What changed in this filing

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Item 1. Financial Statements

2025-11-10 compared with 2025-08-11 · 469 added, 421 removed, 860 unchanged (51% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

September 30,

Current assets

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Deferred revenue and customer deposits

Current portion of notes payable, net of unamortized debt discount

Current portion of operating lease obligations

1 unchanged sentence

Operating lease obligations, net of current portion

Notes payable, net of unamortized debt discount and current portion

Notes payable, net of unamortized debt discount

TOTAL LIABILITIES

1 unchanged sentence

STOCKHOLDERS’ EQUITY

Common stock, $ 0.001 par value, 50,000,000 shares authorized, 36,714,679 and 35,622,214 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Common stock, $ 0.001 par value, 50,000,000 shares authorized, 37,034,582 and 35,622,214 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

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For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Product sales, net

$ 182,899,000

$ 132,398,000

Other revenues

19 unchanged sentences

( 3,171,000 )

Loss on extinguishment of debt

( 7,750,000 )

Other (expense) income, net

( 7,750,000 )

Other income, net

Total other expense, net

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Diluted net income (loss) per share of common stock

Weighted average number of shares of common stock outstanding, basic

Weighted average number of shares of common stock

outstanding, basic

Weighted average number of shares of common stock outstanding, diluted

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

the periods ended June 30, 2025 and 2024

the periods ended September 30, 2025 and 2024

Noncontrolling

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( 24,258,000 )

Balance at June 30, 2024

Balance at September 30, 2024

$ 216,103,000

7 unchanged sentences

Exercise of employee stock-based options

Vesting of RSUs and PSUs

Vesting of PSUs and RSUs

Shares withheld related to net share settlement of equity awards

6 unchanged sentences

( 11,765,000 )

Balance at June 30, 2025

Balance at September 30, 2025

$ 210,129,000

4 unchanged sentences

Stockholders’

Balance at March 31, 2024

Balance at June 30, 2024

$ 212,439,000

3 unchanged sentences

Exercise of employee stock-based options

Vesting of RSUs

Shares withheld related to net share settlement of equity awards

( 1,205,000 )

Stock-based compensation expense

2 unchanged sentences

( 4,220,000 )

Balance at June 30, 2024

Balance at September 30, 2024

$ 216,103,000

1 unchanged sentence

$ ( 355,000 )

Balance at March 31, 2025

Balance at June 30, 2025

$ 213,788,000

6 unchanged sentences

Exercise of employee stock-based options

Vesting of RSUs and PSUs

Vesting of PSUs and RSUs

Shares withheld related to net share settlement of equity awards

4 unchanged sentences

Net income (loss)

Balance at June 30, 2025

Balance at September 30, 2025

$ 210,129,000

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended

For the Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

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Amortization of intangible assets

Amortization of operating lease right-of-use assets

Non-cash lease expense

Provision for (recovery of) credit losses

1 unchanged sentence

Investment loss from investment in Eton Pharmaceuticals

Loss on extinguishment of debt

Stock-based compensation

3 unchanged sentences

( 17,453,000 )

( 2,132,000 )

Prepaid expenses and other current assets

2 unchanged sentences

Accrued payroll and related liabilities

( 2,672,000 )

Deferred revenue and customer deposits

4 unchanged sentences

Investment in patent and trademark assets

Purchase of product rights and related patents

Purchases of property, plant and equipment

( 1,040,000 )

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from new debt, net of costs

Payment of debt issuance costs

( 1,581,000 )

Repayment of notes payable, including exit costs

( 230,901,000 )

Payment of payroll taxes upon vesting of PSUs, RSUs and exercise of stock options

2 unchanged sentences

Proceeds from exercise of stock options

Payment of debt issuance costs

NET CASH USED IN FINANCING ACTIVITIES

( 7,680,000 )

( 1,457,000 )

NET CHANGE IN CASH AND CASH EQUIVALENTS

7 unchanged sentences

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

Change in right-of-use assets for operating lease obligations assumptions

Right-of-use assets obtained in exchange for new operating lease obligations

Purchase of product rights associated with contingent consideration payable

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

TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Three and Six Months Ended June 30, 2025 and 2024

the Three and Nine Months Ended September 30, 2025 and 2024

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

Operating results for the three and six months ended June

Operating results for the three and nine months ended September

30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other period.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

following represents an update for the six months ended June 30, 2025 to the significant accounting policies described in the Company’s

following represents an update for the nine months ended September 30, 2025 to the significant accounting policies described in the Company’s

Annual Report on Form 10-K for the year ended December 31, 2024.

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of operations.

Oaktree Loan (as defined in Note 10) totaling $ 107,500,000 principal at June 30, 2025 and the 2026 Notes (as defined in Note 10) totaling

$ 75,000,000 in principal amount outstanding at June 30, 2025 become due in January 2026 and April 2026, respectively.

The maturity of

these debt obligations prior to their maturities without a refinancing event could raise substantial doubt about the Company’s

ability to continue as a going concern.

Company is currently in discussions with its current senior lender, Oaktree Fund Administration, LLC, as administrative agent for the

lenders (together, “Oaktree”), and other potential lenders about refinancing the Oaktree Loan and the 2026 Notes.

believes it is probable that the Company will be able to refinance the Oaktree Loan and the 2026 Notes based on the Company’s collateral

strength and expected cash flows from operations;

however, there can be no assurance that the Company will be able to refinance the indebtedness

on terms acceptable to it, or at all.

believes that one of the other alternatives available to it in lieu of refinancing the Oaktree Loan and the 2026 Notes is the sale of

one or more of the Company’s assets.

There can be no assurance that any sale could be completed on a timely basis or on terms acceptable

to the Company.

If the Company is unable to successfully refinance the Oaktree Loan and the 2026 Notes, or sell assets to raise sufficient

capital, the Company does not expect to have the ability to repay the Oaktree Loan and the 2026 Notes in full.

accompanying condensed consolidated financial statements are prepared on a going concern basis and do not include any adjustments that

might result from the Company’s inability to refinance the Oaktree Loan and the 2026 Notes or sell some of its assets to meet its

Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables.

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following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts

receivable to present the net amount expected to be collected at June 30, 2025:

receivable to present the net amount expected to be collected at September 30, 2025:

OF ACCOUNTS RECEIVABLE ALLOWANCE OF CREDIT LOSS

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Write-offs, net of recoveries

Balance at June 30, 2025

Balance at September 30, 2025

Value Measurements

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

Company’s 2026 Notes (as defined in Note 10) are carried at face value, including the unamortized premium, less unamortized debt

issuance costs, the 2027 Notes (as described in Note 10) are carried at face value less unamortized debt issuance costs, and the Oaktree

Loan (as defined in Note 10) is carried at face value less the original issue discount and unamortized debt issuance costs on the condensed

consolidated balance sheets and the Company presents fair value for disclosure purposes only.

The 2026 Notes and the 2027 Notes are classified

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

Loan is classified as a Level 2 instrument and its fair value is determined through an income approach that considers collateral coverage,

yield calibration, yield analysis and any adjustments to implied yield associated with the Company’s fundamental measures.

2030 Notes (as defined in Note 10) are carried at face value less unamortized debt issuance costs.

The Company fully repaid

principal balances under the Oaktree Loan and the 2026 and 2027 Notes in September.

The Company’s 2026 Notes (as defined in

Note 10) were carried at face value, including the unamortized premium, less unamortized debt issuance costs, the 2027 Notes (as

defined in Note 10) were carried at face value less unamortized debt issuance costs, and the Oaktree Loan (as defined in Note 10)

was carried at face value less the original issue discount and unamortized debt issuance costs on the condensed consolidated balance

sheets and the Company presents fair value for disclosure purposes only.

The 2026 Notes and the 2027 Notes were classified as Level

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

The 2030 Notes

are classified, and the Oaktree Loan was classified as Level 2 instruments and the fair value is determined through an income

approach that considers collateral coverage, yield calibration, yield analysis and any adjustments to implied yield associated with

the Company’s fundamental measures.

following table presents the estimated fair values and the carrying values:

OF ESTIMATED FAIR VALUE

June 30, 2025

September 30, 2025

December 31, 2024

Carrying Value

$ 107,407,000

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and Diluted Net Income (Loss) per Common Share

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

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

Diluted net income (loss) per share is computed by

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

common equivalent shares, such as stock options, restricted stock units (“RSUs”), performance stock units

(“PSUs”), and warrants, outstanding during the period.

Common equivalent shares (using the treasury stock method) from

stock options, unvested RSUs, unvested PSUs and warrants were 2,816,409

and 4,488,940

for the six-months ended June 30, 2025 and the three and six-months ended June 30, 2024, respectively, and are excluded in the

calculation of diluted net loss per common share for the periods presented, because the effect is anti-dilutive.

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 ceases providing services to the Company.

The number of shares underlying

vested RSUs at June 30, 2025 and 2024 was 212,452

and 181,038 ,

respectively.

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

weighted average number of common shares outstanding during the period.

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

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

such as stock options, restricted stock units (“RSUs”), performance stock units (“PSUs”), and warrants, outstanding

during the period.

Common equivalent shares (using the treasury stock method) from stock options, unvested RSUs, unvested PSUs and warrants

were 1,911,979 and 4,411,488 at September 30, 2025 and 2024, respectively, and are excluded in the calculation of diluted net loss per

common share for the periods presented, because the effect is anti-dilutive.

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 ceases providing services to the Company.

The number of shares underlying vested RSUs at September 30, 2025 and 2024 was 216,483

and 195,696 , respectively.

following table shows the computation of basic net income (loss) per share of common stock:

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

September 30,

For the Nine Months Ended

September 30,

Numerator – net income (loss)

4 unchanged sentences

Net income (loss) per share, basic

the three months ended June 30, 2025, 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.

For the three-months the total excluded common stock equivalents was 188,836

because their effect was anti-dilutive.

Diluted common equivalent shares for the three months ended June

30, 2025 consisted of the following:

the three months ended September 30, 2025, 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 three months ended

September 30, 2025 consisted of the following:

OF DILUTED NET INCOME PER SHARE

June 30, 2025

September 30,

Diluted shares related to:

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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 three months ended June 30, 2025:

The 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 three months ended September 30, 2025:

OF BASIC AND DILUTED EARNINGS PER COMMON SHARE

June 30, 2025

September 30,

Numerator - net income

3 unchanged sentences

Net income per share, diluted

Company’s effective tax rate was 0 % and ( 3.38 )% for the six months ended June 30, 2025 and 2024, respectively.

Company’s effective tax rate was ( 3.66 )% and ( 2.95 )% for the nine months ended September 30, 2025 and 2024, respectively.

The Company’s

effective tax rate for the six months ended June 30, 2025 and 2024 differs from the U.S.

federal statutory tax rate of 21 % due to state

taxes, permanent book-tax differences related to Internal Revenue Code of 1986, as amended (“IRC”), Section 162(m) excess

officer compensation limitation and share-based compensation and the change in valuation allowance.

of June 30, 2025 and December 31, 2024, there were $ 2,860,000 and $ 2,858,000 , respectively, of unrecognized tax benefits included in

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

July 4, 2025, the United States enacted the One Big Beautiful Bill Act (“OBBBA”), which, among other provisions,

permanently restores 100% bonus depreciation and modifies the limitation on business-interest expense under §163(j) to be based

on taxable income before interest, amortization, and depreciation.

Based on preliminary analysis, management expects OBBBA to reduce

cash income-tax payments.

There is not expected to be any material impact on the effective tax rate.

The Company is continuing

to evaluate the Act’s impacts, including potential effects on deferred-tax balances, and will refine these estimates as

additional guidance becomes available.

Guidance Issued but Not Adopted at June 30, 2025

effective tax rate for the nine months ended September 30, 2025 and 2024 differs from the U.S.

federal statutory tax rate of 21 % due

to state taxes, permanent book-tax differences related to Internal Revenue Code of 1986, as amended (“IRC”), Section 162(m)

excess officer compensation limitation and share-based compensation and the change in valuation allowance.

of September 30, 2025 and December 31, 2024, there were $ 2,860,000 and $ 2,858,000 , respectively, of unrecognized tax benefits included

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

July 4, 2025, the United States enacted the One Big Beautiful Bill Act (“OBBBA”), which, among other provisions, permanently

restores 100% bonus depreciation and modifies the limitation on business-interest expense under §163(j) to be based on taxable income

before interest, amortization, and depreciation.

Based on preliminary analysis, management expects OBBBA to reduce U.S.

cash income-tax

There is not expected to be any impact on the effective tax rate.

The Company is continuing to evaluate OBBA’s impacts,

including potential effects on deferred-tax balances, and will refine these estimates as additional guidance becomes available.

Guidance Issued but Not Adopted at September 30, 2025

October 2023, FASB issued ASU 2023-06, Disclosure Improvements—Codification Amendments in Response to the SEC’s Disclosure

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following table summarizes activity and ending balances of the Company’s variable consideration provisions in the condensed consolidated

financial statements for the six months ended June 30, 2025, and 2024:

financial statements for the nine months ended September 30, 2025, and 2024:

OF ACCRUALS AND ALLOWANCES

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( 116,423,000 )

Balance at June 30, 2024

Balance at September 30, 2024

$ ( 855,000 )

Balance at December 31, 2024

Beginning, balance

Accruals/Adjustments

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( 158,004,000 )

Balance at June 30, 2025

Ending, balance

Property License and Related Arrangements Revenues

Balance at September 30, 2025

Intellectual Property License and Related Arrangements

Company holds multiple intellectual property licenses and related arrangements pursuant to which the Company has agreed to license or

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

disaggregated by revenue source for the three and six months ended June 30, 2025 and 2024 consisted of the following:

disaggregated by revenue source for the three and nine months ended September 30, 2025 and 2024 consisted of the following:

SCHEDULE OF DISAGGREGATED REVENUE

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Product sales, net

$ 182,899,000

$ 132,398,000

Other revenues

1 unchanged sentence

$ 183,211,000

revenue and customer deposits at June 30, 2025 and December 31, 2024 were $ 91,000 and $ 44,000 , respectively.

All deferred revenue and

customer deposit amounts at December 31, 2024 were recognized as revenue during 2025.

$ 132,783,000

revenue and customer deposits at September 30, 2025 and December 31, 2024 were $ 345,000 and $ 44,000 , respectively.

All deferred revenue

and customer deposit amounts at December 31, 2024 were recognized as revenue during 2025.

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

products, including those held at the Company’s 3PL partner, related laboratory supplies and active pharmaceutical ingredients.

The composition of inventories as of June 30, 2025 and December 31, 2024 was as follows:

The composition of inventories as of September 30, 2025

and December 31, 2024 was as follows:

OF INVENTORIES

June 30, 2025

December 31, 2024

September 30,

Raw materials

3 unchanged sentences

PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets at June 30, 2025 and December 31, 2024 consisted of the following:

expenses and other current assets at September 30, 2025 and December 31, 2024 consisted of the following:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

June 30, 2025

December 31, 2024

September 30,

Prepaid insurance

7 unchanged sentences

PROPERTY, PLANT AND EQUIPMENT

plant and equipment at June 30, 2025 and December 31, 2024 consisted of the following:

plant and equipment at September 30, 2025 and December 31, 2024 consisted of the following:

OF PROPERTY, PLANT AND EQUIPMENT

June 30, 2025

December 31, 2024

September 30,

Property, plant and equipment, net:

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Property, plant and equipment,

the three and six months ended June 30, 2025, depreciation related to the property, plant and equipment was $ 347,000 and $ 659,000 , respectively,

compared to $ 301,000 and $ 597,000 during the same periods in 2024, respectively.

the three and nine months ended September 30, 2025, depreciation expense related to the property, plant and equipment was $ 326,000 and

$ 985,000 , respectively, compared to $ 351,000 and $ 948,000 during the same periods in 2024, respectively.

CAPITALIZED SOFTWARE COSTS

software costs at June 30, 2025 and December 31, 2024 consisted of the following:

software costs at September 30, 2025 and December 31, 2024 consisted of the following:

SCHEDULE OF CAPITALIZED SOFTWARE COSTS

June 30, 2025

December 31, 2024

September 30,

Capitalized software costs

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Total capitalized software

the three and six months ended June 30, 2025, the Company recorded amortization expense related to capitalized software costs of $ 149,000

and $ 302,000 , respectively, and $ 152,000 and $ 288,000 during the same periods in 2024, respectively.

the three and nine months ended September 30, 2025, amortization expense related to capitalized software costs was $ 148,000 and $ 450,000 ,

respectively, and $ 146,000 and $ 434,000 during the same periods in 2024, respectively.

INTANGIBLE ASSETS AND GOODWILL

Company’s intangible assets at June 30, 2025 consisted of the following:

Company’s intangible assets at September 30, 2025 consisted of the following:

SCHEDULE OF INTANGIBLE ASSETS

Weighted-average

relationships

pharmacy licenses

expense for intangible assets for the three and six months ended June 30, 2025 and 2024 was as follows:

Carrying Value

Acquired NDAs

( 35,619,000 )

Customer relationships

State pharmacy licenses

$ 208,740,000

$ ( 36,333,000 )

$ 172,457,000

expense for intangible assets for the three and nine months ended September 30, 2025 and 2024 was as follows:

SCHEDULE OF AMORTIZATION EXPENSES FOR INTANGIBLE ASSETS

For the Three Months Ended

For the Six Months Ended

Acquired NDAs

For the Nine Months Ended

September 30,

Acquired product rights

State pharmacy license

Customer relationships

expense of intangible assets

future amortization expense for the Company’s intangible assets at June 30, 2025 was as follows:

Amortization expense of intangible assets

future amortization expense for the Company’s intangible assets at September 30, 2025 was as follows:

OF ESTIMATED FUTURE AMORTIZATION EXPENSE

1 unchanged sentence

$ 172,146,000

were no changes to the carrying value of the Company’s goodwill during the three and six months ended June 30, 2025 and 2024.

were no changes to the carrying value of the Company’s goodwill during the three and nine months ended September 30, 2025 and 2024.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses at June 30, 2025 and December 31, 2024 consisted of the following:

payable and accrued expenses at September 30, 2025 and December 31, 2024 consisted of the following:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

September 30,

Accounts payable

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Total accounts payable and accrued expenses

Loan Due 2026

March 2023, the Company entered into a Credit Agreement and Guaranty (the “Oaktree Loan”) with Oaktree, providing for a senior

secured term loan facility to the Company with a principal amount of up to $ 100,000,000 .

Upon entering into the Oaktree Loan, the Company

drew a principal amount of $ 65,000,000 (“Tranche A”) from the Oaktree Loan and used the net proceeds to repay all amounts

owed by the Company pursuant to the Loan and Security Agreement the Company previously entered into with B.

Riley Commercial Capital,

LLC on December 14, 2022.

The additional principal loan amount of up to $ 35,000,000 available under the Oaktree Loan (“Tranche

B”) was available to the Company upon the commercialization of TRIESENCE.

Since Tranche B was not drawn by the Company on or before

March 27, 2024, the amount available under Tranche B was reduced to $ 30,000,000 .

While undrawn, the Company was required to pay a commitment

fee related to Tranche B amount equal to 2 % per annum, payable quarterly.

This fee was recorded within prepaid expenses and other current

assets and was being amortized on a straight-line basis over the access period.

July 2023, the Company entered into the First Amendment to the Oaktree Loan (the “Oaktree Amendment”).

Under the Oaktree

Amendment, the overall credit facility size was increased from $ 100,000,000 to $ 112,500,000 .

The Company drew down a principal amount

of $ 12,500,000 (the “Loan Increase”) to fund the initial one-time payment associated with product acquisitions and for other

working capital and general corporate purposes.

No other material changes to the Oaktree Loan were made pursuant to the Oaktree Amendment.

Following entry into the Oaktree Amendment and the funding of the Loan Increase upon closing of certain product acquisitions, the Company

had drawn down a total principal loan amount of $ 77,500,000 under the Oaktree Loan.

October 2024, the Company entered into the Second Amendment to Credit Agreement and Guaranty with Oaktree (“Second Amendment”).

Upon satisfaction of certain conditions to funding, the Company drew down the principal amount of the Tranche B commitment of $ 30,000,000

(the “$ 30,000,000 Draw”) to partially fund a one-time milestone payment to Novartis.

Under its asset purchase agreement with

Novartis, the Company made a one-time milestone payment to Novartis equal to $ 37,000,000 upon the commercial availability of TRIESENCE,

which the Company paid in October 2024.

In connection with the Second Amendment and following the $ 30,000,000 Draw, the Company has drawn

down a total principal loan amount of $ 107,500,000 under the Oaktree Loan and no additional principal loan amount remains available to

the Company under the Oaktree Loan.

Oaktree Loan is secured by nearly all of the assets, including intellectual property, of the Company and its material subsidiaries.

Oaktree Loan has a maturity date of January 19, 2026 and carries an interest rate equal to the Secured Overnight Financing Rate plus

6.5 % per annum (totaling 10.84 % at June 30, 2025).

The Oaktree Loan also carries an exit fee equal to 3.5 % of the aggregate principal

amount owed, payable at maturity.

The total exit fee of $ 3,763,000 has been recorded as a debt discount.

The original issue discount,

fees and expenses (including the exit fee) are being amortized over the term of the Oaktree Loan using the effective interest rate method.

The Oaktree Loan requires quarterly interest-only payments with all of the unpaid principal, interest and fees due on the maturity date,

Third Revolving Credit Facility - Undrawn

September 2025, the Company entered into a Credit Agreement (the “5/3 Revolver”) with Fifth Third Bank, National

Association as administrative agent for itself and the other lenders, providing for a senior secured revolving credit facility in the

initial principal amount of $ 40,000,000 , together with an uncommitted incremental revolving line of credit in the principal amount of

up to $ 20,000,000 .

The 5/3 Revolver will mature on September 26, 2030 , or, if earlier, the date that is 91 days prior to the earliest

maturity date of the Company’s 2030 Notes (as defined below).

under the 5/3 Revolver bear interest at a floating rate equal to, at the Company’s option, either (i) a base rate plus a margin

ranging from 0.25 % to 0.75 %, or (ii) a Secured Overnight Financing Rate (“SOFR”)-based rate plus a margin ranging from 1.25 %

In addition, an unused fee of 0.25 % per annum is payable monthly in arrears based on the undrawn portion of the commitments

in respect of the 5/3 Revolver.

Borrowings under the 5/3 Revolver are secured by a first priority lien in substantially all of the present

and future property and assets, real and personal, of the Company, subject to customary exceptions.

the 5/3 Revolver, the Company is subject to certain customary affirmative and negative covenants.

In addition, the 5/3 Revolver contains

certain financial covenants requiring the Company to maintain, on a consolidated basis as of the last day of each month, a fixed charge

coverage ratio of at least 1.10 to 1.0.

financing costs of $ 611,000 were recorded and will be amortized to interest expense over the term of agreement.

The commitment fee related

to the unused line of credit will be expensed as incurred.

of September 30, 2025, there were no borrowings drawn or outstanding under the 5/3 Revolver.

The Company was in compliance with all covenants

as of September 30, 2025.

Senior Notes Due 2030

September 2025, the Company closed a private offering of $ 250,000,000 , aggregate principal amount of 8.625 % senior notes due 2030 (the

“2030 Notes”).

The 2030 Notes offering resulted in net proceeds to the Company of approximately $ 242,794,000 after deducting

underwriting discounts of $ 5,625,000 and commissions and other offering expenses of $ 1,581,000 .

2030 Notes are senior unsecured obligations of the Company.

The 2030 Notes are effectively subordinated to any of the Company’s

secured indebtedness to the extent of the value of the assets securing such indebtedness.

The 2030 Notes will be guaranteed on a senior

unsecured basis by the Company, subject to certain exceptions.

The 2030 Notes bear interest at the rate of 8.625 % per annum.

on the 2030 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing March 15, 2026.

costs were recorded as a debt discount and are being amortized as interest expense over the term of the 2030 Notes using the effective

interest rate method.

Company may redeem all or part of the 2030 Notes prior to September 15, 2027, at a price equal to 100% of the principal amount of the

2030 Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make-whole”

premium, as described in the indenture.

The Company may redeem all or part of the 2030 Notes on or after September 15, 2027 at the applicable

redemption prices described in the indenture.

The Company may also redeem up to 40% of the aggregate principal amount of the 2030 Notes

at any time prior to September 15, 2027, at a redemption price equal to 108.625 % of the principal amount of the 2030 Notes redeemed,

plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with the net cash proceeds from certain equity offerings.

If a change in control triggering event occurs, unless the Company has previously exercised or substantially concurrently exercise its

optional redemption right, the Company will be required to offer to repurchase the 2030 Notes from holders at 101% of the principal amount

thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

expense related to the 2030 Notes totaled $ 1,063,000 for the three and nine months ended September 30, 2025, and included the amortization

of debt issuance costs and discount of $ 80,000

Loan Due 2026 – Paid in Full

March 2023, the Company entered into a Credit Agreement and Guaranty (the “Oaktree Loan”) with Oaktree Fund Administration,

LLC, as administrative agent for the lenders (together, “Oaktree”).

Including through subsequent amendments to the Oaktree

Loan, the Company had drawn down a total principal loan amount of $ 107,500,000 .

The Oaktree Loan carried an interest rate equal to SOFR

plus 6.5 % per annum, and included an exit fee equal to 3.5 % of the aggregate principal amount owed, payable at maturity.

to the exit fee, the Oaktree Loan required a make-whole premium to be paid on early principal amount payments prior to its maturity in

January 2026.

Oaktree Loan contains customary guarantees and covenants, including financial covenants related to minimum liquidity and minimum net

As of June 30, 2025, the Company was in compliance with the financial covenants.

expense related to the Oaktree Loan totaled $ 3,827,000 and $ 7,686,000 for the three and six months ended June 30, 2025, respectively,

The exit fee of $ 3,763,000 was recorded as a debt discount.

September 2025, the Company repaid the $ 107,500,000 principal balance owed under the Oaktree Loan and all accrued interest as of the

date the loan was repaid.

In connection with the loan repayment, the Company agreed to pay an exit fee and a make-whole premium to Oaktree.

During the three and nine months ended September 30, 2025, the Company recorded the unaccrued exit fee of $ 268,000 , make-whole premium

of $ 1,861,000 , and write-off of unamortized debt issuance costs of $ 1,289,000 as a loss on debt extinguishment of $ 3,418,000

in the aggregate.

expense related to the Oaktree Loan totaled $ 3,141,000 and $ 10,826,000 for the three and nine months ended September 30, 2025, respectively,

and included the amortization of debt issuance costs and discount of $ 745,000 and $ 2,567,000 , respectively.

Interest expense related

to the Oaktree Loan totaled $ 2,944,000 and $ 5,897,000 for the three and six months ended June 30, 2024, respectively, and included the

amortization of debt issuance costs and discount of $ 602,000 and $ 1,205,000 , respectively.

– 8.625% Senior Notes Due 2026

April 2021, the Company closed an offering of $ 50,000,000 aggregate principal amount of 8.625 % senior notes due April 2026, and in May

2021 issued an additional $ 5,000,000 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 note and the

offering resulted in net proceeds to the Company of approximately $ 51,909,000 after deducting underwriting discounts and commissions

and other offering expenses of $ 3,091,000 .

In September 2021, in a further issuance of the April Notes, the Company sold an additional

$ 20,000,000 aggregate principal amount of such notes (the “September Notes,” and together with the April Notes, the “2026

Notes”), at a price of $ 25.75 per September Note, with interest of $ 278,000 on the September Notes being accrued from April 20,

2021, the date of issuance of the April Notes.

The September offering resulted in net proceeds to the Company of approximately $ 19,164,000

after deducting underwriting discounts and commissions and other offering expenses of $ 1,158,000 and a premium on note issuance of $ 322,000 .

The September 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).

The 2026 Notes are senior

unsecured obligations of the Company and rank equally in right of payment with all of the Company’s other existing and future senior

unsecured and unsubordinated indebtedness.

The 2026 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 2026 Notes bear interest at a rate of 8.625 % per annum.

Interest on the 2026 Notes is payable

quarterly in arrears on January 31, April 30, July 31 and October 31 of each year.

The 2026 Notes will mature on April 30, 2026 .

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 2026 Notes using the effective interest rate method.

to February 1, 2026, the Company may, at its option, redeem the 2026 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 2026 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 2026 Notes for cash in whole or in part at any time at

its 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.

The 2026 Notes trade on the Nasdaq Stock Market LLC under the symbol “HROWL”.

expense related to the 2026 Notes totaled $ 1,812,000 and $ 3,622,000 for the three and six months ended June 30, 2025, respectively, and

included amortization of debt issuance costs and discount of $ 195,000 and $ 388,000 , respectively.

to the Oaktree Loan totaled $ 3,026,000 and $ 8,923,000 for the three and nine months ended September 30, 2024, respectively, and included

the amortization of debt issuance costs and discount of $ 656,000 and $ 1,861,000 , respectively.

– 8.625% Senior Notes Due 2026 – Paid in Full

April 2021, the Company closed an offering of $ 50,000,000 aggregate principal amount of 8.625 % senior notes due 2026.

In May 2021, the

Company issued an additional $ 5,000,000 of such notes pursuant to the full exercise of the underwriters’ option to purchase additional

notes, and in September 2021, the Company sold an additional $ 20,000,000 aggregate principal amount of such notes (collectively, the

“2026 Notes”).

September 2025, the Company fully repaid the principal balance of $ 75,000,000 , along with all accrued interest owed under the 2026 Notes.

through US Bank Trust Company National Association as Trustee.

The notes were considered legally extinguished upon such repayment.

connection with the 2026 Notes repayment, the Company paid a make-whole premium of $ 907,000 , recorded $ 449,000 of unaccrued interest

and wrote off $ 452,000 of unamortized debt issuance costs.

During the three and nine months ended September 30, 2025, the make-whole

premium, unaccrued interest paid after the redemption notice date, and unamortized debt issuance costs were recorded as a loss on debt

extinguishment equal to $ 1,808,000 in the aggregate.

The 2026 Notes listed on The Nasdaq Stock Market under the symbol “HROWL”

were delisted on October 10, 2025.

expense related to the 2026 Notes totaled $ 1,452,000 and $ 5,074,000 for the three and nine months ended September 30, 2025, respectively,

and included amortization of debt issuance costs and discount of $ 159,000 and $ 546,000 , respectively.

Interest expense related to the

Notes totaled $ 1,812,000 and $ 3,624,000 for the three and six months ended June 30, 2024, respectively, and included amortization of

debt issuance costs and discount of $ 195,000 and $ 390,000 , respectively

- 11.875% Senior Notes Due 2027

2026 Notes totaled $ 1,814,000 and $ 5,438,000 for the three and nine months ended September 30, 2024, respectively, and included amortization

of debt issuance costs and debt discount of $ 197,000 and $ 587,000 , respectively.

- 11.875% Senior Notes Due 2027 – Paid in Full

December 2022 and in January 2023, the Company closed an offering of $ 35,000,000 and $ 5,250,000 , respectively, aggregate principal amount

of 11.875 % senior notes due in December 2027 (the “2027 Notes”).

The 2027 Notes were sold to investors at a par value of

$ 25.00 per 2027 Note, and the offering resulted in net proceeds to the Company of approximately $ 36,699,000 after deducting underwriting

discounts and commissions and other offering expenses of $ 3,551,000 .

2027 Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of the Company’s other

existing and future senior unsecured and unsubordinated indebtedness.

The 2027 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 2027 Notes bear interest at the rate of 11.875 % per annum.

on the 2027 Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year.

The 2027 Notes will mature

on December 31, 2027 .

The issuance costs were recorded as a debt discount and are being amortized as interest expense over the term of

the 2027 Notes using the effective interest rate method.

Company may redeem the 2027 Notes for cash in whole or in part at any time at its option (i) prior to December 31, 2025, at a price equal

to $25.50 per note, plus accrued and unpaid interest to, but excluding, the date of redemption, (ii) on or after December 31, 2025 and

prior to December 31, 2026, at a price equal to $25.25 per note, plus accrued and unpaid interest to, but excluding, the date of redemption,

and (iii) on or after December 31, 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.

In addition, the Company is required to redeem the 2027 Notes, for cash, in whole

but not in part, at the price of $25.50 per note, plus accrued and unpaid interest to, but excluding, the date of redemption, upon occurrence

of certain events including the occurrence of a Material Change, as defined in the Second Supplemental Indenture.

The 2027 Notes trade

on the Nasdaq Stock Market LLC under the symbol “HROWM.”

expense related to the 2027 Notes totaled $ 1,373,000 and $ 2,744,000 for the three and six months ended June 30, 2025, respectively, and

included the amortization of debt issuance costs and discount of $ 178,000 and $ 354,000 , respectively.

Interest expense related to the

2027 Notes totaled $ 1,373,000 and $ 2,746,000 for the three and six months ended June 30, 2024, respectively, and included the amortization

of debt issuance costs and discount of $ 178,000 and $ 356,000 , respectively.

summary of the Company’s current portion of debt at June 30, 2025 and December 31, 2024 is described as follows:

of 11.875 % senior notes due 2027 (the “2027 Notes”).

The 2027 Notes could be redeemed for cash in whole or in part prior

to December 31, 2025, at a price equal to $ 25.50 per note, plus accrued and unpaid interest to, but excluding, the date of redemption.

September 2025, the Company fully repaid the principal balance of $ 40,250,000 , along with all accrued interest owed under the 2027 Notes

through US Bank Trust Company National Association as Trustee.

The notes were considered legally extinguished upon such repayment.

connection with the 2027 Notes repayment, the Company paid a prepayment penalty of $ 805,000 , recorded unaccrued interest of $ 98,000 and

wrote off $ 1,621,000 of unamortized debt issuance costs.

During the three and nine months ended September 30, 2025, the prepayment penalty,

unaccrued additional interest paid after the redemption notice date and the unamortized debt issuance costs were recorded as a loss on

debt extinguishment equal to $ 2,524,000 in the aggregate.

The 2027 Notes listed on The Nasdaq Stock Market under the symbol “HROWM”

were delisted on October 8, 2025.

expense related to the 2027 Notes totaled $ 1,101,000 and $ 3,845,000 for the three and nine months ended September 30, 2025, respectively,

and included the amortization of debt issuance costs and discount of $ 145,000 and $ 499,000 , respectively.

Interest expense related to

the 2027 Notes totaled $ 1,376,000 and $ 4,121,000 for the three and nine months ended September 30, 2024, respectively, and included amortization

of debt issuance costs and debt discount of $ 181,000 and $ 537,000 , respectively.

loss on extinguishment of debt equal to $ 7,750,000 was recorded during the three months ending September 30, 2025.

summary of the Company’s non-current portion of debt at September 30, 2025 and December 31, 2024 is described as follows:

OF LONG TERM DEBT

Oaktree Loan due January 2026

$ 111,263,000

8.625% Senior Notes due April 2026

Notes payable current, gross

Unamortized debt issuance costs

( 2,644,000 )

payable current, net

$ 183,619,000

summary of the Company’s non-current portion of debt at June 30, 2025 and December 31, 2024 is described as follows:

September 30,

8.625% Senior Notes due April 2026

1 unchanged sentence

Oaktree Loan due January 2026

Notes payable non-current,

8.625% Senior Notes due September 2030

Notes payable current, gross

Unamortized debt issuance costs

1 unchanged sentence

( 6,974,000 )

payable non-current, net

payable current, net

$ 242,874,000

the three and six months ended June 30, 2025, the total effective interest rate of the Company’s debt was 10.65 % and 10.74 %, respectively,

and 10.78 % and 10.88 % for the same periods in 2024, respectively.

June 30, 2025, future minimum payments under the Company’s debt were as follows:

OF FUTURE MINIMUM PAYMENT UNDER NOTES PAYABLES

$ 219,539,000

the three and nine months ended September 30, 2025, the total effective interest rate of the Company’s debt was 10.29 % and 10.41 %,

respectively, and 11.03 % and 11.17 % for the same periods in 2024, respectively.

September 30, 2025, future minimum payments under the Company’s debt were as follows:

SCHEDULE OF FUTURE MINIMUM PAYMENT UNDER NOTES PAYABLES

Remainder of 2025

3 unchanged sentences

Notes payable, gross principal amount due

current portion, net of unamortized discount

( 183,619,000 )

unamortized debt issuance costs, net of premium

( 7,126,000 )

Notes payable, net of unamortized discount, net of current portion

Notes payable, net of unamortized discount

$ 242,874,000

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

Except as indicated, these lease agreements

have remaining terms between two 2 to seven years and contain various clauses for renewal at the Company’s option.

have remaining terms between two 2 to

years and contain various clauses for renewal

at the Company’s option.

operating lease for 38,200 square feet of lab, warehouse and office space in Ledgewood, New Jersey that expires in July 2027 , with

4 unchanged sentences

in September 2027 .

June 30, 2025, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases

September 30, 2025, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases

held by the Company were 8.08 % and 9.5 years, respectively.

the three and six months ended June 30, 2025, cash paid for amounts included for the operating lease liabilities was $ 227,000 and $ 508,000 ,

the three and nine months ended September 30, 2025, cash paid for amounts included for the operating lease liabilities was $ 332,000 and

$ 840,000 , respectively, and $ 327,000 and $ 972,000 for the same periods in 2024, respectively.

During the three and six months ended June 30, 2025,

the Company recorded operating lease expense of $ 365,000 and $ 750,000 , respectively, and $ 319,000 and $ 638,000 for the same periods in

2024, respectively.

Operating lease expense is included in selling, general and administrative expenses.

lease payments under operating leases as of June 30, 2025 were as follows :

During the three and nine months ended

September 30, 2025, the Company recorded operating lease expense of $ 365,000 and $ 1,116,000 , respectively, and $ 414,000 and $ 1,053,000

for the same periods in 2024, respectively.

Operating lease expense is included in selling, general and administrative expenses within

the condensed consolidated statements of operations.

lease payments under operating leases as of September 30, 2025 were as follows :

OF FUTURE LEASE PAYMENTS UNDER OPERATING LEASES

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STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

the six months ended June 30, 2025, upon vesting of 346,500 PSUs granted in April 2023 to Andrew R.

Boll, the Company’s Chief Financial

Officer, the Company issued 209,755 shares of common stock to Mr.

Boll, net of 136,745 shares of common stock withheld for payroll tax

withholdings totaling $ 3,157,000 .

the six months ended June 30, 2025, upon vesting of 762,300 PSUs granted in April 2023 to Mark L.

Baum, the Company’s Chief Executive

Officer, the Company issued 461,937 shares of common stock to Mr.

Baum, net of 300,363 shares of common stock withheld for payroll tax

withholdings totaling $ 6,935,000 .

During the six months ended June 30, 2025, 277,200 PSUs granted in April 2023 to John P.

Saharek, the President of ImprimisRx, vested,

and the Company issued 167,725 shares of common stock to Mr.

Saharek, net of 109,475 shares of common stock withheld for payroll tax

withholdings totaling $ 2,528,000 .

During the six months ended June 30, 2025, 20,000 RSUs granted in prior periods vested, and the Company issued 14,434 shares of common

stock, net of 5,566 shares of common stock withheld for payroll tax withholdings totaling $ 149,000 .

the six months ended June 30, 2025, 198,795 RSUs and PSUs granted in prior periods vested, and the Company issued 198,795 shares of common

the six months ended June 30, 2025, the Company issued 10,618 shares of common stock and received proceeds of $ 125,000 upon the exercise

of options to purchase 10,618 shares of common stock with exercise prices ranging from $ 6.75 to $ 18.35 per share.

the six months ended June 30, 2025, the Company issued 29,214 shares of its common stock underlying RSUs held by a director that ceased

providing services to the Company.

The RSUs had previously vested, including 4,173 RSUs that vested during the six months ended June

30, 2025, but the issuance and delivery of the shares were deferred until the director ceased providing services to the Company.

the six months ended June 30, 2025, 17,806 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 person ceases providing services to the Company.

the six months ended June 30, 2025, 8,667 shares of the Company’s common stock underlying RSUs issued to consultants vested, but

the issuance and delivery of these shares has not occurred.

the nine months ended September 30, 2025, upon vesting of 346,500 PSUs granted in April 2023 to Andrew R.

Boll, the Company’s President

and Chief Financial Officer, the Company issued 209,755 shares of common stock to Mr.

Boll, net of 136,745 shares of common stock withheld

for payroll tax withholdings totaling $ 3,157,000 .

the nine months ended September 30, 2025, upon vesting of 762,300 PSUs granted in April 2023 to Mark L.

Baum, the Company’s Chief

Executive Officer, the Company issued 461,937 shares of common stock to Mr.

Baum, net of 300,363 shares of common stock withheld for

payroll tax withholdings totaling $ 6,935,000 .

During the nine months ended September 30, 2025, 277,200 PSUs granted in April 2023 to John P.

Saharek, the President of ImprimisRx,

vested, and the Company issued 167,725 shares of common stock to Mr.

Saharek, net of 109,475 shares of common stock withheld for payroll

tax withholdings totaling $ 2,528,000 .

July 2025, the Company issued 286,662 shares of common stock to Mark L.

Baum, Chief Executive Officer, upon the cashless exercise of

options to purchase 600,000 shares at an exercise price of $ 7.87 per share.

The Company withheld 127,345 shares from Mr.

Baum as consideration

for the cashless exercise and an additional 185,993 shares for payroll tax obligations totaling $ 6,897,000 .

During the nine months ended September 30, 2025, 42,500 RSUs granted in prior periods vested, and the Company issued 32,672 shares of

common stock, net of 9,828 shares of common stock withheld for payroll tax withholdings totaling $ 343,000 .

the nine months ended September 30, 2025, 198,795 RSUs and PSUs granted in prior periods vested, and the Company issued 198,795 shares

of common stock.

the nine months ended September 30, 2025, the Company issued 28,108 shares of common stock and received proceeds of $ 287,000 upon the

exercise of options to purchase 28,146 shares of common stock with exercise prices ranging from $ 4.66 to $ 25.86 per share.

the nine months ended September 30, 2025, the Company issued 29,214 shares of its common stock underlying RSUs held by a director that

ceased providing services to the Company.

The RSUs had previously vested, including 4,173 RSUs that vested during the nine months ended

September 30, 2025, but the issuance and delivery of the shares were deferred until the director ceased providing services to the Company.

the nine months ended September 30, 2025, 17,806 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 person ceases providing services to the Company.

the nine months ended September 30, 2025, 13,000 shares of the Company’s common stock underlying RSUs issued to consultants vested,

but the issuance and delivery of these shares has not occurred.

September 17, 2007, the Company’s stockholders adopted the Company’s 2007 Incentive Stock and Awards Plan, which was subsequently

12 unchanged sentences

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

summary of stock option activity under the Plans for the six months ended June 30, 2025 is as follows:

summary of stock option activity under the Plans for the nine months ended September 30, 2025 is as follows:

OF STOCK OPTION PLAN ACTIVITY

Number of Shares

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life

Aggregate Intrinsic Value

Exercise Price

Intrinsic Value

Options outstanding – January 1, 2025

2 unchanged sentences

Options cancelled/forfeited

Options outstanding – June 30, 2025

Options outstanding – September 30, 2025

Options exercisable

2 unchanged sentences

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

price lower than the market price on June 30, 2025, based on the closing price of the Company’s common stock of $ 30.54 on that

the six months ended June 30, 2025, the Company granted stock options to certain 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 ten years.

Vesting terms for options granted to employees during

the three and six months ended June 30, 2025 included the following vesting schedule:

25% of the shares subject to the option vest and

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

exercisable quarterly in equal installments thereafter over three years.

Certain option awards provide for accelerated vesting if there

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

price lower than the market price on September 30, 2025, based on the closing price of the Company’s common stock of $ 48.18 on

the nine months ended September 30, 2025, the Company granted stock options to certain 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 ten years.

Vesting terms for options granted to employees

during the three and nine months ended September 30, 2025 included the following vesting schedule:

25% of the shares subject to the option

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

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

Certain option awards provide for accelerated vesting

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

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

19 unchanged sentences

Risk-free interest rate

3.84 %- 4.53 %

Dividend yield

following table summarizes information about stock options outstanding and exercisable at June 30, 2025:

following table summarizes information about stock options outstanding and exercisable at September 30, 2025:

OF STOCK OPTION OUTSTANDING AND EXERCISABLE

1 unchanged sentence

Options Exercisable

Range of Exercise Prices

Number Outstanding

Weighted Average Remaining Contractual Life in Years

of Exercise Prices

Life in Years

$ 1.47 - $ 1.70

4 unchanged sentences

$ 1.47 - $ 48.18

of June 30, 2025, there was approximately $ 3,150,000 of total unrecognized compensation expense related to unvested stock options granted

under the Plans.

of September 30, 2025, there was approximately $ 6,307,000 of total unrecognized compensation expense related to unvested stock options

granted under the Plans.

That expense is expected to be recognized over the weighted-average remaining vesting period of 3.31 years.

The stock-based

compensation for all stock options was $ 186,000 and $ 385,000 during the three and six months ended June 30, 2025, respectively, and $ 130,000

and $ 256,000 during the same periods in 2024, respectively.

intrinsic value of options exercised during the six months ended June 30, 2025 was $ 178,000 .

The stock-based compensation for all stock options was $ 281,000 and $ 666,000 during the three and nine months ended September 30, 2025,

respectively, and $ 160,000 and $ 416,000 during the same periods in 2024, respectively.

intrinsic value of options exercised during the nine months ended September 30, 2025 was $ 18,232,000 .

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

2 unchanged sentences

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

summary of the Company’s RSU activity and related information for the six months ended June 30, 2025 is as follows:

summary of the Company’s RSU activity and related information for the nine months ended September 30, 2025 is as follows:

OF RESTRICTED STOCK UNITS ACTIVITY

Number of Shares

Weighted Average Grant Date Fair Value

RSUs unvested - January 1, 2025

RSUs cancelled/forfeited

RSUs unvested – June 30, 2025

of June 30, 2025, the total unrecognized compensation expense related to unvested RSUs was approximately $ 7,322,000 , which is expected

RSUs unvested – September 30, 2025

of September 30, 2025, the total unrecognized compensation expense related to unvested RSUs was approximately $ 6,431,000 , which is expected

to be recognized over a weighted-average period of 1.56 years, based on estimated and actual vesting schedules of the applicable RSUs.

The stock-based compensation for RSUs during the three and six months ended June 30, 2025 was $ 689,000 and $ 1,408,000 , respectively,

The stock-based compensation for RSUs during the three and nine months ended September 30, 2025 was $ 284,000 and $ 1,692,000 , respectively,

and was $ 587,000 and $ 1,494,000 during the same periods in 2024, respectively.

summary of the Company’s PSU activity and related information for the six months ended June 30, 2025 is as follows:

July 2025, the Company granted an aggregate of 1,295,250 performance stock units to Mark L.

Baum, Chief Executive Officer, and Andrew

Boll, President and Chief Financial Officer, which are subject to the satisfaction of certain market-based and continued service conditions

(the “2025 PSUs”).

The vesting of the 2025 PSUs require (i) a minimum of a three-year service period, and (ii) during a five-year

term, the achievement and maintenance of Company common stock price targets ranging between $ 50 to $ 100 per share, broken out into four

separate tranches as described further in the table below.

OF PERFORMANCE STOCK UNITS

Stock Price assumes that no dividends or like distributions are made to stockholders of the Company.

If such distributions are made,

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

part of the Target Stock Price.

aggregate fair value of the 2025 PSUs was $ 32,465,000

using a Monte Carlo Simulation with a five 5 -year

volatility and a risk-free interest rate of 3.8 %.

This amount is being amortized over a three 3 -year

derived service period.

summary of the Company’s PSU activity and related information for the nine months ended September 30, 2025 is as follows:

OF PERFORMANCE STOCK UNITS ACTIVITY

Number of Shares

Weighted Average Grant Date Fair Value

Weighted Average

PSUs unvested – January 1, 2025

1 unchanged sentence

PSUs cancelled/forfeited

PSUs unvested – June 30, 2025

of June 30, 2025, there is no unrecognized compensation expense related to unvested PSUs.

The stock-based compensation for PSUs during

the three and six months ended June 30, 2025 was $ 0 and $ 3,638,000 , respectively, and $ 3,638,000 and $ 7,276,000 during the same periods

in 2024, respectively.

PSUs unvested – September 30, 2025

of September 30, 2025, the total unrecognized compensation expense related to unvested PSUs was approximately $ 29,759,000 , which is expected

to be recognized over a weighted-average period of 2.75 years, based on estimated and actual vesting schedules of the applicable PSUs.

The stock-based compensation for PSUs during the three and nine months ended September 30, 2025 was $ 2,705,000 and $ 6,344,000 , respectively,

and $ 3,638,000 and $ 10,915,000 during the same periods in 2024, respectively.

Compensation Summary

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For the Three Months Ended

For the Six Months Ended

September 30,

For the Nine Months Ended

September 30,

Employees - selling, general and administrative

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ImprimisRx, LLC was violating the Lanham Act with false advertising.

The Court granted cross motions for summary judgement on each party’s

The Court granted cross motions for summary judgment on each party’s

Lanham Act claims, thus leaving only ImprimisRx, LLC’s copyright infringement, trademark infringement, and unfair competition claims

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trademark infringement and unfair competition under California and federal law, and ImprimisRx, LLC received a $ 34,900,000 jury verdict

award, which includes $ 20,400,000 in punitive damages and $ 14,500,000 in actual damages.

Due to uncertainty regarding probability of

collection, the Company has not recognized any gains associated with the verdict award in the accompanying condensed consolidated financial

award, which included $ 20,400,000 in punitive damages and $ 14,500,000 in actual damages.

An amended final judgment was entered on October

1, 2025, which reduced the OSRX liability to $ 11,249,000 , plus post-judgment interest, and required OSRX to cease use of certain trademarks.

The Company is pursuing efforts to enforce and collect the full judgment amount of $ 11,249,000 (plus post-judgment interest), including

the filing of liens on OSRX assets;

however, due to uncertainty regarding the probability of collection, the Company has not recognized

any gains associated with the judgment in the accompanying condensed consolidated financial statements.

and Professional Liability

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$500,000 at the time the Company makes its first commercial sale of BYQLOVI to a third party and Formosa will be eligible to receive

other one-time payments based on achievement of commercial gross profit milestones along with royalties on gross profits of BYQLOV I.

the three and six months ended June 30, 2025, $ 2,201,000 and $ 4,374,000 were incurred under these agreements as royalty expenses, respectively,

and $ 1,036,000 and $ 1,310,000 , respectively, during the same period in 2024.

The Company incurred $ 0 and $ 0 related to upfront and milestone

payments under these agreements during the three and six months ended June 30, 2025, respectively, and $ 0 and $ 0 , respectively, during

the same periods in 2024.

As of June 30, 2025, the remaining contingent consideration payable pursuant to these agreements were not considered

probable and reasonably estimable and therefore, no amount was accrued related to these contingent obligations during the six months

ended June 30, 2025.

At the time contingent consideration payable becomes probable and reasonably estimable, the additional consideration,

if any, paid will be allocated to the assets based on their initial estimated fair values as a percent of total purchase price.

other one-time payments based on achievement of commercial gross profit milestones along with royalties on gross profits of BYQLOVI.

the three and nine months ended September 30, 2025, $ 2,480,000 and $ 6,853,000 were incurred under these agreements as royalty expenses,

respectively, and $ 730,000 and $ 2,040,000 , respectively, during the same period in 2024, which are presented as a component of cost of

goods sold within the statement of operations.

During the three and nine months ended September 30, 2024, $ 0 was incurred under

these agreements related to upfront and milestone payments under these agreements., and $ 0 , during the same periods in 2024.

As of September

30, 2025, the remaining contingent consideration payable pursuant to these agreements were not considered probable and reasonably estimable

and therefore, no amount was accrued related to these contingent obligations during the nine months ended September 30, 2025.

time contingent consideration payable becomes probable and reasonably estimable, the additional consideration, if any, paid will be allocated

to the assets based on their initial estimated fair values as a percent of total purchase price.

and OPUVIZ TM – Commercialization Agreement

July 2025, the Company entered into a development and commercialization agreement (the “Samsung Agreement”) with Samsung

Bioepis Co., Ltd.

Under the terms of the Samsung Agreement, following completion of the transition of commercial

rights from Biogen, Inc.

back to Samsung, Samsung will develop, manufacture, and supply BYOOVIZ (ranibizumab-nuna) and OPUVIZ (aflibercept-yszy)

(individually, a “Product” and together, the “Products”) for Harrow to commercialize in the U.S.

In consideration of such Rights, Harrow will make a one-time upfront payment to Samsung, and Samsung will be eligible

to receive additional one-time payments based on the achievement of net sales-based milestones of the Products.

In addition to other

mutually agreed terms, Harrow shall pay to Samsung a share of net sales from the Products generated in the U.S.

of Remaining Interests in Melt Pharmaceuticals, Inc.

- Related Party

September 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company,

Harrow Acquisition Sub, Inc., a wholly owned subsidiary of the Company, Melt Pharmaceuticals, Inc.

(“Melt”), and D.

Osborne, as stockholder representative.

of September 30, 2025, the Company owned approximately 46 % of Melt’s outstanding equity and also had a mid-single digit royalty

interest on future net sales of Melt’s primary product (MELT-300).

Certain officers and directors of the Company, including Mark

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

Boll, the Company’s President and Chief Financial

Officer, own additional equity interests in Melt, and Mr.

Baum serves on the board of directors of Melt.

the terms of the Merger Agreement and related milestone payment agreement, the Company agreed to acquire the remaining equity interests

of Melt in exchange for an initial cash payment of approximately $ 4,300,000 at closing, and contingent consideration consisting of cash

and Company equity upon achievement of (i) U.S.

Food and Drug Administration (“FDA”) approval of the MELT-300 product candidate,

(ii) coding and reimbursement of the MELT-300 product candidate, and (iii) various one-time sales milestones, as follows:

FDA approval of MELT-300, the Company shall pay an aggregate amount in cash of approximately $ 87,200,000 .

receipt of pass-through status awarded and J-Code (or any other similar designation) issued by the Center for Medicare & Medicaid

Services for MELT-300 the Company shall issue an aggregate of approximately 1,112,000 shares of the Company’s common stock.

achievement of various annual net sales milestones ranging from $ 100,000,000 to $ 1,000,000,000 per year, the Company shall make one-time

cash payments that in the aggregate may total up to approximately $ 261,000,000 if all annual net sales milestones are achieved.

regulatory and commercial milestones must be achieved on or before December 31, 2035.

Merger Agreement includes representations and warranties and covenants of the parties customary for such a transaction.

Until the earlier

of the termination of the Merger Agreement and the effective time of the acquisition, Melt has agreed to operate its business in the

ordinary course and has agreed to certain other operating covenants.

In addition, Melt has agreed to use reasonable best efforts to obtain

approval of the Merger Agreement and the transactions contemplated thereby by the requisite Melt stockholders needed for approval.

closing of this acquisition has not yet occurred and is subject to certain customary closing conditions, including the approval of the

requisite stockholders of Melt, the continued accuracy of representations and warranties and performance of covenants, and the absence

of any material adverse effect.

The Company expects to close this acquisition during the fourth quarter of 2025.

Company has acquired and sourced intellectual property rights related to certain proprietary innovations from certain inventors, innovator

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the Inventors.

During the three and six months ended June 30, 2025, $ 287,000 and $ 564,000 , respectively, were incurred under these agreements

as royalty expenses, and $ 316,000 and $ 496,000 , respectively, during the same periods in 2024.

During the three and nine months ended September 30, 2025, $ 237,000 and $ 801,000 , respectively, were incurred under these

agreements as royalty expenses, and $ 453,000 and $ 949,000 , respectively, during the same periods in 2024.

Manufacturing

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investor relations), Board of Directors and principal executive officers and other shared expenses.

Operating 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.

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 research and development expenses, amortization, and asset sales and impairments,

2 unchanged sentences

OF SEGMENT NET REVENUES

Three Months Ended June 30, 2025

Three Months Ended June 30, 2024

Three Months Ended

September 30, 2025

Three Months Ended

September 30, 2024

Product sales, net

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Income from operations

Six Months Ended June 30, 2025

Six Months Ended June 30, 2024

Nine Months Ended

September 30, 2025

Nine Months Ended

September 30, 2024

Product sales, net

$ 121,324,000

$ 182,899,000

$ 132,398,000

Other revenues

10 unchanged sentences

all revenue is attributable to the U.S.

All long-lived assets at June 30, 2025 and December 31, 2024 were located in the U.S.

All long-lived assets at September 30, 2025 and December 31, 2024 were located in the U.S.

by segment are further described as follows:

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Other branded products

4 unchanged sentences

$ 183,211,000

$ 132,783,000

than IHEEZO and VEVYE, no other products accounted for more than 10% of total revenues for the periods presented.

2 unchanged sentences

all of the Company’s Branded sales are made to third-party distributors who sell the products to pharmacies and to the end-users.

There were two customers who comprised more than 10 % of the Company’s Branded revenues for the three and six months ended June

30, 2025 and one customer who comprised more than 10 % of the Company’s Branded revenues for the three and six months ended June

There were no customers who comprised more than 10 % of ImprimisRx revenues for the three and six months ended June 30, 2025

As of June 30, 2025 and December 31, 2024, accounts receivable from two customers accounted for 87 % and 94 %, respectively,

There were two customers who comprised more than 10 % of the Company’s Branded revenues for the three and nine months ended September

30, 2025 and one customer who comprised more than 10 % of the Company’s Branded revenues for the three and nine months ended September

There were no customers who comprised more than 10 % of ImprimisRx revenues for the three and nine months ended September 30,

2025 and 2024.

As of September 30, 2025 and December 31, 2024, accounts receivable from two customers accounted for 82 % and 94 %, respectively,

of total consolidated accounts receivable.

Company received its active pharmaceutical ingredients from three main suppliers during the three and six months ended June 30, 2025

These suppliers collectively accounted for 76 % and 72 % of active pharmaceutical ingredient purchases during the three and six

months ended June 30, 2025, respectively, and 61 % and 62 % during the same periods in 2024, respectively.

Company received its active pharmaceutical ingredients from three main suppliers during the three and nine months ended September 30,

2025 and 2024.

These suppliers collectively accounted for 38 % and 68 % of active pharmaceutical ingredient purchases during the three

and nine months ended September 30, 2025, respectively, and 50 % and 51 % during the same periods in 2024, respectively.

SUBSEQUENT EVENTS

Company has performed an evaluation of events occurring subsequent to June 30, 2025 through the filing date of this Quarterly Report

Company has performed an evaluation of events occurring subsequent to September 30, 2025 through the filing date of this Quarterly Report

on Form 10-Q.

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

July 2025, the Company issued 286,662 shares of common stock to Mark L.

Baum, Chief Executive Officer, upon the cashless exercise of

options to purchase 600,000 shares at an exercise price of $ 7.87 per share.

The Company withheld from Mr.

Baum 127,346 shares as consideration

for the cashless exercise and an additional 185,992 shares for payroll tax obligations totaling $ 6,897,000 .

In July 2025, the Company issued 795 shares

of common stock and received proceeds of $11,000 upon the exercise of options to purchase 795 shares of common stock with

exercise prices between $7.60 and $25.86 per share.

and OPUVIZ TM – Commercialization Agreement

July 2025, the Company entered into a development and commercialization agreement (the “Samsung Agreement”) with Samsung

Bioepis Co., Ltd.

Under the terms of the Samsung Agreement, following completion of the transition of commercial

rights from Biogen, Inc.

back to Samsung, Samsung will develop, manufacture, and supply BYOOVIZ (ranibizumab-nuna) and OPUVIZ (aflibercept-yszy)

(individually, a “Product” and together, the “Products”) for Harrow to commercialize in the U.S.

In consideration of such Rights, Harrow will make a one-time upfront payment to Samsung, and Samsung will be eligible

to receive additional one-time payments based on the achievement of net sales-based milestones of the Products.

In addition to other

mutually agreed terms, Harrow shall pay to Samsung a share of net sales from the Products generated in the U.S.

July 2025, the Company granted an aggregate of 1,295,249 performance stock units to Mark L.

Baum, Chief Executive Officer and Andrew

Boll, Chief Financial Officer, which are subject to the satisfaction of certain market-based and continued service conditions (the

“2025 PSUs”).

The vesting of the 2025 PSUs require (i) a minimum of a three-year service period, and (ii) during a five-year

term, the achievement and maintenance of Company common stock price targets ranging between $ 50 to $ 100 per share, broken out into four

separate tranches as described further in the table below.

OF PERFORMANCE STOCK UNITS

Target Stock Price

Number of Shares

2025, the Company issued 1,658 shares of common stock and received proceeds of $ 20,000 upon the exercise of options to purchase 1,658

shares of common stock with exercise prices between $ 7.60 and $ 21.12 per share.

October 2025, the Company issued 1,546 shares of its common stock underlying RSUs held by employees of the Company, net of an aggregate

of 704 shares of the Company ’ s

common stock were withheld from issuance by the Company for payroll tax obligations totaling $ 28,000 .

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

What changed 10-Q

Item 1. Financial Statements