What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-09 compared with 2021-08-10 · 658 added, 596 removed, 585 unchanged (68% of the section changed)

2 unchanged sentences

thousands, except share data)

and cash equivalents, including restricted cash of $ 200

in Eton Pharmaceuticals

receivable - Melt Pharmaceuticals

receivable, net

expenses and other current assets

current assets

Cash and cash equivalents, including restricted cash of $ 200

Investment in Eton Pharmaceuticals

Accounts receivable, net

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net

Operating lease right-of-use assets

Intangible assets, net

Investment in Surface Ophthalmics

Investment in Melt Pharmaceuticals

LIABILITIES AND STOCKHOLDERS’ EQUITY

plant and equipment, net

lease right-of-use assets

in Surface Ophthalmics

in Melt Pharmaceuticals

AND STOCKHOLDERS’ EQUITY

payable and accrued expenses

payroll and related liabilities

revenue and customer deposits

portion of paycheck protection program loan payable

portion of loan payable, net of unamortized debt discount

portion of operating lease liabilities

portion of finance lease obligations

current liabilities

Accounts payable and accrued expenses

Accrued payroll and related liabilities

Deferred revenue and customer deposits

Current portion of paycheck protection program loan payable

Current portion of loan payable, net of unamortized debt discount

Current portion of operating lease liabilities

Current portion of finance lease obligations

Total current liabilities

Operating lease liabilities, net of current portion

Finance lease obligations

Accrued expenses, net of current portion

Paycheck protection program loan payable, net of current portion

Loan payable, net of current portion and unamortized debt discount

TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY

Common stock, $ 0.001 par value, 50,000,000 shares authorized, 26,893,896 and 25,749,875 shares issued

and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated deficit

TOTAL HARROW HEALTH STOCKHOLDERS’ EQUITY

Noncontrolling interests

TOTAL LIABILITIES AND EQUITY

lease liabilities, net of current portion

lease obligations

expenses, net of current portion

protection program loan payable, net of current portion

payable, net of current portion and unamortized debt discount

AND CONTINGENCIES

STOCKHOLDERS’

Common stock, $ 0.001 par value,

50,000,000 shares authorized, 26,902,763 and 25,749,875 shares issued and outstanding at

September 30, 2021 and December 31, 2020, respectively

paid-in capital

HARROW HEALTH STOCKHOLDERS’ EQUITY

Noncontrolling

LIABILITIES AND EQUITY

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

1 unchanged sentence

thousands, except for share and per share data)

For the Three Months Ended

For the Six Months Ended

Other revenues

Total revenues

Cost of sales

the Three Months Ended

the Nine Months Ended

general and administrative

and development

of intangible assets

operating expenses

Selling, general and administrative

Research and development

Impairment of intangible assets

Total operating expenses

Income (loss) from operations

Other (expense) income:

Interest expense, net

Investment loss from Melt Pharmaceuticals, net

Investment loss from Surface Pharmaceuticals, net

Investment (loss) gain from Eton Pharmaceuticals, net

Investment loss

Loss from early extinguishment of loan

Gain on forgiveness of PPP loan

income from operations

(expense) income:

in losses of unconsolidated entities

(loss) gain from Eton Pharmaceuticals, net

from early extinguishment of loan

on forgiveness of PPP loan

(expense) income, net

other (expense) income, net

Total other (expense) income, net

Total net loss including noncontrolling interests

Net loss attributable to noncontrolling interests

Net loss attributable to Harrow Health, Inc.

Preferred dividends and accretion of preferred stock discount

Net loss attributable to common stockholders

Basic and diluted net loss per share of common stock

Weighted average number of shares of common stock outstanding, basic and diluted

net (loss) income including noncontrolling interests

loss attributable to noncontrolling interest

(loss) income attributable to Harrow Health, Inc.

dividends and accretion of preferred stock issuance costs

(loss) income attributable to common stockholders

net (loss) income per share of common stock

average number of shares of common stock outstanding, basic

average number of shares of common stock outstanding, diluted

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

STATEMENTS OF STOCKHOLDERS’ EQUITY

the three and six months ended June 30, 2021 and 2020

the period ended September 30, 2021 and 2020

thousands, except for share data)

Preferred Stock

Harrow Health, Inc.

Noncontrolling

1 unchanged sentence

Stockholders’

Balance at March 31, 2020

Issuance of common stock in connection with:

Exercise of employee stock options

Exercise of warrants

Exercise of warrants, shares

Vesting of RSUs

Vesting of RSUs, shares

Stock-based payment for services provided

at June 30, 2020

of common stock in connection with:

of employee stock-based options

of warrants , shares

of common stock related to vesting of RSUs

of common stock related to vesting of RSUs , shares

Shares withheld related to net share settlement of equity awards

Shares withheld related to net share settlement of equity awards, shares

Issuance of preferred shares, net of discount and issuance costs

Issuance of preferred shares, net of discount and issuance

costs, shares

Redemption of preferred shares

Redemption of preferred shares, shares

Payment of preferred dividends

Stock-based compensation expense

Balance at June 30, 2020

Preferred Stock

Harrow Health, Inc.

Shares withheld related to net share settlement of equity awards

of preferred shares, net of discount and issuance costs

of preferred shares

of preferred dividends

payment for services provided

of RSUs, shares

payment for services provided

compensation expense

at September 30, 2020

Noncontrolling

1 unchanged sentence

Stockholders’

Balance at March 31, 2021

Issuance of common stock in connection with:

Exercise of employee stock options

Exercise of warrants

Vesting of RSUs

Shares withheld related to net share settlement of equity awards

Issuance of preferred shares, net of discount and issuance costs

Redemption of preferred shares

Payment of preferred dividends

Stock-based compensation expense

Balance at June 30, 2021

Preferred Stock

Harrow Health, Inc.

at June 30, 2021

of common stock in connection with:

of employee stock-based options

compensation expense

at September 30, 2021

Noncontrolling

1 unchanged sentence

Stockholders’

Balance at December 31, 2019

Issuance of common stock in connection with:

Exercise of employee stock options

Vesting of RSUs

Stock-based payment for services provided

Stock-based compensation expense

Balance at June 30, 2020

Preferred Stock

Harrow Health, Inc.

Total Noncontrolling

at December 31, 2019

of common stock in connection with:

of employee stock-based options

of common stock related to vesting of RSUs

payment for services provided

compensation expense

at September 30, 2020

Noncontrolling

Stockholders’

Balance at December 31, 2020

Issuance of common stock in connection with:

Exercise of employee stock options

Exercise of warrants

Vesting of RSUs

Shares withheld related to net share settlement of equity awards

Issuance of preferred shares, net of discount and issuance costs

Redemption of preferred shares

Payment of preferred dividends

Stock-based compensation expense

Balance at June 30, 2021

at December 31, 2020

of common stock in connection with:

of employee stock-based options

withheld related to net share settlement of equity awards

of preferred shares, net of discount and issuance costs

of preferred shares

of preferred dividends

compensation expense

at September 30, 2021

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss (including noncontrolling interests)

Adjustments to reconcile net loss to net cash provided by (used in) operating

Depreciation and amortization of property, plant and equipment

Amortization of intangible assets

Amortization of operating lease right-of-use assets

Provision for bad debt expense

Amortization of debt issuance costs and discount

Gain on forgiveness of PPP loan

Investment loss from Eton Pharmaceuticals, net

Investment loss from Surface Opthalmics, net

Investment loss from Melt Pharmaceuticals, net

Loss on sale and disposal of assets

Interest paid-in-kind on loan payable

Impairment of long-lived assets

Loss on early extinguishment of loan

Stock-based payment of consulting services

Stock-based compensation

Changes in assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Accrued payroll and related liabilities

Deferred revenue and customer deposits

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

Net proceeds on sale investments

Investment in patent and trademark assets

Purchases of property, plant and equipment

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on finance lease obligations

Net proceeds from 8.625% notes payable, net of costs

Principal and exit fee payments on SWK loan

Net proceeds from PPP loan

Proceeds from SWK debt, net of costs

Payment of taxes for vesting of RSUs

Proceeds from exercise of stock options

Sale of preferred stock, net of discount and issuance costs

Redemption of preferred stock

Payment of preferred stock dividends

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash and cash equivalents

Restricted cash

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for income taxes

Cash paid for interest

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Right-of-use asset obtained in exchange for lease obligation

Net reduction in right-of-use assets and lease liabilities

in connection with lease modifications

FLOWS FROM OPERATING ACTIVITIES

loss (including noncontrolling interests)

to reconcile net loss to net cash provided by (used in) operating activities:

and amortization of property, plant and equipment

of intangible assets

of operating lease right-of-use assets

for bad debt expense

of debt issuance costs and discount

on forgiveness of PPP loan

loss from Eton, net

in losses of unconsolidated entities

income paid-in-kind from note receivable

on sale and disposal of assets

paid-in-kind on loan payable

of long-lived assets

on early extinguishment of loan

payment of consulting services

in assets and liabilities:

expenses and other current assets

payable and accrued expenses

payroll and related liabilities

revenue and customer deposits

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

FLOWS FROM INVESTING ACTIVITIES

proceeds on sale investments

of note receivable, Melt Pharmaceuticals

in patent and trademark assets

of property, plant and equipment

CASH USED IN INVESTING ACTIVITIES

FLOWS FROM FINANCING ACTIVITIES

on finance lease obligations

proceeds from 8.625% notes payable, net of costs

and exit fee payments on SWK loan

proceeds from PPP loan payable

from SWK debt, net of costs

of taxes upon vesting of RSUs

from exercise of stock options

of preferred stock, net of discount and issuance costs

of preferred stock

of preferred stock dividends

CASH PROVIDED BY FINANCING ACTIVITIES

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

CASH EQUIVALENTS AND RESTRICTED CASH, end of period

RECONCILIATION

OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

and cash equivalents

CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

DISCLOSURE OF CASH FLOW INFORMATION:

paid for income taxes

paid for interest

DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

asset obtained in exchange for lease obligation

reduction in right-of-use assets and lease obligations due to

modifications

of common stock upon vesting of RSUs

accounts receivable transferred to note receivable

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

TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the three and six months ended June 30, 2021 and 2020

the three and nine months ended September 30, 2021 and 2020

dollar amounts are expressed in thousands, except share and per share data)

2 unchanged sentences

(together with its subsidiaries, partially owned companies and royalty arrangements unless the context indicates or otherwise

requires, the “Company” or “Harrow”) specializes in the development, production and sale of innovative medications

that offer unique competitive advantages and serve unmet needs in the marketplace through its subsidiaries and deconsolidated companies.

The Company owns one of the nation’s leading ophthalmology-focused pharmaceutical businesses, ImprimisRx.

In addition to wholly

owning ImprimisRx, the Company also has non-controlling equity positions in Surface Ophthalmics, Inc.

(“Surface”) and Melt

Pharmaceuticals, Inc.

requires, the “Company” or “Harrow”) is an ophthalmic-focused healthcare company that specializes in the development,

production and sale of innovative medications that offer unique competitive advantages and serve unmet needs in the marketplace through

its subsidiaries and deconsolidated companies.

The Company owns one of the nation’s leading ophthalmology-focused pharmaceutical

businesses, ImprimisRx.

In addition to wholly owning ImprimisRx, the Company also has non-controlling equity positions in Surface Ophthalmics,

(“Surface”) and Melt Pharmaceuticals, Inc.

(“Melt”), both companies that began as subsidiaries of Harrow.

In 2020, Harrow created Visionology,

In 2020, Harrow created Visionology, Inc.

(“Visionology”), which recently launched an online eye health platform business.

Harrow also owns royalty rights in

various drug candidates being developed by Surface and Melt.

Harrow also owns royalty rights in various drug candidates being developed by Surface and Melt.

of Presentation

7 unchanged sentences

adjustments) considered necessary for a fair presentation have been included.

Operating results for the three and six months ended June

Operating results for the three and nine months ended September

30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any other period.

9 unchanged sentences

in consolidation.

condensed consolidated balance sheets at June 30, 2021 and December 31, 2020 and the condensed consolidated statements of operations,

stockholders’ equity and cash flows for the periods ended June 30, 2021 and 2020 include our accounts and those of our wholly owned

subsidiaries, as well as our majority owned subsidiaries Mayfield Pharmaceuticals, Inc.

and Stowe Pharmaceuticals, Inc.

condensed consolidated balance sheets at September 30, 2021 and December 31, 2020 and the condensed consolidated statements of operations,

stockholders’ equity and cash flows for the periods ended September 30, 2021 and 2020 include our accounts and those of our wholly

owned subsidiaries, as well as our majority owned subsidiaries Mayfield Pharmaceuticals, Inc.

(“Mayfield”) and Stowe Pharmaceuticals,

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

following represents an update for the six months ended June 30, 2021 to the significant accounting policies described in the Company’s

following represents an update for the nine months ended September 30, 2021 to the significant accounting policies described in the Company’s

Annual Report on Form 10-K for the year ended December 31, 2020.

22 unchanged sentences

component of other income or loss.

and Diluted Net Loss per Common Share

net loss per common share is computed by dividing net loss attributable to common stockholders for the period by the weighted average

number of common shares outstanding during the period.

Diluted net loss per share is computed by dividing the net loss attributable to

common stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants,

outstanding during the period.

Basic and diluted net loss per share is computed using the weighted average number of shares of common

stock outstanding during the period.

Common equivalent shares (using the treasury stock or “if converted” method) from stock

options, unvested restricted stock units (“RSUs”) and warrants were 4,121,398 and 5,414,504 at June 30, 2021 and 2020, respectively.

For the three and six months ended June 30, 2021 and 2020, the common equivalent shares are excluded in the calculation of diluted net

loss per share because the effect is anti-dilutive.

Included in the basic and diluted net loss per share calculation were RSUs awarded

to directors that had vested, but the issuance and delivery of the shares are deferred until the director resigns.

The number of shares

underlying vested RSUs at June 30, 2021 and 2020 was 235,973 and 251,746 , respectively.

following table shows the computation of basic and diluted net loss per share of common stock for the three and six months ended June

30, 2021 and 2020:

OF BASIC AND DILUTED EARNINGS PER COMMON SHARE

For the Three Months Ended

For the Six Months Ended

Numerator – net loss attributable to Harrow Health, Inc.

and Diluted Net Income (Loss) per Common Share

net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders for the period by the

weighted average number of common shares outstanding during the period.

Diluted net (loss) income per share is computed by dividing the

net (loss) income attributable to common stockholders for the period by the weighted average number of common and common equivalent shares,

such as stock options and warrants, outstanding during the period.

Common equivalent shares (using the treasury stock method) from stock

options, unvested restricted stock units (“RSUs”) and warrants were 5,657,046 and 5,447,716 at September 30, 2021 and September

30, 2020, respectively.

For the three and nine months ended September 30, 2021 and the nine months ended September 30, 2020, the common

equivalent shares are excluded in the calculation of diluted net loss per share because the effect is anti-dilutive.

Included in the

basic and diluted net (loss) income per share calculation were RSUs awarded to directors that had vested, but the issuance and delivery

of the shares are deferred until the director resigns.

The number of shares underlying vested RSUs at September 30, 2021 and 2020 was

258,117 and 281,507 , respectively.

following table shows the computation of basic and diluted net (loss) income per share of common stock for the three and nine months

ended September 30, 2021 and 2020:

SCHEDULE OF BASIC AND DILUTED EARNINGS PER COMMON SHARE

For the Three

– net (loss) income attributable to Harrow Health, Inc.

common stockholders

Denominator - weighted average number of shares outstanding, basic and diluted

Net loss per share, basic and diluted

Denominator - weighted average number

of shares outstanding, basic

(loss) income per share, basic

the three months ended September 30, 2020, the Company had net income.

As a result, the Company computed diluted net income per share

using the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period.

Diluted common

equivalent shares for the three months ended September 30, 2020, consisted of the following:

OF DILUTED COMMON EQUIVALENT SHARES

the Three Months Ended

Diluted shares related to:

Stock options

Dilutive common equivalent

following table shows the computation of diluted net (loss) income per share of common stock for the three and nine months ended September

30, 2021 and 2020:

OF DILUTED NET INCOME LOSS PER SHARES

For the Three

– net (loss) income attributable to Harrow Health, Inc.

Denominator – weighted average number of shares outstanding, basic

Dilutive common equivalent

Number of shares used

for diluted earnings per share computation

Net (loss) income per

share, diluted

in Eton Pharmaceuticals, Inc.

the three and six months ended June 30, 2021, the Company sold 1,518,000 shares of its Eton Pharmaceuticals, Inc.

common stock through an underwritten public offering at a public offering price of $ 7.00 per share

(the “Eton Stock Sale”).

the nine months ended September 30, 2021, the Company sold 1,518,000 shares of its Eton Pharmaceuticals, Inc.

(“Eton”) common

stock through an underwritten public offering at a public offering price of $ 7.00 per share (the

“Eton Stock Sale”).

The gross proceeds to the Company from the Eton Stock Sale were $ 10,626 , before deducting underwriting

discounts and commissions and other offering expenses payable by the Company of $ 799 .

During the three and six months ended June 30,

2021, the Company recorded a realized loss of $ 1,406 related to the sale of 1,518,000 shares of its Eton common stock.

the Eton Stock Sale and as of June 30, 2021, the Company owns 1,982,000 shares of Eton common stock, which represents less than 10 % of

the equity interests of Eton.

At June 30, 2021, the fair market value of Eton’s common stock was $ 6.16 per share.

In accordance

with the Accounting Standards Update (“ASU”) 2016-01, Financial Instruments-Overall (Subtopic 825-10):

Recognition and

Measurement of Financial Assets and Financial Liabilities , the Company recorded an unrealized investment gain (loss) from its Eton

common stock position of $ ( 2,178 ) and $ ( 5,013 ) and $ 4,725 and $ ( 6,125 ) during the three and six months ended June 30, 2021 and 2020,

respectively, related to the change in fair market value of its investment in Eton during the measurement period.

As of June 30, 2021,

the fair market value of the Company’s investment in Eton was $ 12,209 .

part of the Eton Stock Sale, the Company also agreed, for a period of 180 days, not to conduct any further sales of shares of its common

stock of Eton or otherwise dispose of, directly or indirectly, any common stock of Eton (or any securities convertible into, or exercisable

During the nine months ended September 30, 2021,

the Company recorded a realized loss of $ 1,406 related to the Eton Stock Sale.

the Eton Stock Sale and as of September 30, 2021, the Company owns 1,982,000 shares of Eton common stock, which represents less than

10 % of the equity interests of Eton.

At September 30, 2021, the fair market value of Eton’s common stock was $ 5.04 per share.

accordance with the Accounting Standards Update (“ASU”) 2016-01, Financial Instruments-Overall (Subtopic 825-10):

and Measurement of Financial Assets and Financial Liabilities , the Company recorded an unrealized investment gain (loss) from its

Eton common stock position of $ ( 2,220 ) and $ ( 7,233 ) , during the three and nine months ended September 30, 2021, respectively, and $ 8,575

and $ 2,450 during the three and nine months ended September 30, 2020, respectively, related to the change in fair market value of its

investment in Eton during the measurement period.

As of September 30, 2021, the fair market value of the Company’s investment in

Eton was $ 9,989 .

part of the Eton Stock Sale, the Company agreed, for a period of 180 days, not to conduct any further sales of shares of its common stock

of Eton or otherwise dispose of, directly or indirectly, any common stock of Eton (or any securities convertible into, or exercisable

or exchangeable for, the common stock of Eton).

1 unchanged sentence

– Related Party

Company owns 3,500,000 common shares (which is approximately 44 % of the equity interests as of June 30, 2021) of Melt and uses the equity

method of accounting for this investment, as management has determined that the Company has the ability to exercise significant influence

over the operating and financial decisions of Melt.

Under this method, the Company recognizes earnings and losses in Melt in its condensed

consolidated financial statements and adjusts the carrying amount of its investment in Melt accordingly.

The Company’s share of

earnings and losses are based on the Company’s ownership interest of Melt.

Company owns 3,500,000 common shares (which is approximately 46 % of the equity interests as of September 30, 2021) of Melt and uses the

equity method of accounting for this investment, as management has determined that the Company has the ability to exercise significant

influence over the operating and financial decisions of Melt.

Under this method, the Company recognizes earnings and losses in Melt in

its condensed consolidated financial statements and adjusts the carrying amount of its investment in Melt accordingly.

The Company’s

share of earnings and losses are based on the Company’s ownership interest of Melt.

Any intra-entity profits and losses are eliminated.

During the three months ended June 30, 2021 and 2020, the Company recorded equity in the net losses of Melt of $ 477 and $ 690 , and $ 947

and $ 1,236 during the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021 and December 31, 2020, the Company’s

investment in Melt was $ 1,594 and $ 2,506 , respectively, which includes $ 885 and $ 851 , respectively, due from Melt for reimbursable expenses

and amounts due under a Management Services Agreement between the Company and Melt (the “Melt MSA”).

During the three months ended September 30, 2021 and 2020, the Company recorded equity in the net losses of Melt of $ 706 and $ 300 , and

$ 1,653 and $ 1,536 during the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021 and December 31, 2020,

the Company’s investment in Melt was $ 0 and $ 1,655 .

At September 30, 2021 and December 31, 2020, the Company recorded $ 8 and $ 851 ,

respectively, due from Melt for reimbursable expenses and amounts due under a Management Services Agreement between the Company and Melt

(the “Melt MSA”), which are included in prepaid expenses and other current assets in the accompanying consolidated balance

Note 4 for more information and related party disclosure regarding Melt.

1 unchanged sentence

– Related Party

Company owns 3,500,000

common shares (which is approximately 20 %

of the equity interests following the close of

a round of financing completed by Surface at various dates from May 2021 to July 2021) of Surface and uses the equity method

of accounting for this investment, as management has determined that the Company has the ability to exercise significant influence over

the operating and financial decisions of Surface.

Under this method, the Company recognizes earnings and losses in Surface in its condensed

consolidated financial statements and adjusts the carrying amount of its investment in Surface accordingly.

The Company’s share

of earnings and losses are based on the Company’s ownership interest of Surface.

Company owns 3,500,000 common shares (which is approximately 20 % of the equity interests following the close of a round of financing

completed by Surface in July 2021) of Surface and uses the equity method of accounting for this investment, as management has determined

that the Company has the ability to exercise significant influence over the operating and financial decisions of Surface.

method, the Company recognizes earnings and losses in Surface in its condensed consolidated financial statements and adjusts the carrying

amount of its investment in Surface accordingly.

The Company’s share of earnings and losses are based on the Company’s ownership

interest of Surface.

Any intra-entity profits and losses are eliminated.

The Company recorded equity in the net losses of Surface of

during the three months and $ 1,314

during the six months ended June 30, 2021 and

2020, respectively.

As of June 30, 2021 and December 31, 2020, the Company’s investment in Surface was $ 0

and $ 1,314 ,

respectively.

Notes 5 for more information and related party disclosure regarding Surface.

Plant and Equipment

plant and equipment is stated at cost less accumulated depreciation and amortization.

Depreciation and amortization is calculated using

the straight-line method over the estimated useful life of the asset.

Leasehold improvements and capital lease equipment are amortized

over the estimated useful life or remaining lease term, whichever is shorter.

Software costs during the application development

stage used to meet the Company’s internal needs are generally capitalized.

Computer software and hardware and furniture and equipment

are depreciated over three to five years .

$ 0 and $ 756 during the three months ended September 30, 2021 and 2020, respectively, and $ 1,314 and $ 1,694 during the nine months ended

September 30, 2021 and 2020, respectively.

As of September 30, 2021 and December 31, 2020, the Company’s investment in Surface

was $ 0 and $ 1,314 , respectively.

Note 5 for more information and related party disclosure regarding Surface.

of Equity Method Investments and Note Receivable

a quarterly basis, management assesses whether there are any indicators that the carrying value of the Company’s equity method

investments and note receivable may be other than temporarily impaired.

Indicators include financial condition, operating performance,

and near-term prospects of the investee.

To the extent indicators suggest that a loss in value may have occurred, the Company will evaluate

both quantitative and qualitative factors to determine if the loss in value is other than temporary.

If a potential loss in value is

determined to be other than temporary, the Company will recognize an impairment loss based on the estimated fair value of the equity

method investments and note receivable.

At September 30, 2021 and December 31, 2020, no indicators of impairment existed.

and Development

and development (“R&D”) expenses consist of expenses incurred in performing research and development activities, including

salaries and benefits, other overhead expenses, and costs related to clinical trials, contract services and outsourced contracts.

expense all costs related to R&D as they are incurred.

and milestone payments related to the acquisition and licensing of technology for drug and product candidates that are not yet approved

by the FDA are considered acquisition of in process R&D and expensed as R&D in the period in which the expense occurs.

Adopted Accounting Pronouncements

5 unchanged sentences

not have a material impact on the Company’s condensed consolidated financial statements.

Reclassifications

prior period items and amounts have been reclassified to conform to the classifications used to prepare the consolidated financial statements

for the current period.

These reclassifications had no material impact on the Company’s consolidated financial position,

results of operations, or cash flows as previously reported.

Company accounts for contracts with customers in accordance with ASC 606, Revenues from Contracts with Customers .

49 unchanged sentences

Property License Revenues

of June 30, 2021, we are party to four intellectual property licenses and asset purchase agreements in which we have agreed to grant

of September 30, 2021, we are party to four intellectual property licenses and asset purchase agreements in which we have agreed to grant

a license and which provide a customer with the right to access the Company’s intellectual property.

20 unchanged sentences

recognized on a straight-line basis over the applicable term.

disaggregated by revenue source for the three and six months ended June 30, 2021 and 2020, consists of the following:

disaggregated by revenue source for the three and nine months ended September 30, 2021 and 2020, consists of the following:

SCHEDULE OF DISAGGREGATED REVENUE

For the Three Months Ended

For the Six Months Ended

Product sales, net

For the Three

Product sales,

Commission revenues

License revenues

Total revenues

revenue and customer deposits at June 30, 2021 and December 31, 2020, were $ 56 and $ 66 , respectively.

revenue and customer deposits at September 30, 2021 and December 31, 2020, were $ 3 and $ 66 , respectively.

All deferred revenue and customer

deposit amounts at December 31, 2020 were recognized as revenue during the six months ended June 30, 2021.

INVESTMENT IN MELT PHARMACEUTICALS, INC.

deposit amounts at December 31, 2020 were recognized as revenue during the nine months ended September 30, 2021.

INVESTMENT IN, AND NOTE RECEIVABLE FROM MELT PHARMACEUTICALS, INC.

- RELATED PARTY TRANSACTIONS

6 unchanged sentences

January and March 2019, the Company entered into the Melt Series A Preferred Stock Agreement.

See also Note 2, under the subheading

(see Note 2).

in Melt Pharmaceuticals, Inc.

2 unchanged sentences

amount of $ 10 .

of June 30, 2021 and December 31, 2020, the Company was due $ 885 and $ 851 , respectively, from Melt for reimbursable expenses and amounts

due under the Melt MSA.

Melt did not make any payments to the Company during the three and six months ended June 30, 2021.

As of September 30, 2021 and December 31, 2020, the Company was due $ 8 and $ 851 , respectively, from Melt for reimbursable

expenses and amounts due under the Melt MSA.

Melt did not make any payments to the Company during the three and nine months ended September

The net funds received by Melt excluded $ 908 for amounts owed to the Company for reimbursable expenses and amounts due under

the Melt MSA prior to the effective date of the note receivable (see Note 2).

Company’s Chief Executive Officer, Mark L.

Baum is a member of the Melt board of directors, and several employees of the Company

(including Mr.

Baum and the Company’s Chief Financial Officer, Andrew R.

Boll) entered into consulting agreements and provide consulting

services to Melt.

Baum, was previously a member of the Melt board of directors until his resignation in

September 2021.

Following Mr.

Baum’s departure, the Company no longer has any representation on Melt’s board of directors.

unaudited condensed results of operations information of Melt is summarized below:

SCHEDULE OF CONDENSED INCOME STATEMENT

For the Six Months Ended

SUMMARY OF CONDENSED INCOME STATEMENT

Revenues, net

Loss from operations

unaudited condensed balance sheet information of Melt is summarized below:

SCHEDULE OF CONDENSED BALANCE SHEET

SUMMARY OF CONDENSED BALANCE SHEET

At September 30,

At December 31,

2 unchanged sentences

Total liabilities

Total stockholders’ (deficit) equity

Total liabilities and stockholders’ equity

Total stockholders’

(deficit) equity

liabilities and stockholders’ equity

September 2021, the Company entered into a loan and security agreement in the principal amount of $ 13,500 (the “Melt Loan Agreement”),

as lender, with Melt, as borrower.

Amounts borrowed under the Melt Loan Agreement bear interest at twelve and one-half percent ( 12.50 % )

per annum, which interest can be paid in-kind at the option of Melt until the maturity date.

The Melt Loan Agreement permits Melt to

pay interest only on the principal amount loaned thereunder through the term and all amounts owed will be due and payable on September

Melt may elect to prepay all, but not less than all, of the amounts owed prior to the maturity date at any time without penalty.

has granted the Company a security interest in substantially all of its personal property, rights and assets, including intellectual

property rights, to secure the payment of all amounts owed under the Melt Loan Agreement.

The Melt Loan Agreement contains customary

representations, warranties and covenants, including covenants by Melt limiting additional indebtedness, liens, mergers and acquisitions,

dispositions, investments, distributions, subordinated debt, and transactions with affiliates.

The Melt Loan Agreement includes customary

events of default, and upon the occurrence of an event of default (subject to cure periods for certain events of default), all amounts

owed by Melt thereunder may be declared immediately due and payable by the Company, and the interest rate on the loan may be increased

by three percent (3%) per annum.

connection with the Melt Loan Agreement, the Company and Melt entered into a Right of First Refusal Agreement providing the Company with

the right, but not the obligation, to match any offer received by Melt associated with the commercial rights to any of Melt’s drug

candidates for a period of five years following the effective date of the Melt Loan Agreement.

net funds received by Melt excluded $ 908 for amounts owed to the Company for reimbursable expenses and amounts due under the Melt MSA

prior to the effective date of the note receivable (see Note 2).

INVESTMENT IN SURFACE OPHTHALMICS, INC.

5 unchanged sentences

is required to make mid-single-digit royalty payments to the Company on net sales of the Surface Products while any patent rights remain

of June 30, 2021, the Company owned 3,500,000

shares of Surface common stock.

A Company director,

of September 30, 2021, the Company owned 3,500,000 shares of Surface common stock (approximately 20 % of the equity interests).

director, Richard L.

Lindstrom, and the Company’s Chief Executive Officer, Mark L.

Baum, are directors of Surface.

Surface is required to

make royalty payments to Dr.

Surface is required

to make royalty payments to Dr.

Lindstrom of net sales of certain Surface products while certain patent rights remain outstanding.

is also a minority owner of Flying L Partners, an affiliate of the funding investor who purchased the Surface Series A Preferred Stock.

Lindstrom is also a minority owner of Flying L Partners, an affiliate of the funding investor who purchased the Surface Series A Preferred

Several employees and a director of the Company (including Mr.

Lindstrom) entered into consulting agreements and provide

consulting services to Surface.

Lindstrom) entered into consulting agreements and

provide consulting services to Surface.

unaudited condensed results of operations information of Surface is summarized below:

SUMMARY OF CONDENSED INCOME STATEMENT

For the Six Months Ended

Revenues, net

Loss from operations

unaudited condensed balance sheet information of Surface is summarized below:

SUMMARY OF CONDENSED BALANCE SHEET

At September 30,

At December 31,

2 unchanged sentences

Total liabilities

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total stockholders’

Total liabilities and

stockholders’ equity

RESTRICTED CASH

restricted cash at June 30, 2021 and December 31, 2020 consisted of funds held in a money market account.

At June 30, 2021 and December

31, 2020, the restricted cash was recorded at amortized cost, which approximates fair value.

June 30, 2021 and December 31, 2020, the funds held in a money market account of $ 200 were classified as a current asset.

The money market

account funds are required as collateral as additional security for the Company’s New Jersey facility lease.

restricted cash at September 30, 2021 and December 31, 2020 consisted of funds held in a money market account.

At September 30, 2021

and December 31, 2020, the restricted cash was recorded at amortized cost, which approximates fair value.

September 30, 2021 and December 31, 2020, the funds held in a money market account of $ 200 were classified as a current asset.

market account funds are required as collateral as additional security for the Company’s New Jersey facility lease.

are comprised of finished compounded formulations, over-the-counter and prescription retail pharmacy products, commercial pharmaceutical

products, related laboratory supplies and active pharmaceutical ingredients.

The composition of inventories as of June 30, 2021 and December

31, 2020 was as follows:

The composition of inventories as of September 30, 2021

and December 31, 2020 was as follows:

SCHEDULE OF INVENTORIES

4 unchanged sentences

PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets at June 30, 2021 and December 31, 2020, consisted of the following:

expenses and other current assets at September 30, 2021 and December 31, 2020, consisted of the following:

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid insurance

Due from Melt Pharmaceuticals

Other prepaid expenses

Deposits and other current assets

Total prepaid expenses and other current assets

Deposits and other current

Total prepaid expenses

and other current assets

PROPERTY, PLANT AND EQUIPMENT

plant and equipment at June 30, 2021 and December 31, 2020, consisted of the following:

plant and equipment at September 30, 2021 and December 31, 2020, consisted of the following:

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net:

Computer software and hardware

Internal use software costs in development

Computer software

Furniture and equipment

Lab and pharmacy equipment

Leasehold improvements

Property, plant and equipment, gross

Accumulated depreciation and amortization

Accumulated depreciation

and amortization

plant and equipment, net

the three and six months ended June 30, 2021, depreciation and amortization related to the property, plant and equipment was $ 412 and

$ 876 , respectively.

For the three and six months ended June 30, 2020, depreciation and amortization related to the property, plant and

equipment was $ 465 and $ 913 , respectively.

the three and nine months ended September 30, 2021, depreciation and amortization related to the property, plant and equipment was $ 399

and $ 1,275 , respectively.

For the three and nine months ended September 30, 2020, depreciation and amortization related to property,

plant and equipment was $ 464 and $ 1,377 , respectively.

INTANGIBLE ASSETS AND GOODWILL

Company’s intangible assets at June 30, 2021 consisted of the following:

Company’s intangible assets at September 30, 2021 consisted of the following:

SCHEDULE OF INTANGIBLE ASSETS

Carrying Value

Customer relationships

Non-competition clause

pharmacy licenses

expense for intangible assets for the three and six months ended June 30, 2021 and 2020 was as follows:

State pharmacy licenses

expense for intangible assets for the three and nine months ended September 30, 2021 and 2020 was as follows:

SCHEDULE OF AMORTIZATION EXPENSES FOR INTANGIBLE ASSETS

relationships

future amortization expense for the Company’s intangible assets at June 30, 2021 is as follows:

Customer relationships

Amortization of intangible assets

future amortization expense for the Company’s intangible assets at September 30, 2021 is as follows:

SCHEDULE OF ESTIMATED FUTURE AMORTIZATION EXPENSE

Remainder of 2021

Intangible assets

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

3 unchanged sentences

Other accrued expenses

Accrued litigation settlement (see Note 15)

Accrued interest

Accrued exit fee for loan payable

Accrued exit fee for

Total accounts payable and accrued expenses

Current portion

Non-current total accrued expenses

Non-current total accrued

Senior Notes Due 2026

34 unchanged sentences

On and after any redemption date, interest will cease to accrue on the redeemed Notes.

expense related to the Notes totaled $ 1,466 for the three and six months ended June 30, 2021, and included amortization of debt issuance

costs and discount of $ 192 for the three and six months ended June 30, 2021.

expense related to the Notes totaled $ 1,464 and $ 2,930 for the three and nine months ended September 30, 2021, and included amortization

of debt issuance costs and discount of $ 197 and $ 389 for the three and nine months ended September 30, 2021.

Senior Note – Paid in April 2021

24 unchanged sentences

to the interest accrued as of such date.

expense related to the SWK Loan Agreement, as amended, amounted to $ 138 and $ 647 for the three and six months ended June 30, 2021, respectively,

and $ 505 and $ 1,065 for the three and six months ended June 30, 2020, respectively, and included amortization of debt issuance costs

and discount of $ 0 and $ 96 for the three and six months ended June 30, 2021, respectively, and $ 83 and $ 243 for the three and six months

ended June 30, 2020, respectively.

expense related to the SWK Loan Agreement, as amended, amounted to $ 0 and $ 647 for the three and nine months ended September 30, 2021,

respectively, and $ 501 and $ 1,566 for the three and nine months ended September 30, 2020, respectively, and included amortization of

debt issuance costs and discounts of $ 0 and $ 96 for the three and nine months ended September 30, 2021, respectively, and $ 111 and $ 354

for the three and nine months ended September 30, 2020, respectively.

April 2021, the Company paid $ 15,540 related to all outstanding obligations to SWK under the SWK Loan, including outstanding principal,

accrued interest, accrued exit fee and related expenses and recorded a loss from early extinguishment of $ 756 related to the SWK Loan

during the three and six months ended June 30, 2021.

during the nine months ended September 30, 2021.

Protection Program Loan – Forgiven in March 2021

April 2020, the Company entered into an unsecured promissory note and related Business Loan Agreement with Renasant Bank, as lender,

for a loan (the “PPP Loan”) in the principal amount of $ 1,967

and received cash proceeds of the same amount,

pursuant to the Paycheck Protection Program (the “PPP”) under the Federal Coronavirus Aid, Relief, and Economic Security

Act (the “CARES Act”), which was enacted March 27, 2020.

for a loan (the “PPP Loan”) in the principal amount of $ 1,967 and received cash proceeds of the same amount, pursuant to

the Paycheck Protection Program (the “PPP”) under the Federal Coronavirus Aid, Relief, and Economic Security Act (the “CARES

Act”), which was enacted March 27, 2020.

The PPP is administered by the U.S.

Small Business Administration

On March 30, 2021, the Company received a notice of forgiveness of the full balance of the PPP Loan, including

all accrued interest, in accordance with the terms and conditions of the CARES Act.

Related to the forgiveness, the Company recorded

a gain on the forgiveness of the PPP Loan for the loan balance of $ 1,967

in the accompanying condensed consolidated statement

of operations for the six months ended June 30, 2021.

June 30, 2021, future minimum payments under the Company’s debt were as follows:

Small Business Administration (the “SBA”).

On March 30, 2021, the Company received a notice of forgiveness of the full balance of the PPP Loan, including all accrued interest,

in accordance with the terms and conditions of the CARES Act.

Related to the forgiveness, the Company recorded a gain on the forgiveness

of the PPP Loan for the loan balance of $ 1,967 in the accompanying condensed consolidated statement of operations for the nine months

ended September 30, 2021.

September 30, 2021, future minimum payments under the Company’s debt were as follows:

SUMMARY OF FUTURE MINIMUM PAYMENTS

1 unchanged sentence

Total minimum payments

amount representing interest payments

amount representing

interest payments

Notes payable, gross

unamortized discount, net of premium

Notes payable, net of unamortized discount

unamortized discount,

net of premium

Notes payable, net of

unamortized discount

Company leases office and laboratory space under non-cancelable operating leases listed below.

These lease agreements have remaining

terms between one to four years and contain various clauses for renewal at the Company’s option.

terms between one to five years and contain various clauses for renewal at the Company’s option.

operating lease for 10,200 square feet of office space in San Diego, California that expires in December 2021 ;

8 unchanged sentences

which will expire in July 2027 .

The Company expects to take possession of this additional space in September 2021, which will trigger

The Company expects to take possession of this additional space in November 2021, which will trigger

the commencement of the May Lease Amendment.

Since the commencement date of the May Lease Amendment is expected to occur after June 30,

Since the commencement date of the May Lease Amendment is expected to occur after September

30, 2021, right-of-use assets and operating lease liabilities associated with the May Lease Amendment are not included in the Company’s

condensed consolidated balance sheets as of June 30, 2021.

June 30, 2021, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases

condensed consolidated balance sheet as of September 30, 2021.

May 2021, the Company entered into an operating lease for 5,789

square feet of office space (the “1000

Aviara Lease”) in Carlsbad, California, which will expire in March

The Company expects to take possession

of this space in December 2021, which will trigger the commencement of the 1000 Aviara Lease.

Since the commencement date of the 1000

Aviara Lease is expected to occur after September 30, 2021, right-of-use assets and operating lease liabilities associated with the 1000

Aviara Lease is not included in the Company’s condensed consolidated balance sheet as of September 30, 2021.

September 30, 2021, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases

held by the Company were 6.32 % and 14.18 years , respectively.

the three and six months ended June 30, 2021, cash paid for amounts included for the operating lease liabilities was $ 251 and $ 502 , respectively,

and the Company recorded operating lease expense of $ 241 and $ 502 included in selling, general and administrative expenses, respectively.

lease payments under operating leases as of June 30, 2021 were as follows :

the three and nine months ended September 30, 2021, cash paid for amounts included for the operating lease liabilities was $ 250 and $ 752 ,

respectively, and the Company recorded operating lease expense of $ 203 and $ 705 , included in selling, general and administrative expenses,

respectively.

lease payments under operating leases as of September 30, 2021 were as follows :

SCHEDULE OF FUTURE LEASE PAYMENTS UNDER OPERATING LEASES

1 unchanged sentence

Total minimum lease payments

amount representing interest payments

amount representing

interest payments

Total operating lease liabilities

current portion, operating lease liabilities

Operating lease liabilities, net of current portion

current portion,

operating lease liabilities

Operating lease liabilities,

net of current portion

Company also has a finance lease that is included in its lease accounting but is not considered significant.

lease payments under the non-cancelable finance lease as of June 30, 2021 were as follows :

lease payments under the non-cancelable finance lease as of September 30, 2021 were as follows :

SCHEDULE OF FUTURE LEASE PAYMENTS UNDER FINANCE LEASE

1 unchanged sentence

Total minimum lease payments

amount representing interest payments

amount representing

interest payments

Present value of future minimum lease payments

current portion, finance lease obligation

Finance lease obligation, net of current portion

June 30, 2021, the weighted average incremental borrowing rate and the weighted average remaining lease term for the finance lease held

by the Company were 6.36 % and 2.58 years, respectively.

the three and six months ended June 30, 2021, depreciation expense related to the equipment held under the finance lease obligation was

$ 2 and $ 4 , respectively.

the three and six months ended June 30, 2021, cash paid and expense recognized for interest expense related to the finance lease obligation

current portion,

finance lease obligation

Finance lease obligation,

net of current portion

September 30, 2021, the incremental borrowing rate and the remaining lease term for the finance lease held by the Company were 6.36 %

and 2.33 years, respectively.

the three and nine months ended September 30, 2021, depreciation expense related to the equipment held under the finance lease obligation

was $ 2 and $ 6 , respectively.

the three and nine months ended September 30, 2021, cash paid and expense recognized for interest expense related to the finance lease

obligation was $ 0 and $ 1 , respectively.

STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

June 30, 2021 and 2020, the Company had 5,000,000 shares of preferred stock, $ 0.001 par value, authorized and no shares of preferred

September 30, 2021 and 2020, the Company had 5,000,000 shares of preferred stock, $ 0.001 par value, authorized and no shares of preferred

stock issued and outstanding.

B Cumulative Preferred Stock – Redeemed

May 2021, the Company sold 440,000

shares of the Company’s Series B Cumulative

Preferred Stock, par value $ 0.001

per share and liquidation preference of $ 25.00

per share (the “Series B Preferred Stock”),

for a net purchase price of approximately $ 10,655 .

B Preferred Stock was not convertible into our common stock, had no voting rights ,

except as required by Delaware law, and was redeemable by the Company at any time.

Holders of Series B Preferred Stock were entitled

to cumulative cash dividends at the rate of 9.50 %

of the $ 25.00

liquidation preference per year;

provided, however,

that for each thirty (30) day period following May 5, 2021, the dividend rate increased at various rates, except as otherwise limited

by applicable law.

Dividends were payable quarterly in arrears, on or about the 15th of January, April, July and October, beginning on

or about July 15, 2021.

June 2021, the Company redeemed all of the outstanding shares of the Company’s Series B Preferred Stock, par value $ 0.001 per share.

The redemption price for the 440,000 shares of Series B Preferred Stock outstanding was equal to $ 25.00 per share, plus accrued and unpaid

dividends, which in aggregate totaled $ 11,127 .

During the three and six months ended June 30, 2021, the Company recorded preferred stock

cash dividends and deemed dividends equal to $ 472 .

the six months ended June 30, 2021, the Company issued 311,369 shares of its common stock upon the cashless exercise of warrants to purchase

406,539 shares of common stock with exercise prices between $ 1.79 and $ 3.75 per share.

the six months ended June 30, 2021, the Company issued 16,613 shares of its common stock upon the exercise of options to purchase 16,613

B Cumulative Preferred Stock – Redeemed in June 2021

May 2021, the Company sold 440,000 shares of the Company’s Series B Cumulative Preferred Stock, par value $ 0.001 per share and

liquidation preference of $ 25.00 per share (the “Series B Preferred Stock”), for net proceeds of approximately $ 10,655 .

Series B Preferred Stock was not convertible into our common stock, had no voting rights , except as required by Delaware law, and was

redeemable by the Company at any time.

Holders of Series B Preferred Stock were entitled to cumulative cash dividends at the rate of

9.50 % of the $ 25.00 liquidation preference per year;

provided, however, that for each thirty (30) day period following May 5, 2021, the

dividend rate increased at various rates, except as otherwise limited by applicable law.

Dividends were payable quarterly in arrears,

on or about the 15th of January, April, July and October, beginning on or about July 15, 2021.

June 2021, the Company redeemed all of the outstanding shares of the Series B Preferred Stock.

The redemption price for the 440,000 shares

of Series B Preferred Stock outstanding was equal to $ 25.00 per share, plus accrued and unpaid dividends, which in aggregate totaled

During the three and nine months ended September 30, 2021, the Company recorded preferred stock cash dividends and deemed dividends

equal to $ 0 and $ 472 , respectively.

the nine months ended September 30, 2021, the Company issued 311,369 shares of its common stock upon the cashless exercise of warrants

to purchase 406,539 shares of common stock with exercise prices between $ 1.79 and $ 3.75 per share.

the nine months ended September 30, 2021, the Company issued 25,480 shares of its common stock upon the exercise of options to purchase

25,480 shares of common stock with exercise prices between $ 1.70 and $ 4.29 per share and received net proceeds of $ 65 .

the six months ended June 30, 2021, the Company issued 715,871 shares of its common stock to Mark L.

Baum, its CEO, related to the vesting

of 1,050,000 performance-based restricted stock units.

The Company withheld issuance of 334,129 shares of common stock valued at $ 2,760

for payroll tax purposes.

the six months ended June 30, 2021, the Company issued 100,168 shares of common stock to Andrew R.

Boll, its CFO, related to the vesting

of 157,500 performance-based restricted stock units.

The Company withheld issuance of 57,332 shares of common stock to Mr.

Boll for payroll

tax purposes valued at $ 468 .

the six months ended June 30, 2021, 35,510 shares of the Company’s common stock underlying RSUs issued to directors vested, but

the issuance and delivery of these shares are deferred until the director resigns.

the nine months ended September 30, 2021, the Company issued 715,871 shares of its common stock to Mark L.

Baum, its Chief Executive

Officer, related to the vesting of 1,050,000 performance-based restricted stock units.

The Company withheld issuance of 334,129 shares

of common stock valued at $ 2,760 for payroll tax purposes.

the nine months ended September 30, 2021, the Company issued 100,168 shares of common stock to Andrew R.

Boll, its Chief Financial Officer,

related to the vesting of 157,500 performance-based restricted stock units.

The Company withheld issuance of 57,332 shares of common

Boll for payroll tax purposes valued at $ 468 .

the nine months ended September 30, 2021, 57,654 shares of the Company’s common stock underlying RSUs issued to directors vested,

but the issuance and delivery of these shares are deferred until the applicable director resigns.

September 17, 2007, the Company’s Board of Directors and stockholders adopted the Company’s 2007 Incentive Stock and Awards

7 unchanged sentences

with the 2007 Plan, the “Plans”).

As of June 30, 2021, the 2017 Plan provides for the issuance of a maximum of 6,000,000

As of September 30, 2021, the 2017 Plan provides for the issuance of a maximum of 6,000,000

shares of the Company’s common stock.

3 unchanged sentences

Under the Plans, the Company is authorized to issue incentive stock

options intended to qualify under Section 422 of the Internal Revenue Code, non-qualified stock options, restricted stock units and restricted

options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options, restricted

stock units and restricted stock.

The Plans are administered by the Compensation Committee of the Company’s Board of Directors.

The Company had 3,967,251

shares available for future issuances under the 2017 Plan at June 30, 2021.

summary of stock option activity under the Plans for the six months ended June 30, 2021 is as follows:

The Company had 2,400,592 shares available for future issuances under the 2017 Plan at September 30, 2021.

summary of stock option activity under the Plans for the three and nine months ended September 30, 2021 is as follows:

SCHEDULE OF STOCK OPTION PLAN ACTIVITY

Number of Shares

Weighted Avg.

Remaining Contractual

Exercise Price

Remaining Contractual Life

Intrinsic Value

Options outstanding – January 1, 2021

2 unchanged sentences

Options cancelled/forfeited

Options outstanding - June 30, 2021

Options outstanding – September

Options exercisable

Options vested and expected to vest

Options vested and expected

aggregate intrinsic value in the table above represents the total pre-tax amount of the proceeds, net of exercise price, which would

have been received by option holders if all option holders had exercised and immediately sold all options with an exercise price lower

than the market price on June 30, 2021, based on the closing price of the Company’s common stock of $ 9.29 on that date.

the six months ended June 30, 2021, the Company granted stock options to certain employees and a consultant.

The stock options were granted

with an exercise price equal to the current market price of the Company’s common stock, as reported by the securities exchange

on which the common stock was then listed, at the grant date and have contractual terms of 10 years.

Vesting terms for options granted

to employees and consultants during the six months ended June 30, 2021 included the following vesting schedules:

25% of the shares subject

to the option vest and become exercisable on the first anniversary of the grant date and the remaining 75% of the shares subject to the

option vest and become exercisable quarterly in equal installments thereafter over three years.

Certain option awards provide for accelerated

vesting if there is a change in control (as defined in the Plans) and in the event of certain modifications to the option award agreement.

have been received by option holders if all option holders had exercised and immediately sold all shares underlying options with an exercise

price lower than the market price on September 30, 2021, based on the closing price of the Company’s common stock of $ 9.09 on that

the nine months ended September 30, 2021, the Company granted stock options to certain employees and a consultant.

The stock options

were granted with an exercise price equal to the current market price of the Company’s common stock, as reported by the securities

exchange on which the common stock was then listed, at the grant date and have contractual terms of 10 years.

Vesting terms for options

granted to employees and consultants during the nine months ended September 30, 2021, generally included the following vesting schedules:

25% of the shares subject to the option vest and become exercisable on the first anniversary of the grant date and the remaining 75%

of the shares subject to the option vest and become exercisable quarterly in equal installments thereafter over three years.

option awards provide for accelerated vesting if there is a change in control (as defined in the Plans) and in the event of certain modifications

to the option award agreement .

fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model.

14 unchanged sentences

SCHEDULE OF FAIR VALUE ASSUMPTIONS

Weighted-average fair value of options granted

Expected terms (in years)

Expected volatility

Risk-free interest rate

Weighted-average

fair value of options granted

terms (in years)

interest rate

0.39 - 0.45 %

Dividend yield

following table summarizes information about stock options outstanding and exercisable at June 30, 2021:

following table summarizes information about stock options outstanding and exercisable at September 30, 2021:

SCHEDULE OF STOCK OPTION OUTSTANDING AND EXERCISABLE

1 unchanged sentence

Options Exercisable

Range of Exercise Prices

Number Exercisable

of Exercise Prices

Average Exercise Price

$ 1.47 - $ 2.60

3 unchanged sentences

$ 1.47 - $ 8.99

of June 30, 2021, there was approximately $ 2,012 of total unrecognized compensation expense related to unvested stock options granted

of September 30, 2021, there was approximately $ 1,656 of total unrecognized compensation expense related to unvested stock options granted

under the Plans.

1 unchanged sentence

The stock-based

compensation for all stock options was $ 569 and $ 1,021 during the three and six months ended June 30, 2021, respectively.

intrinsic value of options exercised during the three and six months ended June 30, 2021 was $ 14 and $ 77 , respectively.

compensation for all stock options was $ 355 and $ 1,376 during the three and nine months ended September 30, 2021, respectively.

intrinsic value of options exercised during the three and nine months ended September 30, 2021 was $ 69 and $ 146 , respectively.

Stock Units/ Performance Stock Units

awards are granted subject to certain vesting requirements and other restrictions, including performance and market-based vesting criteria.

1 unchanged sentence

grant date, is expensed over the vesting period of the RSUs.

the six months ended June 30, 2021, 300,000 RSUs with a fair market value of $ 2,670 were issued to certain employees;

the RSUs vest in

full on the third anniversary of the grant date.

the six months ended June 30, 2021, the Company’s board of directors were granted 38,576 RSUs with a fair market value of $ 400

the nine months ended September 30, 2021, 300,000 RSUs with a fair market value of $ 2,670 were issued to certain employees;

vest in full on the third anniversary of the grant date.

the nine months ended September 30, 2021, the Company’s board of directors were granted 38,576 RSUs with a fair market value of

$ 400 , which vest in equal quarterly installments over one year.

summary of the Company’s RSU activity and related information for the six months ended June 30, 2021 is as follows:

the three and nine months ended September 30, 2021, the Company granted 1,567,913

performance stock units (“PSUs”)

to members of its senior management including Mark Baum, Chief Executive Officer, Andrew Boll, Chief Financial Officer, and John Saharek,

President of ImprimisRx , which are subject to the satisfaction of certain market-based and continued service conditions (the “2021

The 2021 PSUs are separated into four tranches and require that the Company achieve and maintain certain levels of total

stockholder returns (“TSR”) ranging from 50% to 175% per share during the five-year period following the grant date.

is based on the aggregate of:

(i) the percent increase of the closing price of the Company’s common stock from July 22, 2021;

(ii) any dividends or like stockholder distributions as specified in the table below.

With certain limited exceptions, in addition to

reaching the TSR targets, the employee must be employed with the Company on the second anniversary of the grant date in order for the

2021 PSUs to vest.

SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY

Number of RSUs

Weighted Average Grant Date Fair Value

100% or greater

150% or greater

175% or greater

Share Price assumes that no dividends or like distributions are made to shareholders of the Company.

If such distributions are made,

the Target Share Price would decrease accordingly, to the benefit of the employee, to account for the dividend/distribution as a part

fair value of the 2021 PSUs was $ 10,113 using a Monte Carlo Simulation with a five-year life, 75 % volatility and a risk free interest

rate of 0.72 % .

This amount is being amortized over a two-year derived service period.

summary of the Company’s RSU activity (including PSUs) and related information for the nine months ended September 30, 2021 is

SCHEDULE OF WARRANTS ACTIVITY

Average Grant Date Fair Value

RSUs unvested - January 1, 2021

1 unchanged sentence

RSUs cancelled/forfeited

RSUs unvested at June 30, 2021

of June 30, 2021, the total unrecognized compensation expense related to unvested RSUs was approximately $ 3,606 , which is expected to

be recognized over a weighted-average period of 1.74 years, based on estimated and actual vesting schedules of the applicable RSUs.

stock-based compensation for RSUs during the three and six months ended June 30, 2021 was $ 481 and $ 827 , respectively.

RSUs unvested at September 30, 2021

of September 30, 2021, the total unrecognized compensation expense related to unvested RSUs was approximately $ 12,379 , which is expected

to be recognized over a weighted-average period of 1.73 years, based on estimated and actual vesting schedules of the applicable RSUs.

The stock-based compensation for RSUs during the three and nine months ended September 30, 2021 was $ 1,340 and $ 2,167 , respectively.

time to time, the Company issues warrants to purchase shares of the Company’s common stock to investors, lenders, underwriters

and other non-employees for services rendered or to be rendered in the future, or pursuant to settlement agreements.

summary of warrant activity for the six months ended June 30, 2021 is as follows:

SCHEDULE OF WARRANTS ACTIVITY

Number of Shares Subject to Warrants Outstanding

Weighted Avg.

Exercise Price

Warrants outstanding - January 1, 2021

Warrants outstanding and exercisable - June 30, 2021

Weighted average remaining contractual life of the outstanding warrants in years - June 30, 2021

outstanding and exercisable as of June 30, 2021 are as follows:

summary of warrant activity for the nine months ended September 30, 2021 is as follows:

SCHEDULE OF WARRANTS OUTSTANDING AND WARRANTS EXERCISABLE

Warrant Series

of Shares Subject to Warrants Outstanding

Average Exercise Price

Warrants outstanding - January 1, 2021

Warrants outstanding

and exercisable - September 30, 2021

Weighted average remaining

contractual life of the outstanding warrants in years - September 30, 2021

outstanding and exercisable as of September 30, 2021 are as follows:

Lender warrants

Stock-Based Transactions

Company recognized $ 28 and $ 85 in stock-based compensation expense related to subsidiary stock options during the three and six months

ended June 30, 2021, respectively.

Company recognized $ 2 and $ 87 in stock-based compensation expense related to subsidiary stock options during the three and nine months

ended September 30, 2021, respectively.

Compensation Summary

1 unchanged sentence

SCHEDULE OF STOCK BASED COMPENSATION GRANTED TO EMPLOYEES DIRECTORS CONSULTANTS

For the Three Months Ended

For the Six Months Ended

Employees - selling, general and administrative

For the Three

Employees - selling, general and

administrative

Employees - R&D

Directors - selling, general and administrative

Consultants - selling, general and administrative

Consultants - selling,

general and administrative

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

April 2018, Novel Drug Solutions, LLC and Eyecare Northwest, PA (collectively “NDS”) filed a lawsuit against the Company

District Court of Delaware asserting various claims, including breach of contract.

The claims stem from an asset purchase

agreement between the Company and NDS entered into in 2013.

In July 2019, NDS filed a second amended complaint which added claims related

to its purported termination of the APA.

In October 2019, NDS voluntarily dismissed all but two claims, leaving only claims related to

the scope and performance of the post-termination obligations to be litigated.

Trial is currently set to begin in November 2021.

is seeking damages, interest, attorneys’ fees and other costs.

The Company believes the claims are meritless and has previously

and will continue to dispute all claims asserted against it and intends to vigorously defend against these allegations.

the Company cannot predict the eventual outcome of this litigation and it could result in substantial costs, losses and a diversion of

management’s resources and attention, which could harm the Company’s business and the value of its common stock.

District Court for the District of Delaware asserting various claims, including breach of contract.

The claims stem from

an asset purchase agreement between the Company and NDS entered into in 2013.

In July 2019, NDS filed a second amended complaint which

added claims related to its purported termination of the asset purchase agreement.

In October 2019, NDS voluntarily dismissed all but

two claims, leaving only claims related to the scope and performance of the post-termination obligations to be litigated.

8, 2021, following a jury trial, the Company and NDS entered into a voluntary settlement agreement (the “Settlement Agreement”)

to resolve all claims and pending matters related to this lawsuit.

The Company estimates the Settlement Agreement will result in a single

one-time payment of $ 1,500 to NDS.

Except for the one-time payment, the Company does not expect the Settlement Agreement will have any

future material impact on the Company’s consolidated cash flows, financial position, and results of operations.

As of September

30, 2021, the Company had accrued an estimate of $ 1,500 in selling, general and administrative expenses owed to NDS as a result of the

Settlement Agreement.

and Professional Liability

4 unchanged sentences

January 2018, John Erick and Deborah Ferrell, successors-in-interest and heirs of Jade Erick, (collectively “Erick”) filed

a lawsuit in the San Diego County Superior against Kim Kelly, ND, MPH asserting claims related to the death of Jade Erick.

In April 2018,

a lawsuit in the San Diego County Superior Court against Kim Kelly, ND, MPH asserting claims related to the death of Jade Erick.

2018, Erick filed an amendment to the lawsuit, naming the Company as a co-defendant.

In September 2018, co-defendant Dr.

Kelly filed a cross-complaint

against the Company and various entities affiliated with Spectrum Laboratory Products, Inc., Spectrum Chemical Manufacturing Corp.

Spectrum Pharmacy Products, Inc.

a cross-complaint against the Company and various entities affiliated with Spectrum Laboratory Products, Inc., Spectrum Chemical Manufacturing

and Spectrum Pharmacy Products, Inc.

(collectively “Spectrum”).

The cross-complaint seeks indemnity and contribution from the

Company and Spectrum.

The Company answered the claims filed by Dr.

Kelly in October 2018.

The case is currently in the discovery phase.

Trial is currently set to begin October 2021.

Erick is seeking unspecified damages, interest, attorneys’ fees and other costs.

The Company believes the claims are meritless and has previously and will continue to dispute all claims asserted against it and intends

to vigorously defend against these allegations.

The Company’s insurance carrier has reserved its rights to seek contribution from

the Company if the plaintiffs prevail on certain claims which the carrier alleges are uncovered.

The Company believes the policy covers

Nonetheless, the Company cannot predict the eventual outcome of this litigation, it could result in substantial costs, losses

and a diversion of management’s resources and attention, which could harm the Company’s business and the value of its common

The cross-complaint sought indemnity and contribution

from the Company and Spectrum.

In November 2021, the lawsuit involving the Company was resolved.

There was no impact to the Company’s

consolidated financial position and results of operations as a result of the resolution of the case for the Company.

the ordinary course of business, the Company may face various claims brought by third parties and it may, from time to time, make claims

17 unchanged sentences

License Agreement – Related Party

Company entered into a license agreement in April 2017 and as amended in April 2018, (the “Klarity License Agreement”) with

Company entered into a license agreement in April 2017, as amended in April 2018 (the “Klarity License Agreement”), with

Lindstrom, M.D., a member of its Board of Directors.

15 unchanged sentences

of the Company’s restricted common stock.

Payments totaling $ 35 and $ 70 were made during the three and six months ended June 30,

2021, respectively.

Payments totaling $ 0 and $ 55 were made during the three and six months ended June 30, 2020, respectively.

expense of $ 44 and $ 79 was incurred during the three and six months ended June 30, 2021, respectively, and $ 44 is included in accounts

payable to Dr.

Lindstrom as of June 30, 2021.

Royalty expense of $ 27 and $ 56 was incurred during the three and six months ended June

Payments totaling $ 44 and $ 114 were made during the three and nine months ended September

30, 2021, respectively.

Payments totaling $ 0 and $ 55 were made during the three and nine months ended September 30, 2020, respectively.

Royalty expense of $ 51 and $ 130 was incurred during the three and nine months ended September 30, 2021, respectively, and $ 51 is included

in accounts payable to Dr.

Lindstrom as of September 30, 2021.

Royalty expense of $ 38 and $ 94 was incurred during the three and nine

months ended September 30, 2020, respectively.

Asset Purchase Agreement – Related Party

4 unchanged sentences

Lindstrom to develop, formulate, make, sell, and sub-license an ophthalmic injectable product (the “Lindstrom Product”).

the terms of the Lindstrom APA, the Company is required to make royalty payments to Dr.

Lindstrom ranging from 2% to 3% of net sales,

dependent upon the final formulation and patent protection of the Lindstrom Product sold.

In addition, the Company is required to make

certain milestone payments to Dr.

Lindstrom including an initial payment of $ 33 upon execution of the Lindstrom APA.

Lindstrom was

paid $ 7 and $ 14 in cash during the three and six months ended June 30, 2021, respectively.

Lindstrom was paid $ 0 and $ 7 in cash during

the three and six months ended June 30, 2020, respectively.

The Company incurred royalty expense of $ 7 and $ 14 and $ 4 and $ 42 related

to the Lindstrom APA during the three and six months ended June 30, 2021, and 2020, respectively.

the terms of the Lindstrom APA, the

Company is required to make royalty payments to Dr.

Lindstrom ranging from 2% to 3% of net sales, dependent upon the final formulation

and patent protection of the Lindstrom Product sold.

addition, the Company is required to make certain milestone payments to Dr.

Lindstrom including an initial payment of $ 33

upon execution of the Lindstrom APA.

in cash during the three and nine months ended

September 30, 2021, respectively.

Lindstrom was paid $ 0

in cash during the three and nine months ended

September 30, 2020, respectively.

The Company incurred royalty expense of $ 7

and $ 6 and $ 48 related to the Lindstrom APA during

the three and nine months ended September 30, 2021, and 2020, respectively.

Commercial Alliance Agreement

8 unchanged sentences

Agreement , the Company shall use commercially reasonable efforts to promote and market DEXYCU in the U.S.

to early termination, the Dexycu Agreement expires on August 1, 2025, subject to specified

notice periods and specified limitations, either party may terminate the Dexycu Agreement

in the event of (i) uncured material breach by the other party or (ii) if DEXYCU ceases to have “pass-through” payment status.

In addition, subject to certain limitations, the Company may terminate the Dexycu Agreement

(i) for convenience subject to an extended specified notice period or (ii) in the event Eyepoint undergoes a change of control.

may terminate the Dexycu Agreement , subject to specified notice periods and specified limitations,

if the Company fails to achieve certain minimum sales levels during specified periods.

During the three and six months ended June 30,

2021, the Company recorded $ 827 and $ 1,312 , respectively, in commission revenues related to the Dexycu Agreement.

Dexycu Agreement expires on August 1, 2025, subject to early termination in accordance with

the terms set forth therein.

Either party may terminate the Dexycu Agreement, subject to specified

notice periods and limitations, in the event of (i) uncured material breach by the other party or (ii) if DEXYCU ceases to have

“pass-through” payment status.

In addition, subject to certain limitations, the Company may terminate the Dexycu

Agreement (i) for convenience subject to an extended specified notice period or (ii) in the event Eyepoint undergoes a change

Eyepoint may terminate the Dexycu Agreement , subject to specified notice periods

and specified limitations, if the Company fails to achieve certain minimum sales levels during specified periods.

During the three and

nine months ended September 30, 2021, the Company recorded $900 and $2,212, respectively, in commission revenues related to the Dexycu

and Marketing Agreements

9 unchanged sentences

Commission expenses of $ 953 and $ 2,766 and $ 741 and $ 1,745 were incurred under these

agreements during the three and six months ended June 30, 2021, and 2020, respectively.

agreements during the three and nine months ended September 30, 2021, and 2020, respectively.

Purchase, License and Related Agreements

25 unchanged sentences

the Inventors.

Royalty expenses of $ 261 and $ 493 and $ 117 and $ 261 were incurred under these agreements for the three and six months

ended June 30, 2021 and 2020, respectively, and $ 272 and $ 431 are included in accounts payable at June 30, 2021 and 2020, respectively.

Royalty expenses of $ 285 and $ 778 and $ 159 and $ 420 were incurred under these agreements for the three and nine months

ended September 30, 2021 and 2020, respectively, and $ 285 and $ 590 are included in accounts payable at September 30, 2021 and 2020, respectively.

Pharmaceuticals MAY-66 License Termination

6 unchanged sentences

Pharmaceuticals MAY-44 APA Termination

May 2021, Mayfield and Harrow terminated their asset purchase agreement dated January 2020 for intellectual property rights associated

with Mayfield’s drug candidate MAY-44 with Elle Pharmaceutical LLC (the “MAY-44 APA”).

As part of the termination,

Mayfield re-acquired 350,000 shares of its common stock from Elle.

Mayfield has no outstanding or remaining obligations related to the

May 2021, Mayfield and Harrow terminated their asset purchase agreement dated January 2020 (the “MAY-44 APA”) for intellectual

property rights associated with Mayfield’s drug candidate MAY-44 with Elle Pharmaceutical LLC (“Elle”).

the termination, Mayfield re-acquired 350,000 shares of its common stock from Elle.

Mayfield has no outstanding or remaining obligations

related to the MAY-44 APA.

License Termination

5 unchanged sentences

or remaining obligations under the Stowe License.

July 2021, the Company entered into a License and Supply Agreement (the “Sintetica Agreement”) with Sintetica S.A.

(“Sintetica”),

pursuant to which Sintetica granted the Company the exclusive license and marketing rights to its patented ophthalmic drug candidate

(“AMP-100”) in the U.S.

to the Sintetica Agreement, the Company will pay Sintetica a per unit transfer price to supply AMP-100, along with a per unit royalty

for units sold.

The Company is required to pay Sintetica up to $ 18,000 in one-time milestone payments including a $ 5,000 payment (the

“Upfront Payment”) due within 30 days of signing the Sintetica Agreement and the balance of payments due upon achievement

of certain regulatory and commercial milestones.

Under the terms of the Sintetica Agreement, Sintetica will be responsible for regulatory

filings for AMP-100 in the U.S.

The Upfront Payment was paid and recorded as R&D expense during the three and nine months ended September

to certain limitations, the term of the Sintetica Agreement is ten years, and allows for a ten-year extension if certain sales thresholds

August 2021, the Company entered into a License Agreement and a Basic Sale and Purchase Agreement (together, the “Wakamoto Agreements”)

with Wakamoto Pharmaceutical Co., Ltd.

(“Wakamoto”), pursuant to which Wakamoto granted the Company the exclusive license

and marketing rights to its ophthalmic drug candidate (“MAQ-100”) in the U.S.

to the Wakamoto Agreements, Wakamoto will supply MAQ-100 to the Company, and the Company

will pay Wakamoto a per unit transfer price to supply MAQ-100.

In addition, the Company is required to pay Wakamoto various one-time

milestone payments totaling up to $ 2,000 upon the achievement of certain regulatory milestones and up to $ 6,200 upon the achievement

of certain commercial milestones.

Under the terms of the Agreements, the Company will be responsible for regulatory filings and fees

for MAQ-100 in the U.S.

Through September 30, 2021, no amounts have been paid or accrued under the Wakamoto agreement.

to certain limitations, the term of the Agreements is for five years from the date of the FDA’s market approval of MAQ-100 and

allows for a five-year extension if certain unit sales thresholds are met.

SEGMENT INFORMATION AND CONCENTRATIONS

3 unchanged sentences

The Company’s reportable segments consist of (i) its commercial stage pharmaceutical business known as ImprimisRx;

and (ii) its start-up operations associated with pharmaceutical drug development business (Pharmaceutical Drug Development).

contribution for the segments represents net revenues less cost of sales, research and development, selling and marketing expenses, and

select general and administrative expenses.

and (ii) its start-up operations associated with its pharmaceutical drug development business (“Pharmaceutical Drug Development”).

Segment contribution for the segments represents net revenues less cost of sales, research and development, selling and marketing expenses,

and select general and administrative expenses.

The Company does not evaluate the following items at the segment level:

15 unchanged sentences

and attributable to the segment.

net revenues, segment operating expenses and segment contribution information consisted of the following for the three and six months

ended June 30, 2021:

net revenues, segment operating expenses and segment contribution information consisted of the following for the three and nine months

ended September 30, 2021 and 2020:

SCHEDULE OF SEGMENT NET REVENUES, SEGMENT OPERATING EXPENSES AND SEGMENT CONTRIBUTION

Three Months Ended

June 30, 2021

Pharmaceutical Drug Development

the Three Months Ended September 30, 2021

Pharmaceutical

Drug Development

Cost of sales

1 unchanged sentence

Selling, general and administrative

Research and development

Segment contribution

and development

Research and development

Operating income

Six Months Ended

June 30, 2021

Pharmaceutical Drug Development

the Nine Months Ended September 30, 2021

Pharmaceutical

Drug Development

Cost of sales

1 unchanged sentence

Selling, general and administrative

Research and development

Segment contribution

and development

Research and development

Operating income

Three Months Ended

June 30, 2020

Pharmaceutical Drug Development

the Three Months Ended September 30, 2020

Pharmaceutical

Drug Development

Cost of sales

1 unchanged sentence

Selling, general and administrative

Research and development

Segment contribution

and development

Research and development

Asset sales and impairments, net

Operating loss

Six Months Ended

June 30, 2020

Asset sales and impairments,

the Nine Months Ended September 30, 2020

Pharmaceutical

Drug Development

Cost of sales

1 unchanged sentence

Selling, general and administrative

Research and development

Segment contribution

and development

Research and development

Asset sales and impairments, net

Operating loss

Asset sales and impairments,

Company categorizes revenues by geographic area based on selling location.

1 unchanged sentence

total revenues are attributed to the U.S.

All long-lived assets at June 30, 2021 and December 31, 2020 were located in the U.S.

All long-lived assets at September 30, 2021 and December 31, 2020 were located in the U.S.

Concentrations

Company has two products that each comprised more than 10% of total revenues during the quarter.

These products collectively accounted

for 36 % of revenues during each of the three and six months ended June 30, 2021.

Company has two products

that each comprised more than 10% of total revenues during the quarter.

These products collectively accounted for 35 %

of revenues during each of the three and nine months ended September

Company sells its compounded formulations to a large number of customers.

There were no customers who comprised more than 10% of the

Company’s total pharmacy sales for the three and six months ended June 30, 2021 and 2020.

Company’s total pharmacy sales for the three and nine months ended September 30, 2021 and 2020.

The Company receives its active pharmaceutical ingredients from three main suppliers.

These suppliers collectively accounted for 59 %

and 79 % of active pharmaceutical ingredient purchases during the three and six months ended June 30, 2021, respectively, and 60 % and

70 % of active pharmaceutical ingredient purchases during the three and six months ended June 30, 2020, respectively.

and 71 % of active pharmaceutical ingredient purchases during the three and nine months ended September 30, 2021, respectively, and 76 %

and 72 % of active pharmaceutical ingredient purchases during the three and nine months ended September 30, 2020, respectively.

SUBSEQUENT EVENTS

Company has performed an evaluation of events occurring subsequent to June 30, 2021 through the filing date of this Quarterly Report.

Based on its evaluation, no events other than those described below need to be disclosed.

July 2021, the Company entered into a License and Supply Agreement (the “Sintetica Agreement”) with Sintetica S.A.

(“Sintetica”),

pursuant to which Sintetica granted the Company the exclusive license and marketing rights to its patented ophthalmic drug candidate

(“AMP-100”) in the U.S.

to the Sintetica Agreement, the Company will pay Sintetica a per unit transfer price to supply AMP-100, along with a per unit royalty

for units sold.

The Company is required to pay Sintetica up to $ 18,000 in one-time milestone payments including a $ 5,000 payment due

within 30 days of signing the Sintetica Agreement and the balance of payments due upon achievement of certain regulatory and commercial

Under the terms of the Sintetica Agreement, Sintetica will be responsible for regulatory filings for AMP-100 in the U.S.

to certain limitations, the term of the Sintetica Agreement is ten years, and allows for a ten-year extension if certain sales thresholds

Company has performed an evaluation of events occurring subsequent to September 30, 2021 through the filing date of this Quarterly Report.

Based on its evaluation, no events other than those described in the notes hereto need to be disclosed.

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 1. Financial Statements