What changed in this filing

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Item 9A. Controls and Procedures

2022-03-10 compared with 2021-03-08 · 1547 added, 1720 removed, 471 unchanged (87% of the section changed)

1 unchanged sentence

Controls and Procedures

management, under the supervision and with the participation of our Chief Executive Officer (“CEO”), our principal

executive officer, and our Chief Financial Officer (“CFO”), our principal financial and accounting officer, conducted

an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2020, the end of the period covered

by this Annual Report, pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange

connection with that evaluation, our CEO and CFO concluded that, as of December 31, 2020, our disclosure controls and procedures

were effective.

For the purpose of this review, disclosure controls and procedures means controls and procedures designed to ensure

that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed,

summarized and reported within the time periods specified in the SEC’s rules and forms.

These disclosure controls and procedures

include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the

reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive

officer, principal financial officer and principal accounting officer, as appropriate to allow timely decisions regarding required

management, under the supervision and with the participation of our Chief Executive Officer (“CEO”), our principal executive

officer, and our Chief Financial Officer (“CFO”), our principal financial and accounting officer, conducted an evaluation

of the effectiveness of our disclosure controls and procedures as of December 31, 2021, the end of the period covered by this Annual

Report, pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

connection with that evaluation, our CEO and CFO concluded that, as of December 31, 2021, our disclosure controls and procedures were

For the purpose of this review, disclosure controls and procedures means controls and procedures designed to ensure that information

required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported

within the time periods specified in the SEC’s rules and forms.

These disclosure controls and procedures include, without limitation,

controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under

the Exchange Act is accumulated and communicated to management, including our principal executive officer, principal financial officer

and principal accounting officer, as appropriate to allow timely decisions regarding required disclosure.

Annual Report on Internal Control over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules

13a-15(f) and 15d-15(f) under the Exchange Act.

Internal control over financial reporting is a process designed by, or under the

supervision of, our CEO and CFO and effected by our board of directors, management and other personnel, to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in

accordance with generally accepted accounting principles.

Our management, under the supervision and with the participation of

our CEO and CFO, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework

in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations.

Based on such

evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2020.

report does not include an attestation report of our independent registered public accounting firm regarding internal control

over financial reporting, in accordance with applicable SEC rules that permit us to provide only management’s report in

the annual report.

management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f)

and 15d-15(f) under the Exchange Act.

Internal control over financial reporting is a process designed by, or under the supervision of,

our CEO and CFO and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted

accounting principles.

Our management, under the supervision and with the participation of our CEO and CFO, conducted an evaluation of

the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations.

Based on such evaluation, management concluded that our internal control

over financial reporting was effective as of December 31, 2021.

Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control

over financial reporting, in accordance with applicable SEC rules that permit us to provide only management’s report in the annual

in Internal Control over Financial Reporting

has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during

the year ended December 31, 2020, that has materially affected, or is reasonably likely to materially affect our internal control

over financial reporting.

has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the

year ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect our internal control over financial

Limitations on Effectiveness of Controls

management, including our CEO and CFO, do not expect that our disclosure controls or our internal control over financial reporting

will prevent or detect all errors and all fraud.

A control system, no matter how well designed and operated, can provide only

reasonable, not absolute, assurance that the control system’s objectives will be met.

The design of a control system must

reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance

that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur

because of simple error or mistake.

Controls can also be circumvented by the individual acts of some persons, by collusion of

two or more people, or by management override of the controls.

The design of any system of controls is based in part on certain

assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its

stated goals under all potential future conditions.

Projections of any evaluation of controls effectiveness to future periods

are subject to risks.

Over time, controls may become inadequate because of changes in conditions or deterioration in the degree

of compliance with policies or procedures.

management, including our CEO and CFO, do not expect that our disclosure controls or our internal control over financial reporting will

prevent or detect all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable,

not absolute, assurance that the control system’s objectives will be met.

The design of a control system must reflect the fact

that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Further, because of the

inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error

or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

These inherent limitations include

the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there

can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Projections of

any evaluation of controls effectiveness to future periods are subject to risks.

Over time, controls may become inadequate because of

changes in conditions or deterioration in the degree of compliance with policies or procedures.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

information required by this item is incorporated by reference to the information set forth under the captions “Election

of Directors,” “Executive Officers,” “Corporate Governance,” “Corporate Governance —

Delinquent Section 16(a) Reports,” and “Corporate Governance — Code of Business Conduct and Ethics” in

the Company’s Proxy Statement for the 2021 Annual Meeting of Stockholders.

information required by this item is incorporated by reference to the information set forth under the captions “Election of Directors,”

“Executive Officers,” “Corporate Governance,” “Corporate Governance — Delinquent Section 16(a) Reports,”

and “Corporate Governance — Code of Business Conduct and Ethics” in the Company’s Proxy Statement for the 2022

Annual Meeting of Stockholders.

EXECUTIVE COMPENSATION

information required by this item is incorporated by reference to the information set forth under the captions “Executive

Compensation” and “Director Compensation” in the Company’s Proxy Statement for the 2021 Annual Meeting

of Stockholders.

information required by this item is incorporated by reference to the information set forth under the captions “Executive Compensation”

and “Director Compensation” in the Company’s Proxy Statement for the 2022 Annual Meeting of Stockholders.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

information required by this item is incorporated by reference to the information set forth under the captions “Security

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Executive Compensation

— Securities Authorized for Issuance Under Equity Compensation Plans” in the Company’s Proxy Statement for the

2021 Annual Meeting of Stockholders.

information required by this item is incorporated by reference to the information set forth under the captions “Security Ownership

of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Executive Compensation — Securities

Authorized for Issuance Under Equity Compensation Plans” in the Company’s Proxy Statement for the 2022 Annual Meeting of

Stockholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

information required by this item is incorporated by reference to the information set forth under the captions “Corporate

Governance — Transactions with Related Persons” and “Corporate Governance — Director Independence”

in the Company’s Proxy Statement for the 2021 Annual Meeting of Stockholders.

information required by this item is incorporated by reference to the information set forth under the captions “Corporate Governance

— Transactions with Related Persons” and “Corporate Governance — Director Independence” in the Company’s

Proxy Statement for the 2022 Annual Meeting of Stockholders.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

information required by this item is incorporated by reference to the information set forth under the caption “Ratification

of Selection of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 2021 Annual

Meeting of Stockholders.

information required by this item is incorporated by reference to the information set forth under the caption “Ratification of

Selection of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 2022 Annual Meeting

of Stockholders.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

of the following documents filed as part of the report:

the index to our consolidated financial statements on page F-1 for a list of the financial statements being filed in this

Annual Report.

the index to our consolidated financial statements on page F-1 for a list of the financial statements being filed in this Annual

financial statement schedules are omitted because they are not applicable or the required information is shown in the consolidated

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Item 15(b) below for all exhibits being filed or incorporated by reference herein.

INDEX to be UPDATED BY HARROW

Agreement and Plan of Merger, dated as of September 17, 2007, by and among Imprimis Pharmaceuticals, Inc., Transdel Pharmaceuticals Holdings, Inc.

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filed with the Securities and Exchange Commission on December 31, 2018)

of the Company’s Securities

Certificate of Designation designating the Series B Cumulative Preferred Stock of the Company (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on May 5, 2021).

Description of the Company’s Securities

Indenture, dated as of April 20, 2021, by and between the Company and U.S.

Bank National Association, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on April 20, 2021).

First Supplemental Indenture, dated as of April 20, 2021, by and between the Company and U.S.

Bank National Association, as Trustee (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on April 20, 2021).

Form of 8.625% Senior Note due 2026 (included in Exhibit 4.3).

Form of Directors and Officers Indemnification Agreement (incorporated herein by reference to Exhibit 10.8 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

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filed with the Securities and Exchange Commission on May 8, 2013)

Stand-alone Restricted Stock Unit Agreement, dated July 18, 2012, granted by Imprimis Pharmaceuticals, Inc.

Baum (incorporated herein by reference to Exhibit 10.40 to the Company’s Registration Statement on Form S-1 (File No.

333-182846) filed on July 25, 2012)

Stand-alone Restricted Stock Unit Agreement, dated July 18, 2012, granted by Imprimis Pharmaceuticals, Inc.

Kammer (incorporated herein by reference to Exhibit 10.41 to the Company’s Registration Statement on Form S-1 (File No.

333-182846) filed on July 25, 2012)

Form of Underwriter’s Warrant (incorporated herein by reference to Exhibit 10.41 to the Company’s Registration Statement on Form S-1 (File No.

333-182846) filed on October 26, 2012)

Amended and Restated Employment Agreement, dated May 2, 2013, by and between Imprimis Pharmaceuticals, Inc.

Baum (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on May 8, 2013)

Performance Stock Units Agreement, dated May 2, 2013, by and between Imprimis Pharmaceuticals, Inc.

Baum (incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on August 14, 2013)

Amended and Restated Employment Agreement, effective as of February 1, 2015, by and between Imprimis Pharmaceuticals, Inc.

and Andrew R.

Boll (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on February 2, 2015)

Performance Stock Units Award Agreement, effective as of February 1, 2015, by and between Imprimis Pharmaceuticals, Inc.

Employment Agreement, dated as of April 25, 2016, by and between Imprimis Pharmaceuticals, Inc.

Baum (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on April 26, 2016)

Employment Agreement, dated as of April 25, 2016, by and between Imprimis Pharmaceuticals, Inc.

and Andrew R.

Boll (incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on February 2, 2015)

Employment Agreement, effective as of February 1, 2015, by and between Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on April 26, 2016)

Employment Agreement, dated as of April 25, 2016, by and between Imprimis Pharmaceuticals, Inc.

Saharek (incorporated herein by reference to Exhibit 10.7 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on February 2, 2015)

Warrant to Purchase Stock, dated May 11, 2015, issued by Imprimis Pharmaceuticals, Inc.

(incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on May 12, 2015)

Warrant Amendment to Purchase Stock, dated December 27, 2016, issued by Imprimis Pharmaceuticals, Inc.

(incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on December 29, 2016)

Form of Securities Purchase Agreement, dated March 21, 2017, between the Registrant and the Investors (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on March 22, 2017)

filed with the Securities and Exchange Commission on April 26, 2016)

License Agreement dated April 1, 2017 between Imprimis Pharmaceuticals, Inc.

33 unchanged sentences

filed with the Securities and Exchange Commission on June 20, 2017)

Loan and Security Agreement, dated July 19, 2017, by and between Imprimis Pharmaceuticals, Inc.

and SWK Funding LLC (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on July 20, 2017)

Imprimis Pharmaceuticals, Inc.

2017 Incentive Stock and Awards Plan (incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form S-8 of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on August 25, 2017)

Form of Incentive Stock Option Agreement (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on June 16, 2017)

Form of Non-Statutory Stock Option Agreement (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on June 16, 2017)

Form of Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on June 16, 2017)

Form of Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc.

filed with the Securities and Exchange Commission on June 16, 2017)

Consulting Agreement dated October 27, 2017 between Surface Pharmaceuticals, Inc.

48 unchanged sentences

filed with the Securities and Exchange Commission on May 9, 2019)

Joinder and First Amendment to Loan and Security Agreement, dated May 24, 2019, by and between Harrow Health, Inc., each of its wholly-owned subsidiaries and SWK Funding LLC.

Joinder and Amendment to Loan and Security Agreement, dated May 24, 2019, by and between Harrow Health, Inc., each of its wholly-owned subsidiaries and SWK Funding LLC.

(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Harrow Health, Inc.

24 unchanged sentences

filed with the Securities and Exchange Commission on March 13, 2020).

Second Amendment, dated as of April 1, 2020, to the Loan and Security Agreement by and among Harrow Health, Inc., several of its wholly-owned subsidiaries and the Lenders named therein (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Harrow Health, Inc.

filed with the Securities and Exchange Commission on April 4, 2020)

Business Loan Agreement with Renasant Bank pursuant to the Paycheck Protection Program, dated April 27, 2020 (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Harrow Health, Inc.

filed with the Securities and Exchange Commission on August 10, 2020).

Agreement dated July 1, 2020 between Visionology, Inc.

and Andrew R.

Second Amendment, dated as of April 1, 2020, to the Loan and Security Agreement by and among Harrow Health, Inc., several of its wholly-owned subsidiaries and the Lenders named therein (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Harrow Health, Inc.

filed with the Securities and Exchange Commission on August 10, 2020).

Commercial Alliance Agreement between Eyepoint Pharmaceuticals, Inc.

and ImprimisRx, LLC dated August 1, 2020.

(incorporated herein by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q of Harrow Health, Inc.

and ImprimisRx, LLC dated August 1, 2020 (incorporated herein by reference to Exhibit 10.1+ to the Quarterly Report on Form 10-Q of Harrow Health, Inc.

filed with the Securities and Exchange Commission on November 9, 2020).

Amendment to Commercial Alliance Agreement between Eyepoint Pharmaceuticals, Inc.

ImprimisRx, LLC dated November 13, 2020.

of Subsidiaries

of Independent Registered Public Accounting Firm

Securities Purchase Agreement, dated as of May 5, 2021, by and between the Company and B.

Riley Securities, Inc.

(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on May 5, 2021).

License and Supply Agreement, dated as of July 25, 2021, by and between the Company and Sintetica, S.A.

(incorporated herein by reference to Exhibit 10.2+ to the Current Report on Form 10-Q of the Company filed with the Securities and Exchange Commission on August 10, 2021).

First Amendment to the Harrow Health, Inc.

2017 Incentive Stock and Awards Plan (incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the SEC on April 23, 2021).

Loan and Security Agreement, dated September 1, 2021, by and between the Company and Melt Pharmaceuticals, Inc.

(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on September 2, 2021).

Basic Sale and Purchase Agreement, dated as of August 18, 2021, by and between the Company and Wakamoto Pharmaceutical Co., Ltd.

(incorporated herein by reference to Exhibit 10.3+ to the Current Report on Form 10-Q of the Company filed with the Securities and Exchange Commission on November 9, 2021).

License Agreement, dated as of August 18, 2021, by and between the Company and Wakamoto Pharmaceutical Co., Ltd.

(incorporated herein by reference to Exhibit 10.4+ to the Current Report on Form 10-Q of the Company filed with the Securities and Exchange Commission on November 9, 2021).

Expansion Term Letter Agreement between Eyepoint Pharmaceuticals, Inc.

and ImprimisRx, LLC dated December 6, 2021.

Asset Purchase Agreement, dated as of December 17, 2021, by and between the Company and Novartis Technology, LLC and Novartis Ophthalmics AG

List of Subsidiaries

Consent of Independent Registered Public Accounting Firm

Power of Attorney (included on the signature page to this Annual Report)

Certification

Baum, Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

Boll, Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of

1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Mark

Certification of Mark L.

Baum, Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Andrew R.

Boll, Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Mark L.

Baum, Chief Executive Officer.

Certification

pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Andrew

Certification pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Andrew R.

Boll, Chief Financial Officer.

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the redacted terms, has been separately filed with the Securities and Exchange Commission.

of this exhibit have been omitted in compliance with item 601 of Regulation S-K

FORM 10-K SUMMARY

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

Executive Officer (Principal Executive Officer)

ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark L.

Baum and Andrew

Boll, and each of them individually, as his true and lawful attorneys-in-fact and agents with full power of substitution and

resubstitution, for him and in his name, place and stead, in any and all capacities to any or all amendments to this Annual Report,

and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange

Commission, granting unto said attorneys-in-fact and agents or any of them the full power and authority to do and perform each

and every act and thing requisite and necessary to be done in and about the foregoing, as full to all intents and purposes as

he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or

his substitutes, may lawfully do or cause to be done by virtue thereof.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

Executive Officer and Director

Baum and Andrew R.

and each of them individually, as his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution,

for him and in his name, place and stead, in any and all capacities to any or all amendments to this Annual Report, and to file the same,

with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said

attorneys-in-fact and agents or any of them the full power and authority to do and perform each and every act and thing requisite and

necessary to be done in and about the foregoing, as full to all intents and purposes as he might or could do in person, hereby ratifying

and confirming all that said attorneys-in-fact and agents or any of them, or his substitutes, may lawfully do or cause to be done by

virtue thereof.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Executive Officer and Chairman of the Board

Executive Officer)

Financial Officer

Financial Officer and Corporate Secretary

Accounting and Financial Officer)

of the Board of Directors

Lawrence Van Horn

1 unchanged sentence

to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

Balance Sheets at December 31, 2020 and 2019

Statements of Operations for the years ended December 31, 2020 and 2019

Statements of Stockholders’ Equity for the years ended December 31, 2020 and 2019

Statements of Cash Flows for the years ended December 31, 2020 and 2019

to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets at December 31, 2021 and 2020

Consolidated Statements of Operations for the years ended December 31, 2021 and 2020

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors

Harrow Health, Inc.

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Harrow Health, Inc.

and subsidiaries (the “Company”)

as of December 31, 2020 and 2019, the related consolidated statements of operations, stockholders’ equity and cash flows

for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash

flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted

in the United States of America.

and subsidiaries (the “Company”) as of

December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity and cash flows for

each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the

“consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present

fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of

its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting

principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the

Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

Our responsibility is to express an opinion

on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether

due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over

financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting

but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

1 unchanged sentence

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements

that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that

are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements,

taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical

audit matter or on the accounts or disclosures to which it relates.

Compensation – Modified Stock Option

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that

was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material

to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication

of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we

are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts

or disclosures to which it relates.

for Investments in Melt Pharmaceuticals, Inc.

Audit Matter Description

described further in Note 14 to the consolidated financial statements, during the year ended December 31, 2020, the Company amended

an employee option to purchase 600,000 shares of the Company’s common stock, which is subject to the satisfaction of certain

market-based vesting criteria, by extending the vesting term and contractual term.

Management performed a valuation of the stock

option at the date of modification with the assistance of a third-party valuation specialist, which involved estimation

of the fair value of the modified option.

The Company estimated the fair value of the modified stock option using the Monte-Carlo

simulation and Black-Scholes option pricing models.

management’s valuation of the modified stock option required auditor judgment and required a high degree of subjectivity

as estimates underlying the determination of fair value were based on various inputs and significant assumptions used in the Monte-Carlo

simulation and Black-Scholes option pricing models, including the probability of triggering the market-based targets, and the

number of shares to be vested.

described in Notes 2 and 4 to the consolidated financial statements, the Company has investments in Melt Pharmaceuticals, Inc.

which it records under the equity method of accounting.

The structure and related agreements between the Company and Melt need to be

evaluated for consolidation, including determining whether Melt is a variable interest entity (“VIE”), and if so, whether

the Company is the primary beneficiary.

This assessment was performed at the formation of Melt and upon the occurrence of reconsideration

This determination requires significant judgment by management.

of December 31, 2021, the carrying value of the Company’s investments in Melt was $11.1 million.

identified the accounting for the Company’s investments in Melt, including the primary beneficiary assessment upon the occurrence

of reconsideration events, as a critical audit matter given the complex nature of the relevant accounting guidance, as well as the significant

judgment required by management.

This required a high degree of auditor judgment and an increased extent of audit effort due to the nature

and complexity of the agreements between the Company and Melt.

the Critical Audit Matter Was Addressed in the Audit

audit procedures included, among others, reading the relevant Board of Directors minutes and modified stock option agreement for

accuracy and completeness of the modified stock option terms.

We involved our valuation specialist to assist in the evaluation

of the Company’s determination of the fair value of the modified stock option, which included testing the appropriateness

of the methodologies and underlying assumptions used, and whether the methods used for determining fair value were applied consistently

with the valuation of similar grants in prior periods.

We evaluated the significant assumptions used by management to calculate

the fair value of the modified stock option, which included the expected option term and an independent calculation of the expected

volatility based upon actual historical stock price movements over a period equal to the expected option term.

We developed an

independent estimate of the fair value for the modified stock option with the assistance of our valuation specialist and compared

our estimate of fair value to the fair value determined by management.

KMJ Corbin & Company

audit procedures related to the accounting determination for the investments in Melt, including the primary beneficiary assessment upon

the occurrence of reconsideration events, included obtaining an understanding of management’s assessment of the accounting treatment

of the investments through examination of the related agreements and evaluation of management’s analysis of the significant terms

and characteristics of the investments, the relevant accounting guidance and conclusions.

We evaluated management’s conclusions

regarding the accounting for the investments in Melt and considered whether management appropriately determined if Melt is a variable

interest entity, and if so, appropriately determined the primary beneficiary by considering contractual arrangements of Melt to evaluate

if the Company has the power to direct activities and the obligation to absorb losses of Melt or the right to receive benefits from Melt

that could be significant to the variable interest.

also evaluated evidence obtained in other areas of the audit to determine if there were additional reconsideration events that had not

been identified by the Company, including, among others, reading board minutes of Melt and reading and analyzing all relevant provisions

of the agreements between the Company and Melt.

We further assessed the completeness and accuracy of management’s classification

and disclosure of the Company’s investments in Melt.

KMJ Corbin & Company LLP

have served as the Company’s auditor since 2007.

2 unchanged sentences

thousands, except share data)

Current assets

and cash equivalents, including restricted cash of $ 200

Investment in Eton

Pharmaceuticals

Accounts receivable,

and cash equivalents, including restricted cash of $ 200 at December 31, 2020

in Eton Pharmaceuticals

receivable, net

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’

Current liabilities

Accounts payable

and accrued expenses

Accrued payroll

and related liabilities

current assets

plant and equipment, net

software development costs, net

lease right-of-use assets

in Surface Pharmaceuticals

in Melt Pharmaceuticals

AND STOCKHOLDERS’ EQUITY

payable and accrued expenses

payroll and related liabilities

revenue and customer deposits

Current portion

of paycheck protection program loan payable

portion of loan payable, net of unamortized debt discount

portion of operating lease liabilities

portion of loans payable, net of unamortized debt discount

portion of operating lease obligations

portion of finance lease obligations

Total current liabilities

Operating lease liabilities, net of

current portion

Finance lease obligations, net of current

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

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY

Common stock, $ 0.001

par value, 50,000,000

shares authorized, 25,749,875

and 25,526,931

shares issued and outstanding at December 31, 2020

current liabilities

lease liabilities, net of current portion

lease obligations, net of current portion

expenses, net of current portion

payable, net of current portion and unamortized debt discount

and contingencies

STOCKHOLDERS’

stock, $ 0.001 par value, 50,000,000 shares authorized, 26,902,763 and 25,749,875 shares issued and outstanding at December 31, 2021

and December 31, 2020, respectively

Additional paid-in

TOTAL HARROW HEALTH

STOCKHOLDERS’ EQUITY

paid-in capital

HARROW HEALTH STOCKHOLDERS’ EQUITY

Noncontrolling

LIABILITIES AND EQUITY

STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

accompanying notes are an integral part of these consolidated financial statements

1 unchanged sentence

thousands, except for share and per share data)

the Years Ended December 31,

Total revenues

Cost of sales

Operating expenses:

Selling, general

and administrative

Research and development

the Years Ended

general and administrative

and development

of long-lived assets

Total operating

Income (loss)

operating expenses

from operations

Other income (expense):

Interest expense,

Investment (loss)

gain from Melt Pharmaceuticals, net

Investment loss

from Surface Ophthalmics, net

Investment gain

from Eton Pharmaceuticals, net

(loss) income, net

Total other (loss)

Loss before income tax provision

tax provision

Total net loss including

noncontrolling interests

income (expense):

in losses of unconsolidated entities

(loss) gain from investment in Eton Pharmaceuticals, net

on early extinguishment of debt

on forgiveness of PPP loan

income (expense), net

other expense, net

before income tax provision

tax provision, net

net loss including noncontrolling interests

loss attributable to noncontrolling interests

Net (loss) income

attributable to Harrow Health, Inc.

Basic net (loss)

income per share of common stock

Diluted net (loss)

income per share of common stock

Weighted average number of common

shares outstanding, basic

Weighted average number of common

shares outstanding, diluted

loss attributable to Harrow Health, Inc.

dividends and accretion of preferred stock issuance costs

loss attributable to common stockholders

and diluted net loss per share of common stock

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

accompanying notes are an integral part of these consolidated financial statements

2 unchanged sentences

thousands, except for share data)

Harrow Health, Inc.

Noncontrolling

1 unchanged sentence

Stockholders’

Balance at January 1, 2019

Issuance of common stock in connection

Exercise of warrants

Exercise of employee

options, net of tax withholding

Issuance of common stock related to vesting of RSUs

Stock-based payment

for services provided

Stock-based compensation expense

Net income (loss)

Balance at December 31, 2019

Issuance of common stock in connection

Exercise of employee

options, net of tax withholding

Issuance of common stock related

to vesting of RSUs

Stock-based payment

for services provided

Stock-based compensation expense

Balance at December 31, 2020

at December 31, 2019

of common stock in connection with:

of employee stock-based options

of warrants , Shares

withheld related to net share settlement of equity awards

withheld related to net share settlement of equity awards , shares

of preferred shares, net of discounts and issuance costs

of preferred shares, net of discounts and issuance costs, shares

of preferred shares

of preferred shares, shares

of preferred dividends

payment for services provided

compensation expense

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 discounts and issuance costs

of preferred shares

of preferred dividends

compensation expense

at December 31, 2021

accompanying notes are an integral part of these consolidated financial statements

STATEMENTS OF CASH FLOWS

the Years Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES

the Years Ended

FLOWS FROM OPERATING ACTIVITIES

loss (including noncontrolling interests)

Adjustments to reconcile

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

Depreciation and

amortization of property, plant and equipment

Amortization of

intangible assets

Amortization of

operating lease right-of-use assets

Provision for bad

Interest paid-in-kind

Amortization of

debt issuance costs and discount

Investment gain

from Eton Pharmaceuticals, net

Investment loss

from Surface Ophthalmics, net

Investment loss

(gain) from Melt Pharmaceuticals, net

Loss on disposal

Impairment of long-lived

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

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

and amortization

of intangible assets

of operating lease right-of-use assets

for bad debt expense

paid-in-kind on SWK Loan

of debt issuance costs and discount

on forgiveness of PPP loan

loss (gain) from investment in Eton

in losses of unconsolidated entities

on sale and disposal of equipment

on early extinguishment of loan

of long-lived assets

based 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

NET CASH (USED

IN) PROVIDED BY OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds on sale

and disposal of assets

Investment in patent

and trademark assets

of property, plant and equipment

NET CASH USED

IN INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on finance

lease obligations

Proceeds from SWK

Principal payments

Payments of costs

related to amendment of SWK loan

Proceeds from Paycheck

protection program loan payable

Net proceeds from

exercise of warrants and stock options, net of taxes remitted for RSU’s and options

NET CASH PROVIDED

BY (USED IN) FINANCING ACTIVITIES

NET 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

Cash and cash equivalents

CASH, CASH EQUIVALENTS

AND RESTRICTED CASH AT END OF PERIOD

SUPPLEMENTAL DISCLOSURE

OF CASH FLOW INFORMATION:

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

FLOWS FROM INVESTING ACTIVITIES

proceeds from sale of investment in Eton Pharmaceuticals

of note receivable, Melt Pharmaceuticals

from sale and disposal of assets

in patent and trademark assets

of product NDAs and patents

of property, plant and equipment and capitalized software development costs

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 year

CASH EQUIVALENTS AND RESTRICTED CASH, end of year

RECONCILIATION

OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

and cash equivalents

CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR

DISCLOSURE OF CASH FLOW INFORMATION:

paid for income taxes

paid for interest

SUPPLEMENTAL DISCLOSURES

OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Purchase of property,

plant and equipment included in accounts payable and accrued expenses

and revaluation of right-of-use assets obtained in exchange for lease obligation

DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

of property, plant and equipment included in accounts payable and accrued expenses

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

accounts receivable transferred to note receivable

accompanying notes are an integral part of these consolidated financial statements

TO THE CONSOLIDATED FINANCIAL STATEMENTS

the Year Ended December 31, 2020 and 2019

the Years Ended December 31, 2021 and 2020

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

(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,

In addition to wholly owning ImprimisRx, the Company also has equity positions in Eton Pharmaceuticals, Inc.

Surface Ophthalmics, Inc.

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

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”), all companies that began

as subsidiaries of Harrow.

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

In 2020, Harrow created Visionology, Inc.

(“Visionology”), which intends to launch an online

eye health platform business.

(“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.

The Company intends to continue to create, and hold equity and royalty rights in, new businesses that commercialize drug candidates

that are internally developed or otherwise acquired or licensed from third parties.

and subsequent to the year ended December 31, 2020, the Company discontinued the majority of operational efforts related to its

subsidiaries Stowe Pharmaceuticals, Inc.

of December 31, 2021, the Company suspended the majority of operational efforts related to its subsidiaries Stowe Pharmaceuticals, Inc.

(“Stowe”), Radley Pharmaceuticals, Inc.

(“Radley”) and Mayfield

Pharmaceuticals, Inc.

(“Mayfield”) to allocate resources to other areas of the Company’s business.

does not expect the suspension of these operations to have a material impact on the financial results of the Company.

(“Radley”) and Mayfield Pharmaceuticals, Inc.

to allocate resources in other areas of the Company’s business.

The suspension of these operations did not have a material impact

on the financial results of the Company.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in

the United States of America (“GAAP”).

The accompanying consolidated financial statements include the accounts of

the Company and its wholly-owned subsidiaries, as well as Mayfield, 79 %

majority controlled, and Stowe, 70 %

majority controlled as of December 31, 2020.

The remaining 21 %

of Mayfield is owned by Elle Pharmaceutical, LLC (“Elle”), TGV-Health, LLC and its affiliated entities (collectively

“TGV”) or other consultants.

Mayfield was organized to develop women’s health and urological focused drug candidates.

The remaining 30 %

of Stowe was owned by TGV.

has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United

States of America (“GAAP”).

The accompanying consolidated financial statements include the accounts of the Company and its

wholly-owned subsidiaries, as well as Mayfield and Stowe, subsidiaries of which the Company owned 79 % and 70 % of their equity interests,

respectively, as of December 31, 2020.

The remaining 21 % of Mayfield was owned by Elle Pharmaceutical, LLC (“Elle”), TGV-Health,

LLC and its affiliated entities (collectively “TGV”) or other consultants.

Mayfield was organized to develop women’s

health-focused drug candidates.

The remaining 30 % of Stowe was owned by TGV.

Stowe was organized to develop ophthalmic drug candidates.

The Company controls 100 %

of the equity interests in Visionology.

During 2021, the Company gained control of 100% of the equity interests in Stowe and Mayfield.

The Company controls 100 % of the equity

interests in Visionology.

All inter-company accounts and transactions have been eliminated in consolidation.

consolidates entities in which we have a controlling financial interest.

consolidate subsidiaries in which we hold and/or control, directly or indirectly, more than 50% of the voting rights .

Company consolidates entities in which it

has a controlling financial interest.

The Company assesses control under the Variable Interest Entity (“VIE”) model to

determine whether the Company is the primary beneficiary of that entity’s operations.

If an entity is not deemed to be a VIE,

we consolidate entities in which we hold and/or

control, directly or indirectly, more than 50% of the voting rights.

All intercompany accounts and transactions have been eliminated in consolidation.

preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements

and reported amounts of revenues and expenses during the reporting periods.

Significant estimates made by management are, among

others, allowance for doubtful accounts and contractual adjustments, renewal periods and discount rates for leases, realizability

of inventories, valuation of investments, realizability of deferred taxes, recoverability of goodwill and long-lived assets,

valuation of contingent acquisition obligations and deferred acquisition obligations, fair value of loans payable, and valuation

of stock-based transactions with employees and non-employees.

Actual results could differ from those estimates.

preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported

amounts of revenues and expenses during the reporting periods.

Significant estimates made by management are, among others, allowance

for doubtful accounts and contractual adjustments, renewal periods and discount rates for leases, realizability of inventories, recoverability

of investments, realizability of deferred taxes, fair value of intangible assets, recoverability of long-lived assets and goodwill,

fair value of loans payable, and valuation of stock-based transactions with employees and non-employees.

Actual results could differ

from those estimates.

Uncertainties and Liquidity

Company is subject to risks and uncertainties as a result of the COVID-19 pandemic.

On March 18, 2020, the Centers for Medicare

& Medicaid Services (“CMS”) released guidance for U.S.

healthcare providers to limit all elective medical procedures

in order to conserve personal protective equipment and limit exposure to COVID-19 during the pendency of the pandemic.

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

during the pandemic.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and healthcare

delivery, led to social distancing recommendations, stay-at-home orders and other restrictive measures, and created significant

volatility in financial markets.

of the Company’s customers use its drugs in procedures impacted by the CMS guidance to limit elective procedures.

the Company and our business partners need access to healthcare providers and facilities to conduct clinical trials and other

activities required to achieve regulatory clearance of products under development.

believes reductions in elective procedures in response to CMS guidance have had, and will continue to have, an adverse impact,

which may be material, on the Company’s financial condition, liquidity and results of operations.

The severity of the impact

of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the

duration and severity of the pandemic and the extent and severity of the impact on its customers, all of which are uncertain and

cannot be predicted.

As of the date of the filing of this Annual Report on Form 10-K, the extent to which the COVID-19 pandemic

may materially impact the Company’s financial condition, liquidity or results of operations is uncertain.

In addition, the

Company is subject to certain regulatory standards, guidelines and inspections which could impact the Company’s ability

Company is subject to certain regulatory standards, approvals, guidelines and inspections which could impact the Company’s ability

to make, dispense, and sell certain products.

If the Company was required to cease compounding and selling certain products as

a result of regulatory guidelines or inspections, this may have a material impact on the Company’s financial condition,

liquidity and results of operations.

to 2020, the Company had incurred significant operating losses and negative cash flows from operations since its inception.

Company recorded operating income of $ 385

for the year ended December 31, 2020 and

recorded an operating loss of $ 4,795

for the year ended December 31, 2019.

The Company has an accumulated deficit of $ 77,400

as of December 31, 2020 and 2019, respectively.

In addition, the Company used cash in operating activities of $ 1,100

for the year ended December 31, 2020 and

cash provided by operating activities was $ 950

for the year ended December 31, 2019.

there is no assurance, management of the Company believes existing cash resources and restricted cash of $ 4,301

at December 31, 2020 together with cash

generated from operations, will be sufficient to sustain the Company’s planned level of operations for at least the next

twelve months.

However, estimates of operating expenses and working capital requirements and the future impact of the COVID-19

pandemic on its business could be incorrect.

The Company could use its cash resources faster than anticipated.

Further, some or

all of the ongoing or planned activities may not be successful and could result in further losses.

Company may seek to increase liquidity and capital resources through a variety of means which may include, but are not limited

the sale of assets, investments and/or businesses, obtaining financing through the issuance of equity, debt, or convertible

and working to increase revenue growth through sales.

There is no guarantee that the Company will be able to obtain

capital when needed on terms management deems acceptable, or at all.

Company’s chief operating decision-maker is its Chief Executive Officer who makes resource allocation decisions and assesses

If the Company was required to cease compounding and selling certain products as a result

of regulatory guidelines or inspections, this may have a material impact on the Company’s financial condition, liquidity and results

of operations.

Company’s chief operating decision-maker is its Chief Executive Officer who makes resource allocatio n decisions and assesses

performance based on financial information presented as operating segments.

The Company has identified two

operating segments as reportable segments.

See Note 18 for more information regarding the Company’s reportable segments.

Management has identified two

operating segments as reportable segments for periods covered by this Annual Report on Form 10-K.

See Note 18 for more information

regarding the Company’s reportable segments.

Noncontrolling

3 unchanged sentences

any interest that holds less than 50% of the outstanding voting shares is deemed to be a noncontrolling interest;

however, there

are other factors, such as decision-making rights, that are considered as well.

Company includes the amount of net loss attributable to noncontrolling interests in consolidated net loss on the face of the consolidated

statements of operations.

Company provides in the consolidated statements of stockholders’ equity a reconciliation at the beginning and the end of

the period of the carrying amount of total equity, equity attributable to the parent, and equity attributable to the noncontrolling

interests that separately discloses:

however, there are

other factors, such as decision-making rights, that are considered as well .

The Company includes the amount of net loss attributable

to noncontrolling interests in consolidated net loss on the face of the consolidated statements of operations.

Company provides in the consolidated statements of stockholders’ equity a reconciliation at the beginning and the end of the period

of the carrying amount of total equity, equity attributable to the parent, and equity attributable to the noncontrolling interests that

separately discloses:

income or loss;

2 unchanged sentences

Recognition and Deferred Revenue

Company recognizes revenue at the time of transfer of promised goods to customers in an amount that reflects the consideration

Company recognizes revenue at the time of transfer of promised goods or services to customers in an amount that reflects the consideration

to which the Company expects to be entitled in exchange for those goods or services (see Note 3).

of sales includes direct and indirect costs to manufacture formulations and other products sold, including active pharmaceutical

ingredients, personnel costs, packaging, storage, royalties, shipping and handling costs and the write-off of obsolete inventory.

of sales includes direct and indirect costs to manufacture formulations and other products sold, including active pharmaceutical ingredients,

personnel costs, packaging, storage, royalties, shipping and handling costs and the write-off of obsolete inventory.

and Development

Company expenses all costs related to research and development as they are incurred.

Research and development 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.

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.

Issuance Costs and Debt Discount

issuance costs and the debt discount are recorded net of loans payable and finance lease obligations in the consolidated balance

Amortization of debt issuance costs and the debt discount is calculated using the effective interest method over the term

of the related debt and is recorded in interest expense in the accompanying consolidated statements of operations.

costs of acquiring intellectual property rights to be used in the research and development process, including licensing fees and

milestone payments, are charged to research and development expense as incurred in situations where the Company has not identified

an alternative future use for the acquired rights, and are capitalized in situations where we have identified an alternative future

use for the acquired rights.

Patents and trademarks are recorded at cost and capitalized at a time when the future economic benefits

of such patents and trademarks become more certain (see “—Goodwill and Intangible Assets” below).

began capitalizing certain costs associated with acquiring intellectual property rights during 2015;

if costs are not capitalized

they are expensed as incurred.

Company accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) Accounting

Standards Codification (“ASC”) 740, Income Taxes .

As part of the process of preparing the Company’s consolidated financial statements, the Company

must estimate the actual current tax assets and liabilities and assess permanent and temporary differences that result from differing

treatment of items for tax and accounting purposes.

The temporary differences result in deferred tax assets and liabilities, which

are included within the consolidated balance sheets.

The Company must assess the likelihood that the deferred tax assets will

be recovered from future taxable income and, to the extent the Company believes that recovery is not more likely than not, a valuation

allowance must be established which reduces the amount of deferred tax assets recorded on the consolidated balance sheets.

the extent the Company establishes a valuation allowance or increase or decrease this allowance in a period, the impact will be

included in income tax expense in the consolidated statements of operations.

issuance costs and the debt discount are recorded net of loans payable in the consolidated balance sheets.

Amortization of debt issuance

costs and the debt discount is calculated using the effective interest method over the term of the related debt and is recorded in interest

expense in the accompanying consolidated statements of operations.

costs of acquiring intellectual property rights to be used in the research and development process, including licensing fees and milestone

payments, are charged to research and development expense as incurred in situations where the Company has not identified an alternative

future use for the acquired rights, and are capitalized in situations where we have identified an alternative future use for the acquired

Patents and trademarks are recorded at cost and capitalized at a time when the future economic benefits of such patents and trademarks

become more certain (see “—Goodwill and Intangible Assets” below).

If costs are not capitalized they are expensed as

part of the process of preparing the Company’s consolidated financial statements, the Company must estimate the actual current

tax assets and liabilities and assess permanent and temporary differences that result from differing treatment of items for tax and accounting

The temporary differences result in deferred tax assets and liabilities, which are included within the consolidated balance

The Company must assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the

extent the Company believes that recovery is not more likely than not, a valuation allowance must be established which reduces the amount

of deferred tax assets recorded on the consolidated balance sheets.

To the extent the Company establishes a valuation allowance or increase

or decrease this allowance in a period, the impact will be included in income tax expense in the consolidated statements of operations.

Company accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards

Codification (“ASC”) 740, Income Taxes .

As of December 31, 2021 and 2020, there were no unrecognized tax benefits

included in the consolidated balance sheets that would, if recognized, affect the effective tax rate.

The Company’s practice is

to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company had no accrual for interest or

penalties in its consolidated balance sheets at December 31, 2021 and 2020, and has not recognized interest and/or penalties in the consolidated

statements of operations for the years ended December 31, 2021 and 2020.

The Company is subject to taxation in the United States, California,

Florida, Georgia, Illinois, New Jersey, New York, Tennessee, and Wisconsin.

The Company’s tax years since 2000 may be subject to

examination by the federal and state tax authorities due to the carryforward of unutilized net operating losses.

and Cash Equivalents

4 unchanged sentences

The Federal Deposit Insurance

Corporation (“FDIC”) provides basic deposit coverage with limits up to $ 250

From time to time the Company

has cash deposits in excess of FDIC limits.

Corporation (“FDIC”) provides basic deposit coverage with limits up to $ 250 per owner.

From time to time the Company has

cash deposits in excess of FDIC limits.

in Eton Pharmaceuticals, Inc.

– Related Party

Company owns 3,500,000

shares of Eton common stock, which represents

approximately 14.4 %

of the equity and voting interests of Eton as of December 31, 2020.

At December 31, 2020, the fair market value of Eton’s

common stock was $ 8.13

In accordance with Accounting

Standard Update (“ASU”) 2016-01, Financial Instruments-Overall (Subtopic 825-10):

Recognition and Measurement of

Financial Assets and Financial Liabilities , for the years ended December 31, 2020 and 2019, the Company recorded investment

gains from its Eton common stock position of $ 3,255

and $ 3,780 ,

respectively, related to the change in fair market value of the Company’s investment in Eton during the measurement periods.

As of December 31, 2020 and 2019, the fair market value of the Company’s investment in Eton was $ 28,455

Company’s investment in Eton Pharmaceuticals, Inc.

(“Eton”) consists of common stock with a readily determinable fair

value which is carried at fair value with changes in fair value recognized in earnings.

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 (loss) gain from its Eton common stock position of $ ( 8,720 )

and $ 3,255 ,

respectively.

Baum, the Company’s Chief Executive Officer, is a member of the board of directors of Eton.

during the years ended December 31, 2021, respectively, related to the change in fair market value of its investment in Eton during the

measurement period.

the year ended December 31, 2021, the Company sold 1,518,000 shares of its 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 year ended December 31, 2021, the Company recorded a realized loss of $ 1,406 related to the Eton Stock

Following the Eton Stock Sale and as of December 31, 2021, the Company owns 1,982,000 shares of Eton common stock, which

represents less than 10 % of the equity interests of Eton.

At December 31, 2021, the fair market value of Eton’s common stock was

$ 4.29 per share.

As of December 31, 2021, the fair market value of the Company’s investment in Eton was $ 8,503 .

receivable are stated net of allowances for doubtful accounts and contractual adjustments.

4 unchanged sentences

identified receivables.

Accounts receivable are presented net of allowances for doubtful accounts and contractual adjustments

in the amount of $ 98 and

of December 31, 2020 and 2019, respectively.

Accounts receivable are presented net of allowances for doubtful accounts and contractual adjustments in the

amount of $ 40 and $ 98 as of December 31, 2021 and 2020, respectively.

are stated at the lower of cost or net realizable value.

Cost is determined on a first-in, first-out basis.

The Company evaluates

the carrying value of inventories on a regular basis, based on the price expected to be obtained for products in their respective

markets compared with historical cost.

Write-downs of inventories are considered to be permanent reductions in the cost basis

of inventories.

Company also regularly evaluates its inventories for excess quantities and obsolescence (expiration), taking into account such

factors as historical and anticipated future sales or use in production compared to quantities on hand and the remaining shelf

life of products and active pharmaceutical ingredients on hand.

The Company establishes reserves for excess and obsolete inventories

as required based on its analyses.

The Company evaluates the

carrying value of inventories on a regular basis, based on the price expected to be obtained for products in their respective markets

compared with historical cost.

Write-downs of inventories are considered to be permanent reductions in the cost basis of inventories.

Company also regularly evaluates its inventories for excess quantities and obsolescence (expiration), taking into account such factors

as historical and anticipated future sales or use in production compared to quantities on hand and the remaining shelf life of products

and active pharmaceutical ingredients on hand.

The Company establishes reserves for excess and obsolete inventories as required based

on its analyses.

in Melt Pharmaceuticals, Inc.

– Related Party

April 2018, the Company formed Melt as a wholly-owned subsidiary.

In January and March of 2019, Melt entered into definitive stock

purchase agreements (collectively, the “Melt Series A Preferred Stock Agreement”) with certain investors and closed

on the sale of Melt’s Series A Preferred Stock (the “Melt Series A Stock”), totaling approximately $ 11,400

of proceeds (collectively, the “Melt

Series A Round”) at a purchase price of $ 5.00

As a result, the Company lost

voting and ownership control of Melt and ceased consolidating Melt’s financial statements.

January 2019, the Company deconsolidated Melt and recorded a gain of $ 5,810

and adjusted the carrying value in Melt

to reflect the increased valuation of Melt and the Company’s new ownership interest in accordance with ASC 810-10-40-4(c),

Consolidation .

Company owns 3,500,000

common shares of Melt (which is approximately

of the equity interests as of December 31, 2020) 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 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.

shares of common stock (which is approximately

of the equity interests as of December 31, 2021) of Melt.

The Company analyzes its investment in Melt and related agreements on a regular

basis to evaluate its position of variable interests in Melt.

The Company has determined that it does not have the ability to control

Melt, however it has the ability to exercise significant influence over the operating and financial decisions of Melt, and uses the equity

method of accounting for this investment.

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

The Company recorded equity in the net gain of

Melt of $ 3,968

During the year ended December

The Company recorded equity in the net loss of Melt of $ 2,313

during the year ended December 31, 2020.

As of December 31, 2020 and 2019, the Company’s investment in Melt was $ 2,506

and $ 4,690 ,

respectively, which includes $ 851

respectively, due from Melt for reimbursable expenses and amounts due under the Melt Master Services Agreement (“MSA”).

31, 2021, the Company reduced its common stock investment in Melt to $ 0

as a result of the Company recording its share

of equity losses in Melt since its deconsolidation in 2019.

As of December 31, 2021 and at the time of entering into the Melt Loan Agreement

(see Note 4), the Company owned 100 %

of the debt owed by Melt.

Following the reduction

of the carrying value of the Company’s common stock investment in Melt to $ 0 ,

the Company began recording 100% of the equity method losses of Melt, based on its ownership of total debt owed by Melt in accordance

with ASC 323.

In addition, the Company treats interest paid in kind on the Melt Loan Agreement as an in-substance capital contribution

and reduces its investment in Melt accordingly, rather than recording interest income.

The Company has no other requirements to advance

funds to Melt.

following table summarizes the Company’s investments in Melt as of December 31, 2021:

OF INVESTMENT

of Equity Method

In-substance Capital

Contributions

following table summarizes the Company’s investments in Melt as of December 31, 2020:

December 31, 2021 and 2020, the Company recorded $ 48 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 sheets.

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

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common shares (which is approximately 20 %

of the equity interests as of December 31, 2020) 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

Under this method, the Company recognizes earnings and losses in Surface in its 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 loss of Surface of $ 1,200

during the year ended December 31, 2019.

The Company recorded equity in the net loss of Surface of $ 2,433

during the year ended December 31, 2020.

As of December 31, 2020 and 2019, the carrying value of the Company’s investment in Surface was $ 1,314

and $ 3,747 ,

respectively.

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.

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

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 in Surface.

Any intra-entity profits and losses are

During the year ended December 31, 2021 the Company reduced its common stock investment in Surface to $ 0

as a result of the Company recording its share

of equity losses of Surface.

The Company has no other investments in Surface.

following table summarizes the Company’s investment in Surface as of December 31, 2021:

SCHEDULE OF INVESTMENT

following table summarizes the Company’s investments in Surface as of December 31, 2020:

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 from Melt 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 December 31, 2021 and 2020, no indicators of impairment existed.

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.

Computer software and hardware and

furniture and equipment are depreciated over three

to five years .

Company accounts for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies,

and contingent consideration at their fair values on the acquisition date.

The purchase price allocation process requires management

to make significant estimates and assumptions, especially with respect to intangible assets, estimated contingent consideration

payments and pre-acquisition contingencies.

Examples of critical estimates in valuing certain of the intangible assets the Company

has acquired or may acquire in the future include but are not limited to:

expected cash flows from product sales, support agreements, consulting contracts, other customer contracts, and acquired developed

technologies and patents;

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.

Computer hardware and furniture and equipment are depreciated

over three to five years .

Software Development Costs

Company capitalizes certain costs related to the development of internal-use software.

Costs incurred during the application development

phase are capitalized only when the Company believes it is probable the development will result in new or additional functionality.

types of costs capitalized during the application development phase include consulting fees for third-party developers working on these

Costs related to the preliminary project stage and post-implementation activities are expensed as incurred.

Internal-use software

is amortized on a straight-line basis over the estimated useful life of the asset, which ranges from two

When internal-use software that was previously

capitalized is abandoned, the cost less the accumulated amortization, if any, is recorded as amortization expense.

Fully amortized capitalized

internal-use software costs are removed from their respective accounts.

Company accounts for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies, and contingent

consideration at their fair values on the acquisition date.

The purchase price allocation process requires management to make significant

estimates and assumptions, especially with respect to intangible assets, estimated contingent consideration payments and pre-acquisition

contingencies.

Examples of critical estimates in valuing certain of the intangible assets the Company has acquired or may acquire in

the future include but are not limited to:

expected cash flows from product sales, support agreements, consulting contracts, other customer

contracts, and acquired developed technologies and patents;

rates utilized in valuation estimates.

1 unchanged sentence

events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date,

including changes from events after the acquisition date, such as changes in our estimates of relevant revenue or other targets,

will be recognized in earnings in the period of the estimated fair value change.

A change in fair value of the acquisition-related

contingent consideration or the occurrence of events that cause results to differ from our estimates or assumptions could have

a material effect on the consolidated financial position, statements of operations or cash flows in the period of the change in

the estimate.

Additionally,

any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes

from events after the acquisition date, such as changes in our estimates of relevant revenue or other targets, will be recognized in

earnings in the period of the estimated fair value change.

A change in fair value of the acquisition-related contingent consideration

or the occurrence of events that cause results to differ from our estimates or assumptions could have a material effect on the consolidated

financial position, statements of operations or cash flows in the period of the change in the estimate.

and Intangible Assets

and trademarks are recorded at cost and capitalized at a time when the future economic benefits of such patents and trademarks

become more certain.

At that time, the Company capitalizes third-party legal costs and filing fees associated with obtaining and

prosecuting claims related to its patents and trademarks.

Once the patents have been issued, the Company amortizes these costs

over the shorter of the legal life of the patent or its estimated economic life, generally 20

years, using the straight-line method.

Trademarks are an indefinite life intangible asset and are assessed for impairment based on future projected cash flows as further

described below.

Company reviews its goodwill and indefinite-lived intangible assets for impairment as of January 1 of each year and when an event

or a change in circumstances indicates the fair value of a reporting unit may be below its carrying amount.

Events or changes

in circumstances considered as impairment indicators include but are not limited to the following:

and trademarks are recorded at cost and capitalized at a time when the future economic benefits of such patents and trademarks become

more certain.

At that time, the Company capitalizes third-party legal costs and filing fees associated with obtaining and prosecuting

claims related to its patents and trademarks.

Once the patents have been issued, the Company amortizes these costs over the shorter of

the legal life of the patent or its estimated economic life, generally 20 years, using the straight-line method.

Acquired product rights,

including new drug applications (“NDAs”), are amortized over their estimated useful lives, generally 10 years, based on a

straight-line method.

Trademarks are an indefinite life intangible asset and are assessed for impairment based on future projected cash

flows as further described below.

Company reviews its goodwill and indefinite-lived intangible assets for impairment as of January 1 of each year and when an event or

a change in circumstances indicates the fair value of a reporting unit may be below its carrying amount.

Events or changes in circumstances

considered as impairment indicators include but are not limited to the following:

● significant

underperformance of the Company’s business relative to expected operating results;

● significant

adverse economic and industry trends;

decline in the Company’s market capitalization for an extended period of time relative to net book value;

● significant

decline in the Company’s market capitalization for an extended period of time relative

to net book value;

● expectations

that a reporting unit will be sold or otherwise disposed.

1 unchanged sentence

The Company compares the fair value of each reporting unit to its carrying amount, including the existing goodwill.

value of each reporting unit is determined using a discounted cash flow valuation analysis.

The carrying amount of each reporting

unit is determined by specifically identifying and allocating the assets and liabilities to each reporting unit based on headcount,

relative revenues or other methods as deemed appropriate by management.

If the carrying amount of a reporting unit exceeds its

fair value, an indication exists that the reporting unit’s goodwill may be impaired and the Company then performs the second

step of the impairment test.

If the fair value of a reporting unit exceeds its carrying amount, no further analysis is required.

If further analysis is required, the Company compares the implied fair value of the reporting unit’s goodwill, determined

by allocating the reporting unit’s fair value to all of its assets and its liabilities in a manner similar to a purchase

price allocation, to its carrying amount.

If the carrying amount of the reporting unit’s goodwill exceeds its fair value,

an impairment loss will be recognized in an amount equal to the excess.

The fair value

of each reporting unit is determined using a discounted cash flow valuation analysis.

The carrying amount of each reporting unit is determined

by specifically identifying and allocating the assets and liabilities to each reporting unit based on headcount, relative revenues or

other methods as deemed appropriate by management.

If the carrying amount of a reporting unit exceeds its fair value, an indication exists

that the reporting unit’s goodwill may be impaired and the Company then performs the second step of the impairment test.

fair value of a reporting unit exceeds its carrying amount, no further analysis is required.

If further analysis is required, the Company compares the implied fair value of the reporting unit’s goodwill, determined by

allocating the reporting unit’s fair value to all of its assets and its liabilities in a manner similar to a purchase price allocation,

to its carrying amount.

If the carrying amount of the reporting unit’s goodwill exceeds its fair value, an impairment loss will

be recognized in an amount equal to the excess.

of Long-Lived Assets

1 unchanged sentence

for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted

future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash

flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the

Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the

carrying amount or fair value less costs to sell, and are no longer depreciated.

The assets and liabilities of a disposal group

classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the consolidated

balance sheet, if material.

Restructuring

August 2019, the Company’s subsidiary, Park Compounding, Inc.

(“Park”), and Noice Rx, LLC (“Noice”)

terminated an Asset Purchase Agreement dated July 26, 2019 (the “Park Purchase Agreement”), between the parties.

the terms of the Park Purchase Agreement, Park had agreed to sell substantially all its assets associated with its non-ophthalmology

pharmaceutical compounding business to Noice, including its pharmacy facility and equipment located in Irvine, California.

closing of the sale transaction was dependent on the California State Board of Pharmacy approving of the sale and issuing a temporary

pharmacy and sterile license permit to Noice, which did not occur and led to Park ceasing operations at the close of business

on August 27, 2019.

As a result, the Company restructured its Park business, ceased operations at its Irvine, California-based

pharmacy, and facilitated the transition of certain compounded formulations and related equipment from Park to the Company’s

New Jersey-based compounded pharmaceutical production facilities (the “Park Restructuring”).

As a result of the Park

Restructuring, the Company incurred non-cash impairment costs of approximately $ 3,781

related to assets held at Park, primarily

associated with property, plant, equipment, inventory, goodwill and other intangible assets, and $ 480

in one-time costs related to severance

packages and other costs associated with the Park Restructuring during the year ended December 31, 2019.

Company has reduced the Park compounded product formulary to seven base formulations, based on factors including unit order volumes,

revenues and gross margin percentages, and ImprimisRx retained approximately half of Park’s historical revenues during

the first quarter of 2020.

Recoverability

of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows

expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge

is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed of would

be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to

sell, and are no longer depreciated.

The assets and liabilities of a disposal group classified as held-for-sale would be presented separately

in the appropriate asset and liability sections of the consolidated balance sheet, if material.

Value Measurements

value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability.

GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes

the use of unobservable inputs by requiring that the most observable inputs be used when available.

The established fair value

hierarchy prioritizes the use of inputs used in valuation methodologies into the following three levels:

Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in

active markets.

A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure

fair value whenever available.

Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices, such

as quoted prices for similar assets or liabilities;

establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of

unobservable inputs by requiring that the most observable inputs be used when available.

The established fair value hierarchy prioritizes

the use of inputs used in valuation methodologies into the following three levels:

Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active

A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value

whenever available.

Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices, such as quoted

prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are

observable or can be corroborated by observable market data.

Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s

own assumptions about the assumptions that market participants would use in pricing an asset or liability.

For example, Level

3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.

December 31, 2020 and 2019, the Company measured its investment in Eton on a recurring basis.

The Company’s investment in

Eton is classified as Level 1 as the fair value is determined using quoted market prices in active markets for the same securities.

or other inputs that are observable or can

be corroborated by observable market data.

Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own

assumptions about the assumptions that market participants would use in pricing an asset or liability.

For example, Level 3 inputs

would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.

The Company’s financial instruments include

cash and cash equivalents, restricted cash, investment in Eton, accounts receivable, accounts payable and accrued expenses, accrued payroll

and related liabilities, deferred revenue and customer deposits and the Notes.

The carrying amount of these financial instruments, except

for the investment in Eton and the Notes (see Note 13), approximates fair value due to the short-term maturities of these instruments.

The Company’s restricted cash which is comprised of short-term investments are carried at amortized cost, which approximates fair

December 31, 2021 and 2020, the Company measured its investment in Eton at fair value on a recurring basis.

The Company’s

investment in Eton is classified as Level 1 as the fair value is determined using quoted market prices in active markets for the same

As of December 31, 2021 and 2020, the fair market value of the Company’s investment in Eton was $ 8,503

1 unchanged sentence

respectively.

Company’s financial instruments include cash and cash equivalents, restricted cash, investment in Eton, accounts receivable,

accounts payable and accrued expenses, accrued payroll and related liabilities, deferred revenue and customer deposits, loans

payable and operating and finance lease liabilities.

The carrying amount of these financial instruments, except for loans payable

and operating and finance lease liabilities, approximates fair value due to the short-term maturities of these instruments.

Company’s restricted cash which is comprised of short-term investments are carried at amortized cost, which approximates

Based on borrowing rates currently available to the Company, the carrying values of the loans payable and operating

and finance lease liabilities approximate their respective fair values.

stock-based payments to employees, directors and consultants, including grants of stock options, warrants, restricted stock units

(“RSUs”) and restricted stock, are recognized in the consolidated financial statements based upon their estimated

The Company uses the Black-Scholes-Merton option pricing model and Monte Carlo simulation model to estimate the fair

value of stock-based awards.

The estimated fair value is determined at the date of grant.

The financial statement effect of forfeitures

is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates.

and Diluted Net Income (Loss) per Common Share

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

the weighted average number of common shares outstanding during the period.

Diluted income (loss) per share is computed

by dividing the income (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.

and diluted net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during

December 31, 2021, the carrying value and fair value of the Notes were $ 71,654 and $ 78,810 , respectively.

The Notes are classified

as Level 1 instruments as the fair value is determined using quoted market prices in active markets for the same securities.

stock-based payments to employees, directors and consultants, including grants of stock options, warrants, restricted stock units (“RSUs”)

and restricted stock, are recognized in the consolidated financial statements based upon their estimated fair values.

The Company uses

the Black-Scholes-Merton option pricing model and Monte Carlo simulation model to estimate the fair value of stock-based awards.

estimated fair value is determined at the date of grant.

The financial statement effect of forfeitures is estimated at the time of grant

and revised, if necessary, if the actual effect differs from those estimates.

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 income per share is computed by dividing the 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.

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

Common stock equivalents (using the treasury stock or “if converted” method) from stock options, unvested

restricted stock units (“RSUs”) and warrants were 5,411,929

and 4,848,459

at December 31, 2020 and 2019, respectively,

and are excluded in the calculation of diluted net income (loss) per share for the periods presented, because the effect is anti-dilutive

for that time period.

Included in the basic and diluted net income (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 December 31, 2020 and 2019 was 200,463

and 324,303 ,

restricted stock units (“RSUs”) and warrants were 5,646,594 and 5,411,929 at

December 31, 2021 and 2020, respectively, and are excluded in the calculation of diluted net income per share for the periods

presented, because the effect is anti-dilutive for that time period.

Included in the basic and diluted net income (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 December 31, 2021 and 2020 was 267,761 and 200,463 ,

respectively.

following table shows the computation of basic net income (loss) per share of common stock for the years ended December 31, 2020

and 2019 (in 000’s, except share and per share amounts):

OF BASIC EARNINGS PER COMMON SHARE

following table shows the computation of basic net loss per share of common stock for the years ended December 31, 2021 and 2020 (in

000’s, except share and per share amounts):

OF BASIC AND DILUTED EARNINGS PER COMMON SHARE

the Year Ended December 31,

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

Denominator – weighted average

number of shares outstanding, basic

(loss) income per share, basic

the year end December 31, 2019, the Company computed diluted net income per share using the weighted-average number of common

shares and dilutive common equivalent shares outstanding during that period.

Diluted common equivalent shares for the year ended

December 31, 2019 consisted of the following (in 000’s, except share and per share amounts):

OF DILUTED COMMON EQUIVALENT SHARES

the Year Ended

Diluted shares related to:

Dilutive common

equivalent shares

following table shows the computation of diluted net income per share using the weighted-average number of common shares and dilutive

common equivalent shares outstanding for the year ended December 31, 2019 (in 000’s, except share and per share amounts):

OF DILUTED EARNINGS PER COMMON SHARE

the Year Ended

Weighted average number of shares outstanding, basic

Dilutive common

Denominator –

number of shares used for diluted earnings per share computation

Net income per

share, diluted

– net loss attributable to Harrow Health, Inc.

common stockholders

– weighted average number of shares outstanding, basic and diluted

loss per share, basic and diluted

Adopted Accounting Pronouncements

June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments ,

which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier

recognition of credit losses.

The Company adopted ASU 2016-13 on January 1, 2020, and adoption of the standard did not have a

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

January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other .

This guidance simplifies the accounting for

goodwill impairment for all entities by requiring impairment charges to be based on the first step in the current two-step impairment

test under ASC 350.

The updated standard eliminates the requirement to calculate a goodwill impairment charge using Step 2.

a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference.

The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.

The Company adopted ASU 2017-04

on January 1, 2020, and adoption of the standard did not have a material effect on the Company’s consolidated financial

position, results of operations and cash flows.

August 2018, the FASB issued ASU 2018-13, Changes to Disclosure Requirements for Fair Value Measurements , which improved

the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements.

The standard removes, modifies,

and adds certain disclosure requirements.

The Company adopted ASU 2018-13 on January 1, 2020, and adoption of the standard did

not have a material effect on the Company’s consolidated financial position, results of operations and cash flows.

Issued Accounting Pronouncements

December 2019, the FASB issued ASU 2019-12, Income Taxes:

Simplifying the Accounting for Income Taxes , which simplifies

the accounting for income taxes.

This guidance will be effective for the Company in the first quarter of 2021 on a prospective

basis, and early adoption is permitted.

The Company does not expect a material impact of the new guidance on its consolidated

financial statements.

Simplifying the Accounting for Income Taxes , which simplifies the accounting

for income taxes.

This guidance became effective for the Company on January 1, 2021 on a prospective basis.

Adoption of this ASU did

not have a material impact on the Company’s 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 year ended December 31, 2020.

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

financial position, results of operations, or cash flows as previously reported.

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.

has three primary streams of revenue:

(1) revenue recognized from our sale of products within our pharmacy services (2)

revenue recognized from a commission agreement with a third party and (3) revenue recognized from intellectual property

license and asset purchase agreements.

Revenues from Pharmacy Services

Company sells prescription drugs directly through our pharmacy and outsourcing facility network.

Revenue from our pharmacy services

divisions includes:

(i) the portion of the price the client pays directly to us, net of any volume-related or other discounts

paid back to the client, (ii) the price paid to us by individuals, and (iii) customer copayments made directly to the pharmacy

Sales taxes are not included in revenue.

has two primary streams of revenue:

(1) revenue recognized from our sale of products within our pharmacy services and (2) revenue recognized

from intellectual property license and asset purchase agreements.

Company sells prescription drugs directly through its pharmacy and outsourcing facility network.

Revenue from our pharmacy services division

(i) the portion of the price the client pays directly to us, net of any volume-related or other discounts paid back to the

client, (ii) the price paid to us by individuals, and (iii) customer copayments made directly to the pharmacy network.

Sales taxes are

not included in revenue.

Following the core principles of ASC 606, we have identified the following:

the contract(s) with a customer:

A contract exists with a customer at the time the prescription or order is received by the

A contract exists with a customer at the time the prescription or order is received by the Company.

the performance obligations in the contract:

The order received contains the performance obligations to be met, in almost

all cases the product the customer is wishing to receive.

If we are unable to be meet the performance obligation the customer

The order received contains the performance obligations to be met, in almost all cases

the product the customer is wishing to receive.

If we are unable to be meet the performance obligation the customer is notified.

the transaction price:

the transaction price is based on the product being sold to the customer, and any related customer

the transaction price is based on the product being sold to the customer, and any related customer discounts.

These amounts are pre-determined and built into our order management software.

the transaction price to the performance obligations in the contract:

The transaction price associated with the product(s)

being ordered is allocated according to the pre-determined amounts.

The transaction price associated with the product(s) being

ordered is allocated according to the pre-determined amounts.

revenue when (or as) the entity satisfies a performance obligation:

At the time of shipment from the pharmacy or outsourcing

facility the performance obligation has been met.

At the time of shipment from the pharmacy or outsourcing facility

the performance obligation has been met.

following revenue recognition policy has been established for the pharmacy services division:

generated from prescription or office use drugs sold by our pharmacies and outsourcing facility are recognized when the prescription

At the time of shipment, the pharmacy services division has performed substantially all of its obligations under its

client contracts and does not experience a significant level of returns or reshipments.

Determination of criteria (3) and (4)

is based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability

of those amounts.

The Company records reductions to revenue for discounts at the time of the initial sale.

Estimated returns and

allowances and other adjustments are provided for in the same period during which the related sales are recorded and are based

on actual returns history.

The rate of returns is analyzed annually to determine historical returns experience.

If the historical

data we use to calculate these estimates do not properly reflect future returns, then a change in the allowance would be made

in the period in which such a determination is made and revenues in that period could be materially affected.

The Company will

defer any revenues received for a product that has not been delivered or is subject to refund until such time that the Company

and the customer jointly determine that the product has been delivered and no refund will be required.

the year ended December 31, 2020, the Company entered into an agreement whereby it

is paid a fee calculated based on sales it generates from a pharmaceutical product that is owned by a third party.

earned from this arrangement is recognized at the time a customer has ordered the pharmaceutical product and it has shipped from

the third party (or one of its distributors or affiliates), at which point there is no future performance obligation required

by the Company and no consequential continuing involvement on the part of the Company to recognize the associated revenue.

At the time of shipment, the pharmacy services division has performed substantially all of its obligations under its client

contracts and does not experience a significant level of returns or reshipments.

Determination of criteria (3) and (4) is based on management’s

judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts.

records reductions to revenue for discounts at the time of the initial sale.

Estimated returns and allowances and other adjustments are

provided for in the same period during which the related sales are recorded and are based on actual returns history.

The rate of returns

is analyzed annually to determine historical returns experience.

If the historical data we use to calculate these estimates do not properly

reflect future returns, then a change in the allowance would be made in the period in which such a determination is made and revenues

in that period could be materially affected.

The Company will defer any revenues received for a product that has not been delivered or

is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered and no refund

will be required.

the year ended December 31, 2020, the Company entered into an agreement whereby it is paid a fee calculated based on sales the Company

generates from a pharmaceutical product that is owned by a third party.

The revenue earned from this arrangement is recognized at the

time a customer has ordered the pharmaceutical product and it has shipped from the third party (or one of its distributors or affiliates),

at which point there is no future performance obligation required by the Company and no consequential continuing involvement on the Company’s

part to recognize the associated revenue.

of Profit Revenues

the year ended December 31, 2021, the Company entered into an agreement to purchase the exclusive

commercial rights to assets associated with certain ophthalmic products from another pharmaceutical company (the “Seller”).

During a temporary, six month transition period, the Seller will continue to manufacture and market these products and transfer

the net profit from the sale of the products to the Company.

The revenue recognized by the Company from the transfer of net profit is

recognized at the time profit from the products sales has been calculated by the Seller and confirmed by the Company, typically on a

monthly basis, at which point there is no future performance obligation required by the Company and no consequential continuing involvement

on the Company in part to recognize the associated revenue.

Property License Revenues

Company currently holds five intellectual property license and related agreements in which the Company has promised to grant a

license or sale which provides a customer with the right to access the Company’s intellectual property.

License arrangements

may consist of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive license rights

to patented or patent pending compounds, technology access fees, and various performance or sales milestones.

These arrangements

can be multiple-element arrangements, the revenue of which is recognized at the point of time the performance obligation is met.

Company currently holds five intellectual property license and related agreements in which the Company has promised to grant a license

or sale which provides a customer with the right to access the Company’s intellectual property.

License arrangements may consist

of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive license rights to patented or

patent pending compounds, technology access fees, and various performance or sales milestones.

These arrangements can be multiple-element

arrangements, the revenue of which is recognized at the point of time the performance obligation is met.

Non-refundable

fees that are not contingent on any future performance by the Company and require no consequential continuing involvement on the

part of the Company are recognized as revenue when the license term commences and the licensed data, technology, compounded drug

preparation and/or other deliverable is delivered.

Such deliverables may include physical quantities of compounded drug preparations,

design of the compounded drug preparations and structure-activity relationships, the conceptual framework and mechanism of action,

and rights to the patents or patent applications for such compounded drug preparations.

The Company defers recognition of non-refundable

fees if it has continuing performance obligations without which the technology, right, product or service conveyed in conjunction

with the non-refundable fee has no utility to the licensee and that are separate and independent of the Company’s performance

under the other elements of the arrangement.

In addition, if the Company’s continued involvement is required, through research

and development services that are related to its proprietary know-how and expertise of the delivered technology or can only be

performed by the Company, then such non-refundable fees are deferred and recognized over the period of continuing involvement.

Guaranteed minimum annual royalties are recognized on a straight-line basis over the applicable term.

fees that are not contingent on any future performance by the Company and require no consequential continuing involvement on the part

of the Company are recognized as revenue when the license term commences and the licensed data, technology, compounded drug preparation

and/or other deliverable is delivered.

Such deliverables may include physical quantities of compounded drug preparations, design of the

compounded drug preparations and structure-activity relationships, the conceptual framework and mechanism of action, and rights to the

patents or patent applications for such compounded drug preparations.

The Company defers recognition of non-refundable fees if it has

continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable

fee has no utility to the licensee and that are separate and independent of the Company’s performance under the other elements

of the arrangement.

In addition, if the Company’s continued involvement is required, through research and development services

that are related to its proprietary know-how and expertise of the delivered technology or can only be performed by the Company, then

such non-refundable fees are deferred and recognized over the period of continuing involvement.

Guaranteed minimum annual royalties are

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

disaggregated by revenue source for the years ended December 31, 2021 and 2020, consists of the following:

OF DISAGGREGATED REVENUE

the Years Ended December 31,

revenue and customer deposits at December 31, 2020 and 2019, were $ 66

respectively.

All deferred revenue and customer deposit amounts at December 31, 2019 were recognized as revenue during the year

ended December 31, 2020.

the Year Ended December 31,

revenue and customer deposits at December 31, 2021 and 2020, were $ 16 and $ 66 , respectively.

All deferred revenue and customer deposit

amounts at December 31, 2020 were recognized as revenue during the year ended December 31, 2021.

INVESTMENT IN MELT PHARMACEUTICALS, INC.

1 unchanged sentence

December 2018, the Company entered into an asset purchase agreement with Melt (the “Melt Asset Purchase Agreement”).

Pursuant to the terms of the Melt Asset Purchase Agreement, Melt was assigned certain intellectual property and related rights

from the Company to develop, formulate, make, sell, and sub-license certain Company conscious sedation and analgesia related formulations

(collectively, the “Melt Products”).

Under 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 the Melt Products while any patent rights remain outstanding,

as well as other conditions.

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

see also Note 2, under the subheading Investment in Melt Pharmaceuticals, Inc .

February 2019, the Company and Melt entered into a Management Services Agreement (the “Melt MSA”), whereby the Company

provides to Melt certain administrative services and support, including bookkeeping, web services and human resources related

activities, and Melt is required to pay the Company a monthly amount of $ 10 .

of December 31, 2020 and 2019, the Company was due $ 851

to the terms of the Melt Asset Purchase Agreement, Melt was assigned certain intellectual property and related rights from the Company

to develop, formulate, make, sell, and sub-license certain Company conscious sedation and analgesia related formulations (collectively,

the “Melt Products”).

Under 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 the Melt Products while any patent rights remain outstanding, as well as other conditions.

January and March 2019, the Company entered into the Melt Series A Preferred Stock Agreement, see also Note 2, under the subheading Investment

in Melt Pharmaceuticals, Inc .

February 2019, the Company and Melt entered into the Melt MSA, whereby the Company provides to Melt certain administrative services and

support, including bookkeeping, web services and human resources related activities, and Melt is required to pay the Company a monthly

amount of $ 10 .

As of December 31, 2021 and 2020, the Company was due $ 48

respectively, from Melt for reimbursable expenses and amounts due under the Melt MSA.

Melt did no t

make any payments to the Company during the year ended December 31, 2020 and paid the Company $ 50

during the year ended December 31, 2019.

Company’s Chief Executive Officer, Mark L.

Baum, and Chief Medical Officer, Larry Dillaha, are members of the Melt board

of directors, and several employees of the Company (including Mr.

Dillaha and the Company’s Chief Financial Officer,

Andrew Boll) entered into consulting agreements and provide consulting services to Melt.

Melt did not make any payments to the Company during

the year ended December 31, 2021.

The Company’s Chief Executive Officer, Mark L.

Baum, was previously a member of the Melt board

of directors until his resignation in November 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:

OF CONDENSED INCOME STATEMENT

the Years Ended December 31,

Revenues, net

the Year Ended December 31,

from operations

1 unchanged sentence

OF CONDENSED BALANCE SHEET

Current assets

Total liabilities

Total preferred

stock and stockholders’ equity

Total liabilities

and stockholders’ equity

preferred stock and stockholders’ (deficit) equity

liabilities and stockholders’ equity

Note Receivable

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.

AND AGREEMENTS - RELATED PARTY TRANSACTIONS

Company entered into an asset purchase and license agreement with Surface in 2017 and amended it in April 2018 (the “Surface

License Agreements”).

Pursuant to the terms of the Surface License Agreements, the Company assigned and licensed to Surface

certain intellectual property and related rights associated with Surface’s drug candidates (collectively, the “Surface

Surface is required to make mid-single-digit royalty payments to the Company on net sales of the Surface

Products while any patent rights remain outstanding.

of December 31, 2020, the Company owned 3,500,000

shares of Surface common stock (approximately

of the issued and outstanding equity interests).

Company entered into an asset purchase and license agreement with Surface in 2017 and amended it in April 2018 (the “Surface License

Agreements”).

Pursuant to the terms of the Surface License Agreements, the Company assigned and licensed to Surface certain intellectual

property and related rights associated with Surface’s drug candidates (collectively, the “Surface Products”).

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 December 31, 2021, the Company owned 3,500,000 shares of Surface common stock (approximately 30 % of the issued and outstanding equity

A Company 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.

Lindstrom of 3 %

of net sales of certain Surface Products while certain patent rights remain outstanding.

Lindstrom is also a principal of

Flying L Partners, an affiliate of the funding investor who purchased the Surface Series A Preferred Stock.

Several employees

and a director of the Company (including Mr.

Lindstrom) entered into consulting agreements and provided consulting

services to Surface.

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

Baum, are directors of

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

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

OF CONDENSED INCOME STATEMENT

the Year s Ended December 31,

Revenues, net

the Years Ended December 31,

from operations

1 unchanged sentence

OF CONDENSED BALANCE SHEET

Current assets

Total liabilities

Total stockholders’

stockholders’ equity

liabilities and stockholders’ equity

RESTRICTED CASH

restricted cash at December 31, 2020 and 2019 consisted of funds held in a money market account.

At December 31, 2020 and 2019,

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

December 31, 2020 and 2019, the funds held in a money market account of $ 200

were classified as a current asset.

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

restricted cash at December 31, 2020 consisted of funds in a money market account and held as collateral for additional security for

the Company’s New Jersey facility lease.

All restrictions on this cash were released during the year ended December 31, 2021.

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

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 December 31,

2020 and 2019 was as follows:

The composition of inventories as of December 31, 2021 and

2020 was as follows:

OF INVENTORIES

Raw materials

Work in progress

Finished goods

Total inventories

PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets consisted of the following:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid insurance

Other prepaid expenses

other current assets

Total prepaid

expenses and other current assets

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

prepaid expenses

due from Melt

and other current assets

prepaid expenses and other current assets

PROPERTY, PLANT AND EQUIPMENT

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

OF PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net:

software and hardware

Furniture and

Lab and pharmacy

Property, plant

and equipment, gross

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

plant and equipment, net:

and equipment

and pharmacy equipment

plant and equipment, gross

depreciation and amortization

plant and equipment, net

the year ended December 31, 2020, the Company disposed of property, plant and equipment with a net book value of $ 105

related to the discontinued use of certain

computer software and hardware and was included within other (loss) income of the consolidated statements of operations.

the years ended December 31, 2021 and 2020, the Company disposed of property, plant and equipment with a net book value of $ 41

and a write down of equipment of

$ 150 and $ 105 ,

respectively, related to the discontinued use of certain lab equipment and computer software and hardware and is included in other expense,

net in of the consolidated statements of operations.

The Company purchased $ 753 of lab and pharmacy equipment from Eton during the

year ended December 31, 2021.

The Company recorded depreciation and amortization expense of $ 1,580

during the years ended December 31, 2020

and 2019, respectively.

during the years ended December 31, 2021 and

2020, respectively.

CAPITALIZED SOFTWARE DEVELOPMENT COSTS

software development costs at December 31, 2021 and 2020 consisted of the following:

OF FINITE LIVED INTANGIBLE ASSETS

internal-use software development costs

third-party software license for internal-use

gross capitalized software for internal-use

internal-use software in process

finite lived intangible assets net

Company recorded amortization expense of $ 137

related to capitalized software development

costs during the years ended December 31, 2021 and

2020, respectively.

INTANGIBLE ASSETS AND GOODWILL

Company’s intangible assets at December 31, 2020 consisted of the following:

OF INTANGIBLE ASSETS

Customer relationships

Non-competition clause

State pharmacy

the year ended December 31, 2019, the Company incurred impairment charges of $ 612

related to intangible assets, including

customer relationships, trade name, and state pharmacy licenses as a part of the Park Restructuring and $ 259

of impairment charges related to patents

associated with the termination of an asset agreement.

Company’s intangible assets at December 31, 2020 consisted of the following:

Customer relationships

Non-competition clause

State pharmacy

the year ended December 31, 2020, the Company recorded impairment charges of $ 363

related to patent filings and trademarks

that were abandoned and/or were associated with products the Company was no longer actively selling.

SCHEDULE OF INTANGIBLE ASSETS

relationships

Non-competition

pharmacy licenses

the year ended December 31, 2020, the Company recorded impairment charges of $ 363 related to patent filings and trademarks that were

abandoned and/or were associated with products the Company was no longer actively selling.

the year ended December 31, 2021, the Company entered into an Asset Purchase Agreement (the “NVS Agreement”) with

Novartis Technology, LLC and Novartis Ophthalmics AG (together, “NVS”), pursuant to which the Company purchased from NVS

exclusive commercial rights, including the New Drug Applications (“NDAs”), to assets associated with ophthalmic products

Moxeza, Iopidine 1% and 0.5%, and Maxitrol eyedrops suspension (collectively the “ NVS Products”) in the United States of

America(“U.S.”).

The Company made a one-time payment of $ 14,050

to NVS for the U.S.

rights to the NVS Products and their related intellectual property.

The Company accounted for this transaction as an asset acquisition,

as the Company only acquired the rights and related intellectual property for the NVS Products and the cost was allocated to the

acquired patents and NDAs based on their relative fair values.

The Company’s intangible assets at December

31, 2021 consisted of the following:

relationships

Non-competition

pharmacy licenses

the year ended December 31, 2021, the Company recorded impairment charges of $ 99 related to trademarks that were abandoned and/or were

associated with products the Company was no longer actively selling.

expense for intangible assets for the years ended December 31, 2021 and 2020 were as follows:

OF AMORTIZATION EXPENSES FOR INTANGIBLE ASSETS

the Years Ended

Customer relationships

State pharmacy

SCHEDULE OF AMORTIZATION EXPENSES FOR INTANGIBLE ASSETS

the Year Ended December 31,

relationships

of intangible assets

future amortization expense for the Company’s intangible assets at December 31, 2021 is as follows:

OF ESTIMATED FUTURE AMORTIZATION EXPENSE

SCHEDULE OF ESTIMATED FUTURE AMORTIZATION EXPENSE

ending December 31,

Intangible assets

changes in the carrying value of the Company’s

goodwill during the year ended December 31, 2020.

Changes in the carrying value of the Company’s goodwill during the year

ended December 31, 2019 were as follows:

Balance at December 31,

of Park goodwill (see Note 2)

December 31, 2019

were no changes in the carrying value of the Company’s goodwill during the years ended December 31, 2021 and 2020.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses at December 31, 2021 and 2020 consisted of the following:

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable

Other accrued expenses

Accrued interest (see Note 12)

fee for note payable (see Note 12)

Total accounts payable and accrued

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

accrued expenses

interest (see Note 13)

exit fee for note payable (see Note 13)

accounts payable and accrued expenses

Current portion

total accrued expenses

Senior Note – 2017

July 2017, the Company entered into a term loan and security agreement in the principal amount of $ 16,000

(the “SWK Loan Agreement”

or “SWK Loan”) with SWK Funding LLC and its partners (“SWK”), as lender and collateral agent.

SWK Loan Agreement was fully funded at closing with a five-year term, however, such term could be reduced to four years if certain

revenue requirements are not achieved.

to the loan refinance in May 2019 (see below), the SWK Loan bore interest at a variable rate equal to the three-month London Inter-Bank

Offered Rate (subject to a minimum of 1.50 %

and maximum of 3.00 %),

plus an applicable margin of 10.50 %.

The SWK Loan Agreement permitted the Company

to pay interest only on the principal amount borrowed thereunder for the first six payments (payments are due on a quarterly basis),

which interest-only period could have been reduced to four payments if the Company had not met certain minimum revenue requirements.

Following the interest-only period, the Company was required to pay interest, plus repayments of the principal amount borrowed

under the SWK Loan Agreement, in quarterly payments, which shall not exceed $ 750

amounts owed under the SWK Loan Agreement, including an exit fee equal to 5% of the aggregate principal amount loaned thereunder,

were originally due and payable on July 19, 2022.

Company is obligated under the SWK Loan Agreement to pay for certain expenses incurred by SWK through and after the date of the

SWK Loan Agreement, including certain fees and expenses relating to the preparation and administration of the SWK Loan Agreement.

The Company incurred expenses and an exit fee of approximately $ 1,282

in connection with the SWK Loan Agreement.

The exit fee and expenses were recorded as a debt discount and are being amortized as interest expense over the term of the SWK

Loan using the effective interest rate method and the related liability of $ 800

for the exit fee is included in accrued

expenses (see Note 11) in the accompanying consolidated balance sheets as of December 31, 2020 and 2019.

connection with the SWK Loan Agreement, the Company issued to SWK warrants to purchase up to 415,586

shares of the Company’s common stock

(the “Lender Warrants”) with an exercise price of $ 3.08 .

In August 2017, the Company and SWK amended the warrants, to allow for the purchase of up to 615,386

warrants with an exercise price of $ 2.08 .

The Lender Warrants are exercisable immediately, and have a term of seven

The Lender Warrants are subject

to a cashless exercise feature, with the exercise price and number of shares issuable upon exercise subject to change in connection

with stock splits, dividends, reclassifications and other conditions.

The relative fair value of the Lender Warrants was approximately

was estimated using the Black-Scholes-Merton option pricing model with the following assumptions:

fair value of the Company’s

common stock at issuance of $ 2.08

seven-year contractual term;

dividend rate;

and a risk-free interest rate of 1.77 %.

The relative fair value of the Lender Warrants was recorded as a debt discount which is being amortized as interest expense over

the term of the SWK Loan using the effective interest rate method.

Refinance – May 2019

May 2019, the Company entered into a joinder and amendment (the “Amendment”) to the SWK Loan and with SWK, as lender

and collateral agent.

A summary of the material changes contained in the Amendment are as follows:

interest rate calculation that the loan bears is now equal to the three-month London Inter-Bank Offered Rate (subject to a

minimum of 2.00 %),

plus an applicable margin of 10.00 %

(the “Margin Rate”);

provided that, if, two days prior to a payment date, the Company

provides SWK evidence that the Company has achieved a leverage ratio as of such date of less than 4.00:1:00, the Margin Rate

shall equal 9.00%;

and if the Company has achieved a leverage ratio as of such date of less than 3.00:1:00, the Margin Rate

Senior Notes Due 2026

April 2021, the Company closed an offering of $ 50,000 aggregate principal amount of 8.625% senior notes due in April 2026, and in May

2021 issued an additional $ 5,000 of such notes pursuant to the full exercise of the underwriters’ option to purchase additional

notes (collectively, the “April Notes”).

The April Notes were sold to investors at a par value of $ 25.00 per April Note and

the offering resulted in net proceeds to the Company of approximately $ 51,909 after deducting underwriting discounts and commissions

and expenses of $ 3,091 .

In June 2021, in a further issuance of the April Notes, the Company sold an additional $ 20,000 aggregate principal

amount of such notes (the “June Notes,” and together with the April Notes, the “Notes”), at a price of $ 25.75

per June Note, with interest of $ 278 on the June Notes being accrued from April 20, 2021 as of the date of issuance.

The June offering

resulted in net proceeds to the Company of approximately $ 19,164 after deducting underwriting discounts and commissions and expenses

of $ 1,158 and a premium on note issuance of $ 322 .

The June Notes are treated as a single series with the April Notes under the indenture

governing the April Notes, dated as of April 20, 2021, and have the same terms as the April Notes (other than the initial offering price

and issue date).

T he Notes are senior unsecured obligations of the Company and rank equally

in right of payment with all of our other existing and future senior unsecured and unsubordinated indebtedness.

The Notes are effectively

subordinated in right of payment to all of the Company’s existing and future secured indebtedness and structurally subordinated

to all existing and future indebtedness of the Company’s subsidiaries, including trade payables.

The Notes bear interest at a rate

of 8.625 % per annum.

Interest on the Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year,

commencing on July 31, 2021.

The Notes will mature on April 30, 2026.

The issuance costs were recorded

as a debt discount and are being amortized as interest expense, net of the amortization of the premium on note issuance, over the term

of the Notes using the effective interest rate method.

to February 1, 2026, the Company may, at its option, redeem the Notes, in whole at any time or in part from time to time, at a redemption

price equal to 100% of the principal amount of the Notes to be redeemed , plus a make-whole amount, if any, plus accrued and unpaid interest

to, but excluding, the date of redemption.

The Company may redeem the Notes for cash in whole or in part at any time at our option on

or after February 1, 2026 and prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest

to, but excluding, the date of redemption.

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

expense related to the Notes totaled $ 5,132 for the year ended December 31, 2021, and included amortization of debt issuance costs and

discount of $ 581 for the year ended December 31, 2021.

Senior Note – Paid in April 2021

July 2017, the Company and several of its wholly owned subsidiaries entered into a term loan and security agreement in the principal

amount of $ 16,000 (the “SWK Loan Agreement” or “SWK Loan”) with SWK Funding LLC and its partners (collectively,

“SWK”), as lender and collateral agent.

The SWK Loan Agreement was fully funded at closing with a five-year term;

such term could be reduced to four years if certain revenue requirements were not achieved.

The SWK Loan was secured by substantially

all of the Company’s assets, including its intellectual property rights.

The SWK Loan was subsequently amended in May 2019 and

again in April 2020.

The SWK Loan bore an interest rate equal to the three-month London Inter-Bank Offered Rate (subject to a minimum

of 2.00 %), plus an applicable margin of 10.00 % (the “Margin Rate”);

provided that, if, two days prior to a payment date,

the Company provided SWK evidence that the Company has achieved a leverage ratio as of such date of less than 4.00:1:00, the Margin Rate

shall equal 9.00%;

ratio in the Amendment means, as of any date of determination, the ratio of:

(a) indebtedness as of such date to (b) EBITDA

(as defined in the SWK Loan), of the Company for the immediately preceding twelve (12) month period, adding-back (i) actual

litigation expenses for the immediately preceding twelve (12) month period, minus (ii) actual litigation expenses for the

immediately preceding three (3) month period multiplied by four (4);

definition of the first amortization date was changed to May 14, 2020, permitting the Company to pay interest only on the

principal amount loaned for the next four payments (payments are due on a quarterly basis) following the Amendment;

to the satisfaction of certain revenue and market capitalization requirements and conditions, SWK agreed to make available

to the Company an additional principal amount of up to $ 5,000 ;

maturity date was changed to July

to the Amendment, the Company incurred expenses related to legal and lender costs of $ 282

that are included in debt discount and

will be amortized over the remaining term of the SWK Loan.

addition to the terms described above, the Amendment joined the Company’s recently created subsidiaries to the SWK Loan

and added definitions related to excluded subsidiaries that are not considered co-borrowers and are subsidiaries of the Company

which the Company believes it will eventually deconsolidate from its financial statements and lose 50 %

or more of the equity interests of the subsidiary.

Amendment to SWK Loan

April 1, 2020, the Company and several of its wholly owned subsidiaries entered into a second amendment (the “SWK Second

Amendment”) to the SWK Loan with SWK.

A summary of the material changes contained in the SWK Second Amendment are as follows:

and if the Company had achieved a leverage ratio as of such date of less than 3.00:1:00, the Margin Rate shall equal

The leverage ratio means, as of any date of determination, the ratio of:

(a) indebtedness as of such date to (b) EBITDA (as defined

in the SWK Loan), of the Company for the immediately preceding 12 month period, adding-back (i) actual litigation expenses for the immediately

preceding 12 month period, minus (ii) actual litigation expenses for the immediately preceding 3 month period multiplied by 4.

summary of the material changes contained in the amendment entered into with SWK in April 2020 was as follows:

agreed to make available to the Company, and the Company drew down on, an additional principal amount of $ 1,000 ;

definition of the first amortization date was changed to August 14, 2020, permitting the Company to pay interest only on the

principal amount loaned for the next payment (payments are due on a quarterly basis) following the SWK Second Amendment;

interest payment of $ 358

due May 14, 2020 was paid in-kind

by increasing the principal amount of the term loans by an amount equal to the interest accrued as of such date.

expense related to the SWK Loan Agreement, as amended, amounted to $ 1,768

for the years ended December 31, 2020

and 2019, respectively, and included amortization of debt issuance costs and discount of $ 457

for the years ended December 31, 2020

and 2019, respectively.

Protection Program Loan

definition of the first amortization date was changed to August 14, 2020, permitting the Company to pay interest only on the principal

amount loaned for the next payment (payments are due on a quarterly basis) following the SWK Second Amendment;

interest payment of $ 358 due May 14, 2020 was paid in-kind by increasing the principal amount of the term loans by an amount equal

to the interest accrued as of such date.

expense related to the SWK Loan Agreement, as amended, amounted to $ 647 for the year ended December 31, 2021, and $ 1,767 for the year

ended December 31, 2020, and included amortization of debt issuance costs and discounts of $ 96 for the year ended December 31, 2021,

and $ 354 for the year ended December 31, 2020.

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 year ended December 31, 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 (the “SBA”).

the terms of the PPP Loan, interest accrues on the outstanding principal at the rate of 1.0 %

The term of the PPP Loan is two years, unless payment is sooner required in connection with an event of default under

the PPP Loan.

To the extent the PPP Loan amount is not forgiven under the PPP, the Company is obligated to make equal monthly

payments of principal and interest, beginning seven months from the date of the PPP Loan, until the maturity date.

CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed.

Under the PPP, the Company applied

for forgiveness for all of the PPP Loan during the year ended December 31, 2020, however the SBA has not made a decision related

to the Company’s application for forgiveness.

The amount of loan proceeds eligible for forgiveness is based on a formula

that takes into account a number of factors, including the amount of loan proceeds used by the Company during the 24-week period

after the loan origination for certain purposes including payroll costs, interest on certain mortgage obligations, rent payments

on certain leases, and certain qualified utility payments ( it

being anticipated that at least 75% of the loan amount will be required to be used for eligible payroll costs );

the employer maintaining or rehiring employees and maintaining salaries at certain levels;

and other factors.

Subject to the other

requirements and limitations on loan forgiveness, only loan proceeds spent on payroll and other eligible expenses during the covered

twenty-four-week period will qualify for forgiveness.

While the Company has used proceeds from the PPP Loan for such qualifying

expenses, in particular maintaining continuity of its payroll and workforce (including staff critical to the timely production

and dispensing of medicines the Company produces), no assurance can be provided that the Company will obtain forgiveness of the

PPP Loan in whole or in part.

interest expense was recognized for the

year ended December 31, 2020 related to the PPP Loan.

December 31, 2020, future minimum payments under the Company’s debt were as follows:

OF FUTURE MINIMUM PAYMENTS

Total minimum payments

representing interest

Notes payable, gross

Notes payable

portion, net of unamortized discount

Note payable,

net of current portion and unamortized debt discount

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 consolidated statement of operations for the year ended December 31,

December 31, 2021, future minimum payments under the Company’s Notes were as follows:

SUMMARY OF FUTURE MINIMUM PAYMENTS

minimum payments

amount representing interest payments

payable, gross

unamortized discount, net of premium

payable, net of unamortized discount

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

These lease agreements have

remaining lease terms between one

to four years and contain various clauses

for renewal at the Company’s option.

operating lease for 10,200

of office space in San Diego, California, that expires in December

to extend the term for a five-year period ;

operating lease for 26,400

of lab, warehouse and office space in Ledgewood, New Jersey, that expires in July

option to extend the term for two additional five-year periods .

This includes an amendment that was made effective July 2020 that extended the term of the original lease and added 1,400

of additional

square footage to the lease;

These lease agreements have remaining

lease terms between one to four 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 expired

in December 2021 ;

operating lease for 5,789

square feet of office space in Nashville,

Tennessee, that expires in December

2024 , with an option

to extend the term for two additional five-year periods .

the year ended December 31, 2020, the Company terminated its operating lease for 4,500

square feet of

office and lab space in Irvine, California, that had an expiration date in December 2020.

In connection with the termination,

the Company recorded a gain of $ 4

which was recognized

in other income (expense) on the consolidated statements of operations.

December 31, 2020 and 2019, the weighted-average discount rate and the weighted-average remaining lease term for the operating

leases held by the Company were 6.3 %

years, respectively.

the years ended December 31, 2020 and 2019, cash paid for amounts included for the operating lease liabilities was $ 1,052

respectively, and the Company recorded operating lease expense of $ 1,066

respectively, included in selling, general and administrative expenses.

lease payments under operating leases (including options to extend) as of December 31, 2020 were as follows :

feet of office space in Carlsbad, California, which commenced in January 2022 and will expire

in July 2027 .

Since the commencement date of this lease occurred after December 31, 2021,

right-of-use assets and operating lease liabilities associated with it are not included in

our consolidated balance sheet at December 31, 2021 ;

operating lease for 35,326 square feet of lab, warehouse and office space in Ledgewood, New

Jersey that expires in July 2026 , with an option to extend the term for two additional five-year

This includes an amendment that was made effective July 2020 that extended the term

of the original lease and added 1,400 of additional square footage to the lease and another

amendment entered into in May 2021 that extended the term of the lease to July 2027 and added

8,900 square feet of space;

operating lease for 5,500 square feet of office space in Nashville, Tennessee, that expires

in December 2024 , with an option to extend the term for two additional five-year periods .

the year ended December 31, 2021, the Company terminated its operating lease for 10,200 square feet of office space in San Diego, California,

that had an expiration date in December 2021 .

December 31, 2021 and 2020, the weighted-average discount rate and the weighted-average remaining lease term for the operating leases

held by the Company were 6.3 % and 6.3 % and 14.6 and 11.2 years, respectively.

the years ended December 31, 2021 and 2020, cash paid for amounts included for the operating lease liabilities was $ 1,000 and $ 1,052 ,

respectively, and the Company recorded operating lease expense of $ 912 and $ 1,066 , respectively, included in selling, general and administrative

lease payments under operating leases as of December 31, 2021 were as follows :

OF FUTURE LEASE PAYMENT UNDER OPERATING LEASES

Total minimum lease payments

representing interest payments

Total operating

lease liabilities

portion, operating lease liabilities

minimum lease payments

amount representing interest payments

operating lease liabilities

current portion, operating lease liabilities

lease liabilities, net of current portion

Company also has a finance lease for equipment which requires monthly payments of $ 1

through January 2024.

Company has a finance lease for equipment which requires monthly payments of $ 1 through January 2024.

lease payments under the finance lease as of December 31, 2021 were as follows :

OF FUTURE LEASE PAYMENT UNDER FINANCE LEASE

Total minimum lease payments

representing interest payments

Present value of future minimum lease

portion, finance lease obligation

Finance lease

obligation, net of current portion

December 31, 2020 and 2019, the weighted-average discount rate and the weighted-average remaining lease term for the finance lease

held by the Company were 6.36 %

years, respectively.

minimum lease payments

amount representing interest payments

value of future minimum lease payments

current portion, finance lease obligation

lease obligation, net of current portion

December 31, 2021 and 2020, the weighted-average discount rate and the weighted-average remaining lease term for the finance lease held

by the Company were 6.36 % and 6.36 % and 2.08 and 3.08 years, respectively.

the years ended December 31, 2021 and 2020:

discount amortization related to a finance lease obligation was $ 0

respectively;

expense related to the equipment held under the finance lease obligations was $ 8

respectively;

paid and expense recognized for interest expense related to the finance lease obligation was $ 2

● amortization

expense related to the equipment held under the finance lease obligations was $ 8 and $ 8 ,

respectively;

paid and expense recognized for interest expense related to the finance lease obligation

was $ 1 and $ 2 , respectively.

STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

December 31, 2020 and 2019, the Company had 50,000,000 shares of common stock, $ 0.001 par value, authorized, respectively.

December 31, 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 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 year ended December 31, 2021, the Company recorded preferred stock cash dividends and deemed dividends equal to $ 472 .

each of December 31, 2021 and 2020, the Company had 50,000,000 shares of common stock, $ 0.001 par value, authorized.

During the Year Ended December 31, 2021

the year ended December 31, 2021:

Company issued 15,000 shares of its restricted common stock, with a fair value of $ 75 , as consideration for commission expenses

incurred during the year ended December 31, 2018;

Company issued 27,671 shares of its common stock upon the cashless exercise of options to purchase 82,929 shares of common

stock, with exercise prices ranging from $ 1.70 to $ 4.17 per share, net of 8,806 shares of common stock withheld for payroll

tax withholdings totaling $ 50 ;

Company issued 2,122 shares of its common stock upon the exercise of options to purchase 2,122 shares of common stock, with

exercise prices ranging from $ 1.70 to $ 3.20 per share, and received net proceeds of $ 6 ;

Company issued 688,473 shares of its common stock upon the cashless exercise of warrants to purchase 964,532 shares of common

stock with an exercise price of $ 1.79 per share;

Company issued 454,055 shares of its common stock upon the exercise of warrants to purchase 454,055 shares of common stock

with an exercise price of $ 1.79 per share, and received net proceeds of $ 813 ;

Company issued 87,610 shares of its

common stock underlying RSUs issued to directors vested, but the issuance and delivery of these shares are deferred until

the director resigns.

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

Company issued 25,480 shares of its common stock and received net proceeds of $ 65 upon the

exercise of options to purchase 25,480 shares of common stock with exercise prices between

$ 1.70 and $ 4.29 per share;

Company issued 715,871 shares of its common stock to Mark L.

Baum, its Chief Executive Officer,

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

The Company withheld

334,129 shares of common stock to Mr.

Baum valued at $ 2,760 for payroll tax purposes;

Company issued 100,168 shares of common stock to Andrew R.

Boll, its Chief Financial Officer,

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

The Company withheld

57,332 shares of common stock to Mr.

Boll valued at $ 468 for payroll tax purposes;

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.

During the Year Ended December 31, 2020

the year ended December 31, 2020:

Company issued 30,000 shares of its restricted common stock, with an initial fair value of $ 167 , as consideration for commission

expenses incurred during the year ended December 31, 2019 and the year ended December 31, 2020;

Company issued 4,161 shares of its common stock upon the cashless exercise of options to purchase 16,750 shares of common

stock, with exercise prices ranging from $ 1.70 to $ 4.05 per share, net of 3,564 shares of common stock withheld for payroll

tax withholdings;

Company issued 2,998 shares of its common stock upon the exercise of options to purchase 2,998 shares of common stock, with

exercise prices ranging from $ 3.04 to $ 3.20 per share, and paid $ 8 related to payroll tax withholdings;

Company issued 185,785 shares of its common stock underlying RSUs held by directors that resigned.

The RSUs had previously

vested, including 26,721 RSUs during the year ended December 31, 2020, but the issuance and delivery of the shares

were deferred until the director resigned;

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 resignation of a director.

December 31, 2020 and 2019, the Company had 5,000,000 shares of preferred stock, $ 0.001 par value, authorized and no shares of

preferred stock issued and outstanding.

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

Awards Plan, which was subsequently amended on November 5, 2008, February 26, 2012, July 18, 2012, May 2, 2013 and September 27,

2013 (as amended, the “2007 Plan”).

The 2007 Plan reached its term in September 2017, and we can no longer issue additional

awards under this plan, however, options previously issued under the 2007 Plan will remain outstanding until they are exercised,

reach their maturity or are otherwise cancelled/forfeited.

On June 13, 2017, the Company’s Board of Directors and stockholders

adopted the Company’s 2017 Incentive Stock and Awards Plan (the “2017 Plan” together with the 2007 Plan, the

As of December 31, 2020, the 2017 Plan provides for the issuance of a maximum of 2,000,000 shares of the

Company’s common stock.

The purpose of the Plans are to attract and retain directors, officers, consultants, advisors and

employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of

such persons in the Company’s development and financial success.

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 stock.

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

The Company had 342,882 shares available for future issuances under the 2017 Plan at December 31, 2020.

Company issued 30,000 shares of its restricted common stock, with an initial fair value of

$ 167 , as consideration for commission expenses incurred during the year ended December 31,

2019 and the year ended December 31, 2020;

Company issued 4,161 shares of its common stock upon the cashless exercise of options to

purchase 16,750 shares of common stock, with exercise prices ranging from $ 1.70 to $ 4.05

per share, net of 3,564 shares of common stock withheld for payroll tax withholdings;

Company issued 2,998 shares of its common stock upon the exercise of options to purchase

2,998 shares of common stock, with exercise prices ranging from $ 3.04 to $ 3.20 per share,

and paid $ 8 related to payroll tax withholdings;

Company issued 185,785 shares of its common stock underlying RSUs held by directors that

The RSUs had previously vested, including 26,721 RSUs during the year ended December

31, 2020, but the issuance and delivery of the shares were deferred until the director resigned;

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 resignation of a director.

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

Plan, which was subsequently amended on November 5, 2008, February 26, 2012, July 18, 2012, May 2, 2013 and September 27, 2013 (as amended,

the “2007 Plan”).

The 2007 Plan reached its term in September 2017, and we can no longer issue additional awards under this

however, options previously issued under the 2007 Plan will remain outstanding until they are exercised, reach their maturity

or are otherwise cancelled/forfeited.

On June 13, 2017, the Company’s Board of Directors and stockholders adopted the Company’s

2017 Incentive Stock and Awards Plan which was subsequently amended on June 3, 2021 (as amended, the “2017 Plan” together

with the 2007 Plan, the “Plans”).

As of December 31, 2021, the 2017 Plan provides for the issuance of a maximum of 6,000,000

shares of the Company’s common stock.

purposes of the Plans are to attract and retain directors, officers, consultants, advisors and employees whose services are considered

valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in the Company’s development

and financial success.

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

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

The Company had 2,399,649

shares available for future issuances under

the 2017 Plan at December 31, 2021.

summary of stock option activity under the Plan for the year ended December 31, 2021 is as follows:

3 unchanged sentences

Intrinsic Value

Options outstanding -

January 1, 2020

Options granted

Options exercised

Options cancelled/forfeited

Options outstanding

- December 31, 2020

Options exercisable

Options vested

and expected to vest

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 December 31, 2020, based on the closing price of the Company’s common stock of $ 6.86

on that date.

outstanding - January 1, 2021

cancelled/forfeit

outstanding - December 31, 2021

vested and expected to vest

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 December 31, 2021, based on the closing price of the Company’s common stock of $ 8.64 on that date.

intrinsic value of the options exercised in 2021 was $ 146 .

the year ended December 31, 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 year ended December 31, 2020 generally included one of the following vesting

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

and 100% of the shares subject to the option vest on a quarterly basis in equal installments 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.

July 31, 2015, the Company granted to its Chief Executive Officer, Mark Baum, an option to purchase 600,000 shares of the Company’s

common stock (the “Baum Performance Option”) at an exercise price of $ 7.87 per share under the 2007 Plan subject to

the satisfaction of certain market-based vesting criteria.

The market-based vesting criteria are separated into five tranches

and require that the Company achieve and maintain certain average stock price targets ranging from $ 9 per share to $ 15 per share

during the five year period following the grant date.

On June 4, 2020, the Company amended the Baum Performance Option, to extend

the vesting and contractual term by 5 years.

The Company treated this amendment as a modification to the Baum Performance Option

for accounting purposes.

The fair value of the modification was $ 1,876 using a Monte Carlo simulation model with a five-year life,

70 % volatility and a risk-free interest rate of 0.40 % .

the exception of the Baum Performance Option, the fair value of each option award is estimated on the date of grant using the

Black-Scholes-Merton option pricing model.

Beginning on April 1, 2019, the Company began calculating expected volatility based

solely on the historical volatilities of the common stock of the Company.

Prior to April 1, 2019, the expected volatility was

based on the historical volatilities of the common stock of the Company and comparable publicly traded companies.

previously utilized this methodology based on its estimate that it had limited relevant historical data regarding the volatility

of its stock price on which to base a meaningful estimate of expected volatility.

The expected term of options granted was determined

in accordance with the “simplified approach,” as the Company has limited, relevant, historical data on employee exercises

and post-vesting employment termination behavior.

The expected risk-free interest rate is based on the U.S.

Treasury yield for

a period consistent with the expected term of the option in effect at the time of the grant.

The financial statement effect of

forfeitures is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates.

option grants to employees and directors, the Company assigns a forfeiture factor of 10 % .

These factors could change in the future,

which would affect the determination of stock-based compensation expense in future periods.

Utilizing these assumptions, the fair

value is determined at the date of grant.

table below illustrates the fair value per share determined using the Black-Scholes-Merton option pricing model with the following

assumptions used for valuing options granted to employees:

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 year ended December 31, 2021 generally included one of the following vesting schedules:

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;

and 100% of the

shares subject to the option vest on a quarterly basis in equal installments 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 .

July 31, 2015, the Company granted to its Chief Executive Officer, Mark Baum, an option (the “Baum Performance Option”) to

purchase 600,000 shares of the Company’s common stock at an exercise price of $ 7.87 per share under the 2007 Plan subject to the

satisfaction of certain market-based vesting criteria.

The market-based vesting criteria are separated into five tranches and require

that the Company achieve and maintain certain average stock price targets ranging from $ 9 per share to $ 15 per share during the five

year period following the grant date.

On June 4, 2020, the Company amended the Baum Performance Option, to extend the vesting and contractual

term by 5 years.

The Company treated this amendment as a modification to the Baum Performance Option for accounting purposes.

value of the modification was $ 1,876 using a Monte Carlo simulation model with a five-year life, 70 % volatility and a risk-free interest

rate of 0.40 %.

the exception of the Baum Performance Option, the fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton

option pricing model.

Beginning on April 1, 2019, the Company began calculating expected volatility based solely on the historical volatilities

of the common stock of the Company.

Prior to April 1, 2019, the expected volatility was based on the historical volatilities of the common

stock of the Company and comparable publicly traded companies.

The Company previously utilized this methodology based on its estimate

that it had limited relevant historical data regarding the volatility of its stock price on which to base a meaningful estimate of expected

The expected term of options granted was determined in accordance with the “simplified approach,” as the Company

has limited, relevant, historical data on employee exercises and post-vesting employment termination behavior.

The expected risk-free

interest rate is based on the U.S.

Treasury yield for a period consistent with the expected term of the option in effect at the time

of the grant.

The financial statement effect of forfeitures is estimated at the time of grant and revised, if necessary, if the actual

effect differs from those estimates.

For option grants to employees and directors, the Company assigns a forfeiture factor of 10 %.

factors could change in the future, which would affect the determination of stock-based compensation expense in future periods.

these assumptions, the fair value is determined at the date of grant.

table below illustrates the fair value per share determined using the Black-Scholes-Merton option pricing model with the following assumptions

used for valuing options granted to employees:

SCHEDULE OF FAIR VALUE ASSUMPTIONS

Weighted-average fair

value of options granted

Expected terms (in years)

Expected volatility

Risk-free interest rate

Dividend yield

Weighted-average

fair value of options granted

terms (in years)

interest rate

following table summarizes information about stock options outstanding and exercisable at December 31, 2020:

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of Exercise Prices

$ 1.47 - $ 2.60

$ 3.04 - $ 4.50

$ 5.49 - $ 6.36

$ 6.64 - $ 8.99

$ 1.47 - $ 8.99

of December 31, 2020, there was approximately $ 2,794 of total unrecognized compensation expense related to unvested stock options

granted under the Plan.

of December 31, 2021, there was approximately $ 1,397 of total unrecognized compensation expense related to unvested stock options granted

under the Plan.

That expense is expected to be recognized over the weighted-average remaining vesting period of 5.1 years.

The stock-based compensation for all stock options was $ 1,579 and $ 889 during the years ended December 31, 2020 and 2019, respectively.

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

vesting criteria.

The grant-date fair value of the RSUs, which has been determined based upon the market value of the Company’s

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

The stock-based

compensation for all stock options was $ 1,636 and $ 1,579 during the years ended December 31, 2021 and 2020, respectively.

Stock Units/Performance Stock Units

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

The grant date fair value of the RSUs, which has been determined based upon the market value of the Company’s common stock on the

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

During the Year Ended December 31, 2020

the year ended December 31, 2020, 161,000 RSUs with a fair market value of $ 1,025 were issued to certain employees;

the RSUs vest

in full on the third anniversary of the grant date.

the year ended December 31, 2019, the Company’s board of directors were granted 38,860 RSUs with a fair market value of

$ 300 which vests on a quarterly basis, over a one-year term in equal installments, subject to the director’s

continued service at the vesting date, but the issuance and delivery of these shares are deferred until the director resigns.

the RSUs vest in

full on the third anniversary of the grant date.

the year ended December 31, 2020, the Company’s board of directors were granted 90,524 RSUs with a fair market value $ 511 which

vest on a quarterly basis, over a one-year term in equal installments, subject to the director’s continued service at the vesting

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

summary of the Company’s RSU activity and related information for the year ended December 31, 2020 is as follows:

SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY

Average Grant

Date Fair Value

RSUs unvested - January

RSUs cancelled/forfeited

RSUs unvested

at December 31, 2019

unvested - January 1, 2020

cancelled/forfeited

unvested at December 31, 2020

During the Year Ended December 31, 2021

the year ended December 31, 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 year ended December 31, 2020, the Company’s board of directors were granted 90,524 RSUs with a fair market value $ 511

which vest on a quarterly basis, over a one-year term in equal installments, subject to the director’s continued

service at the vesting date, but the issuance and delivery of these shares are deferred until the director resigns.

the RSUs vest in

full on the third anniversary of the grant date.

the year ended December 31, 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.

the year ended December 31, 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 PSUs”).

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.

TSR is based on the aggregate of:

(i) the percent

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

and (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.

OF SHARE BASED COMPENSATION PERFORMANCE STOCK UNITS AWARD ACTIVITY

* Target 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 of TSR.

fair value of the 2021 PSUs was $ 10,113

using a Monte Carlo Simulation with a five-year

volatility and a risk free interest rate of 0.72 %.

The fair value amount is being amortized over a two-year derived service period.

summary of the Company’s RSU activity and related information for the year ended December 31, 2021 is as follows:

Average Grant

Date Fair Value

RSUs unvested - January

RSUs cancelled/forfeited

RSUs unvested

at December 31, 2020

SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY

Weighted Average Grant Date

unvested - January 1, 2021

( 1,274,797 )

cancelled/forfeit

unvested at December 31, 2021

of December 31, 2021, the total unrecognized compensation expense related to unvested RSUs was approximately $ 10,550 which is expected

to be recognized over a weighted-average period of 1.48 years, based on estimated vesting schedules.

The stock-based compensation

for RSUs was $ 1,167 and $ 879 during the years ended December 31, 2020 and 2019, respectively.

The stock-based compensation for

RSUs was $ 4,022 and $ 1,167 during the years ended December 31, 2021 and 2020, respectively.

Stock-Based Transactions

Pharmaceuticals, Inc.

the year ended December 31, 2019:

issued 1,000,000 shares of its common stock to Elle in connection with the acquisition of certain drug candidate intellectual

property and rights in February 2019;

issued 300,000 shares of its common stock to TGV in connection with the acquisition of certain drug candidate intellectual

property and rights in July 2019;

Company recognized $ 26 in stock-based compensation related to equity instruments granted by Mayfield for 2,450,000 shares

of its restricted common stock that vest upon various performance based milestones and service periods to consultants of Mayfield,

including Mayfield’s CEO candidate and to Harrow employees, including 725,000 shares to Mark Baum, CEO of the Company,

and 362,500 shares to Andrew Boll, CFO of the Company.

Pharmaceuticals, Inc.

the year ended December 31, 2020:

repurchased 650,000 shares of its common stock from Elle, for an aggregate purchase price of $ 1 ;

shares of Mayfield’s restricted common stock were forfeited by a consultant;

issued 475,000 shares of its restricted common stock, with a fair value of $ 11 , that vest upon various performance-based milestones

and over a four-year service period to Mayfield’s Chief Executive Officer candidate.

the year ended December 31, 2020, the Company recognized $ 20 in stock-based compensation for Mayfield stock options.

Pharmaceuticals, Inc.

July 2019, Stowe agreed to issue 1,750,000 shares of its common stock to TGV in connection with the acquisition of certain drug

candidate intellectual property and rights.

the year ended December 31, 2020, Visionology granted 2,000,000 shares of its restricted common stock, with a fair value of $ 96

that vest upon various performance based milestones and service periods to consultants of Visionology, including Visionology’s

CEO candidate and to Harrow employees, including 700,000 shares to Mark Baum, CEO of the Company, and 350,000 shares to Andrew

Boll, CFO of the Company.

Company recognized $ 87 and $ 26 in stock-based compensation expense related to subsidiary stock options during the years ended December

31, 2021 and 2020, respectively.

Company recorded stock-based compensation (including issuance of common stock for services and accrual for stock-based compensation)

1 unchanged sentence

SCHEDULE OF STOCK BASED COMPENSATION GRANTED TO EMPLOYEES DIRECTORS CONSULTANTS

the Years Ended December 31,

Employees – selling,

general and administrative

Directors – selling, general

and administrative

the Year Ended December 31,

– selling, general and administrative

time to time, the Company issues warrants to purchase shares of the Company’s common stock to investors, lenders (see Note 13),

4 unchanged sentences

Exercise Price

Warrants outstanding

- January 1, 2020

Warrants outstanding

and exercisable - December 31, 2020

Weighted average

remaining contractual life of the outstanding warrants in years - December 31, 2020

outstanding - January 1, 2021

outstanding and exercisable - December 31, 2021

average remaining contractual life of the outstanding warrants in years - December 31, 2021

warrants outstanding as of December 31, 2021 are included in the following table:

SCHEDULE OF WARRANTS OUTSTANDING AND WARRANTS EXERCISABLE

Lender warrants

Settlement warrants

Lender warrants

(see Note 12)

Company is subject to taxation in the United States, California, Florida, Georgia, Illinois, New Jersey, New York, Tennessee and

The Company’s income tax provision consists of the following:

Outstanding and Exercisable

warrants (see Note 13)

Company is subject to taxation in the United States, California, Florida, Georgia, Illinois, New Jersey, New York, Tennessee and Wisconsin.

The Company’s income tax provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 are summarized below:

SCHEDULE OF PROVISION FOR INCOME TAXES

Total current

in valuation allowance

Total deferred

Income tax provision

tax provision (benefit)

reconciliation of income taxes computed by applying the statutory U.S.

income tax rate to the Company’s loss before income

tax provision to the income tax provision is as follows:

income tax rate to the Company’s loss before income taxes

to the income tax provision is as follows:

SCHEDULE OF INCOME TAX RECONCILIATION

federal statutory tax

State tax benefit, net

Valuation allowance

Effective income

federal statutory tax rate

tax benefit, net

stock-based compensation

off of NOLs due to previous change in ownership

off of credits due to previous change in ownership

of valuation allowance for write off of NOLs and credits due to previous change in ownership

income tax rate

tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities

3 unchanged sentences

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets (liabilities):

Depreciation and

Research and development

Deferred stock-based

Basis difference

Capital losses

Park stock purchase

identifiable intangibles

Limitation under

ASC 842 lease

842 ROU asset

tax assets (liabilities):

and amortization

and development credits

stock compensation

Difference in Melt

Difference in Surface

Difference in Eton

License Agreement

stock purchase identifiable intangibles

Basis difference in Melt loan

lease liabilities

lease right-of-use assets

deferred tax assets, net

deferred tax assets

deferred tax liabilities

of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain.

Accordingly, the

net deferred tax assets have been fully offset by a valuation allowance.

The valuation allowance increased by $ 633 and

decreased by $ 521 during 2020 and 2019, respectively.

December 31, 2020, the Company has federal and state net operating loss carryforwards of approximately $ 62,856 and $ 60,908 which

will begin to expire in 2027 , unless previously utilized, and will begin to expire for state purposes in 2026.

Accordingly, the net

deferred tax assets have been fully offset by a valuation allowance.

The valuation allowance increased by approximately $ 2,369

and increased by approximately $ 633

during 2021 and 2020, respectively.

of December 31, 2021, the Company had federal and state net operating loss carryforwards of approximately $ 34,400 and $ 53,200 , respectively,

which will begin to expire in 2027 , unless previously utilized, and will begin to expire for state purposes in 2026.

In addition, the

Company has federal net operating loss carryforwards of $3,865 generated after 2017 that can be carried over indefinitely and

may be used to offset up to 80% of federal taxable income.

At December 31, 2020, the Company has federal and state research

and development tax credits of approximately $ 354 and $ 305 , respectively.

The federal research tax credit begins to expire in

2026 , unless previously utilized, and the state research and development tax credit has no expiration date.

of the net operating loss (“NOL”) and research and development (“R&D”) carryforwards maybe subject

to a substantial annual limitation due to ownership change limitations that might have occurred or that could occur in the future,

as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar

state and foreign provisions.

These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be

utilized annually to offset future taxable income and tax, respectively.

In general, an “ownership change” as defined

by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an

ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders or public

Since the Company’s formation, the Company has raised capital through the issuance of capital stock on several occasions

which, combined with the purchasing stockholders’ subsequent disposition of those shares, may have resulted in such an ownership

change, or could result in an ownership change in the future upon subsequent disposition.

Company has not completed a study to assess whether an ownership change or changes have occurred.

If the Company has experienced

an ownership change, utilization of the NOL or R&D credit carryforwards would be subject to an annual limitation under Section 382

of the Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change

by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required.

Any limitation

may result in expiration of a portion of the NOL or R&D credit carryforwards before utilization.

Further, until a study is

complete and any limitation is known, no amounts are being considered as an uncertain tax position or disclosed as an unrecognized

Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred

tax assets with a corresponding reduction of the valuation allowance.

of December 31, 2020 and 2019, there were no unrecognized tax benefits included in the consolidated balance sheets that would,

if recognized, affect the effective tax rate.

The Company’s practice is to recognize interest and/or penalties related to

income tax matters in income tax expense.

The Company had no accrual for interest or penalties in its consolidated balance sheets

at December 31, 2020 and 2019, and has not recognized interest and/or penalties in the consolidated statements of operations for

the years ended December 31, 2020 and 2019.

The Company’s tax years since 2000 may be subject to examination by the federal

and state tax authorities due to the carryforward of unutilized net operating losses.

Company has federal net operating loss carryforward of $3,900 generated after 2017 that can be carried over indefinitely and may be used

to offset up to 80% of federal taxable income .

of December 31, 2021 the Company had federal and state research and development credit carryforwards of approximately $ 47 and $ 54 , respectively,

which will begin to expire in 2026 , unless previously utilized.

For state purposes, the state research and development credit carryforwards

can be carried over indefinitely.

of the net operating losses and research and development carryforwards may be subject to a substantial annual limitation due to ownership

change limitations that might have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code

of 1986, as amended (the “Code”), as well as similar state and foreign provisions.

These ownership changes may limit the

amount of NOL and R&D credit carryforward that can be utilized annually to offset future taxable income and tax.

Respectively.

general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions

over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by

certain stockholders or public groups.

Since the Company’s formation, the Company has raised capital through the issuance of capital

stock on several occasions which, combined with the purchasing stockholders’ subsequent disposition of those shares, may have resulted

in such an ownership change, or could result in an ownership change in the future upon subsequent disposition.

of December 31, 2021, the Company determined that it had net operating loss carryforwards of approximately $ 12,600

and state net operating loss carryforwards

of approximately $ 9,400

restricted under IRC Section 382 of the Internal

Revenue Code related to a 2011 change in ownership.

Section 382 of the Internal Revenue Code limits the utilization of net operating

losses when ownership changes, as defined by that section, occur.

Due to the Section 382 limitation, and the length of time available

to fully utilize the net operating loss carryforwards, the Company removed these NOLs from deferred tax assets with a corresponding reduction

of the valuation allowance.

Similarly, under IRC Section 383 which limits the utilization of credits when ownership changes occur, the

Company removed approximately $ 300

of federal credit and $ 300

of state credits from deferred tax assets with

a corresponding reduction of valuation allowance.

Company did not have any unrecognized tax benefits as of December 31, 2021 and 2020, all of which is offset by a full valuation allowance.

These unrecognized tax benefits, if recognized, would not affect the effective tax rate.

There was no interest or penalties accrued at

the adoption date and at December 31, 2021.

reconciliation of the change in the UTB balance from January 1, 2021 to December 31, 2021 is as follows:

OF UNRECOGNIZED TAX BENEFITS

at January 1, 2021

for tax positions related to current year

Additions/(reductions)

for tax positions related to prior years

at December 31, 2021

unrecognized tax benefits as of December 31, 2021

EMPLOYEE SAVINGS PLAN

Company has established an employee savings plan pursuant to Section 401(k) of the Internal Revenue Code, effective January 1, 2014.

The plan allows participating employees to deposit into tax deferred investment accounts up to 100 % of their salary, subject

to annual limits.

The Company makes certain matching contributions to the plan in amounts up to 4 % of the participants’

annual cash compensation, subject to annual limits.

The Company contributed approximately $ 272 and $ 312 to the plan during the

years ended December 31, 2020 and 2019, respectively.

The plan allows participating employees to deposit into tax deferred investment accounts up to 100 % of their salary, subject to annual

The Company makes certain matching contributions to the plan in amounts up to 4 % of the participants’ annual cash compensation,

subject to annual limits.

The Company contributed approximately $ 282 and $ 272 to the plan during the years ended December 31, 2021 and

2020, respectively.

COMMITMENTS AND CONTINGENCIES

December 2016, Louis L.

(“Sobol”) filed a lawsuit in the U.S.

District Court for the Eastern District

of Michigan, Southern Division against the Company, asserting claims on behalf of himself and an as-yet-uncertified class of consumers.

The claims allege violations under the Telephone Consumer Protection Act, 47 U.S.C.

§ 227 via the Company’s alleged

transmittal of advertisements to its clients via facsimile.

The Court approved the parties’ proposed settlement agreement

in the spring of 2019.

During the year ended December 31, 2018, the Company accrued $ 640 for expected damages related to this

matter and the proposed settlement amount.

As a result of the low claim rate of approximately 1.4 % , the Company’s total

damages were $ 571 , which was paid in October 2019.

This formally resolved all known disputes between the parties.

September 2017, Allergan USA, Inc.

(“Allergan”) filed a lawsuit in the U.S.

District Court for the Central District

of California against the Company, primarily claiming violations under the federal Lanham Act and California’s Sherman Act.

The Court granted in part and denied in part each parties’ motions for summary judgement, resolving all issues except for

whether Allergan was entitled to damages related to the Company’s purported Lanham Act violations.

The parties went to trial

in May 2019 to litigate damages related to the Lanham Act, and a jury found the Company liable for only $ 49 in lost profit damages,

which was accrued as an expense during the year ended December 31, 2019 (see Note 11).

In July 2019, the Court entered a permanent

injunction, the scope of which is limited to compounded drugs prepared in, dispensed from within, or shipped to the state of California.

The injunction requires the Company to:

(1) only dispense drugs from a 503(a) facility with a “Valid Prescription Order”;

(2) abide by the FDA’s anticipatory compounding guidelines;

and (3) only use bulk drug substances identified on a list established

by the Secretary of Health and Human Services or FDA’s interim “Category 1” list.

The Company believes it was

already in compliance with the order, prior to the injunction being ordered.

On October 2, 2019, Allergan and the Company filed

a joint stipulation to voluntarily dismiss each parties’ respective pending appeals arising out of the lawsuit.

consideration was exchanged between the parties related to the filing of the joint stipulation.

This formally resolved all known

disputes between the parties.

Board of Pharmacy

March 2018, the California Board of Pharmacy filed an accusation against Park related to a compounded formulation the Company

believes was legally dispensed and was, without its knowledge, inappropriately administered to a patient unknown to Park, by the

prescribing healthcare professional.

Park filed a response to the accusation and requested a formal hearing.

In April 2019, Park

agreed to, and the California State Board of Pharmacy approved terms of a settlement agreement (the “Settlement Agreement”)

that became effective on May 29, 2019.

Pursuant to the terms of the Settlement Agreement, Park was required to, and did, surrender

its California pharmacy license by August 27, 2019.

This formally resolved all known disputes between the parties.

Drug Solutions et al.

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

District Court of Delaware asserting claims for 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 a claim related

to its purported termination of the APA.

In October 2019, NDS voluntarily dismissed all claims related to breach of contract,

leaving only claims related to the scope of the post-termination obligations to be litigated.

On October 29, 2020, at a hearing

on the various dispositive motions before it, the Court found that there were triable issues of fact and reopened discovery for

limited purposes.

NDS is seeking unspecified damages, interest, attorney’s 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.

Nonetheless, 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.

During the year ended December 31, 2021, the Company recorded $ 1,500

in selling, general and administrative expenses related to the Settlement Agreement.

Except for the one-time payment of $ 1,500 , 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.

and Professional Liability

and professional liability litigation represents an inherent risk to all firms in the pharmaceutical and pharmacy industry.

utilize traditional third-party insurance policies with regard to our product and professional liability claims.

Such insurance

coverage at any given time reflects current market conditions, including cost and availability, when the policy is written.

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

In September 2018, co-defendant

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

Spectrum Chemical Manufacturing Corp.

traditional third-party insurance policies with regard to our product and professional liability claims.

Such insurance coverage at any

given time reflects current market conditions, including cost and availability, when the policy is written.

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 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.

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

The case is currently in the discovery phase.

Erick is seeking unspecified damages, interest, attorney’s fees and

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.

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 stock.

Sue Gaukel et al.

June 2019, Anna Sue Gaukel and Lawrence Gaukel served the Company with a lawsuit filed in state court in Idaho against Imprimis

Pharmaceuticals, Inc.

asserting class action allegations and product liability claims related to Mrs.

Gaukel’s doctor’s

use of a compounded drug injection in each of her eyes.

In June 2019, the Company removed the case to Federal Court and subsequently

answered the complaint.

On January 24, 2019, the plaintiffs and the Company filed a joint stipulation, and the case was dismissed

with prejudice.

No economic consideration was exchanged between the parties related to the filing of the joint stipulation.

formally resolved all known disputes between the parties as connected to this matter.

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

claims or take legal actions to assert its rights, including intellectual property disputes, contractual disputes and other commercial

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 this matter.

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

or take legal actions to assert its rights, including intellectual property disputes, contractual disputes and other commercial disputes.

Any of these claims could subject the Company to litigation.

addition to the indemnification provisions contained in the Company’s charter documents, the Company generally enters into

separate indemnification agreements with each of the Company’s directors and officers.

These agreements require the Company,

among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’

fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of

the individual’s status or service as the Company’s director or officer, other than liabilities arising from willful

misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual

in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification

by the Company.

The Company also indemnifies its lessors in connection with its facility leases for certain claims arising from

the use of the facilities.

These indemnities do not provide for any limitation of the maximum potential future payments the Company

could be obligated to make.

Historically, the Company has not incurred any payments for these obligations and, therefore, no liabilities

have been recorded for these indemnities in the accompanying consolidated balance sheets.

addition to the indemnification provisions contained in the Company’s charter documents, the Company generally enters into separate

indemnification agreements with each of the Company’s directors and officers.

These agreements require the Company, among other

things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines

and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status

or service as the Company’s director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly

fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the

individual with respect to which the individual may be entitled to indemnification by the Company.

The Company also indemnifies its lessors

in connection with its facility leases for certain claims arising from the use of the facilities.

These indemnities do not provide for

any limitation of the maximum potential future payments the Company could be obligated to make.

Historically, the Company has not incurred

any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities in the accompanying consolidated

balance sheets.

and Marketing Agreements

1 unchanged sentence

services to ImprimisRx in select geographies in the U.S., in connection with the Company’s ophthalmic compounded formulations.

the terms of the sales and marketing agreements, the Company is required to make commission payments generally equal to 10 % to

14 % of net sales for products above and beyond the initial existing sales amounts.

In addition, the Company is required to make

periodic milestone payments to certain organizations in shares of the Company’s restricted common stock if net sales in

the assigned territory reach certain future levels by the end of their terms, as applicable.

The Company accrued and recorded

in additional paid in capital $ 83 and $ 159 related to stock-based payments for these agreements during the year ended December

31, 2020 and 2019, respectively, and $ 2,434 and $ 2,700 were incurred under these agreements for commission expenses during the

years ended December 31, 2020 and 2019, respectively.

the terms of the sales and marketing agreements, the Company is required to make commission payments generally equal to 10 % to 14 % of

net sales for products above and beyond the initial existing sales amounts .

In addition, the Company is required to make periodic milestone

payments to certain organizations in shares of the Company’s restricted common stock if net sales in the assigned territory reach

certain future levels by the end of their terms, as applicable.

The Company accrued and recorded in additional paid-in capital of

related to stock-based payments for these agreements

during the years ended December 31, 2021 and 2020, respectively, and $ 3,640

were incurred under these agreements for commission

expenses during the years ended December 31, 2021 and 2020, respectively, which are included in selling, general and administrative expenses.

Purchase, License and Related Agreements

Company has acquired and sourced intellectual property rights related to certain proprietary innovations from certain inventors

and related parties (the “Inventors”) through multiple asset purchase agreements, license agreements, strategic agreements

and commission agreements.

In general, these agreements provide that the Inventors will cooperate with the Company in obtaining

patent protection for the acquired intellectual property and that the Company will use commercially reasonable efforts to research,

develop and commercialize a product based on the acquired intellectual property.

In addition, the Company has acquired a right

of first refusal on additional intellectual property and drug development opportunities presented by these Inventors.

consideration for the acquisition of the intellectual property rights, the Company is obligated to make payments to the Inventors

based on the completion of certain milestones, generally consisting of:

(1) a payment payable within 30 days after the issuance

of the first patent in the United States arising from the acquired intellectual property (if any);

(2) a payment payable within

30 days after the Company files the first investigational new drug application (“IND”) with the FDA for the first

product arising from the acquired intellectual property (if any);

Company has acquired and sourced intellectual property rights related to certain proprietary innovations from certain inventors and related

parties (the “Inventors”) through multiple asset purchase agreements, license agreements, strategic agreements and commission

In general, these agreements provide that the Inventors will cooperate with the Company in obtaining patent protection for

the acquired intellectual property and that the Company will use commercially reasonable efforts to research, develop and commercialize

a product based on the acquired intellectual property.

In addition, the Company has acquired a right of first refusal on additional intellectual

property and drug development opportunities presented by these Inventors.

consideration for the acquisition of the intellectual property rights, the Company is obligated to make payments to the Inventors based

on the completion of certain milestones, generally consisting of:

(1) a payment payable within 30 days after the issuance of the first

patent in the United States arising from the acquired intellectual property (if any);

(2) a payment payable within 30 days after the

Company files the first investigational new drug application (“IND”) with the U.S.

Food and Drug Administration (“FDA”)

for the first product arising from the acquired intellectual property (if any);

(3) for certain of the Inventors, a payment payable within

1 unchanged sentence

property (if any);

and (4) certain royalty payments based on the net receipts received by the Company in connection with the sale

or licensing of any product based on the acquired intellectual property (if any), after deducting (among other things) the Company’s

and (4) certain royalty payments based on the net receipts received by the Company in connection with the sale or

licensing of any product based on the acquired intellectual property (if any), after deducting (among other things) the Company’s

development costs associated with such product.

If, following five years after the date of the applicable asset purchase agreement,

the Company either (a) for certain of the Inventors, has not filed an IND or, for the remaining Inventors, has not initiated a

study where data is derived, or (b) has failed to generate royalty payments to the Inventors for any product based on the acquired

intellectual property, the Inventors may terminate the applicable asset purchase agreement and request that the Company re-assign

the acquired technology to the Inventors.

$ 224 and $ 371 were accrued in accounts payable and accrued expenses under these agreements

during the years ended December 31, 2020 and 2019, respectively, and $ 682 and $ 846 were incurred under these agreements as royalty

expenses for the years ended December 31, 2020 and 2019, respectively.

July 2020, Mayfield entered into a License Agreement (the “TGV License”) with TGV to acquire intellectual property

rights for use in the women’s health field, related to Mayfield’s proprietary drug candidate MAY-66.

The TGV License

provides that TGV will cooperate with Mayfield in transferring all embodiments of the intellectual property (including know-how)

related to the TGV License, assist in obtaining and protecting its patent rights for the acquired intellectual property and that

Mayfield will use commercially reasonable efforts to research, develop and commercialize products based on the acquired intellectual

In connection with the TGV License, Mayfield is obligated to make royalty payments to TGV equal to a low single digit

percentage of net sales received by Mayfield in connection with the sale or licensing of any product based on the licensed intellectual

In addition, Mayfield issued 300,000 shares of its common stock to TGV and is required to make certain milestone payments

to TGV over the development of MAY-66 and any related products based on the licensed intellectual property.

July 2020, Stowe entered into a License Agreement (the “Stowe License”) with TGV, to acquire intellectual property

rights for use in the ophthalmology and otic health field, related to Stowe’s proprietary drug candidate STE-006.

License provides that TGV will cooperate with Stowe in transferring all embodiments of the intellectual property (including know-how)

related to the Stowe License, assist in obtaining and protecting its patent rights for the acquired intellectual property and

that Stowe will use commercially reasonable efforts to research, develop and commercialize products based on the acquired intellectual

In connection with the Stowe License, Stowe is obligated to make royalty payments to TGV equal to a low single digit

percentage of net sales received by Stowe in connection with the sale or licensing of any product based on the licensed intellectual

In addition, Stowe issued 1,750,000 shares of its common stock to TGV and is required to make certain milestone payments

to TGV over the development of STE-006 and any related products based on the licensed intellectual property.

If, following five years after the date of the applicable asset purchase agreement, the

Company either (a) for certain of the Inventors, has not filed an IND or, for the remaining Inventors, has not initiated a study where

data is derived, or (b) has failed to generate royalty payments to the Inventors for any product based on the acquired intellectual property,

the Inventors may terminate the applicable asset purchase agreement and request that the Company re-assign the acquired technology to

the Inventors.

At December 31, 2021 and 2020, $ 251

were accrued in accounts payable and accrued

expenses related to these agreements.

During the years ended December 31, 2021 and 2020, $ 991

respectively, were incurred under these agreements as royalty expenses.

Rights to MAXITROL Eye Drops, IOPIDINE and MOXEZA

December 17, 2021 (the “Closing Date”), the Company entered into the NVS Agreement (see Note 10), pursuant to which the Company

purchased from NVS the exclusive commercial rights to the NVS Products in the U.S.

The Company made a one-time payment of $ 14,050

to NVS for the U.S.

rights to the NVS Products and their related intellectual property .

to the NVS Agreement and various ancillary agreements, immediately following the Closing

Date and subject to certain conditions, for a period of up to six months, and prior to the transfer of the NVS

Products NDAs (the “ NVS NDAs”) to the Company, NVS will continue to sell

the NVS Products on the Company’s behalf and transfer the net profit from the sale

of the NVS Products to the Company.

NVS has agreed to supply certain NVS

Products to the Company for a period of time after the NVS NDAs are transferred to

the Company and to assist with technology transfer of the NVS Products manufacturing to

other third-party manufacturers, if needed.

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 along with an additional milestone payment of $ 3,117 was paid and recorded as a R&D

expenses during the year ended December 31, 2021.

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 December 31, 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.

Commercial Alliance Agreement

August 2020, the Company, through its wholly-owned subsidiary ImprimisRx, LLC, entered into a Commercial Alliance Agreement (the “Dexycu

Agreement”) with Eyepoint Pharmaceuticals, Inc.

(“Eyepoint”), pursuant to which Eyepoint granted the Company the non-exclusive

right to co-promote DEXYCU ® (dexamethasone intraocular suspension) 9% for the treatment of post-operative inflammation

following ocular surgery in the United States.

to the Dexycu Agreement , Eyepoint will pay the Company a fee calculated based on the quarterly

sales of DEXYCU in excess of predefined volumes to specific customers of the Company in the U.S.

Under the terms of the Dexycu

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

In December 2021,

Ithe Company, entered into a letter agreement (the “Letter Agreement”) with EyePoint

to expand the Dexycu Agreement.

During the two-year term of the Letter Agreement, in exchange for EyePoint agreeing to pay the

Company a commission based on all net sales of DEXYCU® in the U.S.

the Company assumed full responsibility for the sales and marketing

of DEXYCU and agreed to make offers of employment to eight EyePoint employees, and will be responsible for all sales and marketing related

regulatory compliance.

EyePoint retained control over all regulatory approvals and commercial rights for DEXYCU.

The Letter Agreement

was made effective as of January 1, 2022 and will continue through December 31, 2023, unless such term is amended by mutual agreement

of the parties or terminated in accordance therewith.

Letter Agreement also amended the Company’s required minimum sales levels based on the DEXYCU unit demand for the third quarter

The failure to achieve these minimum sales levels could result in penalties payable by the Company to EyePoint;

provided however,

in no event shall a penalty, if any, exceed commissions payable by EyePoint to the Company.

expiration or termination of the Letter Agreement, the parties will revert to the terms of the Dexycu Agreement in existence prior to

the effectiveness of the Letter Agreement for the remainder of the original term of the Dexycu Agreement.

The Letter Agreement provides

that either party may terminate the Dexycu Agreement upon 30 days’ prior written notice in the event DEXYCU ceases to have Medicare

Part B “pass-through” payment status for a period of not less than 6 months.

The Company has an additional right to terminate

the Letter Agreement with 30 days written notice if (i) a proposed or final Hospital Outpatient Prospective Payment System (HOPPS) rule

issued by the Centers for Medicare & Medicaid Services (CMS) during calendar year 2022 does not contain an extension of the pass-through

payment period for DEXYCU beyond December 31, 2022, and (ii) EyePoint has not otherwise waived any minimum sales for a respective quarterly

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 years ended December 31, 2021 and 2020,

the Company recorded $ 3,253

respectively, in commission revenues related to the Dexycu Agreement.

License Agreement – Related Party

April 2017, the Company entered into a license agreement (the “Klarity License Agreement”) with Richard L.

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

Pursuant to the terms of the Klarity License Agreement, the Company licensed certain

intellectual property and related rights from Dr.

Lindstrom to develop, formulate, make, sell, and sub-license the topical ophthalmic

solution Klarity designed to protect and rehabilitate the ocular surface (the “Klarity Product”).

Lindstrom, M.D.,

a member of its Board of Directors.

Pursuant to the terms of the Klarity License Agreement, the Company licensed certain intellectual

property and related rights from Dr.

Lindstrom to develop, formulate, make, sell, and sub-license the topical ophthalmic solution Klarity

designed to protect and rehabilitate the ocular surface (the “Klarity Product”).

the terms of the Klarity License Agreement, the Company is required to make royalty payments to Dr.

Lindstrom ranging from 3%

to 6% of net sales, dependent upon the final formulation of the Klarity Product sold.

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

Lindstrom ranging from 3% to 6% of

net sales, dependent upon the final formulation of the Klarity Product sold .

In addition, the Company is required to make certain milestone

payments to Dr.

Lindstrom including:

(i) an initial payment of $ 50

upon execution of the Klarity License

Agreement, (ii) a second payment of $ 50

following the first $ 50

in net sales of the Klarity Product;

(iii) a final payment of $ 50

following the first $ 100

in net sales of the Klarity Product.

of the above referenced milestone payments were payable at the Company’s election in cash or shares of the Company’s

restricted common stock.

Lindstrom was paid $ 149

in cash during the years ended December

31, 2020 and 2019, respectively, and was due an additional $ 35

at December 31, 2020 and 2019, respectively.

(i) an initial payment of $ 50 upon execution of the Klarity License Agreement, (ii) a second payment

of $ 50 following the first $ 50 in net sales of the Klarity Product;

and (iii) a final payment of $ 50 following the first $ 100 in net

sales of the Klarity Product.

All of the above referenced milestone payments were payable at the Company’s election in cash or

shares of the Company’s restricted common stock.

Lindstrom was paid $ 165 and $ 149 in cash during the years ended December 31,

2021 and 2020, respectively, and was due an additional $ 30 and $ 35 at December 31, 2021 and 2020, respectively.

The Company incurred

for royalty expenses related to the Klarity

License Agreement during the years ended December 31, 2020 and 2019, respectively.

$ 160 and $ 129 for royalty expenses related to the Klarity License Agreement during the years ended December 31, 2021 and 2020, respectively.

Asset Purchase Agreement – Related Party

December 2019, the Company entered into an asset purchase agreement (the “Lindstrom APA”) with Dr.

Lindstrom, a member

of its Board of Directors.

Pursuant to the terms of the Lindstrom APA, the Company acquired certain intellectual property and

related rights from Dr.

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

the terms of the Lindstrom APA, t he 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, a member of

its Board of Directors.

Pursuant to the terms of the Lindstrom APA, the Company acquired certain intellectual property and related rights

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 $ 55 and $ 0 in cash during the years ended December 31, 2020 and 2019, respectively, and was due $ 7 and

$ 40 at December 31, 2020 and 2019, respectively.

The Company incurred $ 55 and $ 40 for royalty expenses related to the Lindstrom

APA during the years ended December 31, 2020 and 2019, respectively.

Lindstrom was

paid $ 28 and $ 55 in cash during the year ended December 31, 2021 and 2020, respectively, and was due $ 8 and $ 7 at December 31, 2021 and

2020, respectively.

The Company incurred $ 29 and $ 55 for royalty expenses related to the Lindstrom Agreement during the year ended December

31, 2021 and 2020, respectively.

Asset Purchase Agreement – Related Party

December 2019, the Company entered into an asset purchase agreement (the “Presbyopia APA”) with Richard L.

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

Pursuant to the terms of the Presbyopia APA, the Company acquired certain intellectual

property and related rights from Dr.

Lindstrom to develop, formulate, make, sell, and sub-license an ophthalmic topical product

to treat presbyopia (the “Presbyopia Product”).

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

Lindstrom ranging from 2% to 4% of net

sales, dependent upon the final formulation and patent protection of the Presbyopia Product sold.

Lindstrom was paid $ 0 in

cash during the years ended December 31, 2020 and 2019, and was due $ 0 at December 31, 2020 and 2019.

The Company incurred $ 0

for royalty expenses related to the Presbyopia APA during the years ended December 31, 2020 and 2019.

Commercial Alliance Agreement

August 2020, the Company, through its wholly owned subsidiary ImprimisRx, LLC, entered into a Commercial Alliance Agreement (the

“Dexycu Agreement”) with Eyepoint Pharmaceuticals, Inc.

(“Eyepoint”), pursuant to which Eyepoint granted

the Company the non-exclusive right to co-promote DEXYCU ® (dexamethasone intraocular suspension) 9% for the treatment

of post-operative inflammation following ocular surgery in the United States.

to the Dexycu Agreement , Eyepoint will pay the Company a fee calculated based on

the quarterly sales of DEXCYU in excess of predefined volumes to specific customers of the Company in the U.S.

Under the terms

of the Dexycu Agreement , the Company shall use commercially reasonable efforts to

promote and market DEXCYU 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 DEXCYU 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.

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 year ended December 31, 2020, the Company recorded $ 357 in commission revenues related to the Dexycu Agreement.

Lindstrom, M.D.,

a member of its Board of Directors.

Pursuant to the terms of the Presbyopia APA, the Company acquired certain intellectual property and

related rights from Dr.

Lindstrom to develop, formulate, make, sell, and sub-license an ophthalmic topical product to treat presbyopia

(the “Presbyopia Product”).

the terms of the Presbyopia Product, the Company is required to make royalty payments to Dr.

Lindstrom ranging from 2% to 4% of net sales,

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

Lindstrom was paid $ 0 in cash during the

years ended December 31, 2021 and 2020, and was due $ 0 at December 31, 2021 and 2020.

The Company incurred $ 0 for royalty expenses related

to the Presbyopia APA during the years ended December 31, 2021 and 2020.

Pharmaceuticals MAY-66 License Termination

May 2021, Mayfield terminated the License Agreement (the “TGV License”) with TGV-Health, LLC and affiliated entities (collectively,

“TGV”), pursuant to which it acquired intellectual property rights for use in the women’s health field, related to

Mayfield’s proprietary drug candidate MAY-66.

Concurrent with the termination, TGV returned to Mayfield 300,000 shares of Mayfield’s

common stock, constituting all of the equity held by TGV.

Mayfield has no outstanding or remaining obligations under the TGV License.

Pharmaceuticals MAY-44 APA Termination

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

May 2021, Stowe terminated the License Agreement (the “Stowe License”) with TGV, pursuant to which it acquired intellectual

property rights for use in the ophthalmic field, related to Stowe’s proprietary drug candidate STE-006.

Concurrent with the termination,

TGV returned to Stowe 1,750,000 shares of Stowe’s common stock, constituting all of the equity held by TGV.

Stowe has no outstanding

or remaining obligations under the Stowe License.

SEGMENT INFORMATION AND CONCENTRATIONS

on January 1, 2019, the Company began evaluating performance of the Company based on operating segments.

Segment performance for

its two operating segments are based on segment contribution.

The Company’s reportable segments consist of (i) its commercial

stage pharmaceutical compounding business (Pharmaceutical Compounding), generally including the operations of ImprimisRx and the

former Park businesses;

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

Drug Development).

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

evaluated the Company’s 2021 and 2020 performance based on operating segments.

Segment performance for the Company’s two

operating segments are based on segment contribution.

The Company’s reportable segments consisted of (i) its commercial stage pharmaceutical compounding business (Pharmaceutical Compounding),

generally including the operations of ImprimisRx;

and (ii) its start-up operations associated with pharmaceutical drug development business

(Pharmaceutical Drug Development).

Segment contribution for the segments represents net revenues less cost of sales, R&D expenses,

selling and marketing expenses, and select general and administrative expenses.

The Company does not evaluate the following items

Management does not evaluate the following items

at the segment level:

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

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 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;

assets including capital expenditures.

Company defines segment net revenues as pharmaceutical compounded drug sales, licenses and other revenue derived from related

of sales within segment contribution includes direct and indirect costs to manufacture formulations and sell products, including

active pharmaceutical ingredients, personnel costs, packaging, storage, royalties, shipping and handling costs, manufacturing

equipment and tenant improvements depreciation, the write-off of obsolete inventory and other related expenses.

general and administrative expenses consist mainly of personnel-related costs, marketing and promotion costs, distribution costs,

professional service costs, insurance, depreciation, facilities costs, transaction costs, and professional services costs which

are general in nature and attributable to the segment.

defines segment net revenues as pharmaceutical compounded

drug sales, licenses and other revenues derived from related agreements.

of sales within segment contribution includes direct and indirect costs to manufacture formulations and sell products, including active

pharmaceutical ingredients, personnel costs, packaging, storage, royalties, shipping and handling costs, manufacturing equipment and

tenant improvements depreciation, the write-off of obsolete inventory and other related expenses.

general and administrative expenses consist mainly of personnel-related costs, marketing and promotion costs, distribution costs, professional

service costs, insurance, depreciation, facilities costs, transaction costs, and professional services costs which are general in nature

and attributable to the segment.

net revenues, segment operating expenses and segment contribution information consisted of the following for the years ended December

4 unchanged sentences

Pharmaceutical

Cost of sales

Operating expenses:

Selling, general

and administrative

general and administrative

and development

Research and development

Asset sales and

impairments, net

and development

sales and impairments, net

the Year Ended December 31, 2020

1 unchanged sentence

Pharmaceutical

Cost of sales

Operating expenses:

Selling, general

and administrative

Research and development

Asset sales and

impairments, net

general and administrative

and development

sales and impairments, net

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 December 31, 2020 and December 31, 2019 are located in the

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

Beginning in 2022, due to shifts in the Company’s

strategic plans to further focus on growing the Company’s ImprimisRx business and suspension of activities related to starting

up development-stage pharmaceutical companies, along with changes to the Company’s organizational and internal reporting structure,

management will no longer evaluate the Company’s business in two segments and will instead focus on the performance of the business

as a single operating business.

Concentrations

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

These products collectively accounted

for 35 % and 35 % o f

revenues during the years ended December 31, 2021 and 2020, respectively.

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 years ended December 31, 2020 and 2019.

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

Company’s total pharmacy sales for the years ended December 31, 2021 and 2020 , respectively .

Company receives its active pharmaceutical ingredients from three main suppliers.

These suppliers collectively accounted for 77 %

of active pharmaceutical ingredient purchases during the year ended December 31, 2020, and 73 % during the year ended December

These suppliers collectively accounted for 74 % of active

pharmaceutical ingredient purchases during the year ended December 31, 2021, and 77 % during the year ended December 31, 2020.

SUBSEQUENT EVENTS

March 2021, the Company issued 10,989

shares of its common stock upon the exercise

of options to purchase 10,989

common stock, with exercise prices ranging between $ 1.70

per share, and received net proceeds of

stock units granted in February 2015 to Andrew R.

Boll, the Company’s Chief Financial Officer, vested, and in February 2021,

22,500 shares the Company’s common stock were issued to Mr.

Boll, net of 7,500 shares of common stock withheld for payroll

tax withholdings totaling $ 58 .

stock units granted in February 2015 to Mark L.

Baum, the Company’s Chief Executive Officer, vested, and in February 2021,

200,000 shares the Company’s common stock were issued to Mr.

Company has performed an evaluation of events occurring subsequent to December 31, 2020 through the filing date of this Annual

Report and determined that no subsequent events have occurred that would require recognition in the consolidated financial

statements or disclosures in the notes thereto, other than as disclosed in the accompanying notes.

January 2022, the Company issued 53,594 shares of common stock to Mark L.

Baum, the Company’s Chief Executive Officer, upon the

cashless exercise of options to purchase 125,000 shares at an exercise price of $ 2.40 per share.

The Company withheld from Mr.

shares as consideration for the cashless exercise and an additional 35,392 shares for payroll tax purposes.

February 2022, 50,000 RSUs

granted in February 2019 to Andrew R.

Boll, the Company’s Chief Financial Officer, vested, and, 29,395

shares the Company’s common stock were

issued to Mr.

Boll, net of 20,605

shares of common stock withheld for payroll tax

withholdings totaling $ 162 .

February 2022, 50,000 RSUs

granted in February 2019 to John P.

Saharek, the Company’s President of ImprimisRx, vested, and, 24,077

shares the Company’s common stock were

issued to Mr.

Saharek, net of 25,923

shares of common stock withheld for payroll tax

withholdings totaling $ 204 .

Company has performed an evaluation of events occurring subsequent to December 31, 2021 through the filing date of this Annual Report

and determined that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosures

in the notes thereto, other than as disclosed in the accompanying notes.

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-K

Item 9A. Controls and Procedures