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Item 1. Financial Statements

2026-08-10 compared with 2026-05-11 · 296 added, 597 removed, 178 unchanged (83% of the section changed)

Financial Statements

CONSOLIDATED BALANCE SHEETS

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

2026 December 31,

Current assets

1 unchanged sentence

Accounts receivable, net 118,559,000 110,895,000

Inventories 16,910,000 13,523,000

Prepaid expenses and other current assets 9,949,000 14,405,000

4 unchanged sentences

Intangible assets, net 175,570,000 175,174,000

$ 419,543,000

$ 399,482,000

Goodwill 332,000 332,000

TOTAL ASSETS $ 416,816,000 $ 399,482,000

LIABILITIES AND STOCKHOLDERS’ EQUITY

7 unchanged sentences

Operating lease obligations, net of current portion 7,421,000 7,905,000

Notes payable, net of unamortized debt discount

Notes payable, net 292,379,000 243,184,000

TOTAL LIABILITIES 401,971,000 347,391,000

1 unchanged sentence

STOCKHOLDERS’ EQUITY

Common stock, $ 0.001 par value, 50,000,000 shares authorized, 37,269,400 and 37,229,159 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Common stock, $ 0.001 par value, 50,000,000 shares authorized, 37,484,233 and 37,229,159 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

37,000 37,000

Additional paid-in capital 216,559,000 208,933,000

Accumulated deficit ( 201,396,000 ) ( 156,524,000 )

( 184,126,000 )

( 156,524,000 )

TOTAL HARROW, INC.

3 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 416,816,000 $ 399,482,000

$ 419,543,000

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

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30, For the Six Months Ended June 30,

2026 2025 2026 2025

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31,

Product sales, net $ 70,571,000 $ 63,657,000 $ 114,701,000 $ 111,402,000

2 unchanged sentences

Cost of sales ( 20,298,000 ) ( 16,230,000 ) ( 37,456,000 ) ( 31,754,000 )

( 17,158,000 )

( 15,524,000 )

Gross profit 50,363,000 47,512,000 77,408,000 79,819,000

Operating expenses:

2 unchanged sentences

Total operating expenses 61,370,000 36,103,000 110,495,000 79,642,000

Loss from operations

( 22,080,000 )

( 11,232,000 )

(Loss) income from operations ( 11,007,000 ) 11,409,000 ( 33,087,000 ) 177,000

Interest expense, net ( 6,263,000 ) ( 6,408,000 ) ( 11,760,000 ) ( 12,956,000 )

( 5,497,000 )

( 6,548,000 )

Loss before income taxes

( 27,577,000 )

( 17,780,000 )

Other (expense) income, net — ( 6,000 ) — ( 6,000 )

(Loss) income before income taxes ( 17,270,000 ) 4,995,000 ( 44,847,000 ) ( 12,785,000 )

Income tax expense — — ( 25,000 ) —

$ ( 27,602,000 )

$ ( 17,780,000 )

Basic and diluted net loss per share of common stock

Weighted average number of shares of common stock outstanding,

basic and diluted

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

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

the Three Months Ended March 31, 2026 and 2025

Net (loss) income $ ( 17,270,000 ) $ 4,995,000 $ ( 44,872,000 ) $ ( 12,785,000 )

Basic net (loss) income per share of common stock $ ( 0.46 ) $ 0.14 $ ( 1.20 ) $ ( 0.35 )

Diluted net (loss) income per share of common stock $ ( 0.46 ) $ 0.13 $ ( 1.20 ) $ ( 0.35 )

Weighted average number of shares of common stock outstanding, basic 37,350,401 36,790,306 37,291,190 36,304,787

Weighted average number of shares of common stock outstanding, diluted 37,350,401 38,853,855 37,291,190 36,304,787

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

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three and Six Months Ended June 30, 2026 and 2025

Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Noncontrolling

Stockholders’

Balance at January 1, 2025 35,622,214 $ 35,000 $ 221,002,000 $ ( 151,385,000 ) $ 69,652,000 $ ( 355,000 ) $ 69,297,000

Issuance of common stock in connection with:

Exercise of employee stock-based options 10,618 — 125,000 — 125,000 — 125,000

Vesting of RSUs 1,634,009 2,000 ( 2,000 ) — — — —

Shares withheld related to net share settlement of equity awards ( 552,162 ) ( 1,000 ) ( 12,768,000 ) — ( 12,769,000 ) — ( 12,769,000 )

Stock-based compensation expense — — 5,431,000 — 5,431,000 — 5,431,000

Net loss — — — ( 12,785,000 ) ( 12,785,000 ) — ( 12,785,000 )

Balance at June 30, 2025 36,714,679 $ 36,000 $ 213,788,000 $ ( 164,170,000 ) $ 49,654,000 $ ( 355,000 ) $ 49,299,000

Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Noncontrolling

Stockholders’

Balance at January 1, 2026 37,229,159 $ 37,000 $ 208,933,000 $ ( 156,524,000 ) $ 52,446,000 $ ( 355,000 ) $ 52,091,000

$ 221,002,000

$ ( 151,385,000 )

$ ( 355,000 )

Issuance of common stock in connection with:

1 unchanged sentence

Vesting of RSUs 20,500 — — — — — —

Shares withheld related to net share settlement of equity awards ( 30,520 ) — ( 1,101,000 ) — ( 1,101,000 ) — ( 1,101,000 )

Stock-based compensation expense — — 7,625,000 — 7,625,000 — 7,625,000

( 17,780,000 )

Balance at March 31, 2025

$ 225,581,000

$ ( 169,165,000 )

$ ( 355,000 )

Net loss — — — ( 44,872,000 ) ( 44,872,000 ) — ( 44,872,000 )

Balance at June 30, 2026 37,484,233 $ 37,000 $ 216,559,000 $ ( 201,396,000 ) $ 15,200,000 $ ( 355,000 ) $ 14,845,000

Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Noncontrolling

Stockholders’

Balance at April 1, 2025 35,654,171 $ 35,000 $ 225,581,000 $ ( 169,165,000 ) $ 56,451,000 $ ( 355,000 ) $ 56,096,000

Issuance of common stock in connection with:

Exercise of employee stock-based options 7,875 — 102,000 — 102,000 — 102,000

Vesting of RSUs 1,604,795 2,000 ( 2,000 ) — — — —

Shares withheld related to net share settlement of equity awards ( 552,162 ) ( 1,000 ) ( 12,768,000 ) — ( 12,769,000 ) — ( 12,769,000 )

Stock-based compensation expense — — 875,000 — 875,000 — 875,000

Net income — — — 4,995,000 4,995,000 — 4,995,000

Balance at June 30, 2025 36,714,679 $ 36,000 $ 213,788,000 $ ( 164,170,000 ) $ 49,654,000 $ ( 355,000 ) $ 49,299,000

Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Balance at January 1, 2026

$ 208,933,000

$ ( 156,524,000 )

$ ( 355,000 )

$ 208,933,000

$ ( 156,524,000 )

$ ( 355,000 )

Noncontrolling

Stockholders’

Balance at April 1, 2026 37,269,400 $ 37,000 $ 212,795,000 $ ( 184,126,000 ) $ 28,706,000 $ ( 355,000 ) $ 28,351,000

Issuance of common stock in connection with:

Exercise of employee stock-based options 224,853 — 1,077,000 — 1,077,000 — 1,077,000

Vesting of RSUs 20,500 — — — — — —

Shares withheld related to net share settlement of equity awards ( 30,520 ) — ( 1,101,000 ) — ( 1,101,000 ) — ( 1,101,000 )

Stock-based compensation expense — — 3,788,000 — 3,788,000 — 3,788,000

( 27,602,000 )

Balance at March 31, 2026

$ 212,795,000

$ ( 184,126,000 )

$ ( 355,000 )

$ 212,795,000

$ ( 184,126,000 )

$ ( 355,000 )

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

Net loss — — — ( 17,270,000 ) ( 17,270,000 ) — ( 17,270,000 )

Balance at June 30, 2026 37,484,233 $ 37,000 $ 216,559,000 $ ( 201,396,000 ) $ 15,200,000 $ ( 355,000 ) $ 14,845,000

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

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 27,602,000 )

$ ( 17,780,000 )

Net loss $ ( 44,872,000 ) $ ( 12,785,000 )

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

3 unchanged sentences

(Recovery of) Provision for credit losses ( 295,000 ) 340,000

Amortization of debt issuance costs and debt discount

Amortization of debt issuance costs, discount and premium, net 851,000 2,564,000

Stock-based compensation 7,625,000 5,431,000

1 unchanged sentence

Accounts receivable ( 7,369,000 ) 37,211,000

( 2,973,000 )

Inventories ( 3,387,000 ) ( 850,000 )

Prepaid expenses and other current assets 4,355,000 3,776,000

Accounts payable, accrued expenses, accrued rebates and copay assistance 11,921,000 ( 24,009,000 )

( 11,096,000 )

Accrued payroll and related liabilities 1,146,000 ( 2,672,000 )

( 1,201,000 )

( 1,891,000 )

Deferred revenue and customer deposits ( 682,000 ) 47,000

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ( 18,747,000 ) 18,865,000

( 8,992,000 )

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

Purchase of product rights ( 18,000,000 ) —

( 18,000,000 )

Purchases of property, plant and equipment ( 685,000 ) ( 336,000 )

NET CASH USED IN INVESTING ACTIVITIES ( 18,737,000 ) ( 505,000 )

( 18,203,000 )

CASH FLOWS FROM FINANCING ACTIVITIES

2 unchanged sentences

Proceeds from exercise of stock options 836,000 125,000

NET CASH PROVIDED BY FINANCING ACTIVITIES

Payment of payroll taxes upon exercise and issuance of equity awards ( 835,000 ) ( 12,769,000 )

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 48,446,000 ( 12,644,000 )

NET CHANGE IN CASH AND CASH EQUIVALENTS 10,962,000 5,716,000

CASH AND CASH EQUIVALENTS, beginning of period 72,927,000 47,247,000

CASH, CASH EQUIVALENTS, end of period

CASH AND CASH EQUIVALENTS, end of period $ 83,889,000 $ 52,963,000

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

2 unchanged sentences

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Unpaid debt issuance costs

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

TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Three Months Ended March 31, 2026 and 2025

Unpaid acquisitions of property, plant and equipment $ — $ 130,000

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

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Six Months Ended June 30, 2026 and 2025

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

and Background

(together with its consolidated subsidiaries, unless the context indicates or otherwise requires, the “Company”

or “Harrow”) is a leading eyecare pharmaceutical company engaged in the discovery, development, and commercialization of

innovative ophthalmic pharmaceutical products for the U.S.

Company and Background

(together with its consolidated subsidiaries, unless the context indicates or otherwise requires, the “Company” or “Harrow”) is a leading eyecare pharmaceutical company engaged in the discovery, development, and commercialization of innovative ophthalmic pharmaceutical products for the U.S.

Harrow helps U.S.

eyecare professionals preserve the gift of sight

by making its comprehensive portfolio of prescription and non-prescription pharmaceutical products accessible and affordable to millions

of Americans each year.

The Company owns commercial rights to one of the largest portfolios of branded ophthalmic pharmaceutical products

in the U.S., all of which are marketed under its Harrow name.

The Company also owns and operates ImprimisRx, one of the nation’s

leading ophthalmology-focused pharmaceutical-compounding businesses.

of Presentation

Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles

generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the

rules and regulations of the U.S.

eyecare professionals preserve the gift of sight by making its comprehensive portfolio of prescription and non-prescription pharmaceutical products accessible and affordable to millions of Americans each year.

The Company owns commercial rights to one of the largest portfolios of branded ophthalmic pharmaceutical products in North America, all of which are marketed under its Harrow name.

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

Basis of Presentation

The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the U.S.

Securities and Exchange Commission.

Accordingly, they do not include all of the information and footnotes

required by GAAP for audited financial statements.

In the opinion of management, all adjustments (consisting of only normal recurring

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

Operating results for the three months ended March 31,

2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any other period.

For further information, refer to the Company’s audited consolidated financial statements and notes thereto included in the Company’s

Annual Report on Form 10-K for the year ended December 31, 2025.

accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned

subsidiaries.

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.

The Company consolidates (i) entities

in which it holds and/or controls, directly or indirectly, more than 50% of the voting rights, and (ii) VIEs for which the Company is

deemed to be the primary beneficiary.

Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements.

In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any other period.

For further information, refer to the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries.

Harrow 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.

The Company consolidates (i) entities in which it holds and/or controls, directly or indirectly, more than 50% of the voting rights, and (ii) VIEs for which the Company is deemed to be the primary beneficiary.

All material intercompany accounts and transactions have been eliminated in consolidation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

following represents an update for the three months ended March 31, 2026 to the significant accounting policies described in the Company’s

Annual Report on Form 10-K for the year ended December 31, 2025.

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 credit losses, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates,

returns and other allowances, renewal periods and discount rates for leases, realizability of inventories, recoverability of investments,

realizability of deferred tax assets, recoverability of long-lived assets and goodwill, valuations and purchase price allocations related

to business combinations and asset acquisitions, fair value of loans payable, and valuation of stock-based transactions with employees

and non-employees.

The following represents an update for the three and six months ended June 30, 2026 to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

The 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 credit losses, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, renewal periods and discount rates for leases, realizability of inventories, recoverability of investments, realizability of deferred tax assets, recoverability of long-lived assets and goodwill, valuations and purchase price allocations related to business combinations and asset acquisitions, 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 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 because of

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

of operations.

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

Management considers historical collection rates, the current financial status of the Company’s customers, macroeconomic factors,

and other industry-specific factors when evaluating for current expected credit losses.

Forward-looking information is also considered

in the evaluation of current expected credit losses.

However, because of the short time to the expected receipt of accounts receivable,

management believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical

and current analysis of such financial instruments, including its trade receivables.

determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by class of

customer at the business component level, as management determined that the risk profile of the Company’s customers is consistent

based on the type and industry in which they operate, mainly in the pharmaceuticals industry.

Each business component is analyzed for

estimated credit losses individually.

In doing so, the Company establishes a historical loss matrix, based on the previous collections

of accounts receivable by the age of such receivables, and evaluates the current and forecasted financial position of its customers,

as available.

Further, the Company considers macroeconomic factors and the status of the pharmaceuticals industry to estimate if there

are current expected credit losses within its trade receivables based on the trends of the Company’s expectation of the future

status of such economic and industry-specific factors.

Also, specific allowance amounts are established based on review of outstanding

invoices to record the appropriate provision for customers that have a higher probability of default.

following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net

amount expected to be collected at March 31, 2026:

OF ACCOUNTS RECEIVABLE ALLOWANCE OF CREDIT LOSS

Risks, Uncertainties and Liquidity

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

Credit Losses

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

Management considers historical collection rates, the current financial status of the Company’s customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses.

Forward-looking information is also considered in the evaluation of current expected credit losses.

However, because of the short time to the expected receipt of accounts receivable, management believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical and current analysis of such financial instruments, including its trade receivables.

To determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by class of customer at the business component level, as management determined that the risk profile of the Company’s customers is consistent based on the type and industry in which they operate, mainly in the pharmaceuticals industry.

Each business component is analyzed for estimated credit losses individually.

In doing so, the Company establishes a historical loss matrix, based on the previous collections of accounts receivable by the age of such receivables, and evaluates the current and forecasted financial position of its customers, as available.

Further, the Company considers macroeconomic factors and the status of the pharmaceuticals industry to estimate if there are current expected credit losses within its trade receivables based on the trends of the Company’s expectation of the future status of such economic and industry-specific factors.

Also, specific allowance amounts are established based on review of outstanding invoices to record the appropriate provision for customers that have a higher probability of default.

The following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net amount expected to be collected at June 30, 2026:

Balance, January 1, 2026 $ 884,000

Change in expected credit losses

Recovery of expected credit losses ( 295,000 )

Write-offs, net of recoveries ( 76,000 )

Balance, March 31, 2026

Value Measurements

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

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;

Balance, June 30, 2026 $ 513,000

Fair Value Measurements

Fair 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;

quoted prices in markets that are not active;

or other inputs that are observable or can

be corroborated by observable market data for substantially the full term of the assets or liabilities.

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.

Company’s 2030 Notes (as defined in Note 8) are carried at face value, including the unamortized premium, less unamortized debt

issuance costs on the condensed consolidated balance sheets and the Company presents fair value for disclosure purposes only.

Notes are classified as Level 1 instruments as the fair value is determined using quoted market prices in active markets for the same

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

OF ESTIMATED FAIR VALUE

March 31, 2026

December 31, 2025

Carrying Value

$ 292,087,000

$ 303,750,000

$ 243,184,000

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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 2030 Notes (as defined in Note 8) are carried at face value, including the unamortized premium, less unamortized debt issuance costs on the condensed consolidated balance sheets and the Company presents fair value for disclosure purposes only.

The 2030 Notes are classified as Level 1 instruments as the fair value is determined using quoted market prices in active markets for the same securities.

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

June 30, 2026 December 31, 2025

Carrying Value Fair Value Carrying Value Fair Value

2030 Notes $ 292,379,000 $ 306,000,000 $ 243,184,000 $ 262,500,000

The Company’s other financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, accrued payroll and related liabilities, deferred revenue and customer deposits and operating lease liabilities.

The carrying amount of these financial instruments, except for operating lease liabilities, approximates fair value due to the short-term maturity of these instruments.

Based on borrowing rates currently available to the Company, the carrying value of the operating lease liabilities approximates their respective fair values.

Basic and Diluted Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period.

Diluted net loss per share is computed by dividing the net loss attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options, restricted stock units (“RSUs”), performance stock units (“PSUs”), and warrants, outstanding during the period.

Common equivalent shares (using the treasury stock or “if converted” method) from stock options, unvested RSUs, and unvested PSUs were 329,553 and 288,659 for the three and six months ended June 30, 2026, respectively, and 2,816,409 for the six months ended June 30, 2025, 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 loss per share calculation were RSUs awarded to directors that had vested, but for which 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, 2026 and 2025 was 243,802 and 212,452 , respectively.

The following table reconciles the number of weighted-average shares outstanding used to calculate diluted earnings per share:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Company’s other financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses,

accrued payroll and related liabilities, deferred revenue and customer deposits and operating lease liabilities.

The carrying amount

of these financial instruments, except for operating lease liabilities, approximates fair value due to the short-term maturity of these

Based on borrowing rates currently available to the Company, the carrying value of the operating lease liabilities approximate

their respective fair values.

and Diluted Net Loss per Common Share

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

number of common shares outstanding during the period.

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

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

stock units (“RSUs”), performance stock units (“PSUs”), and warrants, outstanding during the period.

Common equivalent

shares (using the treasury stock or “if converted” method) from stock options, unvested RSUs, unvested PSUs were 1,556,232

and 4,367,766 at March 31, 2026 and 2025, 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 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 March 31, 2026 and 2025 was 195,785 and 199,216 , respectively.

Guidance Issued but Not Adopted at March 31, 2026

October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06 ,

Disclosure Improvements—Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

This ASU modifies the disclosure or presentation requirements of a variety of topics in the codification by aligning them with the SEC’s

The amendments to the various topics should be applied prospectively, and the effective date for the Company for each amendment

will be determined based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation

If the SEC has not removed the applicable requirement by June 30, 2027, then the related amendment in ASU 2023-06 will be removed

from the codification and will not become effective.

Weighted-average number of shares outstanding, basic 37,350,401 36,790,306 37,291,190 36,304,787

Dilutive common equivalents — 2,063,549 — —

Weighted average number of shares outstanding, diluted 37,350,401 38,853,855 37,291,190 36,304,787

Accounting Guidance Issued but Not Adopted at June 30, 2026

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06 , Disclosure Improvements—Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

This ASU modifies the disclosure or presentation requirements of a variety of topics in the codification by aligning them with the SEC’s regulations.

The amendments to the various topics should be applied prospectively, and the effective date for the Company for each amendment will be determined based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K.

If the SEC has not removed the applicable requirement by June 30, 2027, then the related amendment in ASU 2023-06 will be removed from the codification and will not become effective.

Early adoption of this ASU is prohibited.

The Company does not expect the amendments

in this ASU to have a material impact on the disclosures or presentation in its consolidated financial statements.

November 2024, the FASB issued ASU 2024-03 , Income Statement – Reporting Comprehensive Income – Expense Disaggregation

Disclosures , to improve the disclosures by a public business entity about the types of expenses in commonly presented expense captions.

This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December

15, 2027, with early adoption permitted.

Except for expanded footnote disclosure, the Company does not expect the adoption of ASU 2024-03

will have a material effect on its consolidated financial statements.

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

The Company has two primary streams of revenue:

(1) product revenues, including revenue recognized from sales of products through its

pharmacy and outsourcing facility and sales of branded products to wholesalers through a third-party logistics (“3PL”) partner,

and (2) revenue recognized from intellectual property licenses and related arrangements.

Company sells prescription medications directly through its pharmacy, outsourcing facility and 3PL partner.

Revenue from the Company’s

pharmacy services includes:

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

discounts paid back to the client, (ii) the price paid to the Company 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, the Company has identified the

the contract(s) with a customer:

A contract is deemed to exist when the customer places an order through receipt of a prescription,

via an online order or via receipt of a purchase order from a customer.

For branded products, orders are received through the Company’s

3PL partner, and the customer takes title of the products via formal purchase orders placed and fulfilled.

the performance obligations in the contract:

Obligations for fulfillment of the Company’s contracts consist of delivering

the product to customers at their specified destination.

For shipping and handling activities under ASC 606, if the customer takes

control of the goods after shipment, shipping and handling activities would always be considered a fulfillment activity and not treated

as a separate performance obligation.

If the customer takes control of the goods before shipment, entities must make an accounting

policy election to treat shipping and handling activities as either a fulfillment cost or as a separate performance obligation.

Company has elected to treat its shipping and handling activities as a fulfillment cost.

the transaction price:

The transaction price is based on an amount that reflects the consideration to which the Company expects

to be entitled, net of accruals for estimated rebates, wholesaler chargebacks, discounts, copay assistance and other deductions (collectively,

sales deductions) and an estimate for returns and replacements established at the time of sale.

The Company utilizes the services

of a third-party professional services firm to estimate rebates and chargebacks associated with sales of its branded products.

transfer of promised goods is satisfied within a year, and therefore there are no significant financing components.

There is no non-cash

consideration related to product sales.

the transaction price to the performance obligations in the contract:

Because there is only one performance obligation for product

sales, no allocation is necessary.

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

Revenue from products is recognized upon transfer of control

of a product to a customer.

This generally occurs upon shipment unless contractual terms with a customer state that transfer of control

occurs at delivery.

Consideration

of branded pharmaceutical products are subject to variable consideration due to chargebacks, government rebates, returns, administrative

fees, co-pay assistance and other rebates, and prompt pay discounts.

Estimates for these elements of variable consideration require significant

primarily from distributors and wholesalers, result from arrangements with indirect customers establishing prices for products which

the indirect customer purchases through a wholesaler.

Alternatively, the Company may pre-authorize wholesalers to offer specified contract

pricing to other indirect customers.

Under either arrangement, the Company provides a chargeback credit to the wholesaler for any difference

between the contracted price with the indirect customer and the wholesaler’s invoice price, typically Wholesale Acquisition Cost

period chargebacks claimed by wholesalers are analyzed to determine the actual net price per package (“NPP”) for each product.

This calculation is performed by product, by wholesaler.

NPPs can be affected by several factors such as:

in customer mix

in negotiated terms with customers

in the volume of off-contract purchases

necessary, NPPs are adjusted based on anticipated changes in the factors above.

difference between NPP and WAC is recorded as a reduction in both gross revenues in the consolidated statements of operations and accounts

receivable in the consolidated balance sheets, at the time revenue is recognized from the product sale.

The Company continually monitors

chargeback activity and adjusts NPPs when the Company believes that actual selling prices will differ from current NPPs.

for chargebacks, distribution service fees, wholesaler fees, and other commercial deductions may also be affected by timing differences,

duplicate deductions, incorrect unit data, misapplied contractual rates, and other reconciliation matters, and the Company adjusts such

estimates as claims are reconciled, disputed, settled, credited, refunded, offset, recouped, recovered, or otherwise resolved.

include estimated amounts payable to certain group purchasing organizations (“GPOs”) and under government rebate

GPO rebates are generally based on contractual rebate arrangements and are estimated using eligible sales volume,

customer and channel mix, and available purchasing or utilization information.

Rebates reserve consists of estimated payments due to

governmental agencies or their administrators for utilization of the Company’s products by beneficiaries under such

governmental programs.

The two largest government programs are Medicaid and Medicare.

Company participates in the Medicaid Drug Rebate Program and pays rebates to the states related to Medicaid beneficiary utilization of

the Company’s products.

Medicaid rebates are billed within 60-90 days of the end of the quarter in which the product was dispensed

to a Medicaid beneficiary.

Medicaid rebate amounts per product unit are established by law, based on the Average Manufacturer Price (“AMP”),

which is reported on a monthly and quarterly basis, and, in the case of branded products, best price, which is reported on a quarterly

Medicaid reserves are based on expected claims from state Medicaid programs.

Estimates for expected claims are driven by patient

usage, sales mix, calculated AMP or best price, as well as inventory in the distribution channel that will be subject to a Medicaid rebate.

As a result of the delay between selling the products, dispensing the products and rebate billing, the Medicaid rebate reserve includes

both an estimate of outstanding claims for end-customer sales that have occurred but for which the related claim has not been billed,

as well as an estimate for future claims that will be made when inventory in the distribution channel is sold through to plan participants.

of the Company’s branded products are also covered under Medicare.

Beginning in 2025, the Medicare Part D benefit was redesigned

under the Inflation Reduction Act, and the Coverage Gap Discount Program was replaced by the Medicare Part D Manufacturer Discount Program.

To the extent the Company’s applicable branded products are covered under Medicare Part D, the Company is required to provide manufacturer

discounts under that program during the applicable phases of the redesigned Part D benefit.

The Company may also be subject to Medicare

Part B and Medicare Part D inflation rebates and other statutory government pricing obligations, including under the Inflation Reduction

Act, as applicable.

Estimates for these rebates and discounts are based on historical experience with Medicare rebates for products available

utilization data, applicable statutory formulas and program guidance, and other information available at the time the reserve is estimated.

Medicare rebates and discounts are billed quarterly for drugs dispensed to Medicare beneficiaries in the prior quarter, which is typically

120 days after the product is shipped.

As a result of the delay between selling the products, dispensing the products and rebate billing,

Medicare rebate reserve includes both an estimate of outstanding claims for end-customer sales that have occurred but for which the related

claim has not been billed, as well as an estimate for future claims that will be made when inventory in the distribution channel is sold

through to Medicare beneficiaries.

rebate reserves require significant judgment and may be affected by incomplete or delayed claims data, changes in utilization or payor

mix, channel inventory levels, labeler-code or product attribution, statutory or regulatory interpretations, and claims submitted by

governmental agencies, customers, former product owners, or other third parties.

From time to time, the Company may receive claims, invoices,

or rebate demands that it believes are unsupported, duplicative, overstated, not attributable to the Company or its products, or otherwise

inconsistent with applicable program requirements.

The Company evaluates such matters as part of its estimate of variable consideration

under ASC 606 and adjusts reserves when additional information becomes available or when claims are validated, settled, credited, refunded,

offset, recouped, or otherwise resolved.

evaluate the adequacy of the government rebate reserves, reserves are reviewed on a quarterly basis against actual claims data and other

available information to assess whether the liability is appropriately stated.

The Company continually monitors the government rebate

reserve and adjusts estimates if it is expected that actual government rebates may differ from established accruals.

Accruals for government

rebates are recorded as a reduction to gross revenues in the consolidated statements of operations and as an increase to accrued rebates

in the consolidated balance sheets.

returns policy is in place that allows customers to return product within a specified period prior to and subsequent to the expiration

Generally, product may be returned for a period beginning six months prior to its expiration date to up to one year after its expiration

Product returns are settled through the issuance of a credit to the customer.

The estimate for returns is based upon historical

experience with actual returns.

While such experience has allowed for reasonable estimation in the past, history may not always be an

accurate indicator of future returns.

The Company continually monitors estimates for returns and adjusts when it is expected that actual

product returns may differ from the established accruals.

Accruals for returns are recorded as a reduction to gross revenues in the consolidated

statements of operations and as a decrease to accounts receivable in the consolidated balance sheets.

Administrative

Fees and Other Rebates

Administrative

fees and/or rebates are offered to wholesalers and indirect customers.

Fees and rebates are

accrued, by product by wholesaler, at the time of sale based on contracted rates and NPP.

To evaluate the adequacy of the

administrative fee accruals, on-hand inventory counts are obtained from the wholesalers.

The Company continually monitors

administrative fee activity and adjusts accruals when it is expected that actual administrative fees may differ from the accruals.

Accruals for administrative fees and other rebates are recorded as a reduction in both gross revenues in the consolidated statements

of operations and accounts receivable or accrued expenses in the consolidated balance sheets.

who meet certain eligibility requirements may receive co-payment assistance funded by the Company.

The Company records contra-revenue

for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party

administrators.

An accrued liability is recorded on unredeemed co-payment assistance related to products for which control has been transferred

to the customer.

Payment Discounts

discounts may be granted to customers for prompt payment.

The reserve for prompt payment discounts is based on invoices outstanding.

Based on past experience, it is assumed that all available discounts will be taken.

Accruals for prompt payment discounts are recorded

as a reduction in both gross revenues in the consolidated statements of operations and accounts receivable in the condensed consolidated

balance sheets.

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

financial statements for the three months ended March 31, 2026 and 2025:

OF ACCRUALS AND ALLOWANCES

Administrative Fees and Other Rebates

Co-Pay Assistance

Prompt Pay Discounts

The Company does not expect the amendments in this ASU to have a material impact on the disclosures or presentation in its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 , Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures , to improve the disclosures by a public business entity about the types of expenses in

commonly presented expense captions.

This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

Except for expanded footnote disclosure, the Company does not expect the adoption of ASU 2024-03 will have a material effect on its consolidated financial statements.

The following table summarizes activity and ending balances of the Company’s variable consideration provisions in the consolidated financial statements for the six months ended June 30, 2026 and 2025:

Accruals for Chargebacks, Returns, and Other Allowances

Administrative Fees and Other Rebates

Co-Pay Assistance

Prompt Pay Discounts

Chargebacks Rebates Returns Administrative

Fees and Other

Rebates Co-Pay Assistance Prompt Pay

Discounts Total

Balance at December 31, 2024(1) $ 960,000 $ 12,360,000 $ 1,449,000 $ 32,873,000 $ 9,612,000 $ 2,377,000 $ 59,631,000

1 unchanged sentence

Credits taken against reserve ( 7,706,000 ) ( 7,696,000 ) ( 4,828,000 ) ( 53,480,000 ) ( 37,193,000 ) ( 3,185,000 ) ( 114,088,000 )

( 3,687,000 )

( 3,136,000 )

( 2,590,000 )

( 28,698,000 )

( 27,109,000 )

( 1,943,000 )

( 67,163,000 )

Balance at March 31, 2025 (1)

Balance at June 30, 2025(1) $ 4,417,000 $ 15,792,000 $ 1,236,000 $ 19,486,000 $ 3,190,000 $ 1,538,000 $ 45,659,000

Balance at December 31, 2025(1) $ 11,027,000 $ 28,217,000 $ 8,018,000 $ 16,540,000 $ 2,085,000 $ 2,494,000 $ 68,381,000

1 unchanged sentence

Credits taken against reserve ( 12,036,000 ) ( 15,468,000 ) ( 5,834,000 ) ( 63,632,000 ) ( 12,743,000 ) ( 3,258,000 ) ( 112,971,000 )

( 5,272,000 )

( 9,514,000 )

( 2,076,000 )

( 26,376,000 )

( 7,058,000 )

( 1,584,000 )

Balance at June 30, 2026(1) $ 8,023,000 $ 33,683,000 $ 4,361,000 $ 23,852,000 $ 212,000 $ 934,000 $ 71,065,000

________________

Balance at March 31, 2026 (1)

and other allowances are included as an offset to accounts receivable in the condensed consolidated balance sheets.

Administrative

Fees and Other Rebates, Prompt Payment Discounts and Returns are included as a reduction to accounts receivable, net of chargebacks

and other allowances or accrued expenses and other in the condensed consolidated balance sheets.

Government rebates are included

in accrued government rebates and copay assistance in the condensed consolidated balance sheets.

revenue and customer deposits at March 31, 2026 and December 31, 2025 were $ 149,000 and $ 788,000 , respectively.

All deferred revenue

and customer deposit amounts at December 31, 2025 were recognized as revenue during the three months ended March 31, 2026.

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 March 31, 2026

and December 31, 2025 was as follows:

OF INVENTORIES

March 31, 2026

December 31, 2025

(1) Chargebacks and other allowances are included as an offset to accounts receivable in the condensed consolidated balance sheets.

Administrative Fees and Other Rebates, Prompt Pay Discounts and Returns are included as a reduction to accounts receivable, net of chargebacks and other allowances, or accrued expenses and other in the condensed consolidated balance sheets.

Government rebates are included in accrued rebates and copay assistance in the condensed consolidated balance sheets.

Deferred revenue and customer deposits at June 30, 2026 and December 31, 2025 were $ 106,000 and $ 788,000 , respectively.

All deferred revenue and customer deposit amounts at December 31, 2025 were recognized as revenue during the six months ended June 30, 2026.

Inventories 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, 2026 and December 31, 2025 was as follows:

June 30, 2026 December 31, 2025

Raw materials $ 6,297,000 $ 6,958,000

3 unchanged sentences

PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets at March 31, 2026 and December 31, 2025 consisted of the following:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

March 31, 2026

December 31, 2025

Prepaid expenses and other current assets at June 30, 2026 and December 31, 2025 consisted of the following:

June 30, 2026 December 31, 2025

Prepaid insurance $ 403,000 $ 2,185,000

2 unchanged sentences

Other prepaid expenses 3,739,000 1,825,000

Annual Prepaid Prescription Drug User (“PDUFA”) fees

Prescription Drug User Fee Act (“PDUFA”) program fees 1,442,000 4,327,000

Deposits and other current assets 1,428,000 2,128,000

1 unchanged sentence

INTANGIBLE ASSETS AND GOODWILL

Company’s intangible assets at March 31, 2026 consisted of the following:

SCHEDULE OF INTANGIBLE ASSETS

The Company’s intangible assets at June 30, 2026 consisted of the following:

Weighted-average useful life

(in years) Cost Accumulated

Amortization Net

Carrying Value

Definite-lived Intangibles

Patents 19 $ 269,000 $ ( 83,000 ) $ 186,000

Licenses 20 50,000 ( 40,000 ) 10,000

Acquired product rights 14 225,481,000 ( 50,552,000 ) 174,929,000

( 45,042,000 )

Customer relationships 7 190,000 ( 155,000 ) 35,000

Trade name 5 70,000 ( 4,000 ) 66,000

State pharmacy licenses 25 8,000 ( 4,000 ) 4,000

Indefinite-lived Intangibles

$ 226,365,000

Trademarks Indefinite 340,000 — 340,000

$ 226,408,000 $ ( 50,838,000 ) $ 175,570,000

Amortization expense for intangible assets for the three and six months ended June 30, 2026 and 2025 was as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,

2026 2025 2026 2025

expense for intangible assets for the three months ended March 31, 2026 and 2025 was as follows:

SCHEDULE OF AMORTIZATION EXPENSES FOR INTANGIBLE ASSETS

For the Three Months Ended March 31,

Acquired NDAs

Patents $ 12,000 $ 3,000 $ 17,000 $ 6,000

Acquired product rights 5,512,000 4,220,000 10,633,000 8,440,000

Customer relationships 3,000 3,000 6,000 6,000

expense of intangible assets

future amortization expense for the Company’s intangible assets at March 31, 2026 was as follows:

OF ESTIMATED FUTURE AMORTIZATION EXPENSE

$ 5,527,000 $ 4,226,000 $ 10,656,000 $ 8,452,000

Estimated future amortization expense for the Company’s intangible assets at June 30, 2026 was as follows:

Remainder of 2026 $ 11,238,000

2027 20,241,000

January 2026, the Company amended the Asset Purchase Agreement with Eyevance Pharmaceuticals, LLC and License Agreement with Santen S.A.S.

2028 17,112,000

2029 17,013,000

2030 16,582,000

Thereafter 93,044,000

$ 175,230,000

In January 2026, the Company amended the Asset Purchase Agreement with Eyevance Pharmaceuticals, LLC and the License Agreement with Santen S.A.S.

(collectively, the “Santen Agreements”), each a subsidiary of Santen Pharmaceuticals Co., Ltd.

(collectively, “Santen”).

Pursuant to the amendment, the parties agreed to a full and final settlement of all contingent milestone obligations related to specified

manufacturing-related events for the Santen products in exchange for a one-time lump sum payment by the Company of $ 7,000,000 .

this payment, no further milestone payments will be due under the Santen Agreements.

The Company capitalized this payment as an intangible

asset within acquired product rights.

February 2026, the Company made a one-time upfront payment of $ 4,000,000 to Samsung Bioepis Co., Ltd.

(“Samsung”) upon the

license effective date related to the development and commercialization agreement with Samsung entered into in July 2025.

The milestone

was capitalized as an intangible asset within acquired product rights.

March 2026, the Company paid a commercial milestone payment of $ 7,000,000 related to the sales of VEVYE during 2025.

The milestone payment

was included in accounts payable and accrued expenses on the December 31, 2025 condensed consolidated balance sheet and was capitalized

in acquired product rights.

were no changes to the carrying value of the Company’s goodwill during the three months ended March 31, 2026 and 2025.

Pursuant to the amendment, the parties agreed to a full and final settlement of all contingent milestone obligations related to specified manufacturing-related events for the Santen products in exchange for a one-time lump sum payment by the Company of $ 7,000,000 .

Following this payment, no further milestone payments will be due under the Santen Agreements.

The Company capitalized this payment as an intangible asset within acquired product rights.

In February 2026, the Company made a one-time upfront payment of $ 4,000,000 to Samsung Bioepis Co., Ltd.

(“Samsung”) upon the license effective date related to the development and commercialization agreement with Samsung entered into in July 2025.

The milestone was capitalized as an intangible asset within acquired product rights.

In March 2026, the Company paid a commercial milestone payment of $ 7,000,000 related to the sales of VEVYE during 2025.

The milestone payment was included in accounts payable and accrued expenses on the December 31, 2025 condensed consolidated balance sheet and was capitalized in acquired product rights.

There were no changes to the carrying value of the Company’s goodwill during the three and six months ended June 30, 2026 and 2025.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses at March 31, 2026 and December 31, 2025 consisted of the following:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses at June 30, 2026 and December 31, 2025 consisted of the following:

2026 December 31,

Accounts payable $ 26,265,000 $ 35,355,000

Income taxes payable

Accrued interest 7,691,000 6,498,000

2 unchanged sentences

8.625 % Senior Notes Due 2030

March 2026, the Company entered into the First Supplemental Indenture to the Indenture dated September 12, 2025 pursuant to which

the Company issued $ 50,000,000

aggregate principal amount of additional 8.625 %

Senior Notes due 2030 (the “New Notes”).

The New Notes were issued at 100.25 %

of par value and resulted in net proceeds to the Company of $ 48,526,000

after deducting underwriting discounts, commissions and other unpaid offering expenses of $ 1,474,000 .

The New Notes, together with the 8.625 %

Senior Notes due 2030 issued in September 2025 (the “Existing Notes”) (together, the “2030 Notes”) are

treated as a single series and have the same terms as the Existing Notes.

The issuance costs and premium relating to the 2030 Notes

were deferred and will be recognized to interest expense using the effective-interest method ( 9.35 %)

over the remaining term of the debt.

expense totaled $ 5,992,000 for the three months ended March 31, 2026, and included the amortization of debt

issuance costs and premium of $ 451,000 .

summary of the Company’s debt at March 31, 2026 and December 31, 2025 is as follows:

SCHEDULE OF LONG TERM DEBT

In March 2026, the Company entered into the First Supplemental Indenture to the Indenture dated September 12, 2025 pursuant to which the Company issued $ 50,000,000 aggregate principal amount of additional 8.625 % Senior Notes due 2030 (the “New Notes”).

The New Notes were issued at 100.25 % of par value and resulted in net proceeds to the Company of $ 48,445,000 after deducting underwriting discounts, commissions and other offering expenses of $ 1,555,000 .

The New Notes, together with the 8.625 % Senior Notes due 2030 issued in September 2025 (the “Existing Notes”) (together, the “2030 Notes”) are treated as a single series and have the same terms as the Existing Notes.

The issuance costs and premium relating to the New Notes were deferred and will be recognized as interest expense using the effective-interest method ( 9.36 %) over the remaining term of the debt.

Interest expense totaled $ 6,874,000 and $ 12,866,000 for the three and six months ended June 30, 2026, respectively, and included the amortization of debt issuance costs and premium of $ 400,000 and $ 851,000 , respectively.

A summary of the Company’s debt at June 30, 2026 and December 31, 2025 is as follows:

2026 December 31,

8.625 % Senior Notes due September 2030

$ 300,000,000 $ 250,000,000

$ 250,000,000

Unamortized debt issuance costs

( 7,913,000 )

( 6,816,000 )

Notes payable net

$ 292,087,000

Unamortized debt issuance costs, discount and premium, net ( 7,621,000 ) ( 6,816,000 )

$ 292,379,000 $ 243,184,000

March 31, 2026, future minimum principal payments under the Company’s debt were as follows:

SCHEDULE OF FUTURE MINIMUM PAYMENT UNDER NOTES PAYABLES

At June 30, 2026, future minimum principal payments under the Company’s debt were as follows:

Remainder of 2026 $ —

Total minimum principal payments

unamortized issue costs and premium

2030 300,000,000

Total minimum principal payments 300,000,000

unamortized debt issuance costs, discount and premium, net ( 7,621,000 )

Notes payable, net $ 292,379,000

$ 292,087,000

COMMITMENTS AND CONTINGENCIES

the ordinary course of business, the Company is involved in various legal proceedings, government investigations and other matters that

are complex in nature and have outcomes that are difficult to predict.

General and Other

In the ordinary course of business, the Company is involved in various legal proceedings, government investigations and other matters that are complex in nature and have outcomes that are difficult to predict.

See also Part II, Item 1A.

Risk Factors .

The Company describes

legal proceedings and other matters that are/were significant or that it believes could become significant in this footnote.

Company records accruals for loss contingencies to the extent that it concludes it is probable that a liability has been incurred and

the amount of the related loss can be reasonably estimated.

The Company evaluates, on a quarterly basis, developments in legal proceedings

and other matters that could cause an increase or decrease in the amount of a liability that has been accrued previously.

Company’s legal proceedings involve various aspects of its business and a variety of claims, some of which present novel factual

allegations and/or unique legal theories.

Typically, a number of matters pending against the Company are at early stages of the legal

process, which in complex proceedings of the sort the Company face often extend for several years.

While it is not possible to accurately

predict or determine the eventual outcomes of matters that have not concluded, an adverse determination in one or more of these matters

(whether discussed in this footnote or not) currently pending may have a material adverse effect on the Company’s consolidated

results of operations, financial position or cash flows.

The Company describes legal proceedings and other matters that are, or were, significant or that it believes could become significant in this footnote.

The Company records accruals for loss contingencies to the extent that it concludes it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated.

The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of a liability that has been accrued previously.

The Company’s legal proceedings involve various aspects of its business and a variety of claims, some of which present novel factual allegations and/or unique legal theories.

Typically, a number of matters pending against the Company are at early stages of the legal process, which in complex proceedings of the sort the Company faces often extend for several years.

While it is not possible to accurately predict or determine the eventual outcomes of matters that have not concluded, an adverse determination in one or more of these matters (whether discussed in this footnote or not) currently pending may have a material adverse effect on the Company’s consolidated results of operations, financial position or cash flows.

Legal costs incurred for loss contingencies are expensed as incurred.

recent developments concerning legal proceedings the Company believes are or were material to its business and other matters are discussed

Science, Inc.

July 2021, ImprimisRx, LLC, a subsidiary of the Company, filed a lawsuit against Ocular Science, Inc.

Ocular Science, Inc.

In July 2021, ImprimisRx, LLC, a subsidiary of the Company, filed a lawsuit against Ocular Science, Inc.

and OSRX, Inc.

(together, “OSRX”)

District Court for the Southern District of California, asserting claims for copyright infringement, trademark infringement,

unfair competition and false advertising (Lanham Act).

Since July 2021, the complaint had been amended and OSRX added counterclaims alleging

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

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

Following a jury trial in November 2024, a jury found OSRX acted with malice, fraud, or oppression, willfully engaging in

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

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.

(together, “OSRX”) in the U.S.

District Court for the Southern District of California, asserting claims for copyright infringement, trademark infringement, unfair competition and false advertising (Lanham Act).

Since July 2021, the complaint has been amended and OSRX added counterclaims alleging ImprimisRx, LLC was violating the Lanham Act with false advertising.

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 for trial.

Following a jury trial in November 2024, a jury found OSRX acted with malice, fraud, or oppression, willfully engaging in trademark infringement and unfair competition under California and federal law, and ImprimisRx, LLC received a $ 34,900,000 jury verdict 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.

In October 2025, OSRX filed an appeal.

No collection activity is allowed during the appeal.

The Company intends to vigorously pursue

enforcement of its judgment during the appeal process.

However, due to uncertainty regarding the probability of collection, the Company

has not recognized any amounts associated with the judgment during the three months ended March 31, 2026.

and Professional Liability

and professional liability litigation represents an inherent risk to all firms in the pharmaceutical and pharmacy industry.

utilizes 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.

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.

Several of the Company’s asset

purchase and license agreements contain customary representations, warranties, covenants and confidentiality provisions, and also contain

mutual indemnification obligations related primarily to performance under the respective agreements.

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

condensed consolidated balance sheets.

Purchase, License and Related Agreements

Approved Product Acquisitions

recent years, the Company has acquired commercial and product rights to various FDA-approved ophthalmic medications and products through

asset purchase, licenses, supply and/or other related agreements.

In general, in exchange for product and commercial rights these agreements

provide the counterparties with certain upfront and contingent milestone payments typically related to certain annual sales amounts and

manufacturing events, and in certain cases, per unit transfer prices and royalties on sales of some of the products.

the three months ended March 31, 2026 and 2025, $ 2,377,000 and $ 2,173,000 , respectively, were incurred under these agreements as royalty

During the three months ended March 31, 2026 and 2025, $ 11,000,000 and $ 0 , respectively, were incurred under these agreements

related to upfront and milestone payments under these agreements.

As of March 31, 2026, the remaining contingent considerations payable

pursuant to these agreements were not considered probable as the contingency is not resolved and therefore, no amount was accrued related

to these contingent considerations during the three months ended March 31, 2026.

Manufacturing

Company has entered into manufacturing agreements with respect to third-party contract manufacturers for its FDA-approved pharmaceutical

The Company intends to vigorously pursue enforcement of its judgment during the appeal process.

However, due to uncertainty regarding the probability of collection, the Company has not recognized any amounts associated with the judgment during the three and six months ended June 30, 2026.

Product and Professional Liability

Product and professional liability litigation represents an inherent risk to all firms in the pharmaceutical and pharmacy industry.

The Company utilizes traditional third-party insurance policies with regard to its 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.

In 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.

Several of the Company’s asset purchase and license agreements contain customary representations, warranties, covenants and confidentiality provisions, and also contain mutual indemnification obligations related primarily to performance under the respective agreements.

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 condensed consolidated balance sheets.

Asset Purchase, License and Related Agreements

FDA Approved Product Acquisitions

In recent years, the Company has acquired commercial and product rights to various FDA-approved ophthalmic medications and products through asset purchase, licenses, supply and/or other related agreements.

In general, in exchange for product and commercial rights these agreements provide the counterparties with certain upfront and contingent milestone payments typically related to certain annual sales amounts and manufacturing events, and in certain cases, per unit transfer prices and royalties on sales of some of the products.

During the three and six months ended June 30, 2026, $ 3,476,000 and $ 5,853,000 , respectively, were incurred under these agreements as royalty expenses.

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

During the six months ended June 30, 2026, $ 18,000,000 was paid under these agreements related to upfront and milestone payments.

As of June 30, 2026, the remaining contingent considerations payable pursuant to these agreements were not considered probable as the contingency is not resolved and therefore, no amount has been recognized related to these contingent considerations as of June 30, 2026.

Contract Manufacturing

The Company has entered into manufacturing agreements with respect to third-party contract manufacturers for its FDA-approved pharmaceutical products.

Some of these contract manufacturing agreements require minimum annual order amounts.

The Company has committed to pay approximately

$ 10,723,000 related to contract manufacturing agreements for the year ending December 31, 2026.

The Company has committed to pay approximately $ 10,723,000 related to contract manufacturing agreements for the year ending December 31, 2026.

Minimum annual quantities carry no payment obligation for quantities not purchased;

the supplier's sole remedy for a shortfall is prospective repricing and, if no agreement on pricing can be reached, termination of the agreement.

No liability has been recorded, and no commitment loss has been recognized under ASC 330, as of June 30, 2026.

SEGMENTS AND CONCENTRATIONS

chief operating decision maker (“CODM”) is the Chief Executive Officer.

The CODM does not review segment assets when assessing

segment performance and deciding how to allocate resources.

The Company reports on two reportable segments which are generally determined

based on the decision-making structure of the Company and the grouping of similar products and services:

The chief operating decision maker (“CODM”) is the Chief Executive Officer.

The CODM does not review segment assets when assessing segment performance and deciding how to allocate resources.

The Company reports on two reportable segments which are generally determined based on the decision-making structure of the Company and the grouping of similar products and services:

Branded and Compounding.

Branded segment includes activities of the Company’s FDA-approved ophthalmology pharmaceutical products, including

the out-licensing of rights to certain of our branded products.

Compounding segment represents activities in the Company’s ophthalmology-focused pharmaceutical compounding business.

CODM evaluates segment performance and makes resource-allocation decisions primarily on the basis of segment contribution.

Segment contribution

is the internal measure of profitability that the CODM reviews on a regular basis to assess the operational performance of each segment,

determine the appropriate level of sales and marketing investments, evaluate pricing decisions, and prioritize capital deployment among

branded product initiatives and the compounding operations.

contribution for the segments represents net revenues less cost of sales, certain general and administrative expenses, selling and marketing

expenses, and research and development expenses.

• The Branded segment includes activities of the Company’s FDA-approved ophthalmology pharmaceutical products, including the out-licensing of rights to certain of our branded products.

• The Compounding segment represents activities in the Company’s ophthalmology-focused pharmaceutical compounding business.

The CODM evaluates segment performance and makes resource-allocation decisions primarily on the basis of segment contribution.

Segment contribution is the internal measure of profitability that the CODM reviews on a regular basis to assess the operational performance of each segment, determine the appropriate level of sales and marketing investments, evaluate pricing decisions, and prioritize capital deployment among branded product initiatives and the compounding operations.

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

The Company 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.

• Selling, 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 similar 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 research and development 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.

net revenues, segment operating expenses and segment contribution information consisted of the following:

OF SEGMENT NET REVENUES

Three Months Ended March 31, 2026

• 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.

• Other select revenues and operating expenses including research and development 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.

Segment net revenues, segment operating expenses and segment contribution information consisted of the following:

Three Months Ended June 30, 2026 Three Months Ended June 30, 2025

Branded Compounding Consolidated Branded Compounding Consolidated

Product sales, net $ 56,015,000 $ 14,556,000 $ 70,571,000 $ 42,189,000 $ 21,468,000 $ 63,657,000

2 unchanged sentences

Cost of sales 13,434,000 6,864,000 20,298,000 8,734,000 7,496,000 16,230,000

Gross profit 42,671,000 7,692,000 50,363,000 33,540,000 13,972,000 47,512,000

Operating expenses

2 unchanged sentences

Segment contribution $ ( 1,180,000 ) $ 344,000 ( 836,000 ) $ 10,820,000 $ 6,432,000 17,252,000

$ ( 11,630,000 )

( 11,287,000 )

Corporate 10,112,000 5,807,000

Research and development 59,000 36,000

Loss from operations $ ( 11,007,000 ) $ 11,409,000

$ ( 22,080,000 )

Three Months Ended March 31, 2025

Six Months Ended June 30, 2026 Six Months Ended June 30, 2025

Branded Compounding Consolidated Branded Compounding Consolidated

Product sales, net $ 86,646,000 $ 28,055,000 $ 114,701,000 $ 69,883,000 $ 41,519,000 $ 111,402,000

2 unchanged sentences

Cost of sales 24,389,000 13,067,000 37,456,000 16,915,000 14,839,000 31,754,000

Gross profit 62,420,000 14,988,000 77,408,000 53,139,000 26,680,000 79,819,000

Operating expenses

2 unchanged sentences

Segment contribution $ ( 12,950,000 ) $ 389,000 ( 12,561,000 ) $ 7,744,000 $ 11,394,000 19,138,000

$ ( 3,076,000 )

Corporate 20,403,000 18,116,000

Research and development 123,000 845,000

Loss from operations $ ( 33,087,000 ) $ 177,000

Substantially all revenue is attributable to the U.S.

All long-lived assets at June 30, 2026 and December 31, 2025 were located in the U.S.

Revenues by segment are further described as follows:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Substantially

all revenue is attributable to the U.S.

All long-lived assets at March 31, 2026 and December 31, 2025 were located in the U.S.

by segment are further described as follows:

OF REVENUES BY SEGMENT

For the Three Months Ended March 31,

IHEEZO $ 15,619,000 $ 18,336,000 $ 17,535,000 $ 23,558,000

VEVYE 29,387,000 18,641,000 50,335,000 40,156,000

Other branded products 11,009,000 5,212,000 18,776,000 6,169,000

3 unchanged sentences

Total revenues, net $ 70,661,000 $ 63,742,000 $ 114,864,000 $ 111,573,000

than IHEEZO for the three months ended March 31, 2025 and VEVYE, no other products accounted for more than 10% of total revenues for

the periods presented.

and Supplier Concentrations

Substantially

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 months ended March 31, 2026

and one customer who comprised more than 10 % of the Company’s Branded revenues for the three months ended March 31, 2025.

were no customers who comprised more than 10 % of Compounding revenues for either the three months ended March 31, 2026 or 2025.

March 31, 2026, accounts receivable from three customers accounted for 95 % of total consolidated accounts receivable.

As of December

31, 2025, accounts receivable from two customers accounted for 90 % of total consolidated accounts receivable.

Company received its active pharmaceutical ingredients from three main suppliers during each of the three months ended March 31, 2026

These suppliers collectively accounted for 69 % and 67 % of manufacturing supplies purchases during the three months ended March

31, 2026 and 2025, respectively.

Other than IHEEZO and VEVYE for the three and six months ended June 30, 2026 and 2025, no other products accounted for more than 10% of total revenues for the periods presented.

Customer and Supplier Concentrations

Substantially 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 three customers who comprised more than 10 % of the Company’s Branded revenues for the three and six months ended June 30, 2026 and two customers who comprised more than 10 % of the Company’s Branded revenues for the three and six months ended June 30, 2025.

There were no customers who comprised more than 10% of Compounding revenues for either the three and six months ended June 30, 2026 or 2025.

As of June 30, 2026, accounts receivable from three customers accounted for 91 % of total consolidated accounts receivable.

As of December 31, 2025, accounts receivable from three customers accounted for 90 % of total consolidated accounts receivable.

The Company received its active pharmaceutical ingredients from three main suppliers during each of the three and six months ended June 30, 2026 and 2025.

These suppliers collectively accounted for 61 % and 54 % of manufacturing supplies purchases during the three and six months ended June 30, 2026, respectively, and 76 % and 72 % during the three and six months ended June 30, 2025, respectively.

SUBSEQUENT EVENTS

In August 2026, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Viatris Inc.

and certain of its subsidiaries (collectively, “Viatris”), pursuant to which the Company agreed to acquire the global rights to TYRVAYA ® (varenicline solution) nasal spray 0.03% (“TYRVAYA”), a cholinergic agonist indicated for the treatment of the signs and symptoms of dry eye disease (the “Acquisition”).

As consideration for the Acquisition, the Company will pay Viatris $ 30,000,000 in cash at the closing of the Acquisition (the “Closing”) and has agreed to pay up to an additional $ 70,000,000 in contingent milestone payments, payable if specified annual net sales thresholds for TYRVAYA are achieved in certain calendar years following the Closing.

The purchase price is subject to a customary post-closing adjustment based on the net working capital transferred at the Closing.

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