What changed in this filing

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Item 1A. Risk Factors

2021-05-11 compared with 2020-11-09 · 271 added, 179 removed, 13 unchanged (97% of the section changed)

should carefully consider the following risk factors in addition to the other information contained in this Quarterly Report.

Our business, financial condition, results of operations and stock price could be materially adversely affected by any of these

You should consider all of the factors described in this section as well as the risk factors and the other information

in our Quarterly Report on Form 10-Q for the three months ended September 30, 2020 and our Annual Report on Form 10-K including

our audited financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition

and Results of Operations” when evaluating our business.

If any of the following risks actually occurs, our business, financial

condition, results of operations and future growth prospects would likely be materially and adversely affected.

In these circumstances,

the market price of our common stock would likely decline and you may lose all or part of your investments.

Additional risks and

uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

COVID-19 pandemic has had an adverse effect on our business and results of operations and is expected to continue to have further

adverse effects, which could be material, on our business, results of operations, financial condition, liquidity, and capital

March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic.

The COVID-19 pandemic has negatively

impacted the global economy, disrupted supply chains and created significant volatility in financial markets.

We have implemented

business policies intended to protect our employees from the spread of COVID-19.

Those policies include employees working from

home when possible and employees in our facilities increasing physical distancing.

March 18, 2020, the Centers for Medicare & Medicaid Services (“CMS”) released guidance for U.S.

healthcare providers

to limit all elective medical procedures in order to conserve personal protective equipment and limit exposure to COVID-19 during

the pendency of the pandemic.

Many of our customers use our products in procedures impacted by the guidance.

In addition to limiting

medical procedures, many hospitals and other healthcare providers have strictly limited access to their facilities during the

We cannot predict the duration or scope of the pandemic, actions that may be taken by governments and businesses in

response to the pandemic, or the impacts of the pandemic on healthcare systems.

The impacts of the pandemic may include, but are

not limited to:

revenues from our customers, including our major customers, whose products are impacted by CMS guidance to limit elective

medical procedures;

ability or willingness of third parties to market, distribute and sell our products, due to reduced demand from, or lack of

access to, healthcare facilities and providers;

ability, or inability, to complete clinical trials and other activities required to achieve regulatory clearance of our products

under development due to lack of access to healthcare facilities, healthcare providers and patients;

or lost access to third party service providers that we use in our research and development or marketing efforts;

cash flow from our operations due to reductions in revenues or collections from our customers and increases in operating costs

related to actions we have taken in response to the pandemic;

business productivity due to inefficiencies in employees working from home or increasing physical distancing and other pandemic

response protocols in our production facilities;

susceptibility to the risk of information technology security breaches and other disruptions due to increased volumes of remote

access to our information systems from our employees working at home;

to source sufficient components used in our products due to disruptions in supply chains;

ability to identify, evaluate and acquire, or effectively integrate, complementary businesses, products, materials or technologies

due to travel restrictions, physical distancing protocols, and lack of access to third party service providers related to

our development activities;

of manufacturing capacity, which could lead to failures to meet product delivery commitments, or increased operating costs

if one of our facilities were to experience a COVID-19 outbreak;

in assessing and securing intellectual property rights due to lack of access to, or delayed responsiveness of, third party

service providers or governmental agencies;

ability to retain personnel over concerns about workplace exposure to COVID-19, or to hire and effectively train new personnel,

due to physical distancing protocols;

of goodwill or other assets due to reductions in the fair value of our reporting units.

and other factors relating to, or arising from, the pandemic could have material adverse effects on our business, results of operations,

cash flows, financial condition, and capital investments.

Actual or anticipated adverse effects on our cash flows or financial

condition may lead us to seek additional funding.

Any future debt financing into which we enter may impose upon us covenants that

restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our

common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.

We cannot be certain

that additional funding will be available on acceptable terms, if at all.

If we do not have, or are not able to obtain, sufficient

funds, we may have to delay development or commercialization of our products or otherwise curtail our operations.

events could materially harm our business and operating results.

Our business,

financial condition, results of operations and stock price could be materially adversely affected by any of these risks.

You should consider

all of the factors described in this section when evaluating our business as well as the risk factors and the other information in our

Annual Report on Form 10-K for the year ended December 31, 2020, including our audited financial statements and the related notes and

“Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

If any of the following risks

actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and

adversely affected.

In these circumstances, the market price of our common stock would likely decline and you may lose all or part of

your investments.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our

business operations.

Related to O ur Financial Position, Need for Additional Capital and Senior

have incurred significant indebtedness, which will require substantial cash to service and which subjects us to certain financial requirements

and business restrictions.

April and May 2021, we issued $55,000,000 of 8.625% senior notes due 2026.

We may incur additional indebtedness in the future.

to make scheduled payments on our indebtedness depends on our future performance and ability to raise additional capital, which is subject

to economic, financial, competitive and other factors, some of which are beyond our control.

If we are unable to generate sufficient

cash to service our debt, we may be required to adopt one or more alternatives, such as selling assets, restructuring our debt or obtaining

additional capital through equity sales or incurrence of additional debt on terms that may be onerous or highly dilutive to our stockholders.

Our ability to engage in any of these activities would depend on the capital markets and our financial condition at such time, and we

may not be able to do so when needed, on desirable terms or at all, which could result in a default on our debt obligations.

Additionally,

our debt instruments contain or, from time to time, may contain various restrictive covenants, including, among others, our obligation

to deliver certain financial and other information, our obligation to comply with certain notice and insurance requirements, and our

inability, without prior consent, to dispose of certain of our assets, incur certain additional indebtedness, enter into certain merger,

acquisition or change of control transactions, pay certain dividends or distributions on or repurchase any of our capital stock or incur

any lien or other encumbrance on our assets, subject to certain permitted exceptions.

Any failure by us to comply with any of these covenants,

subject to certain cure periods, or to make all payments under the debt instruments when due, would cause us to be in default under the

applicable debt instrument.

In the event of any such default, lenders may be able to foreclose on our assets that secure the debt or

declare all borrowed funds, together with accrued and unpaid interest, immediately due and payable, thereby potentially causing all of

our available cash to be used to pay our indebtedness or forcing us into bankruptcy or liquidation if we do not then have sufficient

cash available.

Any such event or occurrence could severely and negatively impact our operations and prospects.

may need additional capital in order to continue operating our business, and such additional funds may not be available when needed,

on acceptable terms, or at all.

only recently started generating cash from operations, but we do not currently earn sufficient revenues to support our operations.

may need significant additional capital to execute our business plan and fund our proposed business operations.

Additionally, our plans

may change or the estimates of our operating expenses and working capital requirements could be inaccurate, we may pursue acquisitions

of pharmacies or other strategic transactions that involve large expenditures, or we may experience growth more quickly or on a larger

scale than we expect, any of which may result in the depletion of capital resources more rapidly than anticipated and could require us

to seek additional financing earlier than we expect to support our operations.

have raised over $65,000,000 in gross proceeds through equity and debt financings in April and May 2021.

We may seek to

obtain additional capital through equity or debt financings, funding from corporate partnerships or licensing arrangements, sales

of assets or other financing transactions.

If we issue additional equity or debt securities to raise funds, our existing stockholders

may experience substantial dilution, and the newly issued equity or debt securities may have more favorable terms or rights, preferences

and privileges senior to those of our existing stockholders.

If we raise additional funds through collaboration and licensing

arrangements or sales of assets, we may have to relinquish potentially valuable rights to our drug candidates or proprietary technologies,

or grant licenses on terms that are not favorable to us.

If we raise funds by incurring additional debt, we may be required to

pay significant interest expenses and our leverage relative to our earnings or to our equity capitalization may increase.

commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments and may

impose restrictions on our activities.

Further, we may incur substantial costs in pursuing future capital and/or financing transactions,

including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs.

be required to recognize non-cash expenses in connection with certain securities we may issue, such as options, convertible notes

and warrants, which would adversely impact our financial results.

Notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur

in the future.

Notes are not secured by any of our assets or any of the assets of our subsidiaries.

As a result, the Notes are effectively subordinated

to any secured indebtedness that we or our subsidiaries have currently outstanding or may incur in the future (or any indebtedness that

is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness.

The indenture governing the Notes does not prohibit us or our subsidiaries from incurring additional secured (or unsecured) indebtedness

in the future.

In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future

secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness

and may consequently receive payment from these assets before they may be used to pay other creditors, including the holders of the Notes.

indenture under which the Notes were issued contains limited protection for holders of the Notes.

indenture under which the Notes were issued offers limited protection to holders of the Notes.

The terms of the indenture and the Notes

do not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions,

circumstances or events that could have an adverse impact on the holders of the Notes.

In particular, the terms of the indenture and

the Notes do not place any restrictions on our or our subsidiaries’ ability to:

issue debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Notes with respect to the assets of our subsidiaries;

pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities subordinated in right of payment to the Notes;

sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);

enter into transactions with affiliates;

create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;

make investments;

create restrictions on the payment of dividends or other amounts to us from our subsidiaries.

addition, the indenture does not include any protection against certain events, such as a change of control, a leveraged recapitalization

or “going private” transaction (which may result in a significant increase of our indebtedness levels), restructuring or

similar transactions.

Furthermore, the terms of the indenture and the Notes do not protect holders of the Notes in the event that we

experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, as they

do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income,

cash flow, or liquidity.

Also, an event of default or acceleration under our other indebtedness would not necessarily result in an event

of default under the Notes.

ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Notes may

have important consequences for the holders of the Notes, including making it more difficult for us to satisfy our obligations with respect

to the Notes or negatively affecting the trading value of the Notes.

debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional

covenants and events of default.

The issuance or incurrence of any such debt with incremental protections could affect the market for

and trading levels and prices of the Notes.

increase in market interest rates could result in a decrease in the value of the Notes.

general, as market interest rates rise, notes bearing interest at a fixed rate decline in value.

Consequently, if the market interest

rates increase, the market value of the Notes may decline.

We cannot predict the future level of market interest rates.

active trading market for the Notes may not develop, which could limit the market price of the Notes or a holder’s ability to sell

Notes are quoted on Nasdaq under the symbol “HROWL.” We cannot provide any assurances that an active trading market will

develop for the Notes or that a holder will be able to sell the Notes.

If the Notes are traded, they may trade at a discount from their

initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, general economic

conditions, our financial condition, performance and prospects and other factors.

The underwriters of the Notes may make a market in

the Notes, but they are not obligated to do so.

The underwriters may discontinue any market-making in the Notes at any time at their

sole discretion.

Accordingly, we cannot assure a holder that a liquid trading market will develop for the Notes, that a holder will be

able to sell the Notes at a particular time or that the price received will be favorable.

To the extent an active trading market does

not develop, the liquidity and trading price for the Notes may be harmed.

Accordingly, a holder may be required to bear the financial

risk of an investment in the Notes for an indefinite period of time.

may issue additional notes.

the terms of the indenture governing the Notes, we may from time to time without notice to, or the consent of, the holders of the Notes,

create and issue additional notes which will be equal in rank to the Notes.

rating for the Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.

have obtained a rating for the Notes.

Ratings only reflect the views of the issuing rating agency or agencies and such ratings could

at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.

A rating is not a recommendation

to purchase, sell or hold the Notes.

Ratings do not reflect market prices or suitability of a security for a particular investor and

the rating of the Notes may not reflect all risks related to us and our business, or the structure or market value of the Notes.

elect to issue other securities for which we may seek to obtain a rating in the future.

If we issue other securities with a rating, such

ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, could adversely affect the market for or

the market value of the Notes.

could enter into various transactions that could increase the amount of our outstanding debt, or adversely affect our capital structure

or credit rating.

to certain limited exceptions, the terms of the senior notes do not prevent us from entering into a variety of acquisition, divestiture,

refinancing, recapitalization or other highly leveraged transactions.

As a result, we could enter into any such transaction even though

the transaction could increase the total amount of our outstanding indebtedness, adversely affect our capital structure or credit rating

or otherwise adversely affect the holders of the Notes.

Related to the Series B Preferred Stock

have the right to issue shares of preferred stock without obtaining stockholder approval.

The Series B Preferred Stock has, and any preferred

stock issued in the future may have, rights, preferences and privileges superior to those of our common stock.

are authorized to issue 5,000,000 shares of “blank check” preferred stock, with such rights, preferences and privileges as

may be determined from time to time by our Board of Directors.

On May 5, 2021, we issued 440,000 shares of Series B Cumulative Preferred

Such shares have rights, preferences and privileges superior to those of our common stock.

Our Board of Directors is empowered,

without stockholder approval, to issue additional preferred stock at any time in one or more series and to fix the dividend rights, dissolution

or liquidation preferences, redemption prices, conversion rights, voting rights and other rights, preferences and privileges for any

series of our preferred stock that may be issued.

The issuance of shares of such preferred stock, depending on the rights, preferences

and privileges attributable to the preferred stock, could reduce the voting rights and powers of our common stockholders and the portion

of our assets allocated for distribution to holders of our Series B Preferred Stock and to common stockholders in a liquidation event,

and could also result in dilution to the book value per share of our stock.

The preferred stock could also be utilized, under certain

circumstances, as a method for raising additional capital or discouraging, delaying or preventing a change in control of our Company.

cannot assure that quarterly dividends on, or any other payments in respect of, the Series B Preferred Stock will be made timely or at

cannot assure that we will be able to pay quarterly dividends on the Series B Preferred Stock or redeem the Series B Preferred Stock,

if we wanted to do so.

Quarterly dividends on our Series B Preferred Stock will be paid from funds legally available for such purpose

when, as and if declared by our Board of Directors.

Certain factors may influence our decision, or adversely affect our ability, to pay

dividends on, or make other payments in respect of, our Series B Preferred Stock, including, among other things, the amount of our available

cash or other liquid assets;

our ability to service and refinance our current and future indebtedness;

restrictions imposed by our existing,

or any future, credit facilities or other debt instruments;

and limitations on cash payments to stockholders under Delaware law, including

limitations that require dividend payments be made out of surplus or, subject to certain limitations, out of net profits for the then-current

or preceding year in the event there is no surplus.

may seek to redeem the Series B Preferred Stock given the increasing dividends to which such shares are entitled.

We may not have sufficient

capital to redeem the Series B Preferred Stock if, and when, we seek to redeem the stock.

shares of Series B Preferred Stock have no maturity or mandatory redemption date.

However, the dividend rate for such shares increases

over time and, as a result, we may seek to redeem the Series B Preferred Stock.

By their terms, the Series B Preferred Stock may be redeemed

by us at our option either in whole or in part at any time.

Any decision we may make at any time regarding whether to redeem the Series

B Preferred Stock will depend upon a wide variety of factors, including our evaluation of our capital position, our capital requirements

and general market conditions at that time.

However, investors should not assume that we will redeem the Series B Preferred Stock at

any particular time, or at all.

Series B Preferred Stock ranks junior to all of the Company’s indebtedness and other liabilities and are effectively junior to

all indebtedness and other liabilities of the Company’s subsidiaries.

the event of a bankruptcy, liquidation, dissolution or winding-up of the affairs of the Company, the Company’s assets will be available

to pay obligations on the Series B Preferred Stock only after all of the Company’s indebtedness and other liabilities have been

The rights of holders of the Series B Preferred Stock to participate in the distribution of the Company’s assets will rank

junior to the prior claims of the Company’s current and future creditors and any future series or class of preferred stock the

Company may issue that ranks senior to the Series B Preferred Stock.

In addition, the Series B Preferred Stock effectively ranks junior

to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) the Company’s

existing subsidiaries and any future subsidiaries.

The Company’s existing subsidiaries are, and any future subsidiaries would be,

separate legal entities and have no legal obligation to pay any amounts to the Company in respect of dividends due on the Series B Preferred

If the Company is forced to liquidate its assets to pay its creditors, the Company may not have sufficient assets to pay amounts

due on any or all of the Series B Preferred Stock then outstanding.

The Company and its subsidiaries have incurred and may in the future

incur substantial amounts of debt and other obligations that will rank senior to the Series B Preferred Stock.

The Company may incur

additional indebtedness and become more highly leveraged in the future, which could harm the Company’s financial position and potentially

limit cash available to pay dividends.

As a result, the Company may not have sufficient funds remaining to satisfy its dividend obligations

relating to the Series B Preferred Stock if the Company incurs additional indebtedness.

If the Company decides to issue debt or senior

equity securities in the future, it is possible that these securities will be governed by an indenture or other instrument containing

covenants restricting the Company’s operating flexibility.

Risks Related

to Regulatory Approval and Other Legal Compliance Matters

business is significantly impacted by state and federal statutes and regulations.

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approval from the FDA, although our proprietary compounded formulations have not themselves received FDA approval.

is not required in order to market and sell our compounded formulations.

In the future we may choose to pursue FDA approval to

market and sell certain potential drug candidates.

The marketing and sale of compounded formulations is subject to and must comply

with extensive state and federal statutes and regulations governing compounding pharmacies.

These statutes and regulations include,

among other things, restrictions on compounding for office use or in advance of receiving a patient-specific prescription or,

for outsourcing facilities, requirements regarding preparation, such as regular FDA inspections and cGMP requirements, prohibitions

on compounding drugs that are essentially copies of FDA-approved drugs, limitations on the volume of compounded formulations that

may be sold across state lines, and prohibitions on wholesaling or reselling.

These and other restrictions on the activities of

compounding pharmacies and outsourcing facilities may significantly limit the market available for compounded formulations, compared

to the market available for FDA-approved drugs.

FDA approval is not

required in order to market and sell our compounded formulations.

In the future, we may choose to pursue FDA approval to market and sell

certain potential drug candidates.

The marketing and sale of compounded formulations is subject to and must comply with extensive state

and federal statutes and regulations governing compounding pharmacies.

These statutes and regulations include, among other things, restrictions

on compounding for office use or in advance of receiving a patient-specific prescription or, for outsourcing facilities, requirements

regarding preparation, such as regular FDA inspections and cGMP requirements, prohibitions on compounding drugs that are essentially

copies of FDA-approved drugs, limitations on the volume of compounded formulations that may be sold across state lines, and prohibitions

on wholesaling or reselling.

These and other restrictions on the activities of compounding pharmacies and outsourcing facilities may

significantly limit the market available for compounded formulations, compared to the market available for FDA-approved drugs.

pharmacy business is impacted by federal and state laws and regulations governing the following:

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compounding, dispensing, reimbursement, marketing and labeling of prescription drugs and related services including:

state regulation affecting the pharmacy and pharmaceutical industries, including state pharmacy licensure and registration or

permit standards;

rules and regulations issued pursuant to HIPAA and other state and federal laws related to the use, disclosure

and transmission of health information;

FDA and/or state

regulation affecting the pharmacy and pharmaceutical industries, including state pharmacy licensure and registration or permit standards;

rules and regulations issued pursuant to HIPAA and other state and federal laws related to the use, disclosure and transmission of health

and state and federal controlled substance laws.

Our failure to comply with any of these

laws and regulations could severely limit or curtail our pharmacy operations, which would materially harm our business and prospects.

Further, our business could be adversely affected by changes in these or any newly enacted laws and regulations, and federal and

state agency interpretations of the statutes and regulations.

Statutory or regulatory changes could require us to make changes

to our business model and operations and/or could require us to incur significantly increased costs to comply with such regulations.

July 30, 2020, the FDA issued a notice for comments related to certain bulk drug substances to be removed from the 503B

Bulk’s List (or Category 1 List).

Included in this notice for comment were certain bulk drug substances which we currently

use in some of our compounded products.

In the event one or more of these bulk substances are ultimately removed from the Category

1 List, we intend to utilize commercially available versions of these substances or similar active pharmaceutical ingredients

Our failure to comply with any of these laws and regulations could severely

limit or curtail our pharmacy operations, which would materially harm our business and prospects.

Further, our business could be adversely

affected by changes in these or any newly enacted laws and regulations, and federal and state agency interpretations of the statutes

and regulations.

Statutory or regulatory changes could require us to make changes to our business model and operations and/or could require

us to incur significantly increased costs to comply with such regulations.

July 30, 2020 and separately on March 24, 2021, the FDA issued public notices for comments related to certain bulk drug substances to

be removed from the 503B Bulk’s List (or Category 1 List).

Included in these notices for comment were certain bulk drug substances

which we currently use in some of our compounded products.

In the event one or more of these bulk substances are ultimately removed from

the Category 1 List, we intend to utilize commercially available versions of these substances or similar active pharmaceutical ingredients

as replacements of the bulk powders contained in our sterile products.

In addition, nothing in the FDA’s notice affects

the dispensing of bulk powder-containing products from our 503A pharmacy.

Nonetheless, if all or some of the bulk drug substances

we use are removed from the 503B Bulk’s List, this may result in a disruption in our operations, revenues and cash flows.

October 27, 2020, the FDA announced availability of a final Memorandum of Understanding, Addressing Certain Distributions

of Compounded Human Drug Products Between the State Board of Pharmacy or Other Appropriate State Agency and the Food and Drug

Administration (the “MOU”).

The MOU describes the responsibilities of a state board of pharmacy, or other appropriate

state agency that chooses to sign the MOU, in investigating and responding to complaints related to drug products compounded in

such state and distributed outside such state and in addressing the interstate distribution of inordinate amounts of compounded

human drug products.

Additionally, as part of the MOU, FDA refined the definition of “inordinate amount,” a threshold

for certain information identification and sharing which does not place a limit on the distribution of compounded human drug products

interstate by a pharmacy located in a state that has entered into the MOU.

Section 503A of the FDCA sets a five percent limit

on compounded drugs distributed outside the state by a pharmacist, pharmacy or physician located in a state that has not entered

In addition, nothing in the FDA’s notice affects the dispensing

of bulk powder-containing products from our 503A pharmacy.

Nonetheless, if all or some of the bulk drug substances we use are removed

from the 503B Bulk’s List, this may result in a disruption in our operations, revenues and cash flows.

October 27, 2020, the FDA announced availability of a final Memorandum of Understanding, Addressing Certain Distributions of Compounded

Human Drug Products Between the State Board of Pharmacy or Other Appropriate State Agency and the Food and Drug Administration (the “MOU”).

The MOU describes the responsibilities of a state board of pharmacy, or other appropriate state agency that chooses to sign the MOU,

in investigating and responding to complaints related to drug products compounded in such state and distributed outside such state and

in addressing the interstate distribution of inordinate amounts of compounded human drug products.

Additionally, as part of the MOU,

FDA refined the definition of “inordinate amount,” a threshold for certain information identification and sharing which does

not place a limit on the distribution of compounded human drug products interstate by a pharmacy located in a state that has entered

into the MOU.

have 365 days to sign the MOU, before the FDA intends to enforce the five percent limit described in Section 503A of the

FDCA in states that have not signed the MOU.

Our pharmacy is based in the state of New Jersey, and we believe the state board

of pharmacy in New Jersey will sign the MOU and as a result, our operations will not be materially affected by the MOU.

In the event New Jersey does not sign the MOU, our pharmacy that operates under Section 503A may be materially affected and we

will transition as many prescription orders as possible to our outsourcing facility, which is not subject to the MOU.

loan under the Paycheck Protection Program may not be forgiven or may subject us to challenges and investigations regarding qualification

for the loan.

April 2020, we received the PPP Loan, which was established under the CARES Act in the principal amount of $1,967,000.

to Section 1106 of the CARES Act we may apply for and be granted forgiveness for all or a portion of the PPP Loan.

Such forgiveness

will be determined, subject to limitations, based on the use of the loan proceeds for qualifying expenses, which include payroll

costs, rent, and utility costs over the allowable measurement period following receipt of the loan proceeds.

SBA continues to develop and issue new and updated guidance regarding the PPP Loan application and forgiveness process, including

guidance regarding required borrower certifications and requirements for forgiveness of loans made under the program.

evolving nature of the guidance and depending upon our ability to use the loan proceeds for qualifying expenses, we cannot give

any assurance that our PPP Loan will be forgiven in whole, in part, or that we will apply for forgiveness.

Additionally,

the PPP Loan application required us to certify that the current economic uncertainty made the PPP Loan request necessary to support

our ongoing operations.

While we made this certification in good faith after analyzing, among other things, our financial situation

and access to alternative forms of capital, and believe that we satisfied all eligibility criteria for the PPP Loan and that our

receipt of the PPP Loan is consistent with the broad objectives of the Paycheck Protection Program of the CARES Act, the certification

described above does not contain any objective criteria and is subject to interpretation.

In addition, the SBA has stated that

it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required

certification in good faith.

The lack of clarity regarding loan eligibility under the program has resulted in significant media

coverage and controversy with respect to public companies applying for and receiving loans.

If, despite our good faith belief

that we satisfied all eligibility requirements for the PPP Loan, we are found to have been ineligible to receive the PPP Loan

or in violation of any of the laws or regulations that apply to us in connection with the PPP Loan, including the False Claims

Act, we may be subject to penalties, including significant civil, criminal and administrative penalties and would be required

to repay the PPP Loan.

In the event that we seek forgiveness of all or a portion of the PPP Loan, we will also be required to

make certain certifications which will be subject to audit and review by governmental entities and could subject us to significant

penalties and liabilities if found to be inaccurate, including being required to repay the PPP loan.

In addition, our receipt

of the PPP Loan may result in adverse publicity and damage to our reputation, and a review or audit by the SBA or other government

entity or claims under the False Claims Act could consume significant financial and management resources.

Any of these events

could materially harm our business, results of operations and financial condition.

disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

operations, and those of contract research organizations (or CROs), contractors and consultants, could be subject to power shortages,

telecommunications failures, wildfires, water shortages, floods, earthquakes, hurricanes, typhoons, fires, extreme weather conditions,

medical epidemics, such as the COVID-19 pandemic, and other natural or man-made disasters or business interruptions for which

we are predominantly self-insured.

The occurrence of any of these business disruptions could seriously harm our operations and

financial condition and increase our costs and expenses.

Our ability to obtain clinical supplies of our product candidates could

be disrupted if the operations of our contract manufacturers or cell line storage facilities are affected by a man-made or natural

disaster or other business interruption.

market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

time to time, including recently as a result of the COVID-19 pandemic, global credit and financial markets have experienced extreme

volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence,

declines in economic growth, increases in unemployment rates and uncertainty about economic stability.

Our general business strategy

may be adversely affected by any such economic downturn, volatile business environment and continued unpredictable and unstable

market conditions.

If the equity and credit markets deteriorate it may make any debt or equity financing more difficult to complete,

more costly, and more dilutive.

In the event the Company or one of its subsidiaries needed to access additional capital, failure

to secure financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial

performance and stock price and could require us to delay or abandon development plans.

In addition, there is a risk that one

or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly

affect our ability to attain our operating goals on schedule and on budget.

Section 503A of the FDCA sets a five percent limit on compounded drugs distributed outside the state by a pharmacist, pharmacy

or physician located in a state that has not entered into the MOU.

have 365 days to sign the MOU, before the FDA intends to enforce the five percent limit described in Section 503A of the FDCA in states

that have not signed the MOU.

Our pharmacy is based in the state of New Jersey, and we believe the state board of pharmacy in New Jersey

will sign the MOU and as a result, our operations will not be materially affected by the MOU.

In the event New Jersey does not sign the

MOU, our pharmacy that operates under Section 503A may be materially affected, and we will transition as many prescription orders as

possible to our outsourcing facility, which is not subject to the MOU.

Unregistered Sales of Equity Securities and Use of Proceeds

2 unchanged sentences

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What changed 10-Q

Item 1A. Risk Factors