(Former name, former address and former fiscal year, if changed since last report)

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 [X] No [ ]

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act: [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X].

As of ~~November 19,~~August 12, 2019, there were ~~10,761,684~~10,869,530 shares of the registrant’s common stock outstanding.

FOR THE ~~THREE AND NINE MONTHS~~QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2018~~2019

	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
							(Unaudited)
ASSETS

Current assets
Cash	$	6,506,127		$	106,378		$	1,644		$	3,918
Accounts receivable		135,150			-
Accounts receivable, net of allowance								94			48
Inventory		364,851			-			232			242
Prepaid expenses and other assets		448,244			18,565			184			469
Total current assets		7,454,372			124,943			2,154			4,677

Operating lease right of use asset								178			-
Furniture and fixtures, net of depreciation		28,795			-			67			72
Intangible assets, net of amortization		815,514			2,555,974			357			392
Goodwill		-			3,502,829
		844,309			6,058,803			602			464

Total assets	$	8,298,681		$	6,183,746		$	2,756		$	5,141

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities
Accounts payable	$	851,063		$	1,033,353		$	955		$	270
Due to related party, including warrant liability		155,442			1,336,518
Due to related party								4			28
Accrued expenses		978,733			1,139,369			1,063			852
Accrued fee payable		-			320,000
Deferred revenue		200,000			-
Notes payable		-			444,223
Notes payable - related parties		-			1,462,040
Current portion of operating lease liability								78			-
Accrued dividends								1,800			1,064
Loan payable								1,260			-
Total current liabilities	$	2,185,238		$	5,735,503			5,160			2,214

Other lease liability, net of current portion								107			-
Total liabilities								5,267			2,214

Commitments and contingencies (Note 9)

Stockholders’ equity
Stockholders’ equity (deficit)
Preferred stock, $0.01 par value; 100,000 shares authorized

Series C convertible preferred stock, $0.01 par value; $5,100 liquidation preference; 1,200 shares authorized; 100 and 750 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		-			-
Series C convertible preferred stock, $0.01 par value; $5,100 liquidation preference; 1,200 shares authorized; 100 shares issued and outstanding as of June 30, 2019 and December 31, 2018								-			-

Series D convertible preferred stock, $0.01 par value; $300 liquidation preference; 220 shares authorized; 40 and 60 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		-			-
Series D convertible preferred stock, $0.01 par value; $300 liquidation preference; 220 shares authorized; 40 shares issued and outstanding as of June 30, 2019 and December 31, 2018								-			-

Series E convertible preferred stock, $0.01 par value; $5,000 liquidation preference; 3,500 shares authorized; 3,490 and 0 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		35			-
Series E convertible preferred stock, $0.01 par value; $5,000 liquidation preference; 3,500 shares authorized; 3,478 and 3,488 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively								-			-

Series F convertible preferred stock, $0.01 par value; $5,000 liquidation preference; 2,200 shares authorized; 308 and 0 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		3			-
Series F convertible preferred stock, $0.01 par value; $5,000 liquidation preference; 2,200 shares authorized; 381 shares issued and outstanding as of June 30, 2019 and December 31, 2018								-			-

Common stock, $0.006 par value; 180,000,000 shares authorized, 11,241,684 and 10,521,728 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		64,700			63,127
Common stock, $0.006 par value; 180,000,000 shares authorized, 10,869,530 and 10,761,684 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively								65			65
Additional paid-in capital		28,516,045			8,413,823			29,346			28,710
Accumulated deficit		(22,467,340	)		(8,028,707	)		(31,922	)		(25,848	)

Total stockholders’ equity		6,113,443			448,243
Total stockholders’ equity (deficit)								(2,511	)		2,927

Total liabilities and stockholders’ equity	$	8,298,681		$	6,183,746
Total liabilities and stockholders’ equity (deficit)							$	2,756		$	5,141

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY (DEFICIT)

The accompanying notes are an integral part of these ~~unaudited condensed~~ consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~Notes to Condensed Consolidated Financial Statements~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -– Nature of Operations, Basis of Presentation and Significant Accounting Policies

Adhera Therapeutics, Inc. (formerly known as Marina Biotech, Inc.) and its wholly-owned subsidiaries, MDRNA Research, Inc. (“MDRNA”), Cequent Pharmaceuticals, Inc. (“Cequent”), Atossa Healthcare, Inc. (“Atossa”), and ~~IthenaPharma,~~IThenaPharma, Inc. (“~~Ithena”~~IThena”) (collectively “Adhera,”, the ~~“Company”, “we,” “our,” or “us”~~“Company,) is an emerging specialty pharmaceutical company ~~leveraging~~that leverages innovative distribution models and technologies to improve the quality of care for patients in the United States suffering from chronic ~~and acute~~ diseases. ~~Adhera~~The Company is focused on fixed dose combination (“FDC”) therapies in hypertension, with plans to expand the portfolio of drugs we commercialize to include other therapeutic areas.

~~We began marketing~~The Company’s mission is to provide effective and patient centric treatment for hypertension while actively seeking additional assets that can be commercialized through our proprietary Total Care System (“TCS”). At the core of our TCS system is DyrctAxess, our patented technology platform. DyrctAxess is designed to offer enhanced efficiency, control and access to the information necessary to empower patients, physicians and manufacturers to achieve optimal care.

The Company is focused on demonstrating the therapeutic and commercial value of TCS through the commercialization of Prestalia^®, a single-pill FDC of perindopril arginine ~~(an angiotensin-converting-enzyme) inhibitor~~(“perindopril”) and amlodipine besylate ~~(a calcium channel blocker),~~(“amlodipine”) which ~~was approved by the U.S. Food and Drug Administration (“FDA”) in June of 2018.~~is used as a first-line treatment for hypertension. Prestalia was developed in coordination with Les Laboratories, Servier, a French pharmaceutical conglomerate, that sells the formulation outside the United States under the brand ~~name - Viacoram.~~names Coveram^®and/or Viacoram^®. Prestalia ~~is distributed through~~^® was approved by the ~~DyrectAxess platform which we acquired~~U.S. Food and Drug Administration (“FDA”) in January 2015 and was licensed by the Company from Symplmed in June 2017. ~~DyrectAxess is a patented technology platform, also known as Total Care~~By combining Prestalia^®, ~~that offers enhanced efficiency, control~~DyrctAxess and ~~information to empower patients, physicians and manufacturers to achieve optimal care.~~

~~By combining Prestalia, DyrectAxess, and~~an independent pharmacy network, the Company has created a ~~specialty pharma network, we have created~~ proprietary ~~platform~~system for drug adherence and the effective treatment of hypertension, improving the distribution of FDC hypertensive drugs, such as our FDA-approved product Prestalia, devices for therapeutic drug monitoring (e.g., blood pressure and other cardiac monitors), as well asincluding patient counseling and prescription reminder ~~services.~~

~~On November 15, 2016, Adhera entered into, and consummated~~services, as well as improving the ~~transactions contemplated by, an Agreement and Plan~~distribution of ~~Merger between and among IthenaPharma, Inc., a Delaware corporation~~blood pressure monitors for therapeutic drug monitoring (“IThena”), IThena Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Adhera (“Merger Sub”), and a representative of the stockholders of IThena (the “Merger Agreement”), pursuant to which IThena merged into Merger Sub (the “Merger”TDM”).

~~As reported~~In 2018, the Company discontinued all significant clinical development activities and is evaluating disposition options for its development assets, including but not limited to: (i) a next generation celecoxib program of drug candidates for the treatment of acute and chronic pain; (ii) an FDC used to suppress polyps in ~~our Annual Report on Form 10-K, in April 2018, we raised in excess of $10 million, net of fees~~the precancerous syndrome and ~~expenses, from a private placement of our newly created Series E Convertible Preferred Stock (See Recent Developments: Series E Convertible Preferred Stock Private Placement Offering below)~~orphan indication Familial Adenomatous Polyposis; (iii) an FDC to treat Colorectal Cancer; and (iv) an FDC for irritable bowel disease (IBD). Further, in May 2018, we raised an additional $2 million, net of fees and expenses, from the private placement. In July 2018, we raised $1.3 million net of fees and expenses, from a private placement of our newly created Series F Convertible Preferred Stock. The use of funds from the raise will be on the commercialization of Prestalia, funding working capital, capital expenditure needs, payment of certain liabilities and other general corporate requirements. We planCompany plans to license or divest ~~our other pharmaceutical~~these development assets ~~and halt any other FDC development programs,~~ since they no longer align with ~~our~~the Company’s focus on the ~~treatment~~commercialization of ~~hypertension.~~

On October 4, 2018, we filed a Certificate of Amendment to the Restated Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware to change the name of our company from “Marina Biotech, Inc.” to “Adhera Therapeutics, Inc.” The change of name was effective October 9, 2018.

Following the name change from Marina Biotech, Inc. to Adhera Therapeutics, Inc., the common stock, par value $0.006 per share, of the Company began trading on the OTCQB tier of the OTC Markets under the symbol “ATRX”.

In August 2017, we filed a Certificate of Amendment of our Amended and Restated Certificate of Incorporation to effect a one-for-ten reverse split of our issued and outstanding shares of common stock. Our common stock commenced trading on the OTCQB tier of the OTC Markets on a split-adjusted basis on Thursday, August 3, 2017. Unless indicated otherwise, all share and per share information included in these financial statements and Notes to the Consolidated Financial Statements give effect to the reverse split.Prestalia.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions pursuant to ~~Form 10-Q~~the rules and ~~Article 8~~regulations of ~~Regulation S-X.~~the Securities and Exchange Commission. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete audited financial statements. ~~The accompanying unaudited financial information~~This quarterly report should be read in conjunction with the ~~audited~~ consolidated financial statements ~~including~~in the ~~notes thereto, as of and~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017, included in our 2017 Annual Report on Form 10-K filed with the SEC.~~2018. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the ~~nine~~three or six months ended ~~September~~June 30, ~~2018~~2019 are not necessarily indicative of the results for the year ending December 31, ~~2018~~2019 or for any future period.

The condensed consolidated financial statements include the accounts of ~~IThena and~~ Adhera Therapeutics, Inc. and the wholly-owned subsidiaries, Ithena, Cequent, MDRNA, and Atossa, and eliminate any inter-company balances and transactions.

The accompanying condensed consolidated financial statements have been prepared on the basis that wethe Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. ~~At September~~As of June 30, ~~2018, we~~2019, the Company had cash and cash equivalents of $1.6 million and has negative working capital of approximately $3.0 million.

The Company has incurred recurring losses and negative cash flows from operations since inception and has funded its operating losses through the sale of common stock, preferred stock, warrants to purchase common stock, convertible notes and promissory notes. The Company incurred a ~~significant~~net operating loss of approximately $2.8 million and $5.3 million for the three and six months ended June 30, 2019, respectively. The Company had an accumulated deficit of approximately ~~$22~~$31.9 million ~~and working capital~~as of ~~approximately $5 million. Our operating activities consume the majority of our cash resources. We anticipate that we will~~June 30, 2019.

The Company expects to continue to incur operating losses as ~~we execute our~~it executes the commercialization plans for Prestalia^®, as well as other strategic and business development initiatives. ~~In addition, we have had and will continue~~If the Company is unable to ~~have~~obtain additional financing in the future, there may be a negative impact on the financial viability of the Company. The Company plans to increase working capital by managing its cash flows ~~from operations, at least into~~and expenses, divesting development assets and raising additional capital through private or public equity or debt financing. There can be no assurance that such financing or partnerships will be available or on terms which are favorable to the ~~near future. We have previously funded, and~~Company. While management of the Company believes that it has a plan to continue funding, our losses primarily through the sale of common and preferred stock, combined with or without warrants, the sale of notes, cash generated from the outlicensing or sale of our licensed assets and, to a lesser extent, equipment financing facilities and secured loans. However, we cannot be certainfund ongoing operations, there is no assurance that weits plan will be ~~able~~successfully implemented. Failure to ~~obtain such funds required for our operations at terms acceptable~~raise additional capital through one or more financings, divesting development assets or reducing discretionary spending could have a material adverse effect on the Company’s ability to ~~us or at all.~~

In April and May 2018, we raised approximately $12.2 million net proceeds from a private placement of shares of our Series E Convertible Preferred Stock, and warrants to purchase shares of our common stock. Further, in July 2018, we raised an additional $1.4 million net proceeds fromachieve its intended business objectives. These factors raise substantial doubt about the private placement of our Series F Convertible Preferred Stock. For our assessment as of September 30, 2018, we have considered the amount raised and we believe that the $13.6 million will provide us theCompany’s ability to continue as a going ~~concern for one year~~concern. The condensed consolidated financial statements do not contain any adjustments that might result from the ~~issuance date~~resolution of ~~this Form 10-Q. We may continue to attempt to obtain future financing or engage in strategic transactions which may require us to curtail our operations. We cannot predict, with certainty,~~any of the ~~outcome of our actions to generate liquidity, including the availability of additional equity or debt financing, or whether such actions would generate the expected liquidity as currently planned.~~above uncertainties.

The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Significant areas requiring the use of management estimates include ~~valuation allowance for deferred income tax assets,~~revenue and related discounts and allowances and accruals related to our operating activity including legal ~~contingencies~~ and ~~fair value of financial instruments.~~other consulting expenses. Actual results could differ materially from such estimates under different assumptions or circumstances.

~~We consider~~The Company considers the fair value of cash, accounts payable, ~~due to related parties, notes payable, notes payable to related parties,~~ accounts receivable and accrued ~~liabilities~~expenses not to be materially different from their carrying value. These financial instruments have short-term maturities. We follow authoritative guidance with respect to fair value reporting issued by the Financial Accounting Standards Board (“FASB”) for financial assets and liabilities, which defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance does not apply to measurements related to share-based payments. The guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

~~Our cash is subject to fair value measurement and is determined by Level 1 inputs. We measure the liability for committed stock issuances with a fixed share number using Level 1 inputs.~~ There were no liabilities measured at fair value as of ~~September~~June 30, ~~2018~~2019 or December 31, ~~2017.~~2018.

Accounts receivable consists of amounts due from wholesale distributors and specialty pharmacy providers. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. The Company estimates its allowance based on historical experience, assessment of specific risks and discussions with individual customers. The Company believes the reserve is adequate to mitigate current collection risks. During the three and six months ended June 30, 2019 and 2018, the Company recorded an additional allowance of approximately $41,000 and $0, respectively.

The Company periodically reviews the carrying value of intangible assets, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.

~~As of September 30,~~During the year ended December 31, 2018, the Company determined that goodwill was impaired and ~~as a result,~~recognized a loss on impairment of ~~$3,502,830 was recognized for the three and nine-month periods ended September 30, 2018.~~approximately $3.5 million. The impairment determination was primarily a result of the decision to divest of assets that no longer ~~align~~aligned with the Company’s strategic ~~objectives . There was no such loss on~~objectives. No impairment charges were recognized for the ~~year~~three and six-month period ended ~~December 31, 2017.~~June 30, 2019 or 2018.

~~We review all of our~~The Company reviews long-lived assets for impairment indicators throughout the year and ~~perform~~performs detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, ~~we record~~the Company records charges for impairments. Specifically:

~~As of September 30, 2018, the~~The Company determined that the intangible asset from the merger was impaired and, as a result, a loss on impairment of $1,291,200 was recognized for the three and nine-month periods ended September 30, 2018. The impairment determination was primarily a result of the decision to divest of assets that no longer align with the Company’s strategic objectives . There was no suchdid not recognize any loss on impairment for the ~~year~~three or six-month periods ended ~~December 31, 2017.~~June 30, 2019 or 2018.

The Company ~~has~~sells its prescription drug (Prestalia^®) directly to specialty contracted retail pharmacies and indirectly through wholesalers. For the three months ended June 30, 2019, the Company’s three largest customers accounted for 46%, 31% and 23% of the Company’s total gross sales. For the six months ended June 30, 2019, the Company’s three largest customers accounted for 39%, 37%, and 24% of the Company’s total gross sales. The Company works with a third-party pharmacy network manager to attract, retain, and manage the Company’s pharmacy customers and distribution channels. The Company had no sales for the three or six-month periods ending June 30, 2018.

The Company adopted the new revenue recognition guidelines in accordance with ASC 606,Revenue from Contracts with Customers(ASC 606), effective with the quarter ended March 31, 2018.

The Company sells its medicines primarily to wholesale distributors and specialty pharmacy ~~providers.~~providers under agreements with payment terms typically less than 90 days. These customers subsequently resell the Company’s medicines to health care patients. In addition, the Company enters into arrangements with health care providers and payers that provide for government-mandated or privately-negotiated discounts and allowances related to the Company’s medicines. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company’s contracts have a single performance obligation to transfer medicines. Accordingly, revenues from medicine sales are recognized when the customer obtains control of the Company’s medicines, which occurs at a point in time, typically upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring medicines and is generally based upon a list or fixed price less allowances for medicine returns, rebates and discounts. ~~The~~ Company ~~sells its medicines~~records an estimate of unrealized revenue reductions, and the related liability, for bottles sold to ~~wholesale pharmaceutical distributors and~~ pharmacies ~~under agreements with payment terms typically less than 90 days.~~but not yet prescribed.

The nature of the Company’s contracts gives rise to variable consideration because of allowances for medicine returns, rebates and discounts. Allowances for medicine returns, rebates and discounts are recorded at the time of sale to wholesale pharmaceutical distributors and pharmacies. The Company applies significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company will be required to make adjustments to these allowances in the future. The Company’s adjustments to gross sales are discussed further below.

The Company includes distribution service fees paid to its wholesalers for distribution and inventory management services as a reduction to revenue. The Company calculates accrued distribution service fee estimates using the most likely amount method. The Company accrues estimated distribution fees based on contractually determined amounts, typically as a percentage of revenue. Accrued distribution service fees are included in “accrued expenses” on the condensed consolidated balance sheet.

The Company offers discounts to patients under which the patient receives a discount on his or her prescription. In circumstances when a patient’s prescription is rejected by a ~~third party~~third-party payer, the Company will pay for the full cost of the prescription. The Company reimburses pharmacies for this discount directly or through third-party vendors. The Company reduces gross sales by the amount of actual co-pay and other patient assistance in the period based on the invoices received. The Company also records an accrual to reduce gross sales for estimated co-pay and other patient assistance on units sold to distributors or pharmacies that have not yet been prescribed/dispensed to a patient. The Company calculates accrued co-pay and other patient assistance fee estimates using the expected value method. The estimate is based on contract prices, estimated percentages of medicine that will be prescribed to qualified patients, average assistance paid based on reporting from the third-party vendors and estimated levels of inventory in the distribution channel. Accrued co-pay and other patient assistance fees are included in “accrued expenses” on the condensed consolidated balance sheet. Patient assistance programs include both co-pay assistance and fully bought down prescriptions.

Consistent with industry practice, the Company maintains a return policy that allows customers to return medicines within a specified period prior to and subsequent to the medicine expiration date. Generally, medicines may be returned for a period beginning six months prior to its expiration date and up to one year after its expiration date. The right of return expires on the earlier of one year after the medicine expiration date or the time that the medicine is dispensed to the patient. The majority of medicine returns result from medicine dating, which falls within the range set by the Company’s policy and are settled through the issuance of a credit to the customer. The Company calculates sales returns using the expected value method. The estimate of the provision for returns is based upon industry experience. This period is known to the Company based on the shelf life of medicines at the time of shipment. The Company records sales returns in “accrued expenses” and as a reduction of revenue.

The Company includes distribution service fees paid for inventory management services as cost of goods sold. The Company calculates accrued distribution service fee estimates using the most likely amount method. The Company accrues estimated distribution fees based on contractually determined amounts. Accrued distribution service fees are included in “accrued expenses” on the condensed consolidated balance sheet.

The Company includes fees incurred by pharmacies for shipping medicines to patients as ~~a reduction to revenue.~~cost of goods sold. The Company calculates accrued shipping fee estimates using the expected value method. The Company records accrued shipping fees in “accrued expenses” on the condensed consolidated balance sheet.

In terms of licensing agreements entered into by the Company, they typically include payment of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; payments for manufacturing supply services; and royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenues, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues. The core principle of ASC 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services.

~~During the nine months ended September 30, 2018 , Adhera entered into a Licensing Agreement, whereby Adhera granted exclusive rights to the company’s DiLA~~²delivery system in exchange for an upfront payment of approximately $200,000 and further potential future consideration dependent upon event and sales-based milestones. Under the terms of the agreement, Adhera has agreed to assign ownership of the intellectual property associated with the DiLA² ~~delivery system to the purchaser.~~ The Company ~~has yet~~records the cost of non-commercial product distributed to ~~complete certain performance obligations under the agreement and accordingly has deferred the recognition~~patients as a cost of ~~revenue from~~goods sold.

The Company records royalty fees on the sale of ~~the asset until such obligations are fulfilled.~~commercial product as a cost of goods sold.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under the provisions of ASU 2014-09, entities should recognize revenue in an amount that reflects the consideration to which they expect to be entitled to in exchange for goods and services provided. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017. The Company adopted the provisions of this standard effective January 1, 2018.

In February 2016, the FASB issued ASU ~~2016 02,~~No. 2016-02, Leases (Topic 842) (“ASU ~~2016 02”~~No. 2016-02”). ~~The provisions of~~Under ASU 2016 02 set out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the leaseNo. 2016-02, an entity is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to ~~record a right of use asset~~recognize right-of-use assets and a lease ~~liability for all~~liabilities on its balance sheet and disclose key information about leasing arrangements. For leases with a term of ~~greater than 12 months, regardless of their classification. Leases with a term of 12~~twelve months or less, ~~will be accounted for in a similar manner as under existing guidance for operating leases.~~the lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities by class of underlying assets. ASU ~~2016 02 supersedes the previous lease standard, Topic 840, Leases. This guidance is~~No. 2016-02 became effective for the Company ~~for~~beginning in the ~~year ending December 31,~~first quarter of 2019. The Company ~~is currently evaluating the impact that the implementation of~~adopted this standard ~~will~~on January 1, 2019, using a modified retrospective approach at the adoption date through a cumulative-effect adjustment to retained earnings. The adoption did not have a material impact on ~~the Company’s~~its condensed consolidated ~~financial statements.~~statement of operations. The Company elected to not recognize lease assets and liabilities for leases with an initial term of twelve months or less.

Basic net ~~income (loss)~~loss per ~~common~~ share ~~(after giving effect of the one for ten reverse stock split)~~ is ~~computed~~calculated by dividing the net ~~income (loss)~~loss by the weighted average number of common shares outstanding during the ~~period, excluding any unvested restricted stock awards.~~period. Diluted net ~~income (loss)~~loss per share ~~includes~~is computed by dividing the ~~effect~~net loss by the weighted average number of common shares and common stock equivalents ~~(stock options, unvested restricted stock, and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. Net income (loss) is adjusted~~outstanding for the period. Common stock equivalents are only included when their effect is dilutive. Potentially dilutive ~~effect of the change in fair value liability for price adjustable~~securities which include outstanding warrants, ~~if applicable. The following number of shares~~stock options and preferred stock have been excluded from the computation of diluted net ~~(loss) since such inclusion~~loss per share as their effect would be ~~anti-dilutive:~~

~~Reclassification of Prior Period Presentation~~anti-dilutive. For all periods presented, basic and diluted net loss were the same.

~~Certain prior period amounts have been reclassified for consistency with~~The following table presents the ~~current period presentation. These reclassifications had no effect on~~computation of net loss per share (in thousands, except share and per share data):

Potentially dilutive securities not included in the ~~reported results~~calculation of ~~operations or cash flows.~~diluted net loss per common share because to do so would be anti-dilutive are as follows:

Inventory consists of raw material and finished goods stated at the lower of cost or net realizable value with cost determined on a first-in, first-out basis. The Company ~~has deposit~~reviews the composition of ~~approximately $200,000 with a customer which is included~~inventory at each reporting period in ~~prepaid expenses~~order to identify obsolete, slow-moving, quantities in excess of expected demand, or otherwise non-saleable items.

Inventory as of the following as of June 30, 2019 and other assets on the accompanying balance sheet. The deposit is for use by the customer to fund co-pay assistance for a specified period of time, with any unused amounts to then be refunded to the Company.December 31, 2018 are as follows:

In June 2017, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Symplmed Pharmaceuticals LLC (“Symplmed”) pursuant to which we purchased from Symplmed, for aggregate consideration of approximately $620,000 (consisting of $300,000 in cash plus the assumption of certain liabilities of Symplmed in the amount of approximately $320,000), Symplmed’s assets relating to a single-pill FDC of perindopril arginine and amlodipine besylate known as Prestalia® (“Prestalia”), that has been approved by the FDA for the treatment of hypertension. In addition, as part of the transactions contemplated by the Purchase Agreement: (i) Symplmed agreed to transfer to us, not later than 150 days following the closing date, the New Drug Applications for the approval of Prestalia as a new drug by the FDA; and (ii) Symplmed assigned to us all of its rights and obligations under that certain Amended and Restated License and Commercialization Agreement by and between Symplmed and Les Laboratoires Servier (“Servier”) dated January 2012, pursuant to which Symplmed has an exclusive license from Servier to manufacture, have manufactured, develop, promote, market, distribute and sell Prestalia in the U.S. (and its territories and possessions) in consideration of regulatory and sales-based milestone payments and royalty payments based on net sales. Management has determined that this acquisition was deemed an asset purchase under FASB ASC 805.

The purchase price of $620,000 was allocated based on a preliminary estimate of the fair value of the assets acquired and was included in intangible assets as of December 31, 2017. During the three months ended September 30, 2018, the allocation of the purchase price was finalized which resulted in $160,800 of the price being allocated to raw materials received from Symplmed, and the remaining $459,200 being allocated to intangible assets.

Further, we hired our current Chief Commercial Officer, who was the President and Chief Executive Officer of Symplmed, which appointment became effective in June 2017. We also agreed in such offer letter to issue 60,000 restricted shares of our common stock under our 2014 Long-Term Incentive Plan to our Chief Commercial Officer, with all of such shares vesting on the six (6) month anniversary of the date of grant. These shares were fully vested on December 31, 2017.

In furtherance of the acquisition and commercialization of Prestalia, in July 2017 we acquired from Symplmed and its wholly-owned subsidiary, Symplmed Technologies, LLC, certain of the intellectual property assets related to the patented technology platform known as DyrctAxess, also known as Total Care, that offers enhanced efficiency, control and information to empower patients, physicians and manufacturers to help achieve optimal care for $75,000 in cash.

~~The following table summarizes the estimated fair values~~Intangible assets as of ~~September~~June 30, ~~2018 of the identifiable intangible assets acquired, their useful life, and method of amortization:~~2019 are as follows:

	Estimated Fair Value		Remaining Estimated Useful Life (Years)		Annual Amortization Expense		Net Book Value June 30, 2019		Remaining Estimated Useful Life (Years)		Annual Amortization Expense
Intangible asset from the Merger	$	590,267		4.17	$	97,450
							(in thousands)
Intangible asset - Prestalia		459,200		5.25		94,177	$	292		4.50	$	65
Intangible asset - DyrctAxess		75,000		12.84		5,357		65		12.09		5
Total	$	1,124,467			$	196,984	$	357			$	70

As of September 30, 2018, the Company determined that the intangible asset from the Merger was impaired and, as a result, a loss on impairment of approximately $1,291,200 was recognized for the three and nine months ended September 30, 2018 (see Note 1).

~~The net intangible asset was $815,514, net of accumulated amortization of $308,953, as of September 30, 2018.~~ Amortization expense ~~was $288,460 and $327,642 for the nine months ended September 30, 2018 and 2017, respectively, and $41,937 and $123,038~~ for the three months ended ~~September~~June 30, 2019 and June 30, 2018 was approximately $17,000 and ~~2017,~~$123,000, respectively. Amortization expense for the six months ended June 30, 2019 and June 30, 2018 was approximately $35,000 and $247,000 respectively.

On June 28, 2019, the Company entered into term loan subscription agreements with certain accredited investors, pursuant to which the Company issued secured promissory notes (the “Notes”) in the aggregate principal amount of approximately $1.5 million. The Company paid $236,000 in debt issuance costs which was recorded as a debt discount to be amortized as interest expense over the term of the loan using the effective interest rate method.

The Notes shall accrue interest at a rate of 12.0% per annum. Interest will be payable quarterly with the first interest payment to be made on the six-month anniversary of the date of the closing and each subsequent payment every three months thereafter.

The unpaid principal balance of the Notes, plus accrued and unpaid interest thereon, will mature on the earliest to occur of: (i) June 28, 2020 (subject to extension for up to sixty (60) days based upon the mutual agreement of the Company and the holders of a majority of the unpaid principal balance of all outstanding Notes) or (ii) at any time following an Event of Default. The Notes may not be prepaid without the prior written consent of the holders of the Notes. The Notes are secured by a first lien and security interest on all the assets of the Company and certain of its wholly owned subsidiaries.

The Company recognized approximately $1,000 in interest expense related to Notes for the three and six months ended June 30, 2019.

The Company and other related entities have had a commonality of ownership and/or management control, and as a result, the reported operating results ~~and /or~~and/or financial position of the Company could significantly differ from what would have been obtained if such entities were autonomous.

The Company had a Master Services Agreement (“MSA”) with Autotelic ~~Inc .,~~Inc., a related party that is ~~partly-owned~~partly owned by one of the Company’s former Board members and executive officers, namely Vuong Trieu, Ph.D., effective November 15, 2016. ~~Autotelic Inc. currently owns less than 5% of the Company.~~ The MSA ~~states~~stated that Autotelic Inc. will provide business functions and services to the Company and ~~allows~~allowed Autotelic Inc. to charge the Company for these expenses paid on its behalf. The MSA ~~includes~~included personnel costs allocated based on amount of time incurred and other services such as consultant fees, clinical studies, conferences and other operating expenses incurred on behalf of the Company. The MSA ~~requires~~required a 90-day written termination notice in the event either party requires to terminate such services. We and Autotelic Inc. ~~have~~ agreed to terminate the MSA effective October 31, 2018. Dr. Trieu resigned as a director of our company effective October 1, 2018.

During the period commencing November 15, 2016 (the “Effective Date”) and ending on the date that the Company had completed an equity offering of either common or preferred stock in which the gross proceeds therefrom is no less than $10 million (the “Equity Financing Date”), the Company ~~shall pay~~paid Autotelic the following compensation: cash in an amount equal to the actual labor cost (paid on a monthly basis), plus 100% markup in warrants for shares of the Company’s common stock with a strike price equal to the fair market value of the Company’s common stock at the time said warrants ~~are~~were issued. The Company ~~shall~~ also ~~pay~~paid Autotelic for the services provided by third party contractors plus 20% mark up. The warrant price per share ~~will be~~was calculated based on the Black-Scholes model.

After the Equity Financing Date, the Company ~~shall pay~~paid Autotelic Inc. a cash amount equal to the actual labor cost plus 100% mark up of provided services and 20% mark up of provided services by third party contractors or material used in connection with the performance of the contracts, including but not limited to clinical trial, non-clinical trial, Contract Manufacturing Organizations, ~~(“CMO”),~~ FDA regulatory process, Contract Research Organizations ~~(“CRO”)~~ and Chemistry and Manufacturing ~~Controls (“CMC”).~~Controls.

In accordance with the MSA, Autotelic Inc. billed the Company for personnel and service expenses Autotelic Inc. incurred on behalf of the Company. For the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, Autotelic Inc. billed a total of ~~$777,928~~$0 and ~~$492,406,~~approximately $616,000, respectively, including personnel costs of ~~$370,520~~$0 and ~~$386,954,~~$284,000, respectively. An unpaid balance of ~~$99,896 and $730,629~~approximately $4,000 is included in due to related party in the accompanying balance ~~sheet as of September~~sheets for both periods ending June 30, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018.

In April 2018, and in connection with the closing of our private placement on that date, we entered into a Compromise and Settlement Agreement with Autotelic Inc. pursuant to which we agreed to issue to Autotelic Inc. an aggregate of 162.59 shares of Series E Preferred Stock to settle accounts payable of $813,000 and Warrants to purchase up to 1,345,040 shares of common stock to satisfy accrued and unpaid fees in the aggregate amount of approximately ~~$739,772,~~$740,000, and other liabilities, owed to Autotelic Inc. as of ~~March 31,~~June 30, 2018 pursuant to the MSA. The securities that were issued to Autotelic Inc., which were issued upon the closing described above, have the same terms and conditions as the securities that were issued to investors in the offering (See Note 5). The warrants have a five-year term, an initial exercise price of $0.55, and have a fair value of ~~$1,494,469~~approximately $1.5 million resulting in a loss on settlement of debt of ~~$754,697.~~approximately $750,000.

On April 27, 2018, our Board of Directors (the “Board”) increased the size of the entire Board from five (5) directors to seven (7) directors, and it appointed each of Erik Emerson and Tim Boris to fill the vacancies created thereby.

In May 2018, each of Philip C. Ranker and Philippe P. Calais, Ph.D. resigned as members of the Board, and all committees thereof, effective immediately. In connection with their resignations: (i) each of Mr. Ranker and Dr. Calais released us from all claims arising prior to the date of his resignation; (ii) we granted to Mr. Ranker fully-vested options to purchase up to 200,000 shares of our common stock at an exercise price equal to $0.98 per share of common stock; and (iii) we granted to Dr. Calais fully-vested options to purchase up to 80,000 shares of our common stock at an exercise price equal to $0.98 per share of common stock. The foregoing options are exercisable for a period of five years from the grant date.

In May 2018, the Board accepted the resignation of Joseph W. Ramelli, our Chief Executive Officer, whereby Mr. Ramelli resigned as an officer of our company, and as a director and/or officer of any and all subsidiaries of our company, effective immediately, to pursue other opportunities. In connection with his resignation, Mr. Ramelli released us from all claims arising prior to the date of his resignation and affirmed his obligations to be bound by the restrictive covenants contained in the employment agreement between Mr. Ramelli and our company dated February 2, 2017, and we: (i) agreed to make severance payments to Mr. Ramelli in the amount of $60,000 to be paid over a six (6) month period; and (ii) granted to Mr. Ramelli fully-vested options, exercisable for a period of five years from the grant date, to purchase up to 100,000 shares of our common stock at an exercise price equal to $0.98 per share of common stock. In May 2018, the Board appointed Vuong Trieu, a director of the Company and former Executive Chairman, to serve as our Interim Chief Executive Officer, to replace Mr. Ramelli, effective with Mr. Ramelli’s departure. In his capacity as Interim Chief Executive Officer, Dr. Trieu received a salary in the amount of $20,000 per month. Dr. Trieu resigned from the position of Interim Chief Executive Officer on June 18, 2018.

On June 18, 2018, the Board appointed Robert C. Moscato, Jr., to serve as our Chief Executive Officer effective immediately. In connection with the appointment of Mr. Moscato as Chief Executive Officer, Dr. Trieu resigned as Interim Chief Executive Officer, and also from his position as Executive Chairman of our company, effective immediately.

On June 18, 2018, the Board appointed Uli Hacksell, Ph.D.to serve as a member of the Board, and as Chairman of the Board, effective July 1, 2018. Dr. Hacksell agreed to devote half of his business time to Adhera.

~~On June 28, 2018, the Board appointed Mr. Moscato to serve as a member of the Board, effective July 1, 2018.~~

We entered into an employment agreement with R. Eric Teague pursuant to which Mr. Teague began serving as our Chief Financial Officer on September 24, 2018. In connection with the appointment of Mr. Teague as our Chief Financial Officer, Amit Shah, our prior Chief Financial Officer, resigned from such position, effective September 24, 2018.

In April 2018, and in connection with the closing of our private placement on that date, we entered into Compromise and Settlement Agreements with four of the then current members of our Board of Directors and one former member of our Board of Directors pursuant to which we agreed to issue to such directors an aggregate of 58.25 shares of Series E Preferred Stock and Warrants to purchase up to 436,875 shares of common stock to satisfy accrued and unpaid fees owed to such directors for service as members of the Board of Directors during the period ending on December 31, 2017 in the aggregate amount of approximately $291,250. The securities that were issued to the directors, which were issued upon the closing of our private placement described above, have the same terms and conditions as the securities that were issued to investors in the offering.

~~Omnibus Settlement Agreement with Vuong Trieu, Ph.D. and Affiliated Entities~~

On October 1, 2018, we entered into an Omnibus Settlement Agreement (the “Settlement Agreement”) with Vuong Trieu, Ph.D., our former interim Chief Executive Officer, Executive Chairman and Chairman of our Board of Directors (the “Board”), Autotelic Inc., Autotelic LLC, Autotelic BIO, Oncotelic, Inc. and LipoMedics, Inc. At the same time, and in connection therewith, we also entered into an Agreement and Release with each of Dr. Trieu and Falguni Trieu (the “Individual Releases”), and entered into an Agreement and Release with each of Autotelic Inc., Autotelic LLC, Autotelic BIO, Oncotelic, Inc. and LipoMedics, Inc. (collectively, the “Entity Releases”). We also delivered a release (the “Company Release”) to Dr. Trieu, Ms. Trieu, Autotelic Inc., Autotelic LLC, Autotelic BIO, Oncotelic, Inc. and LipoMedics, Inc. Pursuant to the Settlement Agreement, we agreed to make a payment to Dr. Trieu in the amount of $10,000 in consideration for Dr. Trieu entering into the Individual Releases between Dr. Trieu and our company. Dr. Trieu also agreed to sell, and we agreed to purchase, from Dr. Trieu for cancellation an aggregate of 500,000 shares of our common stock in consideration of an aggregate purchase price of $250,000. Additionally, each of Dr. Trieu, Autotelic Inc., Autotelic LLC, Oncotelic, Inc. and LipoMedics, Inc. agreed to certain restrictions on sale, transfer or assignment of our common stock.

Furthermore: (i) we and Autotelic Inc. agreed that the Master Services Agreement, dated as of November 15, 2016, by and between our company and Autotelic Inc., shall be terminated as of October 31, 2018; (ii) we and Autotelic BIO agreed that the Term Sheet, entered into as of January 11, 2018, by and between our company and Autotelic BIO, shall be terminated immediately; (iii) we and Oncotelic, Inc. confirmed that the License Agreement, dated July 17, 2017, by and between our company and Oncotelic Inc. was terminated effective May 15, 2018; and (iv) we and Lipomedics, Inc. agreed that the License Agreement, dated as of February 6, 2016, by and between our company and Lipomedics, Inc. would remain in effect.

Under the Settlement Agreement, we and Autotelic LLC agreed with respect to the License Agreement, dated as of November 15, 2016, by and between our company and Autotelic LLC, that such License Agreement shall continue, provided that Autotelic LLC shall be licensee and have a license to, without representation or warranty, nasal apomorphine and nasal scopolamine and related intellectual property in addition to nasal insulin, and Autotelic LLC shall not be a licensee or have a license to Familial Adenomatous Polyposis or CEQ508 and related intellectual property.

Pursuant to the Individual Releases, each of Dr. Trieu and Ms. Trieu, our former Director of Business Development and the spouse of Dr. Trieu, agreed to release us from all claims arising prior to the date of the Release Agreements. Pursuant to the Entity Releases, each of Autotelic Inc., Autotelic LLC, Autotelic BIO, Oncotelic, Inc. and LipoMedics, Inc. agreed to release us from all claims arising prior to the date of the applicable Entity Release. Pursuant to the Company Release, we agreed to release each of Dr. Trieu, Ms. Trieu, Autotelic Inc., Autotelic LLC, Autotelic BIO, Oncotelic, Inc. and LipoMedics, Inc. from all claims arising prior to the date of the Company Release.

~~During~~Until February of 2019, the ~~nine months ended September 30, 2018,~~Company had engaged the ~~company paid a total~~services of ~~$473,397 for services provided by~~ BioMauris, LLC, of which Erik Emerson, our former Chief Commercial Officer and a current director of Adhera, is Executive Chairman. ~~A total of $45,546 was due BioMauris, LLC as of September 30, 2018.~~

~~Following is a breakdown of notes payable as of September 30, 2018 and December 31, 2017:~~

In December 2016, we entered into an Agreement and Promissory Note with a law firm for past services performed totaling $121,523. The note called for monthly payments of $6,000 per month, beginning with an initial payment on March 31, 2017. The note was unsecured and non-interest bearing. The note was paid in full in May 2018. The balance due on the note was $0 and $97,523 as of September 30, 2018 and December 31, 2017, respectively.

In July 2017, we entered into an amendment agreement (the “Amendment Agreement”) with the holders (such holders, the “June 2016 Noteholders”) of the promissory notes that we issued in June 2016 to the June 2016 Noteholders (the “2016 Notes”) with respect to the 2016 Notes and the warrants to purchase shares of our common stock that are held by the June 2016 Noteholders and that were originally issued pursuant to a certain Note and Warrant Purchase Agreement dated as of February 10, 2012 by and among Adhera, MDRNA, Cequent and the purchasers identified on the signature pages thereto (as amended from time to time), to, among other things, extend the maturity date of the 2016 Notes to December 31, 2017, to provide for the issuance of consideration securities at a cost of $375,000 (“Consideration Securities”) and to extend the price protection applicable to certain of the warrants held by the June 2016 Noteholders with respect to dilutive offerings afforded thereunder to February 10, 2020. Refer to our Form 10-Q forDuring the six months ended June 30, ~~2017~~2019 and 2018, the Company recorded approximately $65,000 and $309,000, respectively, for ~~a more detailed discussion and additional terms for~~related party expenses incurred under the ~~2016 Notes.~~

~~In April~~agreement. As of December 31, 2018, ~~and in connection with~~ the closing of our private placement on that date, we issued to the June 2016 Noteholders an aggregate of 71.46 shares of Series E Preferred Stock and Warrants to purchase up to 535,950 shares of common stockCompany recorded approximately, $24,000 as a result of the conversion of the 2016 Notes. As a result of the conversion of the 2016 Notes and the issuance of the securities to the June 2016 Noteholders, the entire unpaid principal balance of the 2016 Notes, and the accrued and unpaid interest thereon, has been satisfied in full, and such notes are no longer outstanding.

In addition, in April 2018, and in connection with the closing of our private placement on that date, we issued to the June 2016 Noteholders an aggregate of 75 shares of Series E Preferred Stock and Warrants to purchase up to 562,500 shares of common stock in full and complete satisfaction of our obligations to issue $375,000 worth of Consideration Securities to the June 2016 Noteholders pursuant to the Amendment Agreement.

As of September 30, 2018 and December 31, 2017, the accrued interest expense on the 2016 Notes amounted to $0 and $46,700, respectively, with a total balance of principal and interest of $0 and $346,700, respectively.

In June 2017, we issued convertible promissory notes (the “2017 Notes”) in the aggregate principal amount of $400,000 to 10 investors pursuant to a Note Purchase Agreement (the “Note Purchase Agreement”) that we entered into with such investors (the “June 2017 Noteholders”). The 2017 Notes bear interest at a rate of five percent (5%) per annum and are due and payable at any time on or after the earlier of (i) June 1, 2018 and (ii) the occurrence of an event of default (as defined in the Note Purchase Agreement). Our then Executive Chairman and our Chief Science Officer were each investors in the 2017 Notes.

As of September 30, 2018 and December 31, 2017, the accrued interest expense on the 2017 Notes amounted to $0 and $11,365, with a total balance of principal and interest of $0 and $411,365, respectively, and is included in notes payable - related ~~parties~~party liability on the accompanying balance ~~sheet.~~sheet for amounts due BioMauris, LLC. No related party liability was recorded as of June 30, 2019.

~~In April 2018, and~~Beginning in ~~connection with~~ the ~~closing~~second quarter of our private placement on that date, we issued to the June 2017 Noteholders an aggregate of 74.17 shares of Series E Preferred Stock and Warrants to purchase up to 505,705 shares of common stock (and also paid to such holders an aggregate of $56 thousand in cash) as full and complete satisfaction2019 when components of the ~~unpaid principal balance (and accrued but unpaid interest thereon) owed by us to the June 2017 Noteholders under the 2017 Notes. As~~financial transaction took place and fully effective in July 2019, Erik Emerson, a result of the conversion of the 2017 Notes and the issuance of the securities to the June 2016 Noteholders (and payment of cash), the entire unpaid principal balance of the 2017 Notes, and the accrued and unpaid interest thereon, has been satisfied in full, and such notes are no longer outstanding. The securities that were issued to the June 2017 Noteholders have the same terms and conditions as the securities that were issued to investors in the offering.

In July 2016, IThena issued convertible promissory notes with an aggregate principal balance of $50,000 to certain related-party investors. Borrowings under each of these convertible notes bore interest at 3% per annum and these notes mature on September 30, 2018. Upon the completion of certain funding events, IThena had the right to convert the outstanding principal amount of these notes into shares of IThena’s common stock. The notes were assumed by Autotelic Inc. on November 15, 2016 as part of its acquisition of the technology asset (IT-101).

~~In November 2017, the Company issued a convertible promissory note with a related party (a trust affiliated with Isaac Blech, a~~ member of our Board of ~~Directors) for $500,000 (the “Blech Note”), with annual~~Directors and our former Chief Commercial Officer, became the owner of an equity interest ~~at 8%, maturing on March 31,~~of approximately 22% in Pharma Hub Network, our third-party network manager. During the six months ended June 30, 2019 and 2018, ~~and convertible at the price equal to any financing transaction involving the sale by~~ the Company paid approximately $17,000 and $0, respectively, to Pharma Hub Network. An unpaid balance of ~~its equity securities yielding aggregate gross proceeds to the Company of not less than $5 million. The note~~$27,000 and $0 was included ~~warrants to purchase 66,667 shares of the Company’s common stock, with a 5-year term~~in accounts payable and ~~an exercise price of $0.75.~~

In April 2018, and in connection with the closing of our private placement on that date, we issued to the trust an aggregate of 103.18 shares of Series E Preferred Stock and Warrants to purchase up to 777,750 shares of common stock as a result of the conversion of the Blech Noteaccrued expenses in the ~~original principal amount of $500,000. As a result of the conversion of the Blech Note and the issuance of the securities to the holder thereof, the entire unpaid principal~~accompanying balance of the Blech Note, and the accrued and unpaid interest thereon, has been satisfied in full, and the Blech Note is no longer outstanding. The securities that were issued to the holder of the Blech Note have the same terms and conditions as the securities that were issued to investors in the offering.

The Blech Note included a debt discount of $162,210 consisting of loan costs of $50,000 and the fair value of the warrants of $112,210. Total amortization of this debt discount was $113,171 for the nine months ended September 30, 2018, with a remaining unamortized value of $0. Total principal and interest was $0 and $504,274sheets as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017, respectively, and is included in notes payable - related parties on the accompanying balance sheet.~~

In connection with the Merger, Adhera entered into a Line Letter dated November 15, 2016 with Dr. Trieu for an unsecured line of credit in an amount not to exceed $540,000, to be used for current operating expenses. Dr. Trieu has advanced the full $540,000 under the Line Letter as of December 31, 2017. The line of credit was convertible at any time into shares of the Company’s common stock at a price of $1.77 per share.

~~In April~~ 2018, and in connection with the closing of our private placement on that date, we issued to Dr. Trieu 114.63 shares of Series E Preferred Stock and Warrants to purchase up to 859,725 shares of common stock as full and complete satisfaction of the unpaid principal balance (and accrued but unpaid interest thereon) owed by us to Dr. Trieu under the Line of Credit. As such, the Line of Credit was terminated in April 2018. The securities that were issued to Dr. Trieu have the same terms and conditions as the securities that were issued to investors in the offering.respectively.

Accrued interest on the Line Letter was $0 and $25,836 as of September 30, 2018 and December 31, 2017, respectively, and is included in notes payable - related parties on the accompanying consolidated balance sheets.

In April 2017, the Company entered into a Line Letter with Autotelic Inc. for an unsecured line of credit in an amount not to exceed $500,000, to be used for current operating expenses. Autotelic Inc. is a stockholder of IThenaPharma that became the holder of 525,535 shares of Adhera common stock as a result of the Merger, and an entity of which Dr. Trieu serves as Chairman of the Board. Autotelic Inc. was to consider requests for advances under the Line Letter until September 1, 2017. Autotelic Inc. had the right at any time for any reason in its sole and absolute discretion to terminate the line of credit available under the Line Letter or to reduce the maximum amount available thereunder without notice. Advances made under the Line Letter bear interest at the rate of five percent (5%) per annum, are evidenced by the Demand Promissory Note issued to Autotelic Inc., and are due and payable upon demand by Autotelic, Inc. Autotelic Inc. advanced funds after September 1, 2017 but is no longer considering additional requests for advances as of December 31, 2017.

In April 2018, and in connection with the closing of our private placement on that date, we issued to Autotelic Inc. 19 shares of Series E Preferred Stock and Warrants to purchase up to 142,500 shares of common stock as full and complete satisfaction of the unpaid principal balance (and accrued but unpaid interest thereon) owed by us to Autotelic Inc. under the Line of Credit, of which $90,816 had been drawn down as of the date of the closing described above. As such, in April 2018, the line of credit with Autotelic Inc was terminated. The securities that were issued to Autotelic Inc. have the same terms and conditions as the securities that were issued to investors in the offering.

The balance under the line was $0 and $93,662, including accrued interest of $0 and $2,847 as of September 30, 2018 and December 31, 2017, respectively, and is included in notes payable - related parties on the accompanying consolidated balance sheet.

Adhera has authorized 100,000 shares of preferred stock for issuance and has designated 1,000 shares as Series B Preferred Stock (“Series B Preferred”) and 90,000 shares as Series A Junior Participating Preferred Stock (“Series A Preferred”). No shares of Series B Preferred or Series A Preferred are outstanding. In March 2014, Adhera designated 1,200 shares as Series C Convertible Preferred Stock (“Series C Preferred”). In August 2015, Adhera designated 220 shares as Series D Convertible Preferred Stock (“Series D Preferred”). In April 2018, Adhera designated 3,500 shares of Series E Convertible Preferred Stock. In July 2018, Adhera designated 2,200 shares of Series F Convertible Preferred Stock.

Each share of Series C Preferred has a stated value of $5,000 per share, has a $5,100 liquidation preference per share, has voting rights of 666.67 votes per share, and is convertible into shares of common stock at a conversion price of $7.50 per share. In September 2017, an investor converted 270 shares of Series C Preferred stock into 180,000 shares of our common stock.

~~In June 2018, an investor converted 650 shares of Series C Preferred stock into 433,334 shares of our common stock.~~

~~As of September 30, 2018 and December 31, 2017, 100 and 750 shares, respectively, of Series C Preferred remained outstanding.~~

In August 2015, Adhera entered into a Securities Purchase Agreement with certain investors pursuant to which Adhera sold 220 shares of Series D Preferred and warrants to purchase up to 344,000 shares of Adhera’s common stock at an initial exercise price of $4.00 per share before August 2021, for an aggregate purchase price of $1.1 million. Each share of Series D Preferred has a stated value of $5,000 per share, has a liquidation preference of $300 per share, has voting rights of 1,250 votes per share and is convertible into shares of common stock at a conversion price of $4.00 per share. The Series D Preferred is initially convertible into an aggregate of 275,000 shares of Adhera’s common stock, subject to certain limitations and adjustments, has a 5% stated dividend rate, is not redeemable and has voting rights on an as-converted basis.

~~In May 2018, an investor converted 20 shares of Series D Preferred into 25,000 shares of common stock.~~

~~As of September 30, 2018 and December 31, 2017, 40 and 60 shares, respectively, of Series D Preferred remained outstanding.~~

In April and May 2018, wethe Company entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant to which we sold 2,812 shares of our Series E ~~convertible preferred stock (the “Preferred Stock”),~~Preferred, at a purchase price of $5,000 per share of ~~Preferred Stock.~~Series E Preferred. Each share of Series E Preferred ~~Stock~~ is initially convertible into shares of our common stock at a conversion price of $0.50 per share of common stock. In addition, each investor received a 5-year warrant ~~(the “Warrants”, and collectively with the Preferred Stock, the “Securities”)~~ to purchase 0.75 shares of common stock for each share of common stock issuable upon the conversion of the Series E Preferred ~~Stock~~ purchased by such investor at an initial exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. The Series E Preferred ~~Stock~~ accrues 8% dividends per annum and are payable in cash or stock at the Company’s discretion. The Series E Preferred ~~Stock~~ has voting rights, dividend rights, liquidation preferences, conversion rights and anti-dilution rights as described in the Certificate of Designation of Preferences, Rights and Limitations of the Preferred Stock, which we filed with the Secretary of State of Delaware in April 2018. The Warrants have full-ratchet anti-dilution protection, are exercisable for a period of five years and contain customary exercise limitations.

~~We received net proceeds of approximately $12.2 million from~~In April 2019, the sale of the Preferred Stock, after deducting placement agent fees and estimated expenses payable by us of approximately $2.0 million associated with such closing. We intend to use the proceeds of the offering for funding our commercial operations to the sale and promotion of our Prestalia product, working capital needs, capital expenditures, the repayment of certain liabilities and other general corporate purposes. In connection with the private placement described above, we alsoCompany issued ~~to the placement agent for such private placement a Warrant to purchase 2,958,460~~107,846 unregistered shares of our common ~~stock.~~stock to a holder of our Series E Convertible Preferred Stock in connection with the conversion of $53,923 of “Stated Value” of our Series E Convertible Preferred Stock.

WeAs of June 30, 2019, the Company had recorded accrued dividends of approximately $1.7 million on ~~the~~ Series E Preferred ~~Stock of $351,897 for the three months ended September 30, 2018 and $622,530 for the nine months ended September 30, 2018. No similar dividends were accrued for the same periods of 2017.~~ Stock.

In July 2018, wethe Company entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant to which we sold 308 shares of our Series F ~~convertible preferred stock (the “Preferred Stock”),~~Preferred, at a purchase price of $5,000 per share of ~~Preferred Stock.~~Series F Preferred. Each share of Series F Preferred ~~Stock~~ is initially convertible into shares of our common stock at a conversion price of $0.50 per share of common stock. In addition, each investor received a 5-year warrant (the “Warrants”, and collectively with the Preferred Stock, the “Securities”) to purchase 0.75 shares of common stock for each share of common stock issuable upon the conversion of the Series F Preferred ~~Stock~~ purchased by such investor at an initial exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. The Series F Preferred ~~Stock~~ accrues 8% dividends per annum and are payable in cash or stock at the Company’s discretion. The Series F Preferred ~~Stock~~ has voting rights, dividend rights, liquidation preferences, conversion rights and anti-dilution rights as described in the Certificate of Designation of Preferences, Rights and Limitations of the Preferred Stock, which we filed with the Secretary of State of Delaware in July 2018. The Warrants have full-ratchet anti-dilution protection, are exercisable for a period of five years and contain customary exercise limitations.

WeThe Company received proceeds of approximately ~~$1.3~~$1.4 million from the sale of the Securities, after deducting placement agent fees and estimated expenses payable by us of approximately $180,000 associated with such closing. We ~~intend to use~~used the proceeds of the offering for funding our commercial operations to the sale and promotion of our Prestalia product, working capital needs, capital expenditures, the repayment of certain liabilities and other general corporate purposes. In connection with the private placement described above, we also issued to the placement agent for such private placement a Warrant to purchase 308,000 shares of our common stock. The Warrant has a five-year term and an initial exercise price of $0.55 per share.

~~We accrued dividends on~~On November 9, 2018, the Company entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant to which we sold 73 shares of our Series F Preferred Stock, at a purchase price of ~~$27,327 for the 3 months and nine months ended September 30, 2018. No similar dividends were accrued for the same periods~~$5,000 per share of ~~2017.~~

~~In July 2018, we granted our Chief Executive Officer, Robert Moscato, Jr., 1,500,000 stock options; Uli Hacksell, Ph. D., the Chairman~~Preferred Stock. Each share of ~~our Board, 1,000,000 stock options, Erik Emerson, our Chief Commercial Officer, 1,125,000 stock options, and Jay Schwartz, our VP of Operations, 250,000 stock options.~~

~~In September 2018, we granted our Chief Financial Officer, Eric Teague, 450,000 stock options.~~

~~Our common stock currently trades on the OTCQB tier of the OTC Markets under the symbol “ATRX”. We currently have 10,761,684~~Series F Preferred is initially convertible into shares of our common stock ~~outstanding.~~

at a conversion price of $0.50 per share of common stock. In addition, each investor received a 5-year warrant to ~~the~~purchase 0.75 shares of common stock for each share of common stock issuable upon the conversion of the Series F Preferred purchased by such investor at an initial exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. We received total net proceeds of approximately $0.31 million from the issuance of the securities described above, after deducting placement agent fees and ~~preferred stock issuances~~estimated expenses payable by us associated with such closing. In connection with the private placement described above, we ~~issued the following shares of the Company’s common stock during the nine months ended September 30, 2018.~~

~~As discussed in Note 8, in May 2018, we~~also issued to ~~Novosom 51,988~~the placement agent for such private placement a Warrant to purchase 73,000 shares of our common ~~stock as additional consideration pursuant to the Asset Purchase Agreement, dated as~~stock. The Warrant has a five-year term and an initial exercise price of July 27, 2010, between our company and Novosom. Such shares were due to Novosom as a result of the receipt by our company of a license fee under the License Agreement that we entered into with Lipomedics Inc. in February 2017.$0.55 per share.

As ~~discussed in Note 9, in April 2018, we entered into a Stipulation~~ of ~~Settlement with Vaya Pharma and issued a total~~June 30, 2019, the Company had recorded accrued dividends of ~~210,084 shares of our common stock with a fair value of $250,000.~~

~~In May 2018, an investor converted 20 shares of~~approximately $138,000 on Series DF Preferred ~~into 25,000 shares of common stock.~~

~~In June 2018, an investor converted 650 shares of Series C Preferred stock into 433,334 shares of our common stock.~~

As of ~~September~~June 30, ~~2018,~~2019, there were ~~35,646,829~~36,267,329 warrants outstanding, with a weighted average exercise price of $0.79 per share, and annual expirations as follows:

The above includes 29,135,560 warrants issued in April and May 2018 in connection with our Series E Preferred Stock offering with a fair value of $31,106,896 and 2,618,000 warrants issued with our Series F Preferred Stock offering with a fair value of $1,313,684 which are reflected in additional paid-in capital and additional paid in capital-warrants on the accompanying condensed consolidated statement of stockholders’ equity. The warrants have a five-year term and an exercise price of $0.55. There was no expense related to these warrants.

Additionally, the above includes 1,345,040 warrants issued to Autotelic, Inc. in April 2018 to satisfy accrued and unpaid fees in the aggregate amount of approximately $739,772, and other liabilities, owed to Autotelic Inc. as of March 31, 2018. The warrants have a five-year term, an exercise price of $0.55, and have a fair value of $1,494,469 resulting in a loss on settlement of liability of $754,697.

The above includes price adjustable warrants totaling ~~1,895,013 which are described more fully in our 2017 Annual Report on Form 10-K.~~34,737,030 shares.

~~A total of 339,702~~No warrants expired during the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019.

On May 28, 2019, the Company filed a Tender Offer Statement on Schedule TO. The Schedule TO related to the offer (the “Offer”) by the Company to all holders of the Company’s outstanding warrants that were issued to investors in connection with the Company’s private placement of its Series E Convertible Preferred Stock and Series F Convertible Preferred Stock during 2018, which warrants are exercisable for shares of the Company’s common stock at an exercise price of $0.50 per share (subject to adjustment) with respect to the warrants that were issued in connection with the Company’s private placement of its Series E Convertible Preferred Stock and $0.55 per share with respect to the warrants that were issued in connection with the Company’s private placement of its Series F Convertible Preferred Stock, to receive two (2) shares of common stock in exchange for every warrant tendered by the holders thereof.

On June 6, 2019, the Company amended the Schedule TO to change the conversion terms on the issuance of warrant.

As of June 30, 2019, no warrants have been accepted for exchange or been exchanged pursuant to the Offer. See Note 11 – Subsequent Events.

~~Stock~~The following table summarizes stock option activity ~~was as follows:~~for the six months ended June 30, 2019:

The following table summarizes additional information on ~~Adhera’s~~ stock options outstanding at ~~September~~June 30, ~~2018:~~2019.

~~In January 2018,~~During the six months ended June 30, 2019, the Company granted ~~a total~~an aggregate of ~~19,000~~1,635,000 stock options to ~~directors and officers for services. The options have an exercise price of $1.56 and a five-year term.~~employees.

~~In May 2018, the Company granted a total of 380,000~~Total expense related to stock options ~~to directors~~was approximately $241,000 and ~~officers~~$374,000 for ~~services. The options have an exercise price of $0.98~~the three months ended June 30, 2019 and ~~a five-year term.~~

~~InJuly~~ 2018, ~~we granted our Chief Executive Officer, 1,500,000 stock options; Uli Hacksell, Ph.D.,~~respectively and approximately $636,000 and $493,000 for the ~~Chairman of our Board, 1,000,000 stock options;~~six months ended June 30, 2019 and ~~Erik Emerson, our Chief Commercial Officer, 1,125,000 stock options at an exercise prices of $0.66 per share with a 10-year term.~~

~~In July~~ 2018, ~~we granted our SVP of Commercial Operations 250,000 stock options at an exercise price of $0.575 per share with a 10-year term.~~

~~In September 2018 we granted our Chief Financial Officer 450,000 stock options at an exercise price of $0.55 per share with a 10-year term.~~respectively.

As of ~~September~~June 30, ~~2018, we~~2019, the Company had ~~$523,943~~approximately $474,000 of total unrecognized compensation expense related to unvested stock options. Total expense related to stock options was $1,307,046 and $218,295 for the nine months ended September 30, 2018 and 2017, respectively, and $814,008 and $5,109 for the three months ended September 30, 2018 and 2017, respectively.

As of ~~September~~June 30, ~~2018,~~2019, the intrinsic value of options outstanding ~~or exercisable~~ was ~~$0 as there were no options outstanding with an exercise price less than $0.54, the per share closing market price of our common stock at that date.~~zero.

In July 2010, Adhera entered into an asset purchase agreement with Novosom Verwaltungs GmbH (“Novosom”), pursuant to which Adhera acquired intellectual property for Novosom’s SMARTICLES-based liposomal delivery system. In May 2018, we issued to Novosom 51,988 shares of our common stock, with a fair value of $75,000, as additional consideration pursuant to the Asset Purchase Agreement. Such shares were due to Novosom as a result of the receipt by our company of a license fee under the License Agreement that we entered into with Lipomedics Inc. in February 2017.

In February 2017, we entered into a License Agreement (the “License Agreement”) with LipoMedics, pursuant to which, among other things, we provided to LipoMedics a license to our SMARTICLES platform for further development of Lipomedics’s proprietary phospholipid nanoparticles that can deliver protein, small molecule drugs, and peptides. These are not currently being developed at Adhera and Adhera has no IP around these products. On the same date, we also entered into a Stock Purchase Agreement with LipoMedics pursuant to which we issued to LipoMedics an aggregate of 86,207 shares of our common stock for a total purchase price of $250,000.

Under the terms of the License Agreement, we could receive success-based milestones based on commercial sales of licensed products. In addition, if LipoMedics determines to pursue further development and commercialization of products under the License Agreement, LipoMedics agreed, in connection therewith, to purchase shares of our common stock for an aggregate purchase price of $500,000, with the purchase price for each share of common stock being the greater of $2.90 or the volume weighted average price of our common stock for the thirty (30) trading days immediately preceding the date on which LipoMedics notifies us that it intends to pursue further development or commercialization of a licensed product.

If LipoMedics breaches the License Agreement, we shall have the right to terminate the License Agreement effective sixty (60) days following delivery of written notice to LipoMedics specifying the breach, if LipoMedics fails to cure such material breach within such sixty (60) day period.

~~Vuong Trieu, Ph.D. is the Chairman of the Board and Chief Operating Officer of LipoMedics.~~

In consideration Lipomedics agreed to the following fee schedule: 1) Evaluations License Fee. Simultaneous with the execution and delivery of the License Agreement, Lipomedics shall enter into a Stock Purchase Agreement in form and substance reasonably acceptable to Adhera and Lipomedics, pursuant to which Adhera will sell to Lipomedics shares of the common stock of Adhera for an aggregate purchase price of $0.25 million, with the purchase price for each share of Adhera common stock being $2.90. 2) Commercial License Fee. Unless the License Agreement is earlier terminated, within thirty (30) days following Lipomedics’s delivery of an Evaluation Notice advising that it intends to pursue, or cause to be pursued, further development and commercialization of Licensed Products. 3) For up to and including three Licensed Products, Lipomedics shall pay to Adhera a milestone (collectively the “Sales Milestones”) of $10 million upon reaching Commercial Sales in the Territory in any given twelve month period equal to or greater than $500 million for a given Licensed Product and of $20 million upon reaching Commercial Sales in any given twelve month period equal to or greater than $1 million for such Licensed Product, such payments to be made within thirty (30) days following the month in which such Commercial Sale targets are met.

In July 2017, we entered into a License Agreement (the “License Agreement”) with Oncotelic, Inc. (“Oncotelic”) pursuant to which, among other things, we provided to Oncotelic a license to our SMARTICLES platform for the delivery of antisense DNA therapeutics, as well as a license to our conformationally restricted nucleotide (“CRN”) technology with respect to TGF-Beta. Under the terms of the License Agreement, Oncotelic also agreed to purchase 49,019 shares of our common stock for an aggregate purchase price of $0.25 million ($5.10 per share), with such purchase and sale to be made pursuant to a Stock Purchase Agreement to be entered into between us and Oncotelic within thirty (30) days following the date of the License Agreement. Oncotelic has not completed the purchase of the stock and we have not been able to reach to a definitive agreement, as such we have terminated the agreement.

On January 11, 2018, we entered into a binding agreement with Autotelic BIO (“ATB”) pursuant to which, among other things, and subject to the satisfaction of certain conditions on or prior to January 15, 2019, we shall grant to ATB a perpetual exclusive right of development and marketing of our IT-103 product candidate, which is a fixed dose combination of celecoxib and olmesartan medoxomil, at the currently approved dose/approved indications only for celecoxib (100 mg, 200mg and 400mg) for combined hypertension and arthritis only, with such right extending throughout the entire world (excluding the United States and Canada, and the territories of such countries). The grant of the license would be memorialized in a definitive license agreement to be entered into between the parties. On October 1, 2018, we and ATB agreed to terminate this arrangement.

Autotelic LLC, an entity that owns approximately 22% of the issued and outstanding shares of our common stock and of which Dr. Trieu serves as Chief Executive Officer, owns approximately 19% of the issued and outstanding shares of the common stock of ATB.

On March 16, 2018, ~~Adhera~~the Company entered into ~~a Licensing Agreement, whereby Adhera granted~~an exclusive sublicensing agreement for certain intellectual property rights to ~~the company’s~~its DiLA²delivery ~~system in exchange for~~system. The agreement included an upfront payment of $200,000 and ~~further potential~~ future additional consideration ~~dependent~~for sales and development milestones. The upfront fee was contingent upon ~~event and sales-based milestones. Under~~ the ~~terms of~~Company obtaining a third-party consent to the agreement ~~Adhera~~within ninety days of execution. As of June 30, 2019 and December 31, 2018, the Company had not obtained consent for the sublicense and has ~~agreed to assign ownership of~~classified the ~~intellectual property associated with the DiLA~~² delivery system to the purchaser. The Company has yet to complete certain performance obligations under the agreement and accordingly has deferred the recognition of revenue from the sale of the asset until such obligations are fulfilled.upfront payment as an accrued liability on its balance sheet.

In July 2017, Adhera entered into an Asset Purchase Agreement with Symplmed Pharmaceuticals LLC and its wholly-owned subsidiary Symplmed Technologies, LLC pursuant to which the Company purchased from the Sellers, for an aggregate purchase price of $75,000 in cash, certain specified assets of the Sellers relating to the Sellers’ patented technology platform known as DyrctAxess that offers enhanced efficiency, control and information to empower patients, physicians and manufacturers to help achieve optimal care (see Note 3).

On August 17, 2017, we entered into an amendment (the “Amendment”) of that certain Pharmaceutical Development Agreement dated as of March 30, 2017 by and between Windlas Healthcare Private Limited (“Windlas”) and our company (the “Development Agreement”), relating to the development by Windlas of certain pharmaceutical products to be used for conducting clinical trials or for regulatory submissions, as more fully described therein. Pursuant to the Amendment, we and Windlas agreed to amend the Development Agreement to reflect our agreement to issue to Windlas, and Windlas’ agreement to accept from us, in lieu of cash payments with respect to forty percent (40%) of the total amount reflected on invoices sent from time to time by Windlas to us, shares of our common stock having an aggregate value equal to forty percent (40%) of such invoiced amount (with the remaining portion of the invoiced amount being paid in cash). The maximum value of common stock that may be issued to Windlas pursuant to the Development Agreement (as modified by the Amendment) is $2 million. The parties also agreed that the foregoing payment arrangement would apply to any Contract Manufacturing and Supply Agreement (or similar agreement) relating to the manufacturing of commercial batches of the products covered by the Development Agreement that may be entered into between the parties.

Because of the nature of ~~our activities, we are~~the Company’s it is subject to claims and/or threatened legal actions, which arise out of the normal course of business. Other than the disclosure below, as of the date of this filing, ~~we are~~the Company is not aware of any pending lawsuits against ~~us, our~~them, its officers or ~~our~~ directors.

~~We had been named on~~The Company’s Prestalia product was involved in a ~~complaint filed in New York State as a defendant~~paragraph IV challenge regarding patents issued to perindopril arginine. This challenge, which was pending in the ~~matter entitled~~United States District Court for the District of Delaware (No. 1:17-cv-00276), was captioned~~Vaya Pharma,~~Apotex Inc. and Apotex Corp. v. Symplmed ~~Technologies,~~Pharmaceuticals, LLC and Les Laboratoires Servier. The challengers (Apotex Inc., and Apotex Corp. (“Apotex”)) filed an Abbreviated New Drug Application seeking FDA approval to market a generic version of Prestalia and included a Paragraph (IV) certification. In the litigation, Apotex sought a declaratory judgment that no valid claims of the two patents Symplmed listed in the FDA Orange Book as having claims covering Prestalia, U.S. Patent No. 6,696,481 and 7,846,961, will be infringed by the Apotex proposed generic version of Prestalia and that the claims of those patents are invalid. The challenge was designed to provide Apotex with an opportunity to enter the market with a generic version of Prestalia, ahead of the expiration of the patents with claims covering that product.

Apotex entered into negotiations with Symplmed Pharmaceuticals, ~~Inc., Erik Emerson~~LLC (which entity sold its assets relating to Prestalia to us in June 2017, including its License and ~~Marina Biotech, Inc.~~ ~~While this complaint had~~Commercialization Agreement with Les Laboratories Servier) and Les Laboratories Servier (which entity owns or controls intellectual property rights relating to pharmaceutical products containing as an active pharmaceutical ingredient perindopril in combination with other active pharmaceutical ingredients, which rights have been ~~filed~~licensed to Symplmed Pharmaceuticals) to resolve the challenge in the ~~Supreme Court~~second quarter of 2017. Such parties, along with us, have reached an agreement on terms that result in a delay to the challengers’ ability to enter the market with a generic version of Prestalia, while still providing the challenger with the right to enter the market prior to the expiration of the ~~State~~patent covering such product. Specifically, the parties have entered into a Confidential Settlement Agreement in connection with the settlement of ~~New York, we had not been legally served. The complaint alleged, in relevant part, that: (i)~~ the ~~sale by Symplmed Pharmaceuticals, Inc. of its assets related to its Prestalia product, and the sale by Symplmed Technologies, Inc. of its assets related to its DyrctAxess platform, should be set aside~~matter, pursuant to New York law as they were consummated without fair consideration to the sellers (the “Symplmed Defendants”), and thereby had the effect of fraudulently depriving the creditors of the Symplmed Defendants, including Vaya Pharma, Inc., of funds that could have been used to pay their debts; and (ii) we were liable, as successor, for any and all claims by Vaya Pharma, Inc. against the Symplmed Defendants, though pursuant to the agreement we are only contractually responsible for liabilities that accrue afterwhich, among other things, the parties entered into ~~the agreement for Prestalia~~a Confidential License Agreement, whereby Symplmed, Servier and ~~any liabilities that existed prior~~our company agreed to grant to Apotex a non-transferable, non-sublicensable, perpetual, irrevocable, royalty-free, non-exclusive license to the ~~agreement are contractually held by Symplmed. In April 2018, we~~two patents listed in the FDA Orange Book as having claims covering Prestalia to make, use and market a generic version of Prestalia, or import a generic version of Prestalia from India into the United States, on or after January 1, 2021.

The Company entered into a ~~Stipulation~~Standard Form Office Lease with ROC III Fairlead Imperial Center, LLC, as landlord, pursuant to which we lease our corporate headquarters located at 4721 Emperor Boulevard, Suite 350, Durham, North Carolina 27703 for a term of ~~Settlement requiring us~~37 months starting on October 1, 2018. Our base monthly rent for such space is currently $6,458, which amount will increase to ~~issue~~$7,057 for the final month of the term. Other than the lease for our corporate headquarters, we do not own or lease any real property or facilities that are material to ~~Vaya Pharma 210,084 shares~~our current business operations. As we expand our business operations, we may seek to lease additional facilities of our ~~common stock with~~own in order to support our operational and administrative needs under our current operating plan.

The Company adopted ASU No. 2016-02 on January 1, 2019, using a ~~fair value~~modified retrospective approach at the adoption date through a cumulative-effect adjustment to retained earnings. The adoption did not have a material impact on its condensed consolidated statement of ~~$250,000, which shares were issued in April~~operations. However, the new standard required the Company to establish approximately $0.2 million of ~~2018. We accrued $0~~liabilities and ~~$250,000,~~corresponding right-of-use assets of approximately $0.2 million on its condensed consolidated balance sheet for operating leases on rented office properties that existed as of ~~September~~the January 1, 2019, adoption date. The total right-of-use asset was approximately $178,000 as of June 30, ~~2018~~2019 and ~~December 31, 2017, respectively, and such amount was included~~is reflected in ~~accrued expenses~~the operating lease right of use asset on the accompanying condensed consolidated balance ~~sheets.~~ sheet. The total related liability was approximately $185,000 as of June 30, 2019, of which approximately $78,000 is included in current portion of operating lease liability and approximately $107,000 is reflected in operating lease liability, net of current portion on the accompanying condensed consolidated balance sheet.

Except for the ~~event(s)~~events discussed below, there were no subsequent events that required recognition or disclosure. The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission.

On ~~November 9, 2018, we entered into Subscription Agreements~~July 2, 2019, the Company announced the termination of the exchange offer contemplated by that certain Tender Offer Statement on Schedule TO that was originally filed on May 28, 2019. As a result of the termination of the Offer, no Warrants were accepted for exchange or exchanged pursuant to the Offer.

On July 3, 2019, July 17, 2019, and August 5, 2019, the Company completed a second, third, and fourth closing of term loan subscription agreements with certain accredited investors, ~~and conducted a closing~~ pursuant to which ~~we sold 73 shares~~the Company issued secured promissory notes in the aggregate principal amount of ~~our Series F convertible preferred stock, par value~~approximately $4.2 million. The terms of $0.01 per share (the “Preferred Stock”), at a purchase price of $5,000 per share of Preferred Stock. Each share of Preferred stock is initially convertible into shares of our common stock at a conversion price of $0.50 per share of common Stock. In addition, each investor received a 5-year warrant to purchase 0.75 shares of common stock for each share of common stock issuable upon the conversionsuch additional closings of the Preferred Stock purchased by such investor at an exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. We received total net proceeds of approximately $0.31 million from the issuance of the securitiesloan are as described ~~above, after deducting placement agent fees and estimated expenses payable by us associated with such closing.~~

~~As discussed~~ in Note 4 ~~on October 1, 2018, we entered into a Settlement Agreement with Vuong Trieu, Ph.D., our former interim Chief Executive Officer, Executive Chairman and Chairman~~ of ~~our Board of Directors, which incuded the Company repurchasing 500,000 shares of our common stock from Dr. Trieu.~~this filing.

~~In October 2018, an investor converted 2 shares of Series E convertible preferred stock into 20,000 shares of our common stock.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q includes a number of forward-looking statements within the meaning ofthe Private Securities Litigation Reform Act of 1995,Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that reflect management’s current views with respect to future events and financial performance. The following discussion should be read in conjunction with the financial statements and related notes contained in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (“SEC”) on April ~~17, 2018.~~16, 2019. Forward-looking statements are projections in respect of future events or financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology.

Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform them to actual results, new information, future events or otherwise, except as otherwise required by securities and other applicable laws.

The following factors, among others, could cause our or our industry’s future results to differ materially from historical results or those anticipated:

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, as filed with the SEC on April ~~17, 2018,~~16, 2019, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. We are under no duty to update any forward-looking statements after the date of this report to conform these statements to actual results.

As used in this quarterly report and unless otherwise indicated, the terms “we,” “us,” “our” or the “Company” refer to Adhera Therapeutics, Inc., a Delaware corporation, and its wholly-owned subsidiaries, MDRNA Research, Inc., Cequent Pharmaceuticals, Inc., Atossa Healthcare, Inc., and IthenaPharma, Inc. Unless otherwise specified, all dollar amounts are expressed in United States dollars. Our common stock is currently listed on the OTC Market, OTCQB tier, under the symbol “ATRX.”

We are an emerging specialty pharmaceutical company ~~leveraging an~~that leverages innovative distribution ~~model~~models and technologies to improve the quality of care for patients in the United States suffering from chronic ~~and acute diseases in the United States. Adhera is~~diseases. We are focused on fixed dose combination (“FDC”) therapies in hypertension, with plans to expand the portfolio of drugs we commercialize to include other therapeutic areas.

Our mission is to provide effective and patient centric treatment for hypertension and resistant hypertension while actively seeking additional assets that can be commercialized through our proprietary Total Care System (“TCS”). At the core of our TCS is DyrctAxess, our patented technology platform. DyrctAxess is designed to offer enhanced efficiency, control and access to the information necessary to empower patients, physicians and manufacturers to achieve optimal care.

We began marketing Prestalia^®, a single-pill FDC of perindopril arginine ~~(an angiotensin-converting-enzyme) inhibitor~~(“perindopril”) and amlodipine besylate ~~(a calcium channel blocker), which was approved by the U.S. Food and Drug Administration~~ (“~~FDA”~~amlodipine”) in June of 2018. By combining Prestalia, DyrctAxess and an independent pharmacy network, we have created a proprietary system for drug adherence and the effective treatment of hypertension, improving the distribution of FDC hypertensive drugs, such as our FDA-approved product Prestalia, as well as improving the distribution of devices for therapeutic drug monitoring (“TDM”) (e.g., blood pressure monitors), as well as patient counseling and prescription reminder services. We are focused on demonstrating the therapeutic and commercial value of our TCS through the commercialization of Prestalia. Prestalia was developed in coordination with Les Laboratories Servier, a French pharmaceutical conglomerate, that sells the formulation outside the United States under the brand ~~name - Viacoram.~~names Coveram^® and/or Viacoram^®. Prestalia was approved by the U.S. Food and Drug Administration (“FDA”) in January 2015 and is distributed through ~~the DyrectAxess~~our DyrctAxess platform, which we acquired ~~from Symplmed and its wholly-owned subsidiary, Symplmed Technologies, LLC~~ in 2017. ~~DyrectAxess is a patented technology platform, also known as Total Care~~^®~~, that offers enhanced efficiency, control and information to empower patients, physicians and manufacturers to achieve optimal care.~~

By combining Prestalia, DyrectAxess, and a specialty pharma network, we have created a proprietary platform for drug adherence and the effective treatment of hypertension, improving the distribution of FDC hypertensive drugs, such as our FDA-approved product Prestalia, devices for therapeutic drug monitoring (e.g., blood pressure and other cardiac monitors), as well as patient counseling and prescription reminder services.

~~During~~As our strategy is to be a commercial pharmaceutical company, we will drive a primary corporate focus on revenue generation through our commercial assets, while continuing to develop our technology platform and TCS. We intend to create value through the ~~nine months ended September 30, 2018, we received proceeds of approximately $12.2 million from the sale~~expanded commercialization of our ~~newly created Series E Convertible Preferred Stock (the “Series E Preferred Stock”)~~FDA-approved product, Prestalia^®, ~~net of fees~~while continuing to develop and expenses. The use of funds from the raise will be on the commercialization of Prestalia, funding working capital, capital expenditure needs, payment of certain liabilities and other general corporate requirements. We planleverage our TCS to ~~license or divest~~further strengthen our ~~other pharmaceutical assets and halt any other FDC development programs since they no longer align with our focus on the treatment of hypertension.~~commercial presence.

On July 12, 2018, we entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant to which we sold 308 shares of our Series F convertible preferred stock, par value of $0.01 per share (the “Series F Stock”), at a purchase price of $5,000 per share of Series F Stock. Each share of Series F Stock is initially convertible into shares of our common stock at a conversion price of $0.50 per share of common stock. In addition, each investor received a 5-year warrant to purchase 0.75 shares of our common stock for each share of our common stock issuable upon the conversion of the Series F Stock purchased by such investor at an exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. We received total gross proceeds of approximately $1.54 million from the issuance of the securities described above, prior to deducting placement agent fees and estimated expenses payable by us associated with such closing. Our intended use of the proceeds is for funding operations, working capital needs, capital expenditures, the repayment of certain liabilities and other general corporate purposes in pursuit of advancing our commercial, clinical and preclinical efforts, including advancing our commercial operations relating to the sale and promotion of Prestalia® product.

On September 10, 2018, we entered into a Standard Form Office Lease with ROC III Fairlead Imperial Center, LLC, with respect to office space located at 4721 Emperor Boulevard, Suite 350, Durham, North Carolina 27703, for a three year term. Starting on October 1, 2018, our executive offices have been located at such address. We no longer maintain an address at 17870 Castleton Street, Suite 250, City of Industry, California 91748.

We entered into an employment agreement with R. Eric Teague (the “Teague Agreement”) pursuant to which Mr. Teague began serving as our Chief Financial Officer on September 24, 2018. In connection with the appointment of Mr. Teague as our Chief Financial Officer, Amit Shah, our prior Chief Financial Officer, resigned from such position, effective September 24, 2018.

Mr. Teague’s base salary under the Teague Agreement, which provides for a three year term, is initially $285,000 per year, subject to review and adjustment by us from time to time. Starting in 2019, Mr. Teague shall be eligible for an annual discretionary cash bonus with a target of 35% of his base salary, subject to his achievement of any applicable performance targets and goals. Mr. Teague was also granted options to purchase up to 450,000 shares of our common stock, which options shall vest according to the terms of the Teague Agreement.

~~Omnibus Settlement Agreement with Vuong Trieu, Ph.D. and Affiliated Entities~~

On October 1, 2018, in connection with the Settlement Agreement, Dr. Trieu resigned as a member of the Board, and of the Board of Directors of each of our subsidiaries, effective immediately. In addition, and in connection with the continuing reorganization of management following our recent financing transactions, Larn Hwang, Ph.D., our former Chief Scientific Officer, Mihir Munsif, our former Chief Operating Officer, and Peter Weinstein, our former Chief Legal Officer, have resigned as officers of our company. We have contracted with an outside consulting firm to provide Chief Scientific Officer services as required by us, we have moved the roles and responsibilities of the Chief Operating Officer to the commercial team, and we anticipate that Mr. Weinstein will continue to provide legal services to us through his private practice.

~~On October 1, 2018, Nancy R. Phelan was appointed to serve as a member of our Board of Directors, effective immediately.~~

On October 4, 2018, we filed a Certificate of Amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to change our name from “Marina Biotech, Inc.” to “Adhera Therapeutics, Inc.” The change of our name became effective on October 9, 2018. Following the change of our name from Marina Biotech, Inc. to Adhera Therapeutics, Inc., our common stock began trading on the OTCQB tier of the OTC Markets under the symbol “ATRX”.

Comparison of the Three Months Ended ~~September~~June 30, ~~2018~~2019 to the Three Months Ended ~~September~~June 30, ~~2017~~2018

~~Net~~We recorded net sales ~~was $76,186~~of approximately $66,000, net of related discounts for the three months ended ~~September~~June 30, ~~2018, and~~2019 compared to no sales for the three-month period ended June 30, 2018. The increase in sales represents revenues from the sale of Prestalia. We had no sales during the three months ended September 30, 2017. As the Company has yet to complete certain performance obligations under a licensing agreement for the sale of our DiLA2 assets, we have deferred the recognition of revenue of $200,000 until such obligations are fulfilled. The majority of our licensing deals provide for clinical and regulatory milestones, so significant revenues could result from the existing licenses, but are uncertain as to timing or probability. We will continue to seek research and development collaborations as well as licensing transactions to fund business operations.Prestalia^®.

Cost of sales ~~was $7,760~~were $81,000 for the three months ended ~~September~~June 30, ~~2018,~~2019 and represents cost of sales from the sale of ~~Prestalia.~~Prestalia^®. We had no sales or cost of sales during the three months ended ~~September~~June 30, ~~2017.~~2018.

Our operating expenses for the three months ended ~~September~~June 30, 2019 and 2018 are summarized as follows:

For the three months ended June 30, 2019, sales, marketing and commercial operations expense decreased by approximately $1.4 million, as compared to the prior period, primarily due to the 2018 commercial launch including marketing and sales activities related to Prestalia^® and a reduction in costs associated with our go to market model.

General and administrative (“G&A”) expense increased by approximately $0.5 million for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018, primarily due to an increase in share-based compensation of approximately $0.2 million and an increase in personnel related expenses including severance payments made to former executive management.

Amortization of intangible assets decreased by approximately $106,000 for the three-month period ended June 30, 2019 primarily due to the write-off of intangibles in 2018 as a result of our decision to divest assets that no longer align with our strategic objectives.

Total net other expense for the three months ended June 30, 2019 decreased $0.9 million compared to the three months ended June 30, 2018 primarily due to a loss on settlement of a related party liability during the three months ended June 30, 2018.

Comparison of the Six Months Ended June 30, 2019 to the Six Months Ended June 30, 2018

We recorded net sales of approximately $69,000 for the six months ended June 30, 2019 and represents revenues from the sale of Prestalia^®. We had no sales during the six months ended June 30, 2018.

Cost of sales were approximately $198,000 for the six months ended June 30, 2019 and represents cost of sales from the sale of Prestalia^®. We had no sales or cost of sales during the six months ended June 30, 2018.

Our operating expenses for the six months ended June 30, 2019 are summarized as follows in comparison to our expenses for the ~~three~~six months ended ~~September~~June 30, ~~2017.~~

~~Sales,~~For the six months ended June 30, 2019, sales, marketing and commercial operations expense ~~increased~~decreased by approximately ~~$0.8 million~~$379,000, as compared to the prior period, primarily due to a reduction in commercial launch activities related to the ~~launch~~sales of ~~Prestalia.~~Prestalia^® and a reduction in costs associated with our go to market model.

~~Research~~For the six months ended June 30, 2019, research and development ~~(“R&D”)~~ expense decreased by approximately ~~$0.2 million,~~$173,000, as compared to the ~~three~~six months ended ~~September~~June 30, ~~2017~~2018 due to the ~~Company’s primary~~transition of our strategic focus ~~transitioning~~ from ~~research and development~~R&D activities to sales, marketing and commercial operations activities ~~effective April~~beginning in the second quarter of 2018.

General and administrative (“G&A”) expense increased by approximately ~~$1.5~~$1.0 million for the ~~three~~six months ended ~~September~~June 30, ~~2018,~~2019, as compared to the ~~three~~six months ended ~~September~~June 30, ~~2017,~~2018, primarily due to an increase in ~~stock option~~share based compensation of approximately $0.2 million and ~~payroll expense.~~

an increase in personnel related expenses including severance payments made to executive management.

Amortization ~~expenses relate to amortization~~ of intangible assets ~~acquired~~decreased by approximately $212,000 for the six-month period ended June 30, 2019 primarily due to the write-off of intangibles in the November 15, 2016 merger and the asset purchases on June 5, 2017 and July 21, 2017, with an aggregate estimated fair value of $3.1 million (reduced by the impairment loss of $1,291,200 described below).

~~During the three months ended September 30,~~ 2018 ~~the Company determined that goodwill was impaired and,~~ as a result ~~a loss on impairment~~ of ~~$3,502,830 was recognized for the three and nine-month periods ended September 30, 2018. The impairment determination was primarily a result of the~~our decision to divest of assets that no longer align with ~~the Company’s~~our strategic objectives. ~~There was no such loss on impairment for the three months ended September 30, 2017.~~

During the three months ended September 30, 2018, the Company determined that the intangible asset from the Merger was impaired and as a result, a loss on impairment of $1,291,200 was recognized and for the three months ended September 30, 2018. The impairment determination was primarily a result of the decision to divest of assets that no longer align with the Company’s strategic objectives . There was no such loss on impairment for the three months ended September 30, 2017.

	Three Months Ended					Six Months Ended
	September 30, 2018		September 30, 2017
(in thousands)						June 30, 2019			June 30, 2018
Interest expense	$	-	$	(24,301	)	$	(1	)	$	(149	)
Change in fair value liability of warrants		-		7,442
Change in fair value of derivative liability		-		80,672
Loss on settlement							-			(875	)
Total other expense, net	$	-	$	63,813		$	(1	)	$	(1,024	)

Total net other expense for the ~~three~~six months ended ~~September~~June 30, ~~2018~~2019 decreased ~~$63,813~~approximately $1.0 million compared to the ~~three~~six months ended ~~September~~June 30, ~~2017~~2018 primarily due to ~~the repayment~~a loss on settlement of ~~debt~~a related party liability and interest expense on notes payable during the three months ended June 30, ~~2018.~~

~~Comparison of the Nine Months Ended September 30, 2018 to the Nine Months Ended September 30, 2017~~

Net sales was $76,186 for the nine months ended September 30, 2018, and represents revenues from the sale of Prestalia. We had no sales during the nine months ended September 30, 2017. As the Company has yet to complete certain performance obligations under a licensing agreement for the sale of our DiLA2 assets, we have deferred the recognition of revenue of $200,000 until such obligations are fulfilled. The majority of our licensing deals provide for clinical and regulatory milestones, so significant revenues could result from the existing licenses, but are uncertain as to timing or probability. We will continue to seek research and development collaborations as well as licensing transactions to fund business operations.

Cost of sales was $7,760 for the nine months ended September 30, 2018, and represents cost of sales from the sale of Prestalia. We had no sales or cost of sales during the nine months ended September 30, 2017.

~~Our expenses for the nine months ended September 30, 2018 are summarized as follows in comparison to our expenses for the nine months ended September 30, 2017.~~

~~Sales, marketing and commercial operations expense increased by approximately $3.4 million primarily due to launch activities related to the launch of Prestalia and related activities.~~

Research and development (“R&D”) expense decreased by approximately $0.6 million, as compared to the nine months ended September 30, 2017 due to the Company’s primary focus transitioning from research and development activities to sales, marketing and commercial operations activities effective April 2018.

~~General and administrative (“G&A”) expense increased by approximately $2.2 million for the nine months ended September 30,~~ 2018 as compared to the ~~nine months ended September 30, 2017, primarily due to a charge~~same period of ~~approximately $1.3 million related to share based compensation and an increase in payroll expenses.~~

Amortization expenses relate to amortization of intangible assets acquired in the November 15, 2016 merger and the asset purchases on June 5, 2017 and July 21, 2017, with an aggregate estimated fair value of approximately $3.1 million (reduced by the impairment loss of approximately $1,291,200 described below).

During the nine months ended September 30, 2018, the Company determined that goodwill was impaired and, as a result, a loss on impairment of $3,502,830 was recognized for the nine-month period ended September 30, 2018. The impairment determination was primarily a result of the decision to divest of assets that no longer align with the Company’s strategic objectives . There was no such loss on impairment for the nine months ended September 30, 2017.

During the three months ended September 30, 2018, the Company determined that the intangible asset from the Merger was impaired and as a result, a loss on impairment of $1,291,200 was recognized for the three and nine-month periods ended September 30, 2018. The impairment determination was primarily a result of the decision to divest of assets that no longer align with the Company’s strategic objectives . There was no such loss on impairment for the nine months ended September 30, 2017.

Total net other expense for the nine months ended September 30, 2018 increased approximately $0.8 million compared to the nine months ended September 30, 2017. The increase is primarily attributable to the loss on settlement of debt incurred of approximately $0.9 million during the nine months ended September 30, 2018, primarily due to a non-cash loss of approximately $0.8 million related to warrants issued to Autotelic, Inc. to satisfy outstanding liabilities where the fair value of the warrants exceeded the value of liabilities settled as part of the Series E Preferred Stock private placement. Additionally, there was an increase in interest expense of approximately $0.2 million from new notes and lines of credit taken in 2017. Such debt and accrued interest thereon was settled as part of the Series E Preferred Stock private placement. There was no gain or loss on the change in fair value liability of warrants during the nine months ended September 30, 2018 due to the adoption of Accounting Standards Update 2017-11 in November 2017 relating to the issuance of financial statements that include down round provisions utilizing the modified retrospective approach.2019.

	September 30, 2018			December 31, 2017
(in thousands)							June 30, 2019			December 31, 2018
Current assets	$	7,454,372		$	124,943		$	2,154		$	4,677
Current liabilities		(2,185,238	)		(5,735,503	)		(5,160	)		(2,214	)
Working capital (deficiency)	$	5,269,134		$	(5,610,560	)
Working capital (deficit)							$	(3,006	)	$	2,463

~~Working~~Negative working capital as of ~~September~~June 30, ~~2018~~2019 was approximately ~~$5.3~~$3.0 million as compared to ~~negative~~ working capital of approximately ~~$5.6~~$2.5 million as of December 31, ~~2017. As of September 30, 2018, current assets were approximately $7.5 million,~~2018. The decrease in working capital is primarily ~~attributable~~related to an increase in cash of approximately $6.4 million primarily due to the issuance of Series E and F Preferred stock. As of December 31, 2017, current assets were approximately $0.1 million primarily attributable to cash of approximately $0.1 million.

~~As of September 30, 2018,~~our current liabilities ~~were approximately $2.2 million, comprised of accounts payable of approximately $0.9 million, accrued expenses of approximately $1.0 million and deferred revenue of $0.2 million. Comparatively,~~ as of ~~December 31, 2017, current liabilities were $5.7~~June 30, 2019 including approximately $1.3 million primarily consisting of approximately $1.0 million of accounts payable, accrued expenses of approximately $1.5 million and notes payable of approximately $1.9 million. Current liabilities decreased by approximately $3.6 million, which was primarily attributable to the settlement of notes payable, ~~and other liabilities~~an increase in accrued dividends for our convertible preferred stock of approximately ~~$3.4~~$0.8 million ~~by converting such debt~~ and ~~liabilities into the initial round of financing under the Series E Convertible Preferred Stock private placement~~an increase in ~~April of 2018~~accounts payable and ~~paying~~ accrued ~~fees payable of approximately $0.3 million.~~expenses related to our operating activities.

Net cash used in operating activities was approximately ~~$7.0~~$3.5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This was primarily due to ~~the~~our net operating loss of approximately ~~$13.8~~$5.3 million, partially offset by ~~goodwill and intangible asset impairment~~non-cash share-based compensation of approximately ~~$4.8~~$0.6 million and ~~non-cash loss on settlement of approximately $0.9 million.~~other changes in operating assets and liabilities including an increase in accounts payable and accrued expenses.

Comparatively, net cash used in operating activities was approximately ~~$0.9~~$3.9 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018. This was primarily due to the net operating loss of approximately ~~$2.3~~$6.0 million offset by non-cash charges of approximately ~~$0.7~~$2.5 million and ~~change~~other changes in working capital of approximately ~~$0.9~~$0.3 million. ~~The non-cash~~Non-cash charges ~~were comprised of approximately $0.1 million of share based compensation, $0.1 million of services paid in company stock, amortization of intangibles of approximately $0.2 million and~~for the three-months ended June 30, 2018 included the fair value of ~~warrants~~equity issued for settlement of an outstanding liability ~~and derivatives~~including a loss on the settlement of approximately ~~$0.3~~$0.9 million.

~~Net~~There was no cash used in or provided by investing activities for the six months ended June 30, 2019. Cash used in investing activities ~~during~~for the ~~nine months~~period ended ~~September~~June 30, 2018 was ~~due to~~approximately $10,000 for the purchase of furniture ~~of approximately $29 thousand as compared to $0.3 million to purchase intangible assets during~~for the ~~nine months ended September 30, 2017.~~corporate office.

Net cash provided by financing activities ~~of approximately $13.4 million during~~for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 was ~~primarily due to the approximately $12.2 million received from the sale of our Series E Preferred Stock, net of fees, and~~ approximately $1.3 million ~~received~~ from the ~~sales~~issuance of ~~our Series F Preferred Stock, net of fees, offset partially by approximately $0.1 million for repayment of a debt. Correspondingly, during~~promissory notes to certain accredited investors on June 28, 2019. For the ~~nine~~six months ended ~~September~~June 30, ~~2017, net~~2018, cash provided by financing activities was ~~approximately $1.2 million. This was~~$12.1 million primarily ~~attributable~~due to ~~proceeds~~the issuance of approximately $0.25 million from the sale of common stock, approximately $0.8 million from borrowings on third party and related party notes payable, and approximately $0.2 million from the exercise of common stock warrants.preferred stock.

We ~~may~~will need to raise additional operating capital ~~in calendar year 2018~~during the third quarter of 2019 in order to maintain our operations and to realize our business plan. Without additional sources of cash and/or the deferral, reduction, or elimination of significant planned expenditures, we ~~may~~will not have the cash resources to continue as a going concern thereafter.

We will require immediate substantial additional funds to implement our strategic initiatives and continue the ~~growth strategy for our business. As mentioned above,~~commercialization of Prestalia^®. Historically, we have ~~in the past,~~ raised additional capital to supplement our commercialization, clinical development and operational expenses. We will need to raise substantial additional funds required through equity financing, debt financing, strategic alliances or other sources, which may result in further dilution in the equity ownership of our shares. There can be no assurance that additional financing will be available when needed or, if available, that it can be obtained on commercially reasonable terms. ~~If we will not be able~~Failure to ~~obtain the~~raise additional ~~financing~~capital through one or more financings, divesting development assets or reducing discretionary spending could have a material adverse effect on our ability to achieve our intended business objectives. These factors raise substantial doubt about our ability to continue as a timely basis as required, or generate significant material revenues from operations, we will not be able to meet our other obligations as they become due and will be forced to scale down or perhaps even cease our operations.going concern.

As of ~~September~~June 30, ~~2018,~~2019, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Our significant accounting policies are more fully described in the notes to our financial statements included herein for the period ended ~~September~~June 30, ~~2018~~2019 and in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Any new and recently adopted accounting pronouncements are more fully described in Note 1 to our financial statements included herein for the period ended ~~September~~June 30, ~~2018.~~2019.

~~As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation,~~We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the ~~supervision~~Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and ~~with~~reported within the ~~participation of~~time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our ~~senior~~ management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures ~~(as such term is defined in Rules 13a-15(e)~~as of the end of the period covered by this report. Based upon that evaluation and ~~15d-15(e) under~~subject to the Exchange Act). Management identified material weaknesses in internal control over financial reporting as described under the heading “Management Report on Internal Control” contained in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”), which have not been fully remediated, and thereforeforegoing, our principal executive officer and ~~our~~ principal financial officer concluded that, ~~as of September 30, 2018,~~ our disclosure controls and procedures were not effective due to the material weakness(es) in internal control over financial reporting described below.

Management conducted an assessment of the effectiveness of our internal control over financial reporting as of June 30, 2019 based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that our internal control over financial reporting as of June 30, 2019 was not effective.

A material weakness, as defined in the standards established by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which are indicative of many small companies with small number of staff:

~~Internal Control Over Financial Reporting~~Management’s Plan to Remediate the Material Weakness

Management has ~~reported~~been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the ~~Board~~material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions planned include:

During the three months ended June 30, 2019, we continued to execute upon our planned remediation actions which are all intended to strengthen our overall control environment. Our Company and all subsidiaries use a well-regarded accounting software which restricts personnel access and standardizes daily accounting procedures on journal entries. The software includes built-in controls and documentation to facilitate accounting review of ~~Directors~~the books and records. Our Audit Committee continues to exercise oversight responsibilities related to financial reporting and internal control, and we have commenced a search to replace our Chief Financial Officer, who recently resigned. In the meantime, the Company’s Chief Executive Officer will assume the responsibilities of the Chief Financial Officer until we hire a full-time executive. We have hired an external consultant with GAAP expertise to assist in the preparation of financial reporting under management oversight as of May 2, 2019.

The aforementioned measures taken are expected to lead to an improvement in the timely preparation of financial reports and to strengthen our segregation of duties at the Company. We are committed to maintaining a strong internal control environment, and we believe that these remediation efforts will represent significant improvements in our control environment. Our management will continue to monitor and evaluate the relevance of our risk-based approach and the ~~Audit Committee thereof material weaknesses described under the heading “Management Report~~effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Changes in Internal ~~Control” contained in Item 9A of the 2017 Form 10-K. The material weaknesses discussed therein have not been fully remediated.~~ Control over Financial Reporting

There have been no changes in our internal control over financial reporting or(as defined in ~~other factors~~Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended ~~September~~June 30, ~~2018~~2019 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting. To remediate the material weakness identified in our 2017 Form 10-K, we plan to hire additional experienced accounting and other personnel to assist with filings and financial record keeping (in addition to our hiring of Eric Teague to serve as our Chief Financial Officer commencing in September 2018), and to take additional steps to improve our financial reporting systems and enhance our existing policies, procedures and controls, as resources allow.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our Prestalia product ~~is currently~~was involved in a paragraph IV challenge regarding patents issued to perindopril arginine. This challenge, which ~~is currently~~was pending in the United States District Court for the District of Delaware (No. 1:17-cv-00276), iswas captionedApotex Inc. and Apotex Corp. v. Symplmed Pharmaceuticals, LLC and Les ~~Laboratories Servier.~~Laboratoires Servier. The challengers (Apotex Inc. and Apotex Corp. (“Apotex”)) ~~have~~ filed an Abbreviated New Drug Application seeking FDA approval to market a generic version of Prestalia and included a Paragraph (IV) certification. In the litigation, Apotex ~~seeks~~sought a declaratory judgment that no valid claims of the two patents Symplmed listed in the FDA Orange Book as having claims covering Prestalia, U.S. Patent No. 6,696,481 and 7,846,961, will be infringed by the Apotex proposed generic version of Prestalia and that the claims of those patents are invalid. The challenge iswas designed to provide Apotex with an opportunity to enter the market with a generic version of Prestalia, ahead of the expiration of the patents with claims covering that product.

Apotex entered into negotiations with Symplmed Pharmaceuticals, LLC (which entity sold its assets relating to Prestalia to us in June 2017, including its License and Commercialization Agreement with Les Laboratories Servier) and Les Laboratories Servier (which entity owns or controls intellectual property rights relating to pharmaceutical products containing as an active pharmaceutical ingredient perindopril in combination with other active pharmaceutical ingredients, which rights have been licensed to Symplmed Pharmaceuticals) to resolve the challenge in the second quarter of ~~2017, and such~~2017. Such parties, along with us, have ~~come to a general~~reached an agreement on terms that ~~will~~ result in a delay to the challengers’ ability to enter the market with a generic version of Prestalia, while still providing the challenger with the right to enter the market prior to the expiration of the patent covering such product. ~~The term sheet memorializing such terms is pending execution~~Specifically, the parties have entered into a Confidential Settlement Agreement in ~~a final~~connection with the settlement ~~agreement. In the meantime, the District Court has entered an order extending the time for the defendants to respond to Apotex’s Complaint. Resolution~~ of the matter, pursuant to which, among other things, the parties entered into a Confidential License Agreement, whereby Symplmed, Servier and our company agreed to grant to Apotex a non-transferable, non-sublicensable, perpetual, irrevocable, royalty-free, non-exclusive license to the two patents listed in the FDA Orange Book as having claims covering Prestalia to make, use and market a generic version of Prestalia, or import a generic version of Prestalia from India into the United States, on or after January 1, 2021.

Currently, there is no material litigation ~~continues~~pending against our company other than as disclosed above. From time to time, we may become a party to litigation and subject to claims incident to the ordinary course of our business. Although the results of such litigation and claims in the ordinary course of business cannot be predicted with ~~alignment from all parties, including Servier, Apotex, Symplmed~~certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business, results of operations or financial condition. Regardless of outcome, litigation can have an adverse impact on us because of defense costs, diversion of management resources and ~~Adhera. Necessary extensions have been agreed upon and final resolution is anticipated this year.~~other factors.

An investment in our common stock involves a number of very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~2018 (the “Annual Report”), as filed with the SEC on April ~~17, 2018,~~16, 2019, in addition to other information contained in those documents and reports that we have filed with the SEC pursuant to the Securities Act and the Exchange Act since the date of the filing of the Annual Report, including, without limitation, this Quarterly Report on Form 10-Q, and the additional risk factor noted below, in evaluating our company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be adversely affected due to any of those risks.

The company may experience inventory outages as a result of increased demand for Prestalia. The company’s efforts to mitigate this risk may not be successful, resulting in patient supply interruption. Any interruption in the supply of this product could have a material adverse effect on our financial condition, business performance and the results of an investment in our securities.

In April 2019, we issued 107,846 unregistered shares of our common stock to a holder of our Series E Convertible Preferred Stock in connection with the conversion of $53,923 of “Stated Value” of our Series E Convertible Preferred Stock. These shares were issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder.

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.

Large accelerated filer	[ ]	Accelerated filer	[ ]

Non-accelerated filer	[ ] (Do not check if a smaller reporting company)	Smaller reporting company	[X]

		Emerging Growth Company	[ ]

			Page

PART I - FINANCIAL INFORMATION

I~~TEM~~ITEM 1	Financial Statements (unaudited)	3

	~~Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017~~	3

	Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018	3

	Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018	4

	Condensed Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity (Deficit) for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018	5

	Condensed Consolidated ~~Statement~~Statements of ~~Stockholders’ Equity~~Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, 2019 and 2018	6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2619

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	3424

ITEM 4.	Controls and Procedures	3425

PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings	3526

ITEM 1A.	Risk Factors	3527

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

ITEM 6.	Exhibits	3627

SIGNATURES		3728

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017

Net sales	$	76,186		$	-		$	76,186		$	-
Cost of sales		7,760			-		$	7,760			-
Gross profit		68,426			-			68,426			-

Operating expenses

Sales, marketing and commercial operations	$	870,926		$	-		$	3,456,871		$	-
Research and development		-			232,896			173,256			746,221
General and administrative		2,140,992			680,063			4,119,988			1,878,301
Amortization		41,937			123,038			288,460			327,642
Goodwill and intangible assets impairment		4,794,030			-			4,794,030			-
Total operating expenses		7,847,885			1,035,997			12,832,605			2,952,164

Loss from operations		(7,779,459	)		(1,035,997	)		(12,764,179	)		(2,952,164	)

Other expense

Interest expense		-			(24,301	)		(149,900	)		(51,575	)
Change in fair value liability of warrants		-			7,442			-			(106,345	)
Loss on settlement		-			-			(874,697	)		-
Change in fair value of derivative liability		-			80,672			-			(115,271	)
		-			63,813			(1,024,597	)		(273,191	)

Loss before provision for income taxes		(7,779,459	)		(972,184	)		(13,788,776	)		(3,225,355	)

Provision for income taxes		-			-			-			800

Net loss	$	(7,779,459	)	$	(972,184	)	$	(13,788,776	)	$	(3,226,155	)

Net loss per share - basic and diluted	$	(0.69	)	$	(0.10	)	$	(1.27	)	$	(0.33	)

Weighted average shares outstanding		11,241,684			9,869,672			10,864,036			9,645,954

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018

Net sales	$	66		$	-		$	69		$	-
Cost of sales		81			-			198			-
Gross Margin		(15	)		-			(129	)		-

Operating expenses

Sales, marketing and commercial operations		1,148			2,586			2,207			2,586
Research and development		-			-			-			173
General and administrative		1,599			1,059			2,966			1,979
Amortization		17			123			35			247
Total operating expenses		2,764			3,768			5,208			4,985

Loss from operations		(2,779	)		(3,768	)		(5,337	)		(4,985	)

Other expense

Interest expense		(1	)		(5	)		(1	)		(149	)
Loss on settlement		-			(875	)		-			(875	)
		(1	)		(880	)		(1	)		(1,024	)

Loss before provision for income taxes		(2,780	)		(4,648	)		(5,338	)		(6,009	)

Provision for income taxes		-			-			-			-

Net loss		(2,780	)		(4,648	)		(5,338	)		(6,009	)

Preferred Stock Dividends		(357	)		(271	)		(739	)		(271	)

Net Loss Applicable to Common Stockholders	$	(3,137	)	$	(4,919	)	$	(6,077	)	$	(6,280	)

Net loss per share – Common Shareholders - basic and diluted	$	(0.29	)	$	(0.45	)	$	(0.56	)	$	(0.59	)

Weighted average shares outstanding - basic and diluted		10,860,049			10,821,230			10,811,138			10,672,082

	For the Nine Months Ended September 30,
	2018			2017

Cash Flows Used in Operating Activities:

Net loss	$	(13,788,776	)	$	(3,226,155	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share based compensation		1,307,046			218,295
Common shares issued to third party for services		-			54,000
Loss on settlement with issuance of common shares		250,000			-
Loss on note settlement with issuance of preferred shares		375,000			-
Common shares issued to license agreement		75,000			-
Goodwill and intangible assets impairment		4,794,030
Amortization of intangibles		288,460			327,642
Amortization of debt discount		113,171			-
Non-cash interest expense		36,729			-
Loss on settlement		874,697
Change in fair value liabilities for price adjustable warrants		-			106,345
Change in fair value of derivative liability		-			115,271
Changes in operating assets and liabilities:
Accounts receivable		(135,150	)		-
Inventory		(204,051	)		-
Prepaid expenses and other assets		(429,679	)		125,098
Accounts payable		(122,229	)		419,494
Accrued expenses		(641,157	)		637,642
Accrued fee payable		(320,000	)		-
Deferred revenue		200,000			-
Due to related party		313,393			299,166

Net Cash Used in Operating Activities		(7,013,516	)		(923,202	)

Cash Flows Used in Investing Activities:
Purchase of furniture and fixtures		(28,795	)		-
Purchase of intangible assets		-			(375,000	)

Net Cash Used in Investing Activities		(28,795	)		(375,000	)

Cash Flows Provided By Financing Activities:
Proceeds from sale of preferred stock, net of offering expenses		13,585,894			-
Proceeds from sale of common stock to related party		-			250,000
Proceeds from notes payable due to related party		-			90,888
Proceeds from convertible notes		-			400,000
Proceeds from convertible notes due to related parties, net		-			290,000
Proceeds from exercise of warrants for common stock		-			170,643
Payments for notes payable		(143,834	)		-

Net Cash Provided by Financing Activities		13,442,060			1,201,531

Net increase (decrease) in cash		6,399,749			(96,671	)

Cash - Beginning of Period		106,378			105,347
Cash - End of Period	$	6,506,127		$	8,676

Supplementary Cash Flow Information:
Income taxes paid	$	-		$	800

Non-cash Investing and Financing Activities:
Issuance of warrants for liabilities, related party	$	1,494,469		$	-
Common stock issued for settlement of accrued expenses	$	-		$	976,714
Return of common stock for other assets	$	-		$	31,404
Adjustment to goodwill	$	-		$	55,247
Accrued interest	$	-		$	32,080
Assumption of liabilities for acquisition of assets	$	-		$	320,000
Preferred share settlement of debt and accrued liabilities	$	3,437,735		$	-
Issuance of warrants	$	32,420,580		$	-
Accrued dividends	$	649,857		$	-
Cancellation of Series E Preferred Stock	$	46,311		$	-
Goodwill reclassified to inventory	$	160,800		$	-

	Series E Preferred Stock					Series F Preferred Stock				Common Stock				Additional			Additional Paid-in
	Number			Par Value		Number		Par Value		Number		Par Value		Paid-in Capital			Capital Warrants		Accumulated Deficit			Total

Balance, December 31, 2017		-		$	-		-	$	-		10,521,278	$	63	$	8,414		$	-	$	(8,029	)	$	448
Share based compensation		-			-		-		-		-		-		119			-		-			119
Net loss		-			-		-		-		-		-		-			-		(1,361	)		(1,361	)
Balance, March 31, 2018		-			-		-		-		10,521,278		63		8,533			-		(9,390	)		(794	)
Issuance of Series E Preferred Stock, net of fees		2,812			-		-		-		-		-		12,258			-		-			12,258
Warrants issued with Series E Preferred Stock		-			-		-		-		-		-		(31,107	)		31,107		-			-
Issuance of Series E Preferred for debt and accounts payable		687			-		-		-		-		-		3,438			-		-			3,438
Conversion of Series C Preferred stock for common stock		-			-		-		-		433,334		3		(3	)		-		-			-
Conversion of Series D Preferred stock for common stock		-			-		-		-		25,000		-		-			-		-			-
Warrants issued for settlement of liability		-			-		-		-		-		-		-			1,494		-			1,494
Shares issued for settlement of litigation		-			-		-		-		210,084		1		249			-		-			250
Shares issued for License Agreement		-			-		-		-		51,988		-		75			-		-			75
Accrued dividend		-			-		-		-		-		-		-			-		(271	)		(271	)
Share based compensation		-			-		-		-		-		-		374			-		-			374
Cancellation of Series E Preferred Stock		(9	)		-		-		-		-		-		(46	)		-		-			(46	)
Net loss		-			-		-		-		-		-		-			-		(4,648	)		(4,648	)
Balance, June 30, 2018		3,490		$	-		-	$	-		11,241,684	$	67	$	(6,229	)	$	32,601	$	(14,309	)	$	12,130

	For the Six Months Ended June 30,
	2019			2018

Cash Flows Used in Operating Activities:

Net loss	$	(5,338	)	$	(6,009	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share based compensation		636			493
Common shares issued for settlement		-			250
Preferred shares issued for note settlement		-			375
Common shares issued to license agreement		-			75
Amortization of intangibles		35			247
Bad debt expense		41			-
Amortization of debt discount		-			113
Depreciation		5			-
Non-cash interest expense		1			37
Non-cash lease expense		62			-
Loss on settlement		-			875
Changes in operating assets and liabilities:
Accounts receivable		(87	)		-
Inventory		10			(80	)
Prepaid expenses and other assets		285			(193	)
Accounts payable		685			161
Accrued expenses		218			(330	)
Accrued fee payable		-			(320	)
Deferred revenue		-			200
Due to related party		(24	)		250
Lease liability		(62	)		-

Net Cash Used in Operating Activities		(3,533	)		(3,856	)

Cash Flows Used in Investing Activities:
Purchase of furniture and fixtures		-			(10	)

Net Cash Used in Investing Activities		-			(10	)

Cash Flows Provided By Financing Activities:

Proceeds from sale of preferred stock, net offering expenses		-			12,258
Proceeds from loan payable		1,495			-
Loan payable issuance costs		(236	)		-
Payments for notes payable		-			(144	)

Net Cash Provided by Financing Activities		1,259			12,114

Net (decrease) increase in cash		(2,274	)		8,248

Cash – Beginning of Period		3,918			106
Cash - End of Period	$	1,644		$	8,354

Supplemental Cash Flow Information:
Non-cash Investing and Financing Activities:
Capitalization of operating lease right of use asset	$	240		$	-
Issuance of warrants for liabilities, related party		-			1,494
Preferred share settlement of debt and accrued liabilities		-			3,438
Issuance of warrants		-			31,107
Accrued dividends		739			271
Conversion of Series E accrued dividend for common stock		3			-

Level 1:	Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:	Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3:	Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.


●	For indefinite-lived intangible assets, such as acquired in-process R&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any.

	Nine Months Ended September 30,
	2018		2017

Stock options outstanding		5,380,957		233,400
Warrants		35,646,829		2,492,945
Shares to be issued upon conversion of notes payable		-		315,746
Restricted common stock		-		70,000
Series E Preferred Stock		34,900,000		-
Series F Preferred Stock		3,080,000		-
Total		79,007,786		3,112,091

	Three Months ended June 30,						Six Months ended June 30,
	2019			2018			2019			2018
Numerator
Net loss	$	(2,780	)	$	(4,648	)	$	(5,338	)	$	(6,009	)
Preferred stock dividends	$	(357	)	$	(271	)	$	(739	)	$	(271	)
Net Loss allocable to common stock holders	$	(3,137	)	$	(4,919	)	$	(6,077	)	$	(6,280	)
Denominator
Weighted average common shares outstanding used to compute net loss per share, basic and diluted		10,860,049			10,821,230			10,811,138			10,672,082
Net loss per share of common stock, basic and diluted
Net loss per share	$	(0.29	)	$	(0.45	)	$	(0.56	)	$	(0.59	)

	Three and Six Months Ended June 30,
	2019		2018

Stock options outstanding		4,992,807		1,122,457
Warrants		36,267,329		33,028,829
Series C Preferred Stock		68,000		68,000
Series D Preferred Stock		3,000		3,000
Series E Preferred Stock		34,780,000		34,990,000
Series F Preferred Stock		3,810,000		-
Total		79,921,136		69,212,286

~~Expiring in 2018~~			-
Expiring in 2019			600,000
Expiring in 2020			1,189,079
Expiring in 2021			343,750
Expiring in 2022			~~29,202,227~~66,667
Expiring in 2023			33,729,180
Expiring thereafter			~~4,311,773~~338,653
Total			~~35,646,829~~36,267,329

	Options Outstanding
	Shares			Weighted Average Exercise Price
Outstanding, December 31, 2017		745,707		$	8.84
Options granted		4,724,000			0.67
Options expired / forfeited		(88,750	)		67.40
Outstanding, September 30, 2018		5,380,957			0.86
Exercisable, September 30, 2018		1,638,991		$	0.93

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
	$0.98		4,705,000		9.39	$	0.67		1,467,500	$	0.73
	$1.00		7,000		3.13	$	1.00		7,000	$	1.06
	$1.50 - $1.80		521,107		8.64	$	1.79		136,641	$	1.78
	$2.60 - $8.20		135,200		3.78	$	2.77		15,200	$	4.48
	$10.70 - $22.00		12,650		1.00	$	10.92		12,650	$	10.92

	Totals		5,380,957		9.15	$	0.86		1,638,991	$	0.93

	Six Months Ended
	June 30, 2019		June 30,2018
	(in thousands)
Sales and marketing	$	2,207	$	2,586
Research and development		-		173
General and administrative expenses		2,966		1,979
Amortization		35		247
Total operating expenses	$	5,208	$	4,985

	Nine Months Ended
	September 30, 2018		September 30, 2017

Sales, marketing and commercial operations	$	3,456,871	$	-
Research and development		173,256		746,221
General and administrative expenses		4,119,988		1,878,301
Amortization		288,460		327,642
Goodwill and intangible assets impairment		4,794,030		-
Total operating expenses	$	12,832,605	$	2,952,164

	●	Inadequate segregation of duties consistent with control objectives;
	●	Lack of qualified accounting personnel to prepare and report financial information in accordance with GAAP; and
	●	Lack of documentation on policies and procedures that are critical to the accomplishment of financial reporting objectives.

	●	Identify gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company; and
	●	Continue to develop policies and procedures on internal control over financial reporting and monitor the effectiveness of operations on existing controls and procedures.

Exhibit No.		Description
~~3.1~~		Certificate of Amendment of the Restated Certificate of Incorporation of Adhera Therapeutics, Inc. (filed as Exhibit 3.1 to our Current Report on Form 8-K dated October 9, 2018, and incorporated herein by reference).

~~3.2~~		Certificate of Designation of Preferences, rights and Limitations of the Series F Convertible Preferred Stock of Adhera Therapeutics, Inc. (filed as Exhibit 3.1 to our Current Report on Form 8-K dated July 11, 2018, and incorporated herein by reference).

4.1		Form of ~~Common Stock Purchase Warrant~~Secured Promissory Note issued by Adhera Therapeutics, Inc. to ~~the purchasers~~select accredited investors on each of ~~its Series F Convertible Preferred Stock~~June 28, 2019, July 3, 2019, July 17, 2019 and August 5, 2019 (filed as Exhibit 4.1 to our Current Report on Form 8-K dated ~~July 11, 2018,~~June 28, 2019, and incorporated herein by reference).

~~10.1~~10.1#		Employment Agreement, dated ~~as of September 24, 2018,~~April 4, 2019, by and between Adhera Therapeutics, Inc. and Nancy R. ~~Eric Teague~~Phelan (filed as Exhibit 10.1 to our Current Report on Form 8-K dated ~~September 24, 2018,~~April 4, 2019, and incorporated herein by reference).

~~10.2~~10.2#		~~Omnibus~~ Settlement Agreement, dated April 4, 2019, by and between Adhera Therapeutics, Inc. an Robert. C. Moscato, Jr. (filed as Exhibit 10.2 to our Current Report on Form 8-K dated April 4, 2019, and incorporated herein by reference).

10.3		Security Agreement, dated as of ~~September~~June 28, ~~2018, by and~~2019, among Adhera Therapeutics, Inc., ~~Vuong Trieu, Ph.D., Autotelic~~IThenaPharma, Inc., ~~Autotelic LLC, Autotelic BIO, Oncotelic,~~Cequent Pharmaceuticals, Inc., MDRNA Research, Inc., the purchasers of secured promissory notes identified on the signature pages thereto, and ~~LipoMedics, Inc.~~Jeff S. Phillips as agent (filed as Exhibit 10.1 to our Current Report on Form 8-K dated ~~October 3, 2018,~~June 28, 2019, and incorporated herein by reference).

10.4		Form of Subscription Agreement used in connection with the issuance by Adhera Therapeutics, Inc. of Secured Convertible Promissory Notes on each of June 28, 2019, July 3, 2019, July 17, 2019 and August 5, 2019 (filed as Exhibit 10.2 to our Current Report on Form 8-K dated August 5, 2019, and incorporated herein by reference).

31.1		Certification of our Principal Executive Officer ~~pursuant to Rule 13a-14~~ and ~~15d-14 under the Securities Exchange Act of 1934, as amended. (1)~~

~~31.2~~		~~Certification of our~~ Principal Financial Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended. (1)

32.1		Certification of our Principal Executive Officer ~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)~~

~~32.2~~		~~Certification of our~~and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)

101INS		XBRL Instance Document (1)

101SCH		XBRL Taxonomy Extension Schema Document (1)

101CAL		XBRL Taxonomy Extension Calculation Linkbase Document (1)

101DEF		XBRL Taxonomy Extension Definition Linkbase Document (1)

101LAB		XBRL Taxonomy Extension Label Linkbase Document (1)

101PRE		XBRL Taxonomy Extension Presentation Linkbase Document (1)

(1)		Filed herewith.
(2)		Furnished herewith.

	ADHERA THERAPEUTICS, INC.

Date: ~~November 19, 2018~~August 14, 2019	By:	/s/ ~~Robert C. Moscato, Jr.~~Nancy R. Phelan.
		~~Robert C. Moscato, Jr.~~Nancy R. Phelan
		Chief Executive Officer and Director
		(Principal Executive ~~Officer)~~

~~Date: November 19, 2018~~		~~/s/ Eric Teague~~
		~~Eric Teague~~
		~~Chief Financial~~ Officer,
		(Principal Financial Officer and Principal Accounting Officer)