDTH="13%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="13%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2"><B>Condensed statement of operations information</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net revenues</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Gross profit</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(2,066) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(387) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">During the three months ended March 31, 2011, KSP’s development activities increased, as initial batch validation activities were initiated at its manufacturing facility. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 6. Accrued liabilities: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Accrued liabilities at March 31, 2011 and December 31, 2010 were as follows: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="65%" BORDER="0"> <TR> <TD WIDTH="68%"></TD> <TD VALIGN="bottom" WIDTH="10%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="10%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>March 31,<BR>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>December 31,<BR>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Payroll and employee benefits</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,294 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,736 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Sales and marketing</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,511 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,338 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Other accrued liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">457 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">726 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,262 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,800 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 7. Debt: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">In March 2011, our principal operating subsidiary amended its $25,000 senior secured revolving credit facility (the “Revolver”) to permit, among other things, the entry into a new $15,000 term loan credit facility (the “Term Note”) and the incurrence of debt and granting of liens thereunder. The amendment also requires that we become a borrower under the Revolver within 30 days of the consummation of the initial public offering. As of May 13, 2011, we have not yet become a borrower under the facility. The interest rate on the Revolver, which bears interest at a rate </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">6 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"> equal to either an adjusted London Interbank Offered Rate (LIBOR), plus a margin of 5.50%, or an alternate base rate plus a margin of 4.50%, was 8.50% at March 31, 2011 and December 31, 2010. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">In March 2011, our principal operating subsidiary entered into a $15,000 Term Note, which expires June 16, 2013. Borrowings under the Term Note will be used for general corporate purposes, including funding of our working capital. The interest rate on the Term Note, which bears interest at LIBOR plus a margin of 9.0%, subject to a 3.0% LIBOR floor, was 12.0% at March 31, 2011. Equal monthly amortization payments in respect to the Term Note are payable beginning September 1, 2011. Under the agreement, we are required to maintain the lesser of $15,000 or 65% of our consolidated cash balances with a single financial institution and are also required to pay a financing fee of $600 when the Term Note has been repaid. The financing fee will be amortized to interest expense over the life of the loan, and the related obligation is included in other long-term liabilities on our balance sheet. The Term Note is secured by a second lien on substantially all of the assets of our principal operating subsidiary. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The Term Note contains various covenants substantially similar to the senior secured revolving credit facility, including a covenant to maintain minimum net invoiced revenues, restrictions on our ability to incur additional indebtedness, create liens, make certain investments, pay dividends, sell assets, or enter into a merger or acquisition. With respect to dividends, our principal operating subsidiary, as the borrower under the term loan credit facility, is currently prohibited, subject to certain limited exceptions, including an exception to distribute $1,500 to us to cover fees and expenses related to our IPO, from declaring dividends or otherwise making any distributions, loans or advances to us as the parent company. This restriction will continue until we become a borrower under the Term Note, which is required within 30 days of the consummation of the initial public offering. As of May 13, 2011, we have not yet become a borrower under the facility. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Aggregate maturities of our long-term debt for the years ended March 31, were as follows: </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="50%" BORDER="0"> <TR> <TD WIDTH="87%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">For the year ending:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">March 31, 2012</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> 4,773</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">March 31, 2013</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8,182</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">March 31, 2014</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,045</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 8. Fair value measurements: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Liabilities measured at fair value as of March 31, 2011 consist of the following: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="54%"></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Total fair<BR>value</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Quoted prices in<BR>active markets<BR>for identical<BR>assets (Level 1)</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Significant<BR>other<BR>observable<BR>inputs (Level 2)</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Significant<BR>unobservable<BR>inputs</B></FONT><br><FONT STYLE="font-family:Arial" SIZE="2"><B>(Level 3)</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Preferred stock warrants</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,886 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,886 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,886 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,886 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">During the three months ended March 31, 2011, changes in the fair value of our preferred stock warrants measured using significant unobservable inputs (Level 3), were comprised of the following: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="60%" BORDER="0"> <TR> <TD WIDTH="86%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Balance at January 1, 2011</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> 1,432 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Change in fair value of warrants</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">454 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Balance at March 31, 2011</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,886 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The fair values of the preferred stock warrants are estimated in accordance with the guidance outlined in the American Institute of Certified Public Accountants Practice Aid <I>Valuation of Privately-Held-Company Equity Securities Issued as Compensation</I> (the Practice Aid). Several objective and subjective factors are considered when valuing each equity security and related warrant at a valuation date. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">7 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The following scenarios and probabilities were applied for the valuation of the preferred warrants as of March 31, 2011: </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR VALIGN="TOP"> <TD WIDTH="38%"> <P STYLE="margin-bottom:1px; margin-left:13%; text-indent:-2%"><FONT STYLE="font-family:Arial" SIZE="2">Initial public offering – short term </FONT></P></TD> <TD><FONT STYLE="font-family:Arial" SIZE="2">90% </FONT></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR VALIGN="TOP"> <TD WIDTH="38%"> <P STYLE="margin-bottom:1px; margin-left:13%; text-indent:-2%"><FONT STYLE="font-family:Arial" SIZE="2">Initial public offering – medium term </FONT></P></TD> <TD><FONT STYLE="font-family:Arial" SIZE="2"> 5% </FONT></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR VALIGN="TOP"> <TD WIDTH="38%"> <P STYLE="margin-bottom:1px; margin-left:13%; text-indent:-2%"><FONT STYLE="font-family:Arial" SIZE="2">Strategic sale – long term </FONT></P></TD> <TD><FONT STYLE="font-family:Arial" SIZE="2"> 3% </FONT></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR VALIGN="TOP"> <TD WIDTH="38%"> <P STYLE="margin-bottom:1px; margin-left:13%; text-indent:-2%"><FONT STYLE="font-family:Arial" SIZE="2">Dissolution </FONT></P></TD> <TD><FONT STYLE="font-family:Arial" SIZE="2"> 2% </FONT></TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 9. Comprehensive income (loss): </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Comprehensive income (loss) for the three months ended March 31, 2011 and 2010 is comprised of the following: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="68%" BORDER="0"> <TR> <TD WIDTH="72%"></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss, as reported</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Comprehensive income (loss)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top" NOWRAP> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Currency translation adjustment, net of tax</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">244 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total comprehensive loss</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,127) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 10. Earnings per share: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Basic earnings per share is calculated by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Because of their anti-dilutive effect, 20,897,762 and 16,502,820 common share equivalents, comprised of preferred shares, restricted stock, preferred stock warrants and unexercised stock options, have been excluded from the calculation of diluted earnings per share for the three months ended March 31, 2011 and 2010, respectively. The table below presents the computation of basic and diluted earnings per share for the three month periods ended March 31, 2011 and 2010: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="82%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Basic and dilutive numerator:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss, as reported</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Denominator:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Weighted-average common shares outstanding - basic (in thousands)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,088 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,884 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net effect of dilutive securities:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Weighted-average conversion of Class A and Class B preferred stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Stock options and restricted stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Weighted-average common shares outstanding - diluted (in</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">thousands)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,088 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,884 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss per common share (basic)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(2.09) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3.90) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss per common share (diluted)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(2.09) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3.90) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">8 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">On April 19, 2011, we completed our initial public offering, issuing 5,750,000 shares of our common stock in exchange for consideration of $92 million. The underwriters exercised their overallotment option on April 21, 2011, resulting in the issuance of an additional 862,500 shares of our common stock for consideration of $13.8 million. The offering closed on April 26, 2011; we received net proceeds from the offering of approximately $95.5 million. These shares have not been included in the calculation of earnings per share for the three month period ended March 31, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 11. Stock-based compensation: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We did not grant stock options during the first quarter of 2011. There were 146,103 stock options exercised during the first three months of 2011, with an aggregate intrinsic value of $1,307. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 12. Revenue and revenue deductions: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Net revenue by product line is as follows: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="68%" BORDER="0"> <TR> <TD WIDTH="69%"></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"><B>Therapeutic class:</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Anti-infective</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">12,593 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">6,771 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Critical care</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">12,609 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,347 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Oncology</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">5,108 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">526 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Device</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">34 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">30,344 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8,644 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Accrued chargebacks are shown as a reduction in accounts receivable. Changes in accrued chargebacks during the three month period ended March 31, 2011 resulted from the following: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="60%" BORDER="0"> <TR> <TD WIDTH="83%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accrued chargebacks at January 1, 2011</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> 13,507 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Provision for chargebacks</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">29,382 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Credit or checks issued</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(29,779) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accrued chargebacks at March 31, 2011</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">13,110 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 13. Related party transactions: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">As of March 31, 2011 and December 31, 2010, respectively, we had a receivable of $407 and $868 from Sagent Strides LLC, which is expected to offset future profit-sharing payments. As of March 31, 2011 and December 31, 2010, respectively, we had a payable of $1,908 and $2,494 to Sagent Strides LLC, principally for the acquisition of inventory and amounts due under profit-sharing arrangements. During the three months ended March 31, 2011, Sagent Strides LLC distributed $1,340 of profit sharing receipts to its joint venture partners. As the Sagent Strides joint venture is in a cumulative loss position, our share of this distribution has been treated as a return of capital in the condensed consolidated statement of cash flows. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 14. Commitments and contingencies: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">From time to time, we are subject to claims and litigation arising in the normal course of business. At this time, there are no proceedings of which we are aware that we expect will have a material adverse effect on our consolidated financial position or results of operations. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">9 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">In January 2011, Infusive Technologies, LLC (“Infusive”) filed a complaint against us in the United States District Court of Utah, Central Division, alleging that we had breached the terms of an acquisition agreement entered into in September 2008 for failing to use reasonable commercial efforts to develop and commercialize certain products based on patents and other intellectual property assigned to us by Infusive, thereby avoiding a $1,250 contingent payment under the agreement. The complaint seeks compensatory damages of at least $15,000, plus interest, and punitive damages of at least $50,000. We are in the preliminary stages of reviewing this complaint, and intend to vigorously defend ourselves in this litigation, including bringing a number of counterclaims against Infusive in such litigation. In March 2011, we filed motions for change in venue and to dismiss the complaint and Infusive filed its first amended complaint, which, among other things, alleged additional facts to support its allegations and eliminated the claim for punitive damages. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Note 15. Condensed parent company only financial statements: </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The following condensed financial statements present the Company’s financial position as of March 31, 2011 and December 31, 2010, and its results of operations and cash flows for the three month periods ended March 31, 2011 and 2010 on a parent-company only basis. In the parent company only financial statements, the Company’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of formation. The Company’s share of loss is recorded as equity in net loss of unconsolidated subsidiaries. The parent company only financial statements should be read in conjunction with the Company’s condensed consolidated financial statements. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">10 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>Sagent Pharmaceuticals, Inc. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>Condensed Balance Sheets </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>(in thousands) </I></B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="78%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>March 31,<BR>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>December 31,<BR>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>(Unaudited)</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD COLSPAN="2" VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>Assets</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD COLSPAN="5" VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Current assets:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Cash and cash equivalents</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,110 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,110 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Prepaid expenses and other current assets</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,002 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,285 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total current assets</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">9,112 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8,395 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Investment in unconsolidated subsidiaries</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">28,104 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">30,602 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Investment in unconsolidated joint ventures</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">22,874 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">23,663 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total assets</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">60,090 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">62,660 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>Liabilities, preferred stock and stockholders’ equity</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Current liabilities:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accounts payable</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">301 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">248 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accrued liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">247 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">15 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Preferred stock warrants</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,886 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,432 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total current liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,434 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,695 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,434 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,695 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Preferred stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Series A preferred stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">113,000 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">113,000 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Series B preferred stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">44,774 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">44,774 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total preferred stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">157,774 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">157,774 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Stockholders’ equity:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Common stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Preferred stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Additional paid-in capital</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">3,136 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,318 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accumulated other comprehensive income</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,529 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,285 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accumulated deficit</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(104,783) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(100,412) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total stockholders’ equity (deficit)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(100,118) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(96,809) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total liabilities, preferred stock and stockholders’ equity (deficit)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">60,090 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">62,660 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">11 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>Sagent Pharmaceuticals, Inc. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>Condensed Statements of Operations </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>(in thousands, unaudited) </I></B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="76%"></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B> 2011 </B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B> 2010 </B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net revenue</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Cost of sales</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Gross profit</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Operating expenses:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Selling, general and administrative</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">497 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">193 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Equity in net loss of joint venture</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,033 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">387 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Equity in net loss of unconsolidated subsidiaries</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,387 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">6,757 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total operating expenses</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">3,917 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,337 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Loss from operations</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3,917) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Interest income and other</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Change in value of preferred stock warrants</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(454) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Loss before income taxes</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Provision for income taxes</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">- </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">12 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>Sagent Pharmaceuticals, Inc. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="3"><B>Condensed Statement of Cash Flows </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>(in thousands, unaudited) </I></B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="82%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>Cash flows from operating activities</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Adjustments to reconcile net loss to net cash (used in) provided by operating activities:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Stock-based compensation</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">490 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">183 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">(Increase) decrease in restricted stock repurchase liability</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">13 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Equity in net loss of joint venture</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,033 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">387 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Equity in net loss of unconsolidated subsidiaries</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,387 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">6,757 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Change in fair value of preferred stock warrants</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">454 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Changes in operating assets and liabilities:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Prepaid expenses and other current assets</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(717) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Accounts payable and accrued liabilities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">52 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net cash (used in) provided by operating activities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(672) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">3 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>Cash flows from investing activities</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Return of capital from (investments in) unconsolidated subsidiaries</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">111 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(9,677) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Investments in joint venture</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(15) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net cash provided by (used in) investing activities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">111 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(9,692) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><B>Cash flows from financing activities</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Proceeds from issuance of preferred stock, net of issuance costs</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">9,690 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Proceeds from issuance of common stock</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">561 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">9 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net cash provided by financing activities</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">561 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">9,699 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net increase in cash and cash equivalents</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">10 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Cash and cash equivalents, at beginning of period</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,110 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Cash and cash equivalents, at end of period</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,110 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">10 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">13 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_5"></A>Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>The following discussion should be read in conjunction with our condensed consolidated financial statements included elsewhere in this report and with our audited financial statements and the notes found in our IPO prospectus filed with the SEC on April 21, 2011. Unless otherwise noted, all dollar amounts are in thousands. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><U>Disclosure Regarding Forward-Looking Statements </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations,<I> </I>contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements. In addition, this report contains forward-looking statements regarding our ability to generate operating profit in the near term; the adequacy of our current cash balances, including cash received from our IPO, to fund our ongoing operations; that none of our net operating loss carryforwards will be incapable of utilization; and our ability to meet our obligations under the Senior Secured Revolving Credit Agreement and Term Loan Credit Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">These forward-looking statements involve risks and uncertainties, and the cautionary statements set forth below and those contained in the “Risk Factors” found in our IPO prospectus filed with the SEC on April 21, 2011, identify important factors that could cause actual results to differ materially from those predicted in our forward-looking statements. Such factors, include, but are not limited to: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">we rely on our business partners for the manufacture of our products, and if our business partners fail to supply us with high-quality API or finished products in the quantities we require on a timely basis, sales of our products could be delayed or prevented, our revenues would decline and we may not achieve profitability; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">if we or any of our business partners are unable to comply with the regulatory standards applicable to pharmaceutical drug manufacturers, we may be unable to meet the demand for our products, may lose potential revenues and may not achieve profitability; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">any change in the regulations, enforcement procedures or regulatory policies established by the FDA and other regulatory agencies could increase the costs or time of development of our products and delay or prevent sales of our products and our revenues would decline and we may not achieve profitability; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">two of our products, heparin and cefepime, each of which is supplied to us by a single vendor, represent a significant portion of our net revenues and, if the volume or pricing of either of these products declines, or we are unable to satisfy market demand for either of these products, it could have a material adverse effect on our business, financial position and results of operations; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">if we are unable to continue to develop and commercialize new products in a timely and cost-effective manner, we may not achieve our expected revenue growth or profitability or such revenue growth and profitability, if any, could be delayed; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">if we are unable to maintain our GPO relationships, our revenues would decline and future profitability would be jeopardized; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">we rely on a limited number of pharmaceutical wholesalers to distribute our products; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">we may be exposed to product liability claims that could cause us to incur significant costs or cease selling some of our products; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">if reimbursement for our current or future products is reduced or modified, our business could suffer; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">current economic conditions could adversely affect our operations; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">we are subject to a number of risks associated with managing our international network of collaborations; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">we may never realize the expected benefits from our investment in our KSP joint venture; and </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">we may seek to engage in strategic transactions that could have a variety of negative consequences, and we may not realize the benefits of such transactions; and the other risks set forth in the section entitled “Risk Factors” in our IPO prospectus filed with the SEC on April 21, 2011. </FONT></P></TD></TR></TABLE> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">14 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary statements that are made from time to time in our SEC filings and public communications. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><U>Introduction </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We are an injectable pharmaceutical company that develops and sources products that we sell primarily in the U.S. through our highly experienced sales and marketing team. With a primary focus on generic injectable pharmaceuticals, we currently offer our customers a broad range of products across anti-infective, oncolytic and critical care indications in a variety of presentations, including single- and multi-dose vials, pre-filled ready-to-use syringes, medical devices and premix bags, and we generally seek to develop injectable products where the form or packaging of the product can be enhanced to improve delivery, product safety or end-user convenience. We have rapidly established a large and diverse product portfolio and pipeline as a result of our innovative business model, which combines an extensive network of collaborations with API suppliers and finished product developers and manufacturers in Asia, Europe, the Middle East and the Americas with our proven and experienced U.S.-based regulatory, quality assurance, business development, project management, and sales and marketing teams. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">On April 26, 2011, we completed our initial public offering (“IPO”), issuing 6,612,500 shares of our common stock at an initial price of $16.00 per share. We received net proceeds from the IPO, after deducting underwriting discounts and commissions and estimated offering expenses of approximately $95.5 million. We plan to use the proceeds from this offering for general corporate purposes. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">15 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><U>Discussion and Analysis </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Consolidated results of operations </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The following compares our consolidated results of operations for the three months ended March 31, 2011 with the three months ended March 31, 2010: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="57%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Three months ended March 31,</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD COLSPAN="2" VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD COLSPAN="2" VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2011</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>2010</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>$ change</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>% change</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net revenue</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> 30,344 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> 8,644 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> 21,700 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">251</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Cost of sales</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">25,755 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8,351 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">17,404 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">208</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Gross profit</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,589 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">293 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,296 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1467</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2"><I>Gross profit as % of net revenues</I></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"><I> </I></FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"><I>15.1%</I></FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"><I> </I></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"><I> </I></FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"><I>3.4%</I></FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"><I> </I></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"><I> </I></FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"><I>11.7%</I></FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"><I> </I></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Operating expenses:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Product development</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,357 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,794 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(437) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">-16</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Selling, general and administrative</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,975 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4,166 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">809 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">19</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:2.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Equity in net loss of joint ventures</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">673 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">435 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">238 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">55</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Total operating expenses</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8,005 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">7,395 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">610 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">8</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Loss from operations</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3,416) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,102) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">3,686 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">-52</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Interest income and other</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">19 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">4 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">15 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">375</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Interest expense</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(520) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(239) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(281) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">118</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Change in fair value of preferred stock warrants</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(454) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(454) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">100</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Loss before income taxes</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,966 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">-40</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Provision for income taxes</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">– </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">0</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD> <TD HEIGHT="16" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(4,371) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(7,337) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,966 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">-40</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Net loss per common share:</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Basic</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(2.09) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3.90) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1.80 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">-46</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Diluted</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(2.09) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3.90) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1.80 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">-46</FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">% </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Net revenue: </I>Net revenue for the three months ended March 31, 2011 totaled $30.3 million, an increase of $21.7 million, or 251%, as compared to $8.6 million for the three months ended March 31, 2010. The launch of 31 codes or presentations of 11 new products since March 31, 2010 contributed $14.2 million, or 65%, of the net revenue increase in the first quarter. Net revenue for products launched prior to March 31, 2010 totaled $16.1 million in the first quarter of 2011, an increase of $7.5 million, or 87%, as compared to $8.6 million in the first quarter of 2010. Unit volumes for products launched prior to March 31, 2010, increased 65% due to strong market penetration, accounting for $5.4 million of the increase as compared to the prior year. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Cost of sales: </I>Cost of goods sold for the three months ended March 31, 2011 totaled $25.8 million, an increase of $17.4 million, or 208%, as compared to $8.4 million for the three months ended March 31, 2010. Gross profit as a percentage of net revenue was 15.1% for the three months ended March 31, 2011, including $0.6 million in costs associated with the voluntary recall of our amiodarone pre-filled syringe in March 2011, due to FDA concerns about known compatibility issues between glass syringes and the Clave device, and 3.4% for the three months ended March 31, 2010. The increase in gross profit as a percentage of net revenue was primarily driven by our introduction of new, higher margin products during the latter half of 2010, principally heparin and topotecan, partially offset by the costs associated with the amiodarone voluntary recall. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Product development: </I>Product development expense for the three months ended March 31, 2011 totaled $2.4 million, a decrease of $0.4 million, or 16%, as compared to $2.8 million for the three months ended March 31, 2010. The decrease in product development expense was primarily due to the timing of activities under our development programs, as the number of products under development has not changed significantly as compared with the first quarter of 2010. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">16 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">As of March 31, 2011, our new product pipeline included 39 products represented by 69 ANDAs which we had filed, or licensed rights to, that were under review by the US Food and Drug Administration (“FDA”) and six products represented by nine ANDAs that have been recently approved and are pending commercial launch. We expect to launch substantially all of these new products by the end of 2012. We also had 32 products represented by 52 ANDAs under initial development at March 31, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Selling, general and administrative: </I>Selling, general and administrative expenses for the three months ended March 31, 2011, totaled $5.0 million an increase of $0.8 million, or 19%, as compared to $4.2 million for the three months ended March 31, 2010. The increase in selling, general and administrative expense was primarily due to increases in headcount and corporate infrastructure to support our initial public offering and anticipated revenue growth. Selling, general and administrative expense as a percentage of net revenue was 16% and 48% for the three months ended March 31, 2011 and 2010, respectively; the reduction reflects the benefit of increased net sales across our established sales and administrative organization, which were established in anticipation of new product launches. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Equity in net loss of joint ventures: </I>Equity in net loss of joint ventures for the three months ended March 31, 2011 totaled $0.7 million, an increase of $0.2 million, or 55%, as compared to $0.4 million for the three months ended March 31, 2010. The increase was primarily due to additional development activities of our KSP joint venture, as the manufacturing facility commenced validation and development activities, partially offset by income generated by the Sagent Strides joint venture. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Interest expense: </I>Interest expense for the three months ended March 31, 2011 totaled $0.5 million, an increase of $0.3 million, or 118%, as compared to $0.2 million for the three months ended March 31, 2010. The increase was principally due to higher average borrowings under our senior secured revolving credit facility during the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Provision for income taxes: </I>We have generated tax losses since inception and do not believe that it is more likely than not that our net operating loss carryforwards and other deferred tax assets will be utilized. As a result, we have decided that a full valuation allowance is needed against our deferred tax assets. Our initial public offering in April 2011 has triggered an ownership change as defined by Section 382 of the US Internal Revenue Code. This change will limit the amount of our net operating loss carryforwards which we could utilize to offset future taxable income. Because none of our current net operating loss carryforwards expire before 2027, we expect that despite the use limitations triggered by our IPO, we will have a reasonable opportunity to utilize these loss carryforwards before they expire. Subject to our ability to generate taxable income, we anticipate that we could utilize substantially all of our net operating loss carryforwards in as few as four years of profitability. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Net loss and net loss per common share:</I> The net loss for the three months ended March 31, 2011 of $4.4 million decreased by $3.0 million, or 40%, from the $7.3 million net loss for the three months ended March 31, 2010. Net loss per common share decreased by $1.81, or 46%. The decrease in net loss per common share is due to the following factors: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="60%" BORDER="0"> <TR> <TD WIDTH="88%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Basic and diluted loss per common share for the three</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">months ended March 31, 2010</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(3.90) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Increases in operations (per share)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1.58 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Increase in shares outstanding</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">0.23 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Basic and diluted loss per common share for the three</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">months ended March 31, 2011</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">(2.09) </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Liquidity and Capital Resources </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>Funding Requirements </I></B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">As of March 31, 2011, we have not generated any operating profit and may not in the near term. We expect our continuing operating losses to result in the continued use of cash for operations. Our future capital requirements will depend on a number of factors, including the continued commercial success of our existing products, launching the 45 products that are represented by our 78 ANDAs that have been recently approved or are pending approval by the FDA as of March 31, 2011 and successfully identifying and sourcing other new product opportunities. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">17 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Based on our existing business plan, we expect the net proceeds of our April 2011 initial public offering, approximately $95.5 million, after deducting underwriters discounts and commissions and estimated offering expenses, together with our existing sources of liquidity, will be sufficient to fund our planned operations, including the continued development of our product pipeline, for at least the next 12 months. However, we may require additional funds in the event we change our business plan or encounter unexpected developments, including unforeseen competitive conditions within our product markets, changes in the regulatory environment or the loss of key relationships with suppliers, group purchasing organizations or end-user customers. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">If required, additional funding may not be available to us on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities or by selling convertible debt securities, further dilution to our existing stockholders may result. To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our future cash needs through public or private equity offerings or debt financings. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">If adequate funds are not available, we may be required to terminate, significantly modify or delay the development or commercialization of new products. We may elect to raise additional funds even before we need them if the conditions for raising capital are favorable. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><I>Cash Flows </I></B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Overview </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">On March 31, 2011, cash and cash equivalents (restricted and unrestricted) on hand totaled $32.6 million, working capital totaled $40.9 million and our current ratio (current assets to current liabilities) was approximately 1.8 to 1.0. Following our IPO, we had cash and cash equivalents of approximately $135 million. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Sources and Uses of Cash </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Operating activities: </I>Net cash used in operating activities was $16.2 million for the three months ended March 31, 2011, compared with $13.4 million during the three months ended March 31, 2010. The increase in the use of cash was primarily due to a $6.4 million increase in working capital, principally from increases in our inventory balances to support increased sales volume, partially offset by the decrease in our net loss by $3.0 million. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Investing activities: </I>Net cash provided by investing activities was $0.7 million for the three months ended March 31, 2011, compared with the $0.4 million used in investing activities during the three months ended March 31, 2010. The change in cash flows from investing activities relates primarily to a $0.7 million in proceeds for the return of capital from our Sagent Strides joint venture. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Financing activities: </I>Net cash provided by financing activities was $13.5 million for the three months ended March 31, 2011, including $15.0 million from the new term loan credit facility, compared with $13.2 million for the three months ended March 31, 2010, which included $9.7 million from the issuance of Class B preferred stock and an increase of $3.5 million in borrowings under our senior secured revolving credit facility. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Senior Secured Revolving Credit Facility </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">On June 16, 2009, our principal operating subsidiary entered into a senior secured revolving credit facility with Midcap Financial, LLC. In December 2010, our principal operating subsidiary entered into an amendment to the senior secured revolving credit facility pursuant to which it is able to borrow up to $25.0 million in revolving loans, subject to borrowing availability. The borrowing availability is calculated based on eligible accounts receivable and inventory. On March 8, 2011, our principal operating subsidiary further amended the senior secured revolving credit facility to, among other things, permit the entry into our new $15.0 million term loan credit facility, which we describe below, and the incurrence of debt and granting of liens thereunder and require that we become a borrower under the senior secured revolving credit facility on or before May 26, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The senior secured revolving credit facility expires June 16, 2013. Borrowings under the senior secured revolving credit facility may be used for general corporate purposes, including funding working capital. Amounts drawn bear an interest rate equal to either an adjusted London Interbank Offered Rate (“LIBOR”), plus a margin of 5.50%, or an alternate base rate plus a margin of 4.50%. Loans under the senior secured revolving credit facility are secured by substantially all of our assets. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">18 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The senior secured revolving credit facility contains various covenants, including net sales performance, ability to incur additional indebtedness, create liens, make certain investments, pay dividends, sell assets, or enter into a merger or acquisition. With respect to dividends, our principal operating subsidiary, as the borrower under the senior secured credit facility, is currently prohibited, subject to certain limited exceptions, from declaring dividends or otherwise making any distributions, loans or advances to Sagent and this restriction will continue until Sagent becomes a borrower under the senior secured revolving credit facility, which is required to occur by May 26, 2011. This restriction has not had a negative effect on our ability to meet our cash obligations since we have funded our operations to date primarily from sales of our preferred stock and other of our equity securities. Going forward, we do not expect that this restriction will have a negative effect on our ability to meet future cash obligations as we have access to the net proceeds from the IPO and we expect this restriction to terminate by May 26, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">As of March 31, 2011, we had $18.7 million of outstanding borrowings under our senior secured revolving credit facility, which represented our maximum borrowing availability as of that date based on our borrowing base calculation. The interest rate on the senior secured revolving credit facility was 8.50% at March 31, 2011 and December 31, 2010. As of March 31, 2011, we were in compliance with all the covenants under the senior secured revolving credit facility. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B>Term Loan Credit Facility </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">On March 8, 2011, our principal operating subsidiary entered into a $15.0 million term loan credit facility with Midcap Funding III, LLC, as agent and a lender, and the other financial institutions party thereto, as lenders. The term loan credit facility is coterminous with the senior secured revolving credit facility and expires June 16, 2013. Borrowings under the term loan facility may be used for general corporate purposes, including funding working capital. Loans outstanding under the term loan credit facility bear interest at LIBOR, plus a margin of 9.0%, subject to a 3.0% LIBOR floor. Equal monthly amortization payments in respect of the term loan will be payable beginning September 1, 2011. The term loan credit facility is secured by a second lien on substantially all of our assets. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The term loan credit facility contains various covenants substantially similar to the senior secured revolving credit facility, including a covenant to maintain minimum net invoiced revenue, restriction on the borrower’s ability to incur additional indebtedness, create liens, make certain investments, pay dividends, sell assets, or enter into a merger or acquisition. In addition, the term loan credit facility requires that Sagent become a borrower on or before May 26, 2011. With respect to dividends, our principal operating subsidiary, as the borrower under the term loan credit facility, is currently prohibited, subject to certain limited exceptions, including an exception to distribute $1.5 million to us to cover fees and expenses related to the IPO, from declaring dividends or otherwise making any distributions, loans or advances to us, and this restriction will continue until Sagent becomes a borrower under the term loan credit facility. We do not expect that this restriction will have a negative effect on our ability to meet our cash obligations since we have historically funded our operations to date primarily from sales of Sagent’s preferred stock and other of our equity securities, we have access to the net proceeds from our IPO and we expect this restriction to terminate on or before May 26, 2011. As of May 13, 2011, we have not yet become a borrower under the facility. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><U>Off-Balance Sheet Arrangements and Aggregate Contractual Obligations </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We have no off-balance sheet arrangements other than the contractual obligations that are discussed below and in our Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2010, included in our IPO prospectus, filed with the SEC on April 21, 2011. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">19 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Aggregate Contractual Obligations: </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The following table summarizes our long-term contractual obligations and commitments as of March 31, 2011. The actual amount that may be required in the future to repay our senior secured revolving credit facility may be different, including as a result of additional borrowings under our senior secured revolving credit facility. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="63%"></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="18" NOWRAP ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Payments due by period</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> <P STYLE="border-bottom:1px solid #000000;width:115pt"><FONT STYLE="font-family:Arial" SIZE="2"><B>Contractual obligations (1)</B></FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Total</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>Less than</B></FONT><br><FONT STYLE="font-family:Arial" SIZE="2"><B>one year</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>1-3 years</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>3-5 years</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2"><B>More</B></FONT><br><FONT STYLE="font-family:Arial" SIZE="2"><B>than five<BR>years</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Long-term debt obligations (2)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">33,904 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">23,677 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">10,227 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> – </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"> – </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Operating lease obligations (3)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,439 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">233 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">487 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">517 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">202 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Contingent milestone payments (4)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">12,977 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">9,724 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">2,567 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">546 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">140 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD> <TD HEIGHT="8" COLSPAN="4"></TD></TR> <TR> <TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Joint venture funding requirements (5)</FONT></P></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">559 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">349 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">105 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">80 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">25 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">48,879 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">33,983 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">13,386 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">1,143 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2">$</FONT></TD> <TD NOWRAP VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2">367 </FONT></TD> <TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Arial" SIZE="2"> </FONT></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <P STYLE="line-height:8px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000;width:26%"> </P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2"></FONT><FONT STYLE="font-family:Arial" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">(1)</SUP> </FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">We had no material purchase commitments, individually or in the aggregate, under our manufacturing and supply agreements. </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2"></FONT><FONT STYLE="font-family:Arial" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">(2)</SUP> </FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Includes amounts payable under our senior secured revolving credit facility based on interest rates calculated at the applicable borrowing rate as of March 31, 2011. As of March 31, 2011, we had approximately $18.7 million of outstanding borrowings under our senior secured revolving credit facility. Also includes amounts payable under our term loan credit facility as of March 31, 2011. </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2"></FONT><FONT STYLE="font-family:Arial" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">(3)</SUP> </FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Includes annual minimum lease payments related to noncancelable operating leases. </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2"></FONT><FONT STYLE="font-family:Arial" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">(4)</SUP> </FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Includes management’s estimate for contingent potential milestone payments and fees pursuant to strategic business agreements for the development and marketing of finished dosage form pharmaceutical products assuming all contingent milestone payments occur. Does not include contingent royalty payments, which are dependent on the introduction of new products. </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2"></FONT><FONT STYLE="font-family:Arial" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">(5)</SUP> </FONT><FONT STYLE="font-family:Arial" SIZE="2"></FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Includes minimum funding requirements in connection with our existing joint ventures. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><U>Critical Accounting Policies </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our significant accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2010. Our significant accounting estimates are described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2010. We have identified the following critical accounting policies: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Revenue Recognition; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Revenue Deductions; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Inventories; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Accounting Estimates and Judgments; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Income Taxes: </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Stock-Based Compensation; </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Product Development; and </FONT></P></TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">•</FONT></TD> <TD WIDTH="1%" VALIGN="top"><FONT SIZE="1"> </FONT></TD> <TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">Intangible Assets. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">For a discussion of critical accounting policies affecting us, see the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our IPO prospectus filed with the SEC on April 21, 2011. There have been no material changes to the Company’s critical accounting policies and estimates since December 31, 2010. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">20 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><U>New Accounting Guidance </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">No new accounting standards were adopted during the three month period ended March 31, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><U>Contingencies </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">See Note 14. Commitments and Contingencies, and Part II, Item 1. <I>Legal Proceedings</I> for a discussion of contingencies. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_6"></A>Item 3. Quantitative and Qualitative Disclosures about Market Risk. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Our market risks relate primarily to changes in interest rates. Our senior secured revolving credit facility bears floating interest rates that are tied to LIBOR and an alternate base rate and our new term loan credit facility bears floating rate interest rates that are tied to LIBOR and, therefore our statements of operations and our cash flows will be exposed to changes in interest rates. A one percentage point increase in LIBOR would cause an increase to the interest expense on our borrowings under our senior secured revolving credit facility and new term loan credit facility of approximately $0.2 million and $0.2 million, respectively. We historically have not engaged in interest rate hedging activities related to our interest rate risk. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">At March 31, 2011, we had cash and cash equivalents of $32.6 million. These amounts are held primarily in cash and money market funds. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">While we operate primarily in the U.S., we do have foreign currency considerations. We generally incur sales and pay our expenses in U.S. dollars. Our KSP joint venture and substantially all of our business partners that supply us with API, product development services and finished product manufacturing are located in a number of foreign jurisdictions, and we believe they generally incur their respective operating expenses in local currencies. As a result, these business partners may be exposed to currency rate fluctuations and experience an effective increase in their operating expenses in the event their local currency appreciates against the U.S. dollar. In this event, such business partners may elect to stop providing us with these services or attempt to pass these increased costs back to us through increased prices for product development services, API sourcing or finished products that they supply to us. Historically we have not used derivatives to protect against adverse movements in currency rates. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We do not have any foreign currency or any other material derivative financial instruments. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_7"></A>Item 4. Controls and Procedures. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Evaluation of Disclosure Controls and Procedures </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that the information is accumulated and communicated to our management, including our certifying officers, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">21 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>PART II – OTHER INFORMATION </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_8"></A>Item 1. Legal Proceedings. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">From time to time we are subject to claims and litigation arising in the ordinary course of business. At this time, there are no proceedings of which management is aware that are expected to have a material adverse effect on the consolidated financial position or results of operations. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">On January 3, 2011, Infusive Technologies, LLC (“Infusive”) filed a complaint against us in the United States District Court of Utah, Central Division, alleging that we had breached the terms of an acquisition agreement we entered into with Infusive in September 2008 for failing to use reasonable commercial efforts to develop and commercialize certain products based on patents and other intellectual property assigned to us by Infusive under such agreement and thereby avoiding a $1.25 million contingent payment under the agreement. The complaint seeks compensatory damages of at least $15.0 million, plus interest, and punitive damages of at least $50.0 million. We are in the preliminary stages of reviewing this complaint, and we intend to vigorously defend ourselves in such litigation, including bringing a number of counterclaims against Infusive in such litigation. Consistent with our vigorous defense, we filed motions addressed to venue and to dismiss the complaint on March 4, 2011. On March 28, 2011, Infusive filed its first amended complaint, which, among other things, alleged additional facts to support its allegations and eliminated the claim for punitive damages. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_9"></A>Item 1A. Risk Factors. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">There are no material changes from the risk factors previously disclosed in our IPO prospectus filed April 21, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_10"></A>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Unregistered Sales of Equity Securities </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">None. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>Use of Proceeds </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">On April 26, 2011, we completed our offering of 5,750,000 shares of common stock in an initial public offering. In the offering, 5,750,000 shares of common stock were sold at a per share price of $16.00 and an additional 862,500 shares of common stock were sold directly to our underwriters when they exercised their option to purchase additional shares at a per share price of $16.00, resulting in net proceeds of approximately $95.5 million, after deducting underwriting discounts and commissions of approximately $7.4 million and expenses of approximately $2.9 million. None of these payments were direct or indirect payments to any of the Company’s directors or officers or their associates or to persons owning 10 percent or more of the Company’s common stock. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">The shares were registered under the Securities Act on a registration statement on Form S-1 (Registration Nos. 333-170179 and 333-173597). The Securities and Exchange Commission declared the registration statement effective on April 19, 2011. The managing underwriters for the offering were Morgan Stanley, Bank of America Merrill Lynch and Jefferies & Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">We plan to use the net proceeds of the offering for general corporate purposes, which we expect to include funding working capital, operating expenses, the continued development of our product pipeline and portfolio, the maintenance and expansion of our current collaboration arrangements, the strengthening of our existing commercial organization and the selective pursuit of business development opportunities in our focus segment areas. We do not, however, have agreements or commitments for any specific investments or acquisitions at this time. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">There has been no material change in the planned use of proceeds from our initial public offering as described in our IPO prospectus filed with the SEC on April 21, 2011. </FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">22 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_11"></A>Item 6. Exhibits. </B></FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> </P><DIV ALIGN="right"> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="95%" BORDER="0"> <TR> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD WIDTH="92%"></TD></TR> <TR> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="1"><B>Exhibit<BR>Number</B></FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="1"><B>Description</B></FONT></P></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">3.1</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Certificate of Incorporation of Sagent Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 3.3 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">3.2</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Bylaws of Sagent Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 3.4 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.1</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Amendment No. 5 Regarding Credit Agreement, effective as of March 8, 2011, by and among Sagent Pharmaceuticals, Inc., Midcap Funding IV, LLC and Silicon Valley Bank (Incorporated by reference to Exhibit 10.6 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.2</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Credit and Security Agreement, dated as of March 8, 2011, by and among Sagent Pharmaceuticals, Inc. and Midcap Funding III, LLC (Incorporated by reference to Exhibit 10.7 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.3</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Form of 2011 Incentive Compensation Plan (Incorporated by reference to Exhibit 10.8 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.4</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Form of Incentive Stock Option Agreement pursuant to the 2011 Incentive Compensation Plan (Incorporated by reference to Exhibit 10.9 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.5</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Form of Restricted Stock Agreement pursuant to the 2011 Incentive Compensation Plan (Incorporated by reference to Exhibit 10.10 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.6</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Form of Restricted Stock Unit Agreement pursuant to the 2011 Incentive Compensation Plan (Incorporated by reference to Exhibit 10.11 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.7</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Form of Stock Appreciation Rights Agreement pursuant to the 2011 Incentive Compensation Plan (Incorporated by reference to Exhibit 10.12 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.8</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Form of Non-Qualified Stock Option Agreement pursuant to the 2011 Incentive Compensation Plan (Incorporated by reference to Exhibit 10.13 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.9</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Employment Agreement, dated as of January 20, 2011, by and between Sagent Pharmaceuticals, Inc. and Jeffrey Yordon (Incorporated by reference to Exhibit 10.25 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.10</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Employment Agreement, dated as of January 20, 2011, by and between Sagent Pharmaceuticals, Inc. and Ronald Pauli (Incorporated by reference to Exhibit 10.26 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.11</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Employment Agreement, dated as of January 20, 2011, by and between Sagent Pharmaceuticals, Inc. and Michael Logerfo (Incorporated by reference to Exhibit 10.27 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.12</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Employment Agreement, dated as of January 20, 2011, by and between Sagent Pharmaceuticals, Inc. and Lorin Drake (Incorporated by reference to Exhibit 10.28 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">10.13</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Employment Agreement, dated as of January 20, 2011, by and between Sagent Pharmaceuticals, Inc. and Albert Patterson (Incorporated by reference to Exhibit 10.29 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">31.1</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">31.2</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.</FONT></TD></TR> <TR> <TD HEIGHT="8"></TD> <TD HEIGHT="8" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top" NOWRAP><FONT STYLE="font-family:Arial" SIZE="2">32.1</FONT></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</FONT></TD></TR></TABLE></DIV> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">23 </FONT></P> <p Style='page-break-before:always'> <HR SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER"> <h5 align="left"><a href="#toc">Table of Contents</a></h5> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B><A NAME="tx186765_12"></A>Signature </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT STYLE="font-family:Arial" SIZE="2">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0"> <TR> <TD WIDTH="14%"></TD> <TD VALIGN="bottom" WIDTH="1%"></TD> <TD WIDTH="85%"></TD></TR> <TR> <TD VALIGN="top"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">SAGENT PHARMACEUTICALS INC.</FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="top"><FONT SIZE=""> </FONT></TD> <TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2">/s/ Ronald Pauli</FONT></TD></TR> <TR> <TD HEIGHT="16"></TD> <TD HEIGHT="16" COLSPAN="2"></TD></TR> <TR> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"><FONT SIZE="1"> </FONT></TD> <TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Ronald Pauli</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Chief Financial Officer</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">May 13, 2011</FONT></P></TD></TR></TABLE> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">24 </FONT></P> </BODY></HTML> </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-31.1 <SEQUENCE>2 <FILENAME>dex311.htm <DESCRIPTION>CERTIFICATION OF CHIEF EXECUTIVE OFFICER <TEXT> <HTML><HEAD> <TITLE>Certification of Chief Executive Officer</TITLE> </HEAD> <BODY BGCOLOR="WHITE"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"><B>EXHIBIT 31.1 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Certifications </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:2%"><FONT STYLE="font-family:Arial" SIZE="2">I, Jeffrey M. Yordon, certify that: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">1.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">I have reviewed this quarterly report on Form 10-Q of Sagent Pharmaceuticals, Inc.; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">2.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">3.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">4.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(a)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(b)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Paragraph omitted in accordance with SEC Release No. 34-47986; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(c)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(d)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">5.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(a)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(b)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Date: May 13, 2011 </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"> </P><DIV ALIGN="right"> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0"> <TR> <TD WIDTH="100%"></TD></TR> <TR> <TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2">/s/ Jeffrey M. Yordon</FONT></TD></TR> <TR> <TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Jeffrey M. Yordon</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Arial" SIZE="2">President and Chief Executive Officer</FONT></P></TD></TR></TABLE></DIV> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">25 </FONT></P> </BODY></HTML> </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-31.2 <SEQUENCE>3 <FILENAME>dex312.htm <DESCRIPTION>CERTIFICATION OF CHIEF FINANCIAL OFFICER <TEXT> <HTML><HEAD> <TITLE>Certification of Chief Financial Officer</TITLE> </HEAD> <BODY BGCOLOR="WHITE"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"><B>EXHIBIT 31.2 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>Certifications </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:2%"><FONT STYLE="font-family:Arial" SIZE="2">I, Ronald Pauli, certify that: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">1.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">I have reviewed this quarterly report on Form 10-Q of Sagent Pharmaceuticals, Inc.; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">2.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">3.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">4.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(a)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(b)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Paragraph omitted in accordance with SEC Release No. 34-47986; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(c)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(d)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">5.</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(a)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> </P> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"><FONT SIZE="1"> </FONT></TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Arial" SIZE="2">(b)</FONT></TD> <TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Arial" SIZE="2">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Date: May 13, 2011 </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px"> </P><DIV ALIGN="right"> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0"> <TR> <TD WIDTH="100%"></TD></TR> <TR> <TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2">/s/ Ronald Pauli</FONT></TD></TR> <TR> <TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Ronald Pauli</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Arial" SIZE="2">Chief Financial Officer</FONT></P></TD></TR></TABLE></DIV> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">26 </FONT></P> </BODY></HTML> </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-32.1 <SEQUENCE>4 <FILENAME>dex321.htm <DESCRIPTION>CERTIFICATIONS OF CEO AND CFO <TEXT> <HTML><HEAD> <TITLE>Certifications of CEO and CFO</TITLE> </HEAD> <BODY BGCOLOR="WHITE"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:Arial" SIZE="2"><B>EXHIBIT 32.1 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>CERTIFICATIONS OF </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>PURSUANT TO </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>18 U.S.C. SECTION 1350, </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>AS ADOPTED PURSUANT TO </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2"><B>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">I, Jeffrey M. Yordon, President and Chief Executive Officer of Sagent Pharmaceuticals, Inc. (“Sagent”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that Sagent’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in Sagent’s Quarterly Report on Form 10-Q fairly presents in all material respects Sagent’s financial condition and results of operations. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0"> <TR> <TD WIDTH="100%"></TD></TR> <TR> <TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2">/s/ Jeffrey M. Yordon</FONT></TD></TR> <TR> <TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Jeffrey M. Yordon</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">President and Chief Executive Officer</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Arial" SIZE="2">May 13, 2011</FONT></P></TD></TR></TABLE> <P STYLE="margin-top:24px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">I, Ronald Pauli, Chief Financial Officer of Sagent Pharmaceuticals, Inc. (“Sagent”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that Sagent’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in Sagent’s Quarterly Report on Form 10-Q fairly presents in all material respects Sagent’s financial condition and results of operations. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> </P> <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0"> <TR> <TD WIDTH="100%"></TD></TR> <TR> <TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Arial" SIZE="2">/s/ Ronald Pauli</FONT></TD></TR> <TR> <TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Arial" SIZE="2">Ronald Pauli</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2">Chief Financial Officer</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Arial" SIZE="2">May 13, 2011</FONT></P></TD></TR></TABLE> <P STYLE="margin-top:24px;margin-bottom:0px"><FONT STYLE="font-family:Arial" SIZE="2"><I>A signed original of these written statements required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Sagent Pharmaceuticals, Inc. and will be retained by Sagent Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. </I></FONT></P> <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1"> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Arial" SIZE="2">27 </FONT></P> </BODY></HTML> </TEXT> </DOCUMENT> </SEC-DOCUMENT>