What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-09 compared with 2021-08-10 · 197 added, 155 removed, 405 unchanged (46% of the section changed)

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and compounding pharmacies generally;

our limited operating history;

and the other risks and uncertainties described under the heading

“Risk Factors” in Part II, Item 1A of this Quarterly Report and in our other filings with the SEC.

You should not place undue

reliance on forward-looking statements.

Forward-looking statements speak only as of the date they are made and, except as required by

law, we undertake no obligation to revise or publicly update any forward-looking statement for any reason.

business specializes in the development, production and sale of innovative medications that offer unique competitive advantages and serve

unmet needs in the marketplace through our subsidiaries and deconsolidated companies.

We own and operate one of the nation’s leading

ophthalmology pharmaceutical businesses, ImprimisRx.

In addition to wholly owning ImprimisRx, we also have non-controlling equity positions

in Surface Ophthalmics, Inc.

(“Surface”) and Melt Pharmaceuticals, Inc.

(“Melt”), both companies that began

as subsidiaries of Harrow.

and the other risks and uncertainties described under the heading “Risk Factors” in

Part II, Item 1A of this Quarterly Report and in our other filings with the SEC.

You should not place undue reliance on forward-looking

Forward-looking statements speak only as of the date they are made and, except as required by law, we undertake no obligation

to revise or publicly update any forward-looking statement for any reason.

are an ophthalmic-focused healthcare company.

Our business specializes in the development, production and sale of innovative medications

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

We own and operate one of the nation’s leading ophthalmology pharmaceutical businesses, ImprimisRx.

In addition to wholly owning

ImprimisRx, we also have non-controlling equity positions in Surface Ophthalmics, Inc.

(“Surface”) and Melt Pharmaceuticals,

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

In 2020, Harrow created Visionology, Inc.

(“Visionology”) and recently launched an online eye

health platform business in certain regions.

We also own royalty rights in various drug candidates being developed by Surface and Melt.

(“Visionology”)

and recently launched an online eye health platform business in certain regions.

We also own royalty rights in various drug candidates

being developed by Surface and Melt.

is our ophthalmology focused prescription pharmaceutical business.

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many of which are patented or patent-pending, and are customizable for the specific needs of a patient.

Some examples of our compounded

medications are various combinations of drugs formulated into one bottle and numerous preservative free formulations.

Depending on the

formulation, the regulations of a specific state and ultimately the needs of the patient, ImprimisRx products may be dispensed as patient-specific

medications from our 503A pharmacy, or for in-office use, made according to current good manufacturing practices (or cGMPs) or other

FDA-guidance documents, in our FDA-registered New Jersey outsourcing facility (“NJOF”).

Some of our compounded medications

are various combinations of drugs formulated into one bottle and numerous preservative free formulations.

Depending on the formulation,

the regulations of a specific state and ultimately the needs of the patient, ImprimisRx products may be dispensed as patient-specific

medications from our 503A pharmacy, or for in-office use, made according to current good manufacturing practices (or “cGMPs”)

or other FDA-guidance documents, in our FDA-registered New Jersey outsourcing facility (“NJOF”).

August 1, 2020, ImprimisRx entered into a Commercial Alliance Agreement (the “Dexycu Agreement”) with Eyepoint Pharmaceuticals,

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intraocular suspension) 9% for the treatment of post-operative inflammation following ocular surgery in the United States.

to the Dexycu Agreement , Eyepoint pays ImprimisRx

a fee that is calculated based on the quarterly sales of DEXCYU in excess of predefined volumes to specific customers of ImprimisRx

the Dexycu Agreement, Eyepoint pays ImprimisRx a fee that is calculated based on the quarterly sales of DEXCYU in excess of predefined

volumes to specific customers of ImprimisRx in the U.S.

has granted the Company the exclusive license and marketing rights to AMP-100 in the U.S.

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cataract procedures, according to Ophthalmologica, there were about 5.9 million intravitreal injections performed in the U.S.

Most of these intravitreal injections, which are typically treatments for variety of conditions, including, age-related macular degeneration,

Most of these intravitreal injections, which are typically treatments for a variety of conditions, including age-related macular degeneration,

diabetic macular edema, and uveitis, often require the ocular surface to be anesthetized during the procedure.

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and could provide protection for AMP-100 into 2037.

addition to AMP -100,

we expect to acquire and/or develop additional FDA-approved/approvable ophthalmic products and product candidates that will allow us

to leverage the commercial infrastructure of ImprimisRx to promote, sell, and ultimately bring these products to market.

addition to AMP-100, we expect to acquire and/or develop additional FDA-approved/approvable ophthalmic products and product candidates

that will allow us to leverage the commercial infrastructure of ImprimisRx to promote, sell, and ultimately bring these products to market.

August 2021, we obtained the exclusive license and marketing rights to MAQ-100 in the U.S.

and Canada from Wakamoto Pharmaceutical Co.,

(“Wakamoto”).

MAQ-100 is a preservative-free triamcinolone acetonide ophthalmic injection drug candidate.

marketed and sold by Wakamoto in Japan as MaQaid®.

Following Japan’s Ministry of Health Labor and Welfare (“MHLW”)

approval, MaQaid was launched in Japan in 2010, indicated as an intravitreal injection for visualization for vitrectomy.

Since its initial

MHLW approval, the indication for MaQaid was expanded to include (a) treatments for alleviation of diabetic macular edema, (b) macular

edema associated with retinal vein occlusion (or RVO), and (c) non-infectious uveitis.

We intend to leverage the clinical data used for

Japanese market approval of MaQaid to support a clinical program and U.S.

market NDA submission of MAQ-100 for visualization during vitrectomy.

We intend to request a meeting with FDA during the first half of 2022 to discuss our planned clinical program for MAQ-100.

expect to acquire and/or develop additional FDA-approved/approvable ophthalmic products and product candidates that will allow us to

leverage the commercial infrastructure of ImprimisRx to promote, sell, and ultimately bring these products to market.

a direct-to-consumer online eye health platform, leverages our experience in the ophthalmic pharmaceutical business as well as our relationships

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We recently launched a proof-of-concept model for Visionology within a certain region

of the U.S., and if successful, will expand the launch on a nationwide basis later in 2021.

of the U.S., and if successful, will expand the launch on a nationwide basis in 2022.

Pharmaceutical

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In 2020, we halted nearly all operating activities

related to these subsidiaries to invest resources in other areas and may not restart any or all activities related to these businesses.

related to these subsidiaries to invest resources in other areas, and we may not restart any or all activities related to these businesses.

In addition, we terminated license and acquisition agreements for Mayfield’s MAY-66 and MAY-44 drug candidates, and Stowe’s

STE-006 drug candidate.

De-Consolidated

Businesses (Noncontrolling Equity Interests)

Noncontrolling

Equity Interests (De-Consolidated Businesses)

Ophthalmics, Inc.

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SURF-201 marks the first ophthalmic therapeutic in the United States to utilize betamethasone

as well as being the first preservative-free unit dose therapy for the treatment of post-operative pain and inflammation.

and the first preservative-free unit dose therapy for the treatment of post-operative pain and inflammation.

in January 2021, Surface announced the first patient dosed in a head-to-head phase 2 trial for its drug candidate SURF-100 (mycophenolate

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purchase price of $4.50 per share resulting in gross proceeds to Surface of approximately $25,000,000 (the “Surface Series B Offering”).

We own 3,500,000 shares of Surface common stock which was approximately 20% of the equity and voting interests following the final close

We own 3,500,000 shares of Surface common stock which was approximately 20% of the equity and voting interests following the final closing

of the Surface Series B Offering.

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In December 2018, we entered into an Asset Purchase Agreement with Melt (the

“Melt Asset Purchase Agreement”), and Harrow assigned to Melt the underlying intellectual property for Melt’s current

pipeline, including its lead drug candidate MELT-100.

The core intellectual property Melt owns is a patented series of combination non-opioid

sedation drug formulations that we estimate to have multitudinous applications.

“Melt Asset Purchase Agreement”), pursuant to which Harrow assigned to Melt the underlying intellectual property for Melt’s

current pipeline, including its lead drug candidate MELT-300.

The core intellectual property Melt owns is a patented series of combination

non-opioid sedation drug formulations that we estimate to have multitudinous applications.

is a novel, sublingually delivered, non-IV, opioid-free drug candidate being developed for procedural sedation.

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announced data from, and the successful completion of, its phase 1 study.

Melt expects to begin its phase 2 study for MELT-100 in the

second half of 2021.

Melt recently began enrolling patients in its phase 2 study

for MELT-300.

January 2019, Melt closed an offering of its Series A Preferred Stock.

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We own 3,500,000 shares of Melt common stock, which was approximately 46% of the equity

and voting interests issued and outstanding of as of June 30, 2021.

We expect Melt to complete another round of financing within the

next six months.

Pursuant to the terms of the Melt Asset Purchase Agreement, Melt is required to make mid-single digit royalty payments

to the Company on net sales of MELT-100, while any patent rights remain outstanding, subject to other conditions.

Melt can require the

Company to cease compounding like products at the time of FDA approval of MELT-100.

If approved, we do not expect a cessation of compounding

like products to have a material impact on our operations and financial performance.

and voting interests issued and outstanding of as of September 30, 2021.

In September 2021, we provided Melt with a senior secured loan

in the amount of $13,500,000, which is intended to fund the Phase 2 program of MELT-300.

In connection with the loan we provided Melt,

we also were provided the right, but not the obligation, to match any offer received by Melt associated with the commercial rights to

any of its drug candidates for a period of five years.

Melt is required to make mid-single digit royalty payments to the Company on net

sales of MELT-300, while any patent rights remain outstanding, subject to other conditions.

Melt can require the Company to cease compounding

like products at the time of FDA approval of MELT-300.

If approved, we do not expect a cessation of compounding like products to have

a material impact on our operations and financial performance.

Pharmaceuticals, Inc.

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In May 2017, Eton closed an offering

of its Series A Preferred Stock and we lost our controlling interest in it.

of its Series A Preferred Stock and we gave up our controlling interest in it.

In November 2018, Eton completed an initial public offering

of its common stock.

At that time, we gave up our controlling interest and deconsolidated Eton from our consolidated financial statements.

As of the date of this Quarterly Report and following our April 2021 sale, we own 1,982,000 shares of Eton common stock.

We owned less

than 10% of the equity and voting interests issued and outstanding of Eton as of June 30, 2021.

As of the date of this Quarterly Report and following our April 2021 sale, we own 1,982,000 shares of Eton common

We owned less than 10% of the equity and voting interests issued and outstanding of Eton as of September 30, 2021.

Affecting Our Performance

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Following such sale, we own 1,982,000 shares of Eton common

stock, which represented less than 10% of the equity interests issued and outstanding of Eton as of June 30, 2021.

stock, which represented less than 10% of the equity interests issued and outstanding of Eton as of September 30, 2021.

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

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

B Cumulative Preferred Stock

May 5, 2021, we sold 440,000 shares of Series B Cumulative Preferred Stock (the “Series B Preferred Stock”) for net

proceeds of $10,670,000.

B Cumulative Preferred Stock - Redeemed

May 5, 2021, we sold 440,000 shares of Series B Cumulative Preferred Stock (the “Series B Preferred Stock”) for net proceeds

of $10,670,000.

On June 17, 2021, the Company redeemed all of the outstanding shares of the Series B Preferred Stock.

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

dividends, which in aggregate totaled $11,127,000.

The redemption

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

which in aggregate totaled $11,127,000.

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

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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

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

August, 2021, we 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 us, and we will pay Wakamoto a per unit transfer price to supply MAQ-100.

In addition, we are required to pay Wakamoto various one-time milestone payments totaling up to $2,000,000 upon the achievement of certain

regulatory milestones and up to $6,200,000 upon the achievement of certain commercial milestones.

Under the terms of the Wakamoto Agreements,

we are responsible for regulatory filings and fees for MAQ-100 in the U.S.

to certain limitations, the term of the Wakamoto 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.

September 2021, we entered into a loan and security agreement in the principal amount of $13,500,000 (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 can be paid in kind interest 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 us 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 us, and the interest rate on the loan may be increased by three percent

(3%) per annum.

connection with the Melt Loan Agreement, we entered into a Right of First Refusal Agreement with Melt providing us 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.

of Operations

following period-to-period comparisons of our financial results for the three and six months ended June 30, 2021 and 2020, are not necessarily

indicative of results for the current period or any future period.

following period-to-period comparisons of our financial results for the three and nine months ended September 30, 2021 and 2020, are

not necessarily indicative of results for the current period or any future period.

revenues include amounts recorded from sales of proprietary compounded formulations, commissions from third parties and revenues received

from royalty payments owed to us pursuant to out-license arrangements.

following presents our revenues for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Product sales, net

following presents our revenues for the three and nine months ended September 30, 2021 and 2020:

Product sales,

Commission revenues

License revenues

Total revenues

increase in revenues between periods was related to an increase in sales volumes of our ophthalmology products and commissions attributable

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the write-off of obsolete inventory and other related expenses.

following presents our cost of sales for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Cost of sales

following presents our cost of sales for the three and nine months ended September 30, 2021 and 2020:

increase in our cost of sales between periods was largely attributable to an increase in unit volumes sold.

Profit and Margin

Three Months Ended

Six Months Ended

increase in gross margin between periods is largely attributable to increased unit volumes sold, efficiencies in our production process,

including increased batch sizes, and improved utilization of capacities as a result of increased output.

decrease in gross margin between the three months ended September 30, 2021 and 2020 is primarily attributable to a second production

shift that was added in 2021 along with increased personnel within our quality department, in preparation for increased production expected

during the remainder of 2021 and into 2022.

increase in gross margin between the nine months ended September 30, 2021 and 2020 is largely attributable to increased unit volumes

sold, efficiencies in our production process, including increased batch sizes, and improved utilization of capacities as a result of

increased output.

General and Administrative Expenses

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our marketing activities and sales of our proprietary compounded formulations and other non-proprietary pharmacy products and formulations.

following presents our selling, general and administrative expenses for the three and six months ended June 30, 2021 and 2020:

following presents our selling, general and administrative expenses for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Selling, general and administrative

Nine Months Ended

general and administrative

increase in selling, general and administrative expenses between periods was primarily attributable to an increase in commissions and

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and new employee costs to support sales growth.

During the three and nine months ended September 30, 2021, the Company recorded $1,500,000

in expenses related to a litigation settlement.

and Development Expenses

research and development expenses primarily include personnel costs, including wages and stock-based compensation, expenses related to

the development of intellectual property, investigator-initiated research and evaluations, formulation development, and other costs related

to the clinical development of our assets.

following presents our research and development expenses for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Research and development

and development expenses between periods was primarily attributable to formulation development studies for new ophthalmic formulations

and clinical programs related to our drug development segment during the three and six months ended June 30, 2021.

expense, net was $1,314,000 and $1,827,000 for the three and six months ended June 30, 2021, respectively, compared to $505,000 and $1,065,000

for the same periods last year, respectively.

The increase during the period ended June 30, 2021 compared to the same period in 2020

was primarily due to an increase in the outstanding principal amount of our debt obligations.

research and development (“R&D”) expenses primarily include personnel costs, including wages and stock-based compensation,

expenses related to the development of intellectual property, investigator-initiated research and evaluations, formulation development,

license fees, acquired in-process R&D and other costs related to the clinical development of our assets.

following presents our research and development expenses for the three and nine months ended September 30, 2021 and 2020:

and development

the three and nine months ended September 30, 2021, research and development expenses increased between periods primarily as a result

of the upfront payment of $5,000,000 to Sintetica upon execution of the license and supply agreement for AMP-100 along with increased

costs associated with the clinical program for MAQ-100.

expense, net was $1,685,000 and $3,512,000 for the three and nine months ended September 30, 2021, respectively, compared to $498,000

and $1,563,000 for the same periods last year, respectively.

The increase during the period ended September 30, 2021 compared to the

same period in 2020 was primarily due to an increase in the outstanding principal amount of our debt obligations.

Loss from Melt

the three and six months ended June 30, 2021, we recorded a net loss of $477,000 and $947,000, respectively, related to our share of

losses in Melt.

During the three and six months ended June 30, 2020, we recorded a loss of $690,000 and $1,236,000, respectively, for

our share of losses based on our ownership of Melt.

the three and nine months ended September 30, 2021, we recorded a loss of $706,000 and $1,653,000, respectively, related to our share

of losses in Melt.

During the three and nine months ended September 30, 2020, we recorded a loss of $300,000 and $1,536,000, respectively,

for our share of losses based on our ownership of Melt.

Loss from Surface

the three and six months ended June 30, 2021, we recorded a loss of $465,000 and $1,314,000, respectively, for our share of losses based

the three and nine months ended September 30, 2021, we recorded a loss of $0 and $1,314,000, respectively, for our share of losses based

on our ownership of Surface.

During the three and six months ended June 30, 2020, we recorded a loss of $599,000 and $938,000, respectively,

for our share of losses based on our ownership of Surface.

Loss from Eton

During the three and nine months ended September 30, 2020, we recorded a loss of $756,000 and $1,694,000,

respectively, for our share of losses based on our ownership of Surface.

(Loss) Gain from Eton

recorded a loss of $2,220,000 and $8,639,000 related to the change in fair market value of Eton’s common stock and the sale of

a portion of our Eton stock during the three and six months ended June 30, 2021, respectively.

We recorded a gain of $4,725,000 and loss

of $6,125 related to the change in fair market value of Eton’s common stock during the three and six months ended June 30, 2020,

a portion of our Eton stock during the three and nine months ended September 30, 2021, respectively.

We recorded a gain of $8,575,000

and $2,450,000 related to the change in fair market value of Eton’s common stock during the three and nine months ended September

30, 2020, respectively.

From Early Extinguishment of Loan

the three and six months ended June 30, 2021, we recorded a loss from the early extinguishment of loan of $756,000 related to the early

payoff of the SWK Loan.

the nine months ended September 30, 2021, we recorded a loss from the early extinguishment of loan of $756,000 related to the early payoff

of the SWK Loan.

on Forgiveness of PPP Loan

the six months ended June 30, 2021, we recorded gain on forgiveness of PPP loan of $1,967,000 related to the forgiveness of our PPP Loan.

following table presents our net loss and per share net loss for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Numerator – net loss attributable to Harrow Health, Inc.

the nine months ended September 30, 2021, we recorded gain on forgiveness of PPP loan of $1,967,000 related to the forgiveness of our

(Loss) Income

following table presents our net (loss) income and per share net (loss) income for the three and nine months ended September 30, 2021

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

common stockholders

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$ (4,506,000 )

Net loss per share, basic and diluted

Net (loss) income per share,

(loss) income per share, diluted

Information About Segments and Geographic Areas

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We do not evaluate the following items at the segment level:

general and administrative expenses that result from shared infrastructure, including certain expenses associated with litigation

and other legal matters, public company costs (e.g.

investor relations), board of directors and principal executive officers, and

other like shared expenses.

expenses within selling, general and administrative expenses that result from the impact of corporate initiatives.

Corporate initiatives

primarily include integration, restructuring, acquisition and other shared costs.

select revenues and operating expenses including R&D expenses, amortization, and asset sales and impairments, net as not all

such information has been accounted for at the segment level, or such information has not been used by all segments.

general and administrative expenses that result from shared infrastructure, including certain

expenses associated with litigation and other legal matters, public company costs (e.g.

relations), board of directors and principal executive officers, and other like shared expenses.

expenses within selling, general and administrative expenses that result from the impact

of corporate initiatives.

Corporate initiatives primarily include integration, restructuring,

acquisition and other shared costs.

select revenues and operating expenses including R&D expenses, amortization, and asset

sales and impairments, net as not all such information has been accounted for at the segment

level, or such information has not been used by all segments.

assets including capital expenditures.

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and Capital Resources

cash on hand (including restricted cash) at June 30, 2021 was $72,851,000, compared to $4,301,000 at December 31, 2020.

cash on hand (including restricted cash) at September 30, 2021 was $57,856,000, compared to $4,301,000 at December 31, 2020.

of the date of this Quarterly Report, we believe that cash and cash equivalents of $57,656,000 and restricted cash of $200,000, totaling

approximately $72,851,000 at June 30, 2021, will be sufficient to sustain our planned level of operations and capital expenditures for

at least the next 12 months.

In addition, we may consider the sale of certain assets including, but not limited to, part of, or all of,

our ownership interest in Eton, Surface, Melt, and/or any of our consolidated subsidiaries.

However, we may pursue acquisitions of pharmacies,

revenue generating products, drug candidates or other strategic transactions that involve large expenditures or we may experience growth

more quickly or on a larger scale than we expect, any of which could result in the depletion of capital resources more rapidly than anticipated

and could require us to seek additional financing to support our operations.

approximately $57,856,000 at September 30, 2021, will be sufficient to sustain our planned level of operations and capital expenditures

for at least the next 12 months.

In addition, we may consider the sale of certain assets including, but not limited to, part of, or all

of, our ownership interest in Eton, Surface, Melt, and/or any of our consolidated subsidiaries.

However, we may pursue acquisitions of

pharmacies, revenue generating products, drug candidates or other strategic transactions that involve large expenditures or we may experience

growth more quickly or on a larger scale than we expect, any of which could result in the depletion of capital resources more rapidly

than anticipated and could require us to seek additional financing to support our operations.

expect to use our current cash position and funds generated from our operations and any financing to pursue our business plan, which

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following provides detailed information about our net cash flows:

Six Months Ended

Net cash provided by (used in):

Operating activities

$ (3,201,000 )

Investing activities

Financing activities

Net change in cash and cash equivalents

Cash, cash equivalents and restricted cash at beginning of the period

Cash, cash equivalents and restricted cash at end of the period

cash provided by operating activities during the six months ended June 30, 2021 was $8,648,000 compared to net cash used in operating

Cash, cash equivalents

and restricted cash at beginning of the period

Cash, cash equivalents

and restricted cash at end of the period

cash provided by operating activities during the nine months ended September 30, 2021 was $6,572,000 compared to net cash used in operating

activities of $534,000 during the same period in the prior year.

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periods was mainly attributed to the increase in revenues.

cash provided by investing activities during the six months ended June 30, 2021 was $8,445,000 compared to net cash used in investing

activities of $610,000, respectively.

Cash provided by investing activities in 2021 was primarily associated with the sale of a portion

of our investment in Eton.

Cash used in investing activities in 2020 was primarily associated with equipment and software purchases and

upgrades along with investments in our intellectual property portfolio.

cash provided by financing activities during the six months ended June 30, 2021 was $51,457,000 and $2,964,000, respectively.

Cash provided

by financing activities during the six months ended June 30, 2021 was primarily related to proceeds received from the sale of Notes,

net of the payment of all outstanding obligations to the Company’s previous senior lender, SWK Funding, LLC and its partners.

cash used in investing activities during the nine months ended September 30, 2021 was $4,489,000 compared to net cash used in investing

activities of $891,000, during the same period in the prior year.

Cash used in investing activities in 2021 was primarily associated

with cash payments made in connection with the Melt note receivable offset by cash received through the sale of a portion of our Eton

Common Stock.

Cash used in investing activities during the 2020 period was primarily associated with equipment and software purchases

and upgrades along with investments in our intellectual property portfolio.

cash provided by financing activities during the nine months ended September 30, 2021 and 2020 was $51,472,000 and $2,203,000, respectively.

Cash provided by financing activities during the nine months ended September 30, 2021 was primarily related to proceeds received from

the sale of Notes, net of the payment of all outstanding obligations to the Company’s previous senior lender, SWK Funding, LLC

and its partners.

principal sources of cash consist of cash provided by operating activities from our ImprimisRx business, and recently, proceeds from

the sale of the Notes and sale of Eton Stock.

We may also sell some or all of our ownership interests in Surface, Melt or our other subsidiaries,

along with the some or all of the remaining portion of our Eton common stock.

the sale of the Notes and sale of Eton Common Stock.

We may also sell some or all of our ownership interests in Surface, Melt or our

other subsidiaries, along with the some or all of the remaining portion of our Eton common stock.

changing trends and overall economic outlook in light of the COVID-19 pandemic, including the historic interim stay-at-home orders and

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is a rise in COVID-19 related cases in the U.S.

In addition, we may acquire new products, product candidates and/or businesses, as a

result, we may need significant additional capital to support our business plan and fund our proposed business operations.

In addition, we may acquire new products, product candidates and/or businesses and, as

a result, we may need significant additional capital to support our business plan and fund our proposed business operations.

We may receive

34 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 2. Management’s Discussion and Analysis