What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-08-10 compared with 2021-05-11 · 78 added, 205 removed, 79 unchanged (78% of the section changed)

4 unchanged sentences

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

Quarterly Report on Form 10-Q for the three months ended March 31, 2021 and 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 the Senior Notes

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.

April, May and June 2021, we issued $75,000,000 aggregate principal amount of 8.625% senior notes due 2026 (the “Notes”).

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.

Our ability 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

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,

7 unchanged sentences

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.

have raised over $85,000,000 in funds through equity and debt financings in April, May and June 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.

Obtaining 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.

We may also 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

16 unchanged sentences

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.

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;

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;

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

into transactions with affiliates;

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

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, leveraged recapitalization,

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

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

10 unchanged sentences

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

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

ability to sell them.

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

25 unchanged sentences

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.

If we issue other securities with ratings lower

than market expectations or that are subsequently lowered or withdrawn, the market for or the market value of the Notes could be adversely

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.

proprietary formulations are comprised of active pharmaceutical ingredients that are components of drugs that have received marketing

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

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:

the purchase, distribution, management,

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

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 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 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.

to certain limited exceptions, the terms of the 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.

Unregistered Sales of Equity Securities and Use of Proceeds

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors