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 utr:sqft

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
 the fiscal year ended December 31, 2023

 OR

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from to

 Commission
File Number: 001-35814

INC.

 (Exact
name of registrant as specified in its charter)

 Delaware

 45-0567010

 (State
 or other jurisdiction of incorporation
 or organization)

 (IRS
 Employer Identification
 No.)

Woodmont Blvd., Suite 610

 Nashville,
 TN 37205

 (Address
of Principal Executive Offices)(Zip Code)

 (615) 733-4730

 (Registrant's
telephone number, including area code)

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of Each Class

 Trading
 Symbol

 Name
 of Each Exchange on Which Registered

 Stock, $0.001 par value per share

 HROW

 The
 Nasdaq Stock Market LLC

 8.625%
 Senior Notes due 2026

 HROWL

 The
 Nasdaq Stock Market LLC

 11.875%
 Senior Notes due 2027

 HROWM

 The
 Nasdaq Stock Market LLC

 Securities
registered pursuant to Section 12(g) of the Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
 No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 As
of June 30, 2023, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market
value of the common stock held by non-affiliates of the registrant was approximately $ 464 million, based on the closing price of $19.04
for the registrant's common stock as quoted on The Nasdaq Stock Market LLC on that date. For purposes of this calculation, it has
been assumed that shares of common stock held by each director, each officer and each person who owns 10% or more of the outstanding
common stock of the registrant are held by affiliates of the registrant. The treatment of these persons as affiliates for purposes of
this calculation is not conclusive as to whether such persons are affiliates of the registrant for any other purpose.

 As
of March 18, 2024, there were 35,362,642 shares of the registrant's common stock outstanding.

 Portions
of the registrant's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders to be held on June 13, 2024 are incorporated
by reference in Part III of this Annual Report on Form 10-K, to the extent stated herein.

 TABLE
OF CONTENTS

 Page

 Item
 1.

 Business

 Item
 1A.

 Risk Factors

 Item
 1B.

 Unresolved Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal Proceedings

 Item
 4.

 Mine Safety Disclosures

 Item
 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 [Reserved]

 Item
 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item
 8.

 Financial Statements and Supplementary Data

 Item
 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls and Procedures

 Item
 9B.

 Other Information

 Item
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item
 10.

 Directors, Executive Officers and Corporate Governance

 Item
 11.

 Executive Compensation

 Item
 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal Accountant Fees and Services

 Item
 15.

 Exhibits, Financial Statement Schedules

 Item
 16.

 Form 10-K Summary

 SIGNATURES

 As
used in this Annual Report on Form 10-K (this "Annual Report"), unless indicated or the context requires otherwise, the terms
the "Company," "Harrow," "we," "us" and "our" refer to Harrow, Inc. and its
consolidated subsidiaries.

 In
addition to historical information, the following discussion contains forward-looking statements regarding future events and our future
performance. In some cases, you can identify forward-looking statements by terminology such as "will," "may,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "forecasts," "potential" or "continue" or the negative of these terms or
other comparable terminology. All statements made in this Annual Report other than statements of historical fact are forward-looking
statements. These forward-looking statements involve risks and uncertainties and reflect only our current views, expectations and assumptions
with respect to future events and our future performance. If risks or uncertainties materialize or assumptions prove incorrect, actual
results or events could differ materially from those expressed or implied by such forward-looking statements. Risks that could cause
actual results to differ from those expressed or implied by the forward-looking statements we make include, among others, risks related
to: liquidity or results of operations; our ability to successfully implement our business plan, develop and commercialize our proprietary
formulations in a timely manner or at all, identify and acquire additional proprietary formulations, manage our pharmacy operations,
service our debt, obtain financing necessary to operate our business, recruit and retain qualified personnel, manage any growth we may
experience and successfully realize the benefits of our previous acquisitions and any other acquisitions and collaborative arrangements
we may pursue; competition from pharmaceutical companies, outsourcing facilities and pharmacies; general economic and business conditions,
including inflation and supply chain challenges; regulatory and legal risks and uncertainties related to our pharmacy operations and
the pharmacy and pharmaceutical business in general; physician interest in and market acceptance of our current and any future formulations
and compounding pharmacies generally; our limited operating history; and the other risks and uncertainties described under the heading
"Risk Factors" in Part I, Item 1A of this Annual Report. You should not place undue reliance on forward-looking statements.
Forward-looking statements speak only as of the date they are made and, except as required by law, we undertake no obligation to revise
or publicly update any forward-looking statement for any reason.

 We
have registered trademarks, copyrights and/or pending trademark and copyright applications for a number of proprietary names in the United
States, including, but not limited to: VEVYE, IHEEZO, VIGAMOX, ILEVRO, TRIESENCE, ImprimisRx,
LessDrops, Dropless Cataract Surgery, Klarity-C, MKO Melt, and Simple
Drops. We may choose to pursue trademark protection in other jurisdictions for one or more of these or other marks in
the future. All other trademarks, service marks and trade names included or incorporated by reference into this Annual Report, are the
property of their respective owners.

 PART
I

 ITEM
1. BUSINESS

 Overview

 We
are a leading eyecare pharmaceutical company engaged in the discovery, development, and commercialization of innovative ophthalmic pharmaceutical
products for the U.S. market. 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. We own commercial
rights to one of the largest portfolios of branded ophthalmic pharmaceutical products in North America, all of which are marketed under
the Harrow name. We also own and operate ImprimisRx, one of the nation's leading ophthalmology-focused pharmaceutical-compounding
businesses. In addition, we have a non-controlling equity interest in Melt Pharmaceuticals, Inc. ("Melt"), and two other
companies that began as subsidiaries of Harrow and were subsequently carved-out of our corporate structure and deconsolidated from our
financial statements.

 Branded
Ophthalmic Pharmaceuticals

 Over
the past few years, we have invested in broadening our product portfolio of FDA-approved products. Our investments in this regard have
led to the pursuit and completion of several announced transactions, all of which are focused on eyecare pharmaceuticals primarily for
the U.S. and Canadian markets. We believe that our continued investments in these and other products will result in our ability to provide
more physician prescribers and their patients with access to a complete portfolio of affordable eyecare pharmaceuticals to address their
clinical needs. We own U.S. commercial rights to the following products:

 IHEEZO
 (chloroprocaine hydrochloride ophthalmic gel) 3% a low-viscosity gel indicated for ocular surface
 anesthesia.

 VEVYE
 (cyclosporine ophthalmic solution) 0.1%, utilizes a novel water-free vehicle (perfluorobutylpentane) based on semifluorinated alkanes,
 indicated for the treatment of the signs and symptoms associated with dry eye disease.

 TRIESENCE
 (triamcinolone acetonide injectable suspension) 40 mg/ml, a steroid injection for the treatment of certain ophthalmic diseases and
 for visualization during vitrectomy.

 VIGAMOX
 (moxifloxacin hydrochloride ophthalmic solution) 0.5%, a fluoroquinolone antibiotic eye drop for the treatment of bacterial conjunctivitis
 caused by susceptible strains of organisms.

 ILEVRO
 (nepafenac ophthalmic suspension) 0.3%, a non-steroidal, anti-inflammatory eye drop indicated for pain and inflammation associated
 with cataract surgery.

 FLAREX
 (fluorometholone acetate ophthalmic suspension) 0.1%, a corticosteroid prepared as a sterile topical ophthalmic suspension indicated
 for use in the treatment of steroid-responsive inflammatory conditions of the palpebral and bulbar conjunctiva, cornea, and anterior
 segment of the eye.

 NATACYN
 (natamycin ophthalmic suspension) 5%, a sterile, antifungal drug for the treatment of fungal blepharitis, conjunctivitis, and keratitis
 caused by susceptible organisms, including Fusarium solani keratitis.

 TOBRADEX
 ST (tobramycin and dexamethasone ophthalmic suspension) 0.3%/0.05%, a topical antibiotic and corticosteroid combination for steroid-responsive
 inflammatory ocular conditions for which a corticosteroid is indicated and where superficial bacterial ocular infection or a risk
 of bacterial ocular infection exists.

 ZERVIATE
 (cetirizine ophthalmic solution) 0.24%, a histamine-1 (H1) receptor antagonist indicated for treatment of ocular itching associated
 with allergic conjunctivitis.

 VERKAZIA
 (cyclosporine ophthalmic emulsion) 0.1%, an orphan designated drug that is a calcineurin inhibitor immunosuppressant indicated for
 the treatment of vernal keratoconjunctivitis.

 NEVANAC
 (nepafenac ophthalmic suspension) 0.1%, a non-steroidal, anti-inflammatory eye drop indicated for pain and inflammation associated
 with cataract surgery.

 FRESHKOTE
 Preservative Free (PF) is a lubricant eye drop that does not require a prescription and temporarily relieves burning, itching and
 other dry eye symptoms.

 MAXITROL
 (neomycin and polymyxin B sulfates and dexamethasone ophthalmic suspension) is an eye drop used to treat steroid-responsive inflammatory
 ocular conditions where bacterial infection or a risk of bacterial ocular infection exist

 MAXIDEX
 (dexamethasone ophthalmic suspension) 0.1%, a steroid eye drop for steroid-responsive inflammatory conditions of the palpebral and
 bulbar conjunctiva, cornea, and anterior segment of the globe.

 IOPIDINE
 1% (apraclonidine hydrochloride) 0.5%, an ophthalmic solution in a sterile isotonic solution indicated to control or prevent post-surgical
 elevations in intraocular pressure that occur in patients after argon laser trabeculoplasty, argon laser iridotomy or Nd: YAG posterior
 capsulotomy

 IOPIDINE
 0.5% (apraclonidine hydrochloride) an ophthalmic solution indicated for short-term adjunctive therapy in patients on maximally tolerated
 medical therapy who require additional intraocular pressure (or IOP) reduction.

 We
also own U.S. rights to some discontinued products. In February 2024, we announced that we out-licensed Canadian rights for VERKAZIA,
Cationorm PLUS (a preservative-free formulation for dry eye or allergy relief), VEVYE, ZERVIATE and IHEEZO to Apotex Inc. ("Apotex").
We also own worldwide rights to NATACYN and FRESHKOTE.

 ImprimisRx

 ImprimisRx
is our ophthalmology-focused pharmaceutical compounding businesses. From its inception in 2014, ImprimisRx, whose business consists of
integrated research and development, production, dispensing/distribution, sales, marketing, and customer-service capabilities, has offered
ophthalmologist and optometrist customers and their patients access to critical medicines to meet their clinical needs. Initially, ImprimisRx
focused exclusively on compounded medications to serve needs unmet by commercially available drugs. Our compounded medications include
various combinations of drugs formulated into one bottle and numerous preservative-free formulations. Depending on the formulation, the
regulations of a specific state, and ultimately the needs of the patient, ImprimisRx products may be dispensed as patient-specific medications
from our 503A pharmacy, or for in-office use, made according to current good manufacturing practices ("cGMPs") or other guidance
documents from the U.S. Food and Drug Administration (the "FDA"), in our FDA-registered New Jersey outsourcing facility.
Our current ophthalmology formulary includes over 30 compounded formulations, many of which are patented or patent-pending, that are
customizable for the specific needs of a patient. We make our formulations available at prices that are, in most cases, lower than non-customized
commercial drugs. ImprimisRx's customer base has grown to include more than 10,000 U.S. eyecare-dedicated prescribers and institutions.

 Carved-Out
Subsidiaries (De-Consolidated Businesses)

 We
have ownership interests in Melt, Surface Ophthalmics, Inc. ("Surface") and Eton Pharmaceuticals, Inc. ("Eton")
and hold royalty interests in some of Surface's and Melt's drug candidates. These companies are pursuing market approval
for their drug candidates under the Federal Food Drug and Cosmetic Act (the "FDCA"), including in some instances under the
abbreviated pathway described in Section 505(b)(2), which permits the submission of a new drug application (an "NDA") where
at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant
has not obtained a right of reference.

 Melt
Pharmaceuticals, Inc.

 Melt
is a clinical-stage pharmaceutical company focused on the development and commercialization of proprietary non-intravenous, sedation
and anesthesia therapeutics for human medical procedures in hospital, outpatient, and in-office settings. Melt is seeking regulatory
approval for its proprietary technologies, where possible. In December 2018, we entered into an Asset Purchase Agreement with Melt (the
"Melt Asset Purchase Agreement"), pursuant to which Harrow assigned to Melt the underlying intellectual property for Melt's
current pipeline, including its lead drug candidate MELT-300. The core intellectual property Melt owns is a patented series of combination
non-opioid sedation drug formulations that we estimate to have many clinical applications.

 MELT-300
is a novel, sublingually delivered, non-IV, opioid-free drug candidate being developed for procedural sedation. In February 2021, Melt
announced data from, and the successful completion of, its Phase 1 study. In December 2022, Melt announced topline data from its Phase
2 study for MELT-300 as set forth below:

 In
 a study of more than 300 patients, undergoing cataract surgery conducted at nine study sites, MELT-300 achieved its primary procedural
 sedation endpoint, demonstrating statistical superiority for procedural sedation compared to all comparator treatment arms, including
 midazolam 3mg (P=0.0129) and ketamine 50mg (P=0.0096).

 Using
 the validated Ramsey Sedation Scale (RSS), MELT-300 treatment arm patients were 50% less likely to require rescue sedation compared
 to midazolam 3mg (P=0.0198).

 Using
 the RSS, MELT-300 treatment arm patients were 66% less likely to require rescue sedation pre-operatively compared to the midazolam
 3mg treatment arm.

 MELT-300's
 safety profile was generally comparable to the placebo arm.

 Melt
expects to begin Phase 3 program activities in 2024, which will consist of a single pivotal study comparing MELT-300 to sublingual midazolam
and placebo in subjects undergoing cataract surgery. Beginning in July 2023 through March 1, 2024, Melt had raised over $23,000,000 in
gross proceeds from the sale and issuance of Melt's Series B Preferred Stock. We own 3,500,000 shares of Melt common stock, 2,260,000
shares of Melt's Series B-1 Preferred Stock and 74,256 shares of Melt's Series B Preferred Stock, which in aggregate represented
approximately 47% and 46% of Melt's equity and voting interests issued and outstanding as of December 31, 2023 and March 1, 2024,
respectively.

 Melt
is required to make mid-single digit royalty payments to the Company on net sales of MELT-300 while any patent rights remain outstanding,
subject to other conditions. Melt can require the Company to cease compounding like products at the time of FDA approval of MELT-300.
If approved, we do not expect a cessation of compounding like products to have a material impact on our operations and financial performance.

 Surface
Ophthalmics, Inc.

 Surface
is a clinical-stage pharmaceutical company focused on development and commercialization of innovative therapeutics for ocular surface
diseases. Surface is developing four product candidates at various stages of development for certain ocular surface related indications.

 We
own 3,500,000 shares of Surface common stock, which represented approximately 20% of Surface's equity and voting interests as of
December 31, 2023. Harrow owns mid-single-digit royalty rights on net sales on Surface's drug candidates SURF-100, SURF-200 and
SURF-201.

 Eton
Pharmaceuticals, Inc.

 Eton
is an innovative pharmaceutical company focused on developing, acquiring, and commercializing treatments for rare diseases. Eton currently
commercializes ALKINDI SPRINKLE and Carglumic Acid tablets and has additional rare disease products under development, including
dehydrated alcohol injection and the ZENEO hydrocortisone autoinjector. In May 2017, we gave up our controlling interest in Eton.
We own 1,982,000 shares of Eton common stock, which represented less than 10% of Eton's equity and voting interests issued and
outstanding as of December 31, 2023.

 Pharmaceutical
Compounding Businesses

 Pharmaceutical
Compounding

 Pharmaceutical
compounding is the science of combining different active pharmaceutical ingredients (APIs), all of which are approved by the FDA (either
as a finished form product or as a bulk drug ingredient), and excipients to create specialized pharmaceutical preparations. Physicians
and healthcare institutions use compounded drugs when commercially available drugs do not optimally treat a patient's needs. In
many cases, compounded drugs, such as ours, have wide market utility and may be clinically appropriate for large patient populations.
Examples of compounded formulations include medications with alternative dosage strengths or unique dosage forms, such as topical creams
or gels, suspensions, or solutions with more tolerable drug delivery vehicles.

 Sales
revenue from our compounded products are derived from us making, selling and dispensing our compounded prescription drug formulations
as cash payment transactions between us and our end-user customers. As such, the majority of our commercial transactions for compounded
products do not involve distributors, wholesalers, insurance companies, pharmacy benefit managers or other middle parties. In regard
to our compounded formulations, by not being reliant on insurance company formulary inclusion and pharmacy benefit manager payment clawbacks,
we are able to simplify the prescription transaction process. We believe the outcome of our compounding business model is a simple transaction,
involving a patient-in-need, a physician's diagnosis, a fair price and great service for a quality pharmaceutical product.

 ImprimisRx
Compounding Facilities

 Pharmaceutical
compounding businesses are governed by Sections 503A and 503B of the FDCA. Section 503A of the FDCA provides that a pharmacy is only
permitted to compound a drug for an individually identified patient based on a prescription for the patient and is only permitted to
distribute the drug interstate if the pharmacy is licensed to do so in the states where it is compounded and where the medication is
received.

 Section
503B of the FDCA provides that a pharmacy engaged in preparing sterile compounded drug formulations may voluntarily elect to register
as an "outsourcing facility." Outsourcing facilities are permitted to compound large quantities of drugs without a prescription
and distribute them out of state with certain limitations, such as the formulation appearing on the FDA's drug shortage list or
the bulk drug substances contained in the formulations appearing on the FDA's "clinical need" list. Entities voluntarily
registering with FDA as outsourcing facilities are subject to additional requirements that do not apply to compounding pharmacies (operating
under Section 503A of the FDCA), including adhering to standards such cGMPs or other FDA guidance documents and being subject to regular
FDA inspection.

 We
operate two compounding facilities located in Ledgewood, New Jersey. Our New Jersey operations are comprised of two separate entities
and facilities, one of which is registered with the FDA as an outsourcing facility ("NJOF") under Section 503B of the FDCA.
The other New Jersey facility ("RxNJ") is a licensed pharmacy operating under Section 503A of the FDCA. All of our compounded
products that we sell, produce and dispense are made in the United States.

 We
believe that, with our current compounding pharmacy facilities and licenses and FDA registration of NJOF, we have the infrastructure
to scale our business appropriately under the current regulatory landscape and meet the potential growth in demand we are targeting.
We plan to invest in one or both of our facilities to further their capacity and efficiencies. Also, we may seek to access greater pharmacy
and production related redundancy and markets through acquisitions, partnerships or other strategic transactions.

 Sales
and Marketing

 The
focus of our sales and marketing is in the U.S. We do, however, believe that our proprietary drug formulations, drug candidates and drug
products could have commercial appeal in international markets, and have engaged distributors and entered into out-licensing arrangements
for certain of our products and proprietary formulations in certain non-U.S. markets, including Canada. Our sales and marketing activities
consist primarily of efforts to educate doctors, ambulatory surgery centers, healthcare systems, hospitals and other users throughout
the U.S. about our branded drug products and compounded formulations. We expect that we may experience growth in the sales of our products
in future periods, particularly in light of our recent product launches and commercial campaigns. However, we may not be successful in
doing so, whether due to the safety, quality or availability of our products and proprietary compounded formulations, the size of the
markets for such products, which could be smaller than we expect, the timing of market entry relative to competitive products, the availability
of alternative compounded formulations or FDA-approved drugs, the price of our products relative to alternative products or the success
of our sales and marketing efforts, which is dependent on our ability to further build and continue to grow a qualified and adequate
internal sales function.

 We
expect to continue to acquire and/or develop additional FDA-approved ophthalmic products that allow us to leverage our existing commercial
infrastructure to promote, sell, and ultimately bring these products to market. As we execute this strategy, we will continue to expand
our sales and marketing team, expertise and expenses.

 Ophthalmology
Market

 For
any ocular procedure, a surgeon may require drugs for sedation, dilation, anesthesia, inflammation and infection prevention, and ocular
surface preservation. The cataract surgery market continues to experience significant growth. According to Market Scope, approximately
4.8 million lens procedures were performed in the U.S. in 2021, 97% of which were cataracts, with the number expected to grow to 5.5
million lens procedures in 2026. Nearly 96% of the refractive surgery procedures performed are LASIK (laser in situ keratomileusis) surgeries,
an outpatient surgical procedure used to treat nearsightedness, farsightedness, and astigmatism. According to an article published in
2021 in Clinical Ophthalmology, an estimated 800,000 eyes were treated with laser correction surgery (such as LASIK) each year
for the previous ten years.

 Dry
eye occurs when the eye does not produce enough tears, or when the tears are not of the correct consistency and evaporate too quickly.
Inflammation of the surface of the eye may also occur. According to a 2023 Market Scope report, there are 39 million people in
the U.S. that suffer from both signs and symptoms of dry eye, with 49% of diagnosed dry eye patients having moderate to severe dry eye.
The same report stated the global dry eye product market is expected to grow from $5.8 billion in 2023 to $7.5 billion in 2028. Dry eye
is among the most common conditions seen by eyecare professionals.

 Intravitreal
injections are one of the most common procedures performed by ophthalmologists in the United States. According to a 2023 article published
in Healio, approximately 8 million intravitreal injections were expected to be performed that year. These injections are utilized
to administer critical medications into the eye that treat diseases including but not limited to proliferative diabetic retinopathy,
diabetic macular edema, wet age-related macular degeneration, neovascular glaucoma, retinal vein occlusions, intraocular tumors, and
endophthalmitis. In addition, products and product candidates are being developed and used to treat symptoms associated with an eye disease
known as geographic atrophy. Most of the medicines in these products and product candidates are administered via intravitreal injection.
Therefore, we believe as these products and product candidates gain commercial adoption, the number of annual intravitreal injections
should increase further and at an increased rate as compared to recent years.

 Vitrectomy
is a surgical procedure undertaken by a specialist where the vitreous humor gel that fills the eye cavity is removed to provide better
access to the retina. This allows for a variety of repairs, including the removal of scar tissue, laser repair of retinal detachments
and treatment of macular holes. According to an October 2022 article published on the Cleveland Clinic website, U.S. surgeons perform
about 225,000 vitrectomies each year. The number is likely to continue to grow as eye care providers find more uses for vitrectomy.

 Chronic
non-infectious uveitis affecting the posterior segment of the eye is an inflammatory disease that afflicts people of all ages, producing
swelling and destroying eye tissues, which can lead to severe vision loss and blindness. Based on internal estimates and information
published on the MedScape website (which was updated as of March 2023) that cites various ranges of prevalence of uveitis, we estimate
this disease affects approximately 100,000 people each year in the U.S. The standard of care treatment for this disease typically involves
the use of short-acting corticosteroids to reduce uveitic flares (such as TRIESENCE) followed by additional treatments of sustained release,
lower dose steroids to minimize the risk of further flares.

 Competition

 The
pharmaceutical and pharmacy industries are highly competitive. We compete against branded drug companies, generic drug companies, outsourcing
facilities and compounding pharmacies. We are smaller than some of our competitors, and we may lack the financial and other resources
needed to develop, produce, distribute, market and commercialize any of our branded products and proprietary formulations or compete
for market share in these sectors. The drug products available through branded and generic drug companies with which our products and
formulations compete have been approved for marketing and sale by the FDA and are required to be manufactured in facilities compliant
with cGMP standards. Although we prepare some of our compounded formulations in accordance with cGMP standards and our other formulations
are produced according to the standards provided by United States Pharmacopoeia (USP) Chapter <795> ("USP 795") and
USP Chapter <797> ("USP 797") and applicable state and federal law, our compounded formulations are not required to
be, and have not been, approved for marketing and sale by the FDA. As a result, some physicians may be unwilling to prescribe, and some
patients may be unwilling to use, our compounded formulations. Additionally, under federal and state laws applicable to our current compounding
pharmacy operations operating under Section 503A of the FDCA, we are not permitted to prepare significant amounts of a specific formulation
in advance of a prescription, compound quantities for office use or utilize a wholesaler for distribution of our formulations; instead,
our compounded formulations must be prepared and dispensed in connection with a physician prescription for an individually identified
patient. Pharmaceutical companies, on the other hand, are able to sell their FDA-approved products to large pharmaceutical wholesalers,
who can in turn sell to and supply hospitals and retail pharmacies. Even though we have registered NJOF with the FDA, our compounding
business may not be scalable on the scope available to our competitors that produce FDA-approved drugs, which may limit our potential
for profitable operations. These facets of our operations may subject our business to limitations our competitors offering only FDA-approved
drugs may not face.

 Biotechnology
and related pharmaceutical technologies are subject to rapid and significant change. Our future success will depend in large part on
our ability to maintain a competitive position with respect to these technologies. Products developed by our competitors, including FDA-approved
drugs and compounded formulations created by other pharmacies, could render our products and technologies obsolete or unable to compete.
Any products that we develop may become obsolete before we recover expenses incurred in developing the products, which may require that
we seek additional funds that may or may not be available to continue our operations. The competitive environment requires an ongoing,
extensive search for medical and technological innovations and the ability to develop and market these innovations effectively, and we
may not be competitive with respect to these factors. Other competitive factors include the safety and efficacy of a product, the size
of the market for a product, the timing of market entry relative to competitive products, the availability of alternative compounded
formulations or approved drugs, the price of a product relative to alternative products, the availability of third-party reimbursement,
the success of sales and marketing efforts, brand recognition and the availability of scientific and technical information about a product.
Although we believe we are positioned to compete favorably with respect to many of these factors, if our proprietary formulations are
unable to compete with the products of our competitors, we may never gain a significant market share or achieve profitability.

 Factors
Affecting Our Performance

 We
believe the primary factors affecting our performance are our ability to increase revenues of our ophthalmic products, grow and gain
operating efficiencies in our pharmacy operations, successfully adjust our operations to account for any future regulatory-related restrictions,
optimize pricing and obtain reimbursement options for our ophthalmic products, and continue to pursue development and commercialization
opportunities for certain of our ophthalmology and other assets that we have not yet made commercially available or have been recently
launched. We believe we have built a tangible and intangible infrastructure that will allow us to scale revenues efficiently in the near
and long-term. All of these activities will require increased costs and other resources, which we may not have or be able to obtain from
operations or other sources. See "Liquidity and Capital Resources" below.

 Medicare,
Medicaid and Other Reimbursement Options

 Sales
in the United States of our marketed products are dependent, in large part, on the availability and extent of reimbursement from third-party
payors, including private payor healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies,
and government programs such as Medicare and Medicaid, see also Part I, Item 1A. "Risk Factors" for additional risks related
to reimbursement and government programs.

 We
participate in, and have certain price reporting obligations to, the Medicaid Drug Rebate program, state Medicaid supplemental rebate
program(s), and other governmental pricing programs. We also have obligations to report the average sales price for certain drugs to
the Medicare program. Under the Medicaid Drug Rebate program, we are required to pay a rebate to each state Medicaid program for our
covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by a state Medicaid program as a condition of having
federal funds being made available for our drugs under Medicaid and Part B of the Medicare program.

 Medicare
is a federal program that is administered by the federal government that covers individuals age 65 and over or that are disabled as well
as those with certain health conditions. Medicare Part B generally covers drugs that must be administered by physicians or other health
care practitioners; are provided in connection with certain durable medical equipment; or are certain oral anti-cancer drugs and certain
oral immunosuppressive drugs. Medicare Part B pays for such drugs under a payment methodology based on the average sales price of the
drugs. Manufacturers, including us, are required to report average sales price information to the Centers for Medicare & Medicaid
Services ("CMS") on a quarterly basis. The manufacturer-submitted information may be used by CMS to calculate Medicare payment
rates. Starting in 2023, manufacturers are now required to pay refunds to Medicare for single-source drugs or biological products, or
biosimilar biological products, reimbursed under Medicare Part B and packaged in single-dose containers or single-use packages for units
of discarded drug reimbursed by Medicare Part B in excess of 10% of total allowed charges under Medicare Part B for that drug. Manufacturers
that fail to pay refunds could be subject to civil monetary penalties. Further, starting in 2023, the Inflation Reduction Act of 2022
("IRA") established a Medicare Part B inflation rebate scheme, effective in 2023, under which, generally speaking, manufacturers
will owe rebates if the average sales price of a Part B drug increases faster than the pace of inflation. Failure to timely pay a Part
B inflation rebate is subject to a civil monetary penalty.

 The
IRA also created a drug price negotiation program under which, after being on the market for a certain period of time, the prices for
certain high Medicare spending drugs and biological products provided to Medicare patients without generic or biosimilar competition
will be capped by reference to, among other things, a specified non-federal average manufacturer price, starting in 2026. Failure to
comply with requirements under the drug price negotiation program is subject to an excise tax and a civil monetary penalty. This or any
other legislative change could impact the market conditions for our products.

 IHEEZO
and TRIESENCE are covered under Medicare Part B and we may develop other drug candidates and/or acquire drug products that are also covered
under Medicare Part B. In February 2023, we announced that CMS had issued a permanent, product specific J-code for IHEEZO (J2403) which
will become effective under the Healthcare Procedure Coding System (HCPCS) on April 1, 2023. TRIESENCE has a permanent product specific
J-code (J3300) as well, which physicians can use for reimbursement purposes of that product. New drugs approved by the FDA that are used
in surgeries performed in a hospital outpatient departments or ambulatory surgical centers may receive a transitional pass-through reimbursement
under Medicare, provided they meet certain criteria, including a "not insignificant" cost criterion. Pass-through status
allows for separate payment (i.e., outside the packaged payment rate for the surgical procedure) under Medicare Part B, which consists
of Medicare reimbursement for a drug based on a defined formula for calculating the minimum fee that a manufacturer may charge for the
drug. Under current regulations of CMS, pass-through status applies for a period of three years; which is measured from the date Medicare
makes its first pass-through payment for the product. Following the three-year period, the product would be incorporated into the cataract
bundled payment system, which could significantly reduce the pricing for that product. Temporary pass-through reimbursement for IHEEZO
was awarded by CMS and made effective in the second quarter of 2023. Following the expiration of pass-through status, under current CMS
policy, non-opioid pain management surgical drugs when used on Medicare Part B patients in an outpatient setting can qualify for ongoing
separate payments. CMS' current non-opioid separate payment policy, like other CMS policies, can be changed by CMS through its
annual rulemaking and comment process.

 We
are also working to ensure our continued access to the Medicare market for the ambulatory surgery center (ASC), hospital and outpatient
department (HOPD), and in-office use markets for IHEEZO. In this regard, we are designing and intend to execute, during 2024, clinical
studies to build data sets that could be presented to CMS to extend our temporary pass-through period for IHEEZO in ASCs and HOPDs. We
also met with CMS in January 2024 to request clarification related to its anesthesia billing policy which has historically not allowed
for the separate billing of anesthesia services in the physician's office. During the meeting we requested that CMS clarify that
J-Code 2403, IHEEZO's permanent J-Code, is appropriate to be billed for the anesthesia product itself (i.e., IHEEZO in our case)
in the physician's office setting. As of the date of this Annual Report, we have not received feedback from CMS following our meeting
in January 2024.

 Medicaid
is a joint federal and state program that is administered by the states for low-income and disabled beneficiaries. Medicaid rebates are
based on pricing data reported by us on a monthly and quarterly basis to CMS, the federal agency that administers the Medicaid and Medicare
programs. These data include the average manufacturer price and, in the case of innovator products, the best price for each drug which,
in general, represents the lowest price available from the manufacturer to any entity in the U.S. in any pricing structure, calculated
to include all sales and associated rebates, discounts, and other price concessions. The amount of the rebate is adjusted upward if the
average manufacturer price increases at a faster rate than inflation (measured by reference to the Consumer Price Index – Urban).
The rebate was previously capped at 100% of the average manufacturer price, but effective January 1, 2024, this cap on the rebate was
removed, and our rebate liability could increase accordingly.

 If
we become aware that our reporting for a prior quarter was incorrect or has changed as a result of recalculation of the pricing data,
we are obligated to resubmit the corrected data for up to three years after those data originally were due, which revisions could affect
our rebate liability for prior quarters. The federal Patient Protection and Affordable Care Act (the "PPACA" or "Health
Care Reform Law") made significant changes to the Medicaid Drug Rebate program, and CMS issued a final regulation, which became
effective on April 1, 2016, to implement the changes to the Medicaid Drug Rebate program under the PPACA. Effective in 2022, CMS modified
Medicaid Drug Rebate program regulations to, among other things, permit reporting multiple best price figures with regard to value-based
purchasing arrangements and provide definitions for "line extension," "new formulation," and related terms with
the practical effect of expanding the scope of drugs considered to be line extensions.

 Civil
monetary penalties can be applied if we are found to have knowingly submitted any false pricing or other information to the government,
if we are found to have made a misrepresentation in the reporting of our average sales price, or if we fail to submit the required data
on a timely basis. Such conduct also could be grounds for CMS to terminate our Medicaid drug rebate agreement, in which case federal
payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.

law requires that any company that participates in the Medicaid Drug Rebate program also participate in the Public Health Service's
340B drug pricing program (the "340B program") in order for federal funds to be available for the manufacturer's drugs
under Medicaid and Medicare Part B. The 340B program, which is administered by the Health Resources and Services Administration ("HRSA"),
requires participating manufacturers to agree to charge statutorily defined covered entities no more than the 340B "ceiling price"
for the manufacturer's covered outpatient drugs. Covered entities include hospitals that serve a disproportionate share of financially
needy patients, community health clinics, and other entities that receive certain types of grants under the Public Health Service Act.
The PPACA expanded the list of covered entities to include certain free-standing cancer hospitals, critical access hospitals, rural referral
centers, and sole community hospitals, but exempts "orphan drugs" from the ceiling price requirements for these covered entities.
The 340B ceiling price is calculated using a statutory formula, which is based on the average manufacturer price and Medicaid rebate
amount for the covered outpatient drug as calculated under the Medicaid Drug Rebate program. In general, products subject to Medicaid
price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.

 HRSA
issued a final regulation regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers
that knowingly and intentionally overcharge covered entities, which became effective on January 1, 2019. It is currently unclear how
HRSA will apply its enforcement authority under this regulation. Any charge by HRSA that we have violated the requirements of the regulation
could result in civil monetary penalties. Moreover, under a final regulation effective January 13, 2021, HRSA established a new administrative
dispute resolution ("ADR") process for claims by covered entities that a manufacturer has engaged in overcharging, and by
manufacturers that a covered entity violated the prohibitions against diversion or duplicate discounts. Such claims are to be resolved
through an ADR panel of government officials rendering a decision that could be appealed only in federal court. An ADR proceeding could
subject us to onerous procedural requirements and could result in additional liability. On November 30, 2022, HRSA issued a notice of
proposed rulemaking that proposes several changes to the ADR process. HRSA also implemented a price reporting system under which we are
required to report our 340B ceiling prices to HRSA on a quarterly basis, which then publishes those prices to 340B covered entities.
In addition, legislation could be passed that would further expand the 340B program to additional covered entities or would require participating
manufacturers to agree to provide 340B discounted pricing on drugs used in an inpatient setting.

 In
order to be eligible to have our products paid for with federal funds under the Medicaid and Medicare Part B programs and purchased by
certain federal agencies and grantees, we participate in the U.S. Department of Veterans Affairs ("VA") Federal Supply Schedule
("FSS") pricing program. FSS participation is required for our products to be purchased by the VA, Department of Defense
("DoD"), Coast Guard, and Public Health Service ("PHS"). Prices for innovator drugs purchased by the VA, DoD,
Coast Guard, and PHS are subject to a cap (known as the "Federal Ceiling Price") equal to 76% of the annual non-federal average
manufacturer price ("non-FAMP") minus, if applicable, an additional discount. The additional discount applies if non-FAMP
increases more than inflation (measured by reference to the Consumer Price Index - Urban). We also participate in the Tricare Retail
Pharmacy Program, under which we pay quarterly rebates to DoD for prescriptions of our innovator drugs dispensed to Tricare beneficiaries
through Tricare Retail network pharmacies. The governing statute provides for civil monetary penalties for failure to provide information
timely or for knowingly submitting false information to the government.

 Medicare
Part D provides coverage to enrolled Medicare patients for self-administered drugs (i.e., drugs that are not administered by a physician).
Medicare Part D is administered by private prescription drug plans approved by the U.S. government and, subject to detailed program rules
and government oversight, each drug plan establishes its own Medicare Part D formulary for prescription drug coverage and pricing, which
the drug plan may modify from time to time. The prescription drug plans negotiate pricing with manufacturers and pharmacies, and may
condition formulary placement on the availability of manufacturer discounts. In addition, manufacturers, including us, are required to
provide to CMS a 70% discount on brand name prescription drugs utilized by Medicare Part D beneficiaries when those beneficiaries are
in the coverage gap phase of the Part D benefit design. The IRA includes a sunset provision with respect to the coverage gap discount
program starting in 2025 and replaces it with a new manufacturer discount program. In addition, as of October 2022, the IRA established
a Medicare Part D inflation rebate scheme under which, manufacturers will generally owe additional rebates if the average manufacturer
price of a Part D drug increases faster than the pace of inflation. Failure to timely pay a Part D inflation rebate is subject to a civil
monetary penalty.

 Private
payor healthcare and insurance providers, health maintenance organizations, and pharmacy benefit managers in the United States are adopting
more aggressive utilization management techniques and are increasingly requiring significant discounts and rebates from manufacturers
as a condition to including products on formulary with favorable coverage and copayment/coinsurance. These payors may not cover or adequately
reimburse for use of our products or may do so at levels that disadvantage them relative to competitive products.

 Our
proprietary ophthalmic compounded formulations are primarily available on a cash-pay basis and generally are not subject to Medicare,
Medicaid, or other payor-related initiatives.

Property

 Our
success and ability to compete depends upon our ability to protect our intellectual property. We conduct a fulsome analysis of the intellectual
property landscape prior to acquiring rights to formulations and filing patent applications. In addition, as of March 1, 2024, we owned
and/or licensed more than 50 total issued and pending patent applications, which include U.S.-issued patents, international-issued patents,
and U.S. and foreign/international patent pending applications. We expect to file additional patent applications in the U.S. and pursue
patent protection for certain of our formulations in other important international jurisdictions in the future.

 As
of March 1, 2024, we had, on a worldwide basis, more than 100 issued trademarks, pending trademark and copyright applications, or registered
copyrights and/or trademarks. We also rely on unpatented trade secrets and know-how and continuing technological innovation in order
to develop our products and formulations, which we seek to protect, in part, by confidentiality agreements with our employees, consultants,
collaborators and others, including certain service providers. We also have invention or patent assignment agreements with our current
employees and certain consultants. However, our employees and consultants may breach these agreements, and we may not have adequate remedies
for any breach, or our trade secrets may otherwise become known or be independently discovered by competitors. In addition, inventions
relevant to us could be developed by a person not bound by an invention assignment agreement with us, in which case we may have no rights
to use the applicable invention.

 The
following table lists our outstanding material patents in the U.S. for certain branded products, general subject matter and latest expiry
date. One or more patents with the same or earlier expiry dates may fall under the same general subject matter and are not listed separately.

 General
 Subject Matter

 Expiration

 IHEEZO

 using topical formulations

 September
 2038

 VEVYE

 Formulation
 composition for treatment of dry eye syndrome

 Ophthalmic
 composition comprising cyclosporine

 Semiflourinated
 compounds for ophthalmic administration

 Topical
 administration method

 2030

 September
 2037

 November
 2038

 October
 2039

 TRIESENCE

 Composition
 of injectable suspension

 for treating ophthalmic disorder

 2029

 March
 2029

 ILEVRO

 Compositions
 containing a synergistic combination of polymers

 Composition
 comprising carbomer, galactomannan and borate

 Carboxyvinyle
 polymer-containing nanoparticle suspension

 June
 2024

 2030 March 2032

 TOBRADEX
 ST

 for treating inflammation where infection may occur

 Compositions
 containing tobramycin and dexamethasone

 2027

 August
 2028

 VERKAZIA

 for treating eye disease

 Compositions
 of oil-in-water cationic emulsion

 Compositions
 containing quaternary ammonium compounds

 May
 2027

 November
 2027

 June
 2029

 ZERVIATE

 for treating ophthalmic allergic conjunctivitis

 Ophthalmic
 topical compositions of cetirizine

 March
 2030

 July
 2032

 Governmental
Regulation

 Our
business is subject to federal, state and local laws, regulations, and administrative practices, including, among others: federal, state
and local licensure and registration requirements concerning the operation of pharmacies and the practice of pharmacy; the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"); the Health Care Reform Law; statutes and regulations of the FDA, the
U.S. Federal Trade Commission (the "FTC"), the U.S. Drug Enforcement Administration and the U.S. Consumer Product Safety
Commission, as well as regulations promulgated by comparable state agencies concerning the sale, advertisement and promotion of the products
we sell. The regulatory and quality compliance environment for compounded drugs has become significantly more rigorous, complex and strict
since the passage of The Drug Quality and Security Act of 2013 (the "DQSA"). The complexity of the current state and federal
regulatory environment, as well as the expected continued evolution of state and federal laws governing pharmaceutical compounding, have
presented, and will continue to present, potentially significant challenges to our business model and the fulfillment of our mission
as a company. Below are descriptions of some of the various federal and state laws and regulations which may govern or impact our current
and planned operations.

 FDA
New Drug Application Process

 As
discussed in other sections of this Annual Report, we are pursuing, and may continue to pursue, alone or with project partners, FDA approval
to market and sell one or more of our product candidates through the FDA's NDA process. As a condition of approval, the FDA or
other regulatory authorities may require further studies, including Phase 4 post-marketing studies, to provide additional data. Other
post-marketing studies may be required to gain approval for the use of a product as a treatment for clinical indications other than those
for which the product was initially tested and approved. Also, the FDA or other regulatory authorities require post-marketing reporting
to monitor the adverse effects of a drug. Results of post-marketing programs may limit or expand the further marketing of a product.

 The
FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer
advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet.
A company can make only those claims relating to safety and efficacy that are approved by the FDA. Failure to comply with these requirements
can result in adverse publicity, warning letters, corrective advertising, fines and potential civil and criminal penalties.

 Section
505(b)(2) New Drug Applications

 As
an alternate path for FDA approval of new indications or new formulations of previously-approved products, a company may file a Section
505(b)(2) NDA instead of a "stand-alone" or "full" NDA. Section 505(b)(2) of the FDCA was enacted as part of
the Drug Price Competition and Patent Term Restoration Act of 1984, otherwise known as the Hatch-Waxman Amendments. Section 505(b)(2)
permits the submission of an NDA where at least some of the information required for approval comes from studies not conducted by or
for the applicant and for which the applicant has not obtained a right of reference. Some examples of products that may be allowed to
follow a Section 505(b)(2) path to approval are drugs that have a new dosage form, strength, route of administration, formulation or
indication.

 The
Hatch-Waxman Amendments permit the applicant to rely upon certain published nonclinical or clinical studies conducted for an approved
product or the FDA's conclusions from prior review of such studies. The FDA may require companies to perform additional studies
or measurements to support any changes from the approved product. The FDA may then approve the new product for all or some of the labeled
indications for which the reference product has been approved, as well as for any new indication supported by the Section 505(b)(2) application.
While references to nonclinical and clinical data not generated by the applicant or for which the applicant does not have a right of
reference are allowed, all development, process, stability, qualification and validation data related to the manufacturing and quality
of the new product must be included in an NDA submitted under Section 505(b)(2).

 To
the extent that the Section 505(b)(2) applicant is relying on the FDA's conclusions regarding studies conducted for an already
approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA's
Approved Drug Products with Therapeutic Equivalence Evaluations, or Orange Book. Specifically, the applicant must certify that: (i) the
required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will
expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed
by the new product. The Section 505(b)(2) application also will not be approved until any non-patent exclusivity, such as exclusivity
for obtaining approval of a new chemical entity, listed in the Orange Book for the referenced product has expired. Thus, the Section
505(b)(2) applicant may invest a significant amount of time and expense in the development of its products only to be subject to significant
delay and patent litigation before its products may be commercialized.

 Pharmacy
Regulation

 Our
pharmacy operations are regulated by both individual states and the federal government. Every state has laws and regulations addressing
pharmacy operations, including regulations relating specifically to compounding pharmacy operations. These regulations generally include
licensing requirements for pharmacists, pharmacy technicians and pharmacies, as well as regulations related to compounding processes,
safety protocols, purity, sterility, storage, controlled substances, recordkeeping and regular inspections, among other things. State
rules and regulations are updated periodically, generally under the jurisdiction of individual state boards of pharmacy. Failure to comply
with the state pharmacy regulations of a particular state could result in a pharmacy being prohibited from operating in that state, financial
penalties and/or becoming subject to additional oversight from that state's board of pharmacy. In addition, many states are considering
imposing, or have already begun to impose, more stringent requirements on compounding pharmacies. If our pharmacy operations become subject
to additional licensure requirements, are unable to maintain their required licenses or if states place burdensome restrictions or limitations
on pharmacies, our ability to operate in some states could be limited.

law limits compounding pharmacies from engaging in the practice of anticipatory compounding, which involves preparing compounded medications
before the actual receipt of a prescription or practitioner's order, unless the compounding pharmacy has a history of filling certain
prescriptions for a customer. In such cases, it is acceptable to engage in anticipatory compounding or the preparation of larger batches
so that medications will be ready when they are needed. Anticipatory compounding also reduces the cost of compounded medications, as
economies of scale can be realized by producing larger batches. Anticipatory compounding also leads to less wasted chemicals, dilutions,
fillers, and other associated products that are produced, and greater accuracy and uniformity in finished medications, as larger batches
decrease the variation caused by preparing multiple, smaller batches. Based on our history of meeting the needs of our customers, we
are able to anticipatorily compound batches of our formulations for our customers, per the applicable regulations.

 Many
of the states into which we deliver pharmaceuticals have laws and regulations that require out-of-state pharmacies to register with,
or be licensed by, the boards of pharmacy or similar regulatory bodies in those states. These states generally permit the dispensing
pharmacy to follow the laws of the state within which the dispensing pharmacy is located. However, various state pharmacy boards have
enacted laws and/or adopted rules or regulations directed at restricting or prohibiting the operation of out-of-state pharmacies by,
among other things, requiring compliance with all laws of the states into which the out-of-state pharmacy dispenses medications, whether
or not those laws conflict with the laws of the state in which the pharmacy is located, or requiring the pharmacist-in-charge to be licensed
in that state. To the extent that such laws or regulations are found to be applicable to our operations, we believe we comply with them.

 Further,
under federal law, Section 503A of the FDCA previously had language that implied a limitation of the amount of compounded products that
a pharmacy can distribute interstate. The interpretation and enforcement of this provision is dependent on the FDA entering into a standard
Memorandum of Understanding ("MOU") with each state setting forth limits on shipments of interstate compounding. In January
of 2019, the FDA released the "2018 Compounding Policy Priorities Plan" (the "2018 Compounding Plan") which provided
an overview of the key priorities the FDA planned to focus on in 2018 in connection with compounding regulations. One of the priorities
outlined in the 2018 Compounding Plan addressed the FDA's plan to release a revised MOU (the "Revised MOU"). Pursuant
to the statements in the 2018 Compounding Plan, the Revised MOU would consider amounts shipped interstate by a compounder to be inordinate
amounts if the "number of prescriptions of compounded drugs distributed interstate during any calendar month is greater than 50
percent." Importantly, instead of that number serving as a "hard limit, for state action," the 50% target would trigger
certain additional reporting requirements. On October 27, 2020, the FDA announced availability of a final MOU, Memorandum of Understanding
Addressing Certain Distributions of Compounded Human Drug Products Between the State Board of Pharmacy or Other Appropriate State Agency
and the U.S. Food and Drug Administration (the "Final MOU"). The Final MOU describes the responsibilities of a state
board of pharmacy, or other appropriate state agency that chooses to sign the Final MOU, in investigating and responding to complaints
related to drug products compounded in such state and distributed outside such state and in addressing the interstate distribution of
inordinate amounts of compounded human drug products. Additionally, as part of the Final MOU, the FDA refined the definition of "inordinate
amount," a threshold for certain information identification and sharing which does not place a limit on the distribution of compounded
human drug products interstate by a pharmacy located in a state that has entered into the Final MOU. Section 503A of the FDCA sets a
5% limit on compounded drugs distributed outside the state by a pharmacist, pharmacy or physician located in a state that has not entered
into the Final MOU. In February 2022, the FDA said it would suspend implementation of the Final MOU and engage in a formal rulemaking
process. During the rulemaking process, the agency will not enter into new agreements with states based on the Final MOU. The FDA does
not expect states that have signed the Final MOU to carry out the activities described in the Final MOU. Thus, there is no reporting
requirement for any pharmacy concerning interstate shipments pursuant to Section 503A and there will not be one until the Final MOU is
finalized through the rulemaking process, which will include the engagement of a notice-and-comment and rulemaking period to implement
certain provisions of Section 503A. The agency indicated that the process may take "several years" to complete. In the same
announcement, the FDA stated it does not intend to enforce the statutory 5% limit on the distribution of compounded drugs out of the
state in which they are compounded by compounders located in states that do not sign the Final MOU for the duration of the rulemaking
process.

 Certain
provisions of the FDCA govern the preparation, handling, storage, marketing and distribution of pharmaceutical products. The DQSA clarifies
and strengthens the federal regulatory framework governing compounding pharmacies. Title 1 of the DQSA, the Compounding Quality Act,
modified provisions of the Section 503A of the FDCA that were found to be unconstitutional by the U.S. Supreme Court in 2002. In general,
Section 503A provides that pharmacies are exempt from the provisions of the FDCA requiring compliance with cGMPs, labeling with adequate
directions for use and FDA approval prior to marketing if the pharmacy complies with certain other requirements. Among other things,
to comply with Section 503A, a compounded drug must be compounded by a licensed pharmacist for an identified individual patient on the
basis of a valid prescription. Pharmacies may only compound in limited quantities before receipt of a prescription for an individual
patient and are subject to limitations on anticipatory compounding for distribution, which generally permit anticipatory compounding
only based on historical prescription volumes.

 The
DQSA also contained new Section 503B of the FDCA, which established an outsourcing facility as a new form of entity that is permitted
to compound larger quantities of drug formulations without a prescription, thus permitting the practice of anticipatory compounding,
and distributing them out of state without limitation, if the drug formulations appear on the FDA's drug shortage list or the bulk
drug substances contained in the formulations appear on a "clinical need" list to be established by the FDA. In January 2017,
the FDA issued Interim Policy on Compounding Using Bulk Drug Substances Under Section 503B of the FFDCA ("Interim Policy")
which informs stakeholders about how the FDA intends to exercise its enforcement discretion for compounding with those substances on
a "Category 1 list" while the agency compiles and evaluates its clinical needs list, and in March 2019 the FDA issued Evaluation
of Bulk Substances Nominated for Use in Compounding Under Section 503B of the Federal Food, Drug and Cosmetic Act which provides
further guidance as to the FDA's policy for evaluating bulk drug substances nominated for use in compounding by outsourcing facilities.
Entities voluntarily registering as outsourcing facilities are subject to cGMP requirements and regular FDA inspection, among other requirements.
As described above, our current pharmacy operations in New Jersey are governed by Section 503A of the FDCA, and our New Jersey based
outsourcing facility is governed by Section 503B of the FDCA.

 On
July 30, 2020, the FDA issued a notice for comments related to certain bulk drug substances to be removed from the 503B Bulk's
List (or Category 1 List). Included in this notice for comment were certain bulk drug substances which we currently use in some of our
compounded products. In the event one or more of these bulk substances are ultimately removed from the Category 1 List, we intend to
utilize commercially available versions of these substances or similar active pharmaceutical ingredients as replacements of the bulk
powders contained in our sterile products. Nonetheless, if all or some of the bulk drug substances we use are removed from the 503B Bulk's
List, this may result in a disruption in our operations, revenues and cash flows. In addition, between September 2020 and January 2021,
NJOF was inspected by the FDA (the "2020 Inspection") and certain observations were made by the FDA in a Form 483. Five observations
made during the 2020 Inspection were considered repeat observations from a 2017 FDA inspection of NJOF. In addition, during the 2020
Inspection, the FDA noted that we were compounding drugs that did not produce for an individual patient a clinical difference from comparable
approved drugs, as determined by a prescribing practitioner. We have responded to the FDA regarding all of their observations from the
2020 Inspection, including providing documentation from prescribing clinicians that indicate a clinical difference between our compounded
drugs and the comparable approved drugs, while also committing to amend our order process to collect "medical necessity/clinical
difference" information for each order of our compounded drugs on a go-forward basis.

 We
prepare our compounded formulations in accordance with the standards provided by USP <795> and USP <797> and applicable state
and federal law. In November 2023, USP made effective finalized revisions to USP <795> and USP <797>, which had been previously
proposed for public comment in September 2021. The revisions include limitations on beyond use dating of sterile and preservative-free
products and batch sizes, among other changes. Some regulatory bodies such as state boards of pharmacy adopted these changes at that
time, and some have not or plan to on different dates, on a case-by-case basis. While USP has no role in enforcement, we believe the
revisions to USP <797> in particular will likely cause two changes to our business, which in the aggregate should have a neutral
to positive revenue impact on Harrow: (i) a reduction in revenues generated from sales of formulations compounded by our 503A pharmacy,
and (ii) an increase in revenues from sales of formulations compounded in our 503B facility. Further, we believe the changes to USP chapter
<797> will likely cause a reduction in the ability of local 503A pharmacies to produce compounded formulations to serve local markets,
and that these changes in policy affecting sterile compounded formulations, if adopted by the various states, may increase demand for
compounded formulations from larger vendors such as Harrow and cause further consolidation in the market for compounded formulations
as smaller 503A pharmacies see a reduction in revenues from certain segments of their formularies affected by these changes.

 Confidentiality,
Privacy and HIPAA

 Our
pharmacy operations involve the receipt, use and disclosure of confidential medical, pharmacy and other health-related information. In
addition, we use aggregated and blinded (anonymous) data for research and analysis purposes. The federal privacy regulations under HIPAA
are designed to protect the medical information of a healthcare patient or health plan enrollee that could be used to identify the individual.
Among other things, HIPAA limits certain uses and disclosures of protected health information and requires compliance with federal security
regulations regarding the storage, utilization and transmission of and access to electronic protected health information. The requirements
imposed by HIPAA are extensive. In addition, most states and certain other countries have enacted privacy and security laws that protect
identifiable patient information that is not health-related. For example, California recently enacted the California Consumer Privacy
Act (the "CCPA") that creates new individual privacy rights for consumers and places increased privacy and security obligations
on entities handling personal data of consumers or households. Effective January 1, 2020, the CCPA gives California residents expanded
privacy rights and protections, and provides civil penalties for violations and a private right of action for data breaches. The CCPA
exemplifies the vulnerability of our business to not only cyber threats but also the evolving regulatory environment related to personal
data and protected health information. In addition, the California Invasion of Privacy Act prohibits the use of "any machine, instrument,
or contrivance" to tap any telephonic communication and use of any "electronic amplifying or recording device" to eavesdrop
upon a "confidential communication" without consent of all parties to the communication. Other countries also have, or are
developing, laws governing the collection, use and transmission of personal information, such as the General Data Protection Regulation
("GDPR") in the European Union (the "EU") that became effective in May 2018 and the Personal Information Protection
and Electronic Documents Act that became effective in Canada in April 2000. Further, several states have enacted more protective and
comprehensive pharmacy-related privacy legislation that not only applies to patient records but also prohibits the transfer or use for
commercial purposes of pharmacy data that identifies prescribers. These regulations impose substantial requirements on covered entities
and their business associates regarding the storage, utilization and transmission of and access to personal health and non-health information.
Many of these laws apply to our business.

 International
Regulation

 If
we pursue commercialization of our branded products and proprietary formulations in countries other than the United States, then we may
need to obtain the approvals required by the regulatory authorities of such foreign countries that are comparable to the FDA and state
boards of pharmacy, and we would be subject to a variety of other foreign statutes and regulations comparable to those relating to our
U.S. operations. Regulatory frameworks and requirements vary by country and could involve significant additional licensing requirements
and product testing and review periods. We currently partner with companies to sell, market and distribute some of our products in certain
foreign countries.

 Environmental
and Other Matters

 We
are or may become subject to environmental laws and regulations governing, among other things, any use and disposal by us of hazardous
or potentially hazardous substances in connection with our research and preparation of our formulations. In addition, we are subject
to work safety and labor laws that govern certain of our operations and our employee relations. In each of these areas, as described
above, the FDA and other government agencies have broad regulatory and enforcement powers, including, among other things, the ability
to levy fines and civil penalties, suspend or delay issuance of approvals, licenses or permits, seize or recall products, and withdraw
approvals, any one or more of which could have a material adverse effect on our business.

 Research
and Development Expenses

 Our
research and development ("R&D") expenses incurred in 2023 and 2022 primarily included expenses related to development
of intellectual property, researcher and investigator-initiated evaluations, and formulation development related primarily to our ophthalmic
products, formulations and certain other assets, in addition to costs associated with our drug candidate development programs.

the year ended December 31, 2023, we incurred $6,652,000 in R&D expenses, compared to $3,050,000 during the year ended December 31,
2022.

 Financial
Information About Segments and Geographic Areas

 The
Company operates the business on the basis of a single reportable segment, which is the business of discovery, development, and commercialization
of innovative ophthalmic therapies. The Company's chief operating decision-maker is the Chief Executive Officer, who evaluates
the Company as a single operating segment.

 The
Company categorizes revenues by geographic area based on selling location. All operations are currently located in the United States;
therefore, total revenues for 2023 and 2022 were attributed to the United States. All long-lived assets at December 31, 2023 and 2022
were located in the United States.

 Human
Capital

 As
of March 1, 2024, we employed 315 employees. Our employees are engaged in pharmacy operations, sales, marketing, research, development,
and general and administrative functions. We expect to add additional employees in all departmental functions, with a focus on sales
force additions and other commercial activities as we carry out our business plan in the next 12 months. We are not party to any collective
bargaining agreements with any of our employees. We have never experienced a work stoppage, and we believe our employee relations are
good. We hire independent contractors and consultants on an as-needed basis.

 Talent
Acquisition and Retention

 We
recognize that our employees largely contribute to our success. To this end, we support business growth by seeking to attract and retain
best-in-class talent. Our talent acquisition team uses internal and external resources to recruit highly skilled candidates in the U.S.
We believe that we continue to attract and retain superior talent as measured by our turnover rate and employee service tenure.

 Total
Rewards

 Our
total rewards philosophy has been to create investment in our workforce by offering competitive compensation and benefits packages. We
provide employees with compensation packages that include base salary, annual incentive bonuses, and long-term equity awards. We also
offer comprehensive employee benefits, which vary by country and region, such as life, disability, and health insurance, health savings
and flexible spending accounts, paid time off, and a 401(k) plan. It is our expressed intent to be an employer of choice in our industry
by providing market-competitive compensation and benefits packages.

 Health,
Safety, and Wellness

 The
health, safety, and wellness of our employees is a priority in which we have always invested and will continue to do so. We provide our
employees and their families with access to a variety of innovative, flexible, and convenient health and wellness programs. Program benefits
are intended to provide protection and security, so employees can have peace of mind concerning events that may require time away from
work or that may impact their financial well-being.

 Diversity,
Equity, and Inclusion

 We
believe a workforce with diverse life experiences is critical to our success. We appreciate differences in the members of our workforce
such as, race, ethnicity, religion, nationality, gender, age, and sexual orientation, as well as education, skill sets and experience.
Because we are always interested in hiring the most productive and committed talent, we are focused on inclusive hiring practices, fair
and equitable treatment, organizational flexibility, and training and resources.

 Training
and Development

 We
believe in encouraging employees in becoming lifelong learners by providing ongoing learning, training and leadership opportunities.
We provide our employees with a tuition reimbursement program, and in certain instances, onsite training programs. While we strive to
provide real-time recognition of employee performance, we have a formal annual review process not only to determine pay and equity adjustments
tied to individual contributions, but to identify areas where training and development may be needed.

 Corporate
Transparency

 In
2022, we released and published on our corporate website (harrow.com) our Corporate Transparency Report, which describes and summarizes
the initiatives the Company has undertaken and associated metrics related to certain issues including:

 Energy,
 Emissions, Waste and Water

 Embracing
 our Community

 Supply
 Chain Management

 Innovation/Sustainable
 Products

 Community
 Involvement

 Employee
 Health and Safety

 Employee
 Recruitment, Development and Retention

 Governance

 Employee
 Diversity

 Drug
 Safety

 Business
 Ethics, Compliance and Bribery

 Data
 Protection, Patient Data Privacy

 Company
Information

 We
were incorporated in Delaware in January 2006 as Bywater Resources, Inc. In September 2007, we closed a merger transaction with Transdel
Pharmaceuticals Holdings, Inc. and changed our name to Transdel Pharmaceuticals, Inc. We changed our name to Imprimis Pharmaceuticals,
Inc. in February 2012. We changed the name of our company to Harrow Health, Inc. in December 2018 and then to Harrow, Inc. in September
2023.

 Our
corporate headquarters are located at 102 Woodmont Blvd., Suite 610, Nashville, Tennessee, 37205, and our telephone number at such office
is (615) 733-4730. Our website address is www.harrow.com. Information contained on our website is not deemed part of this Annual Report.

 ITEM
1A. RISK FACTORS

 Risk
Factors Summary

 We
are subject to a variety of risks and uncertainties, including financial risks, operational risks, human capital risks, legal proceedings
and regulatory risks and certain general risks, that could have a material adverse effect on our business results of operations, financial
condition and prospects. Risks that we deem material are described under "Risk Factors" below and include, but are not limited
to, the following:

 Risks
Related to Economic Conditions and Operations of Our Business.

 Our
 ability to achieve and maintain profitability for our business

 Our
 ability to successfully market, commercialize, and sell current, recently acquired and future products

 Our
 current indebtedness and ability to access additional capital

 Our
 ability to attract customers and increase sales of current and future products

 Our
 ability to obtain marketing approval and ongoing expense associated with it for any of our drug candidates, including those for which
 we own royalty rights

 Our
 reliance on third parties for manufacturing certain components, FDA approved drugs and to conduct clinical trials

 Our
 exposure to liabilities and reputation harm if our products give rise to defects, recalls, patient injury or death

 Our
 information technology systems exposure to cyberattack or information security breach could significantly compromise the confidentiality,
 integrity and availability of our information technology systems

 Risks
Related to Government Regulations and Third-Party Policies

 Governmental
 regulations, including, but not limited to, potential changes to USP 797, 503B bulks list and others, that could or currently do
 burden operations or narrow the market for our products

 Our
 sales depend on coverage and reimbursement from government and commercial third-party payors, and pricing and reimbursement pressures
 have affected, and are likely to continue to affect, our profitability

 The
 adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability

 Our
 business may be affected by litigation and government investigations

 Risks
Related to Competition

 Securing
 and maintaining patent or other intellectual property protection for our products and related improvements

 Market
 acceptance of our drug products, drug candidates, compounded drugs and pharmacies

 Our
 ability to successfully research, develop and timely manufacture our current and future products and drug candidates

 Our
 ability to enforce protect our intellectual property rights along with the potential of future legal proceedings filed against us
 claiming intellectual property infringement

 Retention,
 recruitment, and training of senior management and key personnel

 Risks
Related to Product Development, Regulatory Approval, Manufacturing and Commercialization

 We
 may not be able to develop commercial products despite significant investments in R&D

 Our
 branded products and product candidates in development cannot be sold without regulatory approval

 Our
 drug candidates may face competition sooner than we expect

 We
 rely on third parties to manufacture and conduct clinical trials of our branded drug products and product candidates

 We
 may not be successful in obtaining market exclusivity for our product candidates

 Risks
Related to the Notes

 Our
 ability to pay the interest and debt service payments associated with the Notes

 The
 Notes are unsecured, effectively subordinated to any secured indebtedness, with limited protection for holders of the Notes

 The
 Notes are subject to various market factors, including market interest rates, trading activity, third-party ratings and other factors

 Risks
Related to Our Common Stock

 Volatility
 of the price of our common stock

 Our
 stock price falling as a result of future offerings or sales

 You
should carefully consider the following risk factors in addition to the other information contained in this Annual Report. Our business,
financial condition, results of operations, and prices of our common stock and Notes could be materially adversely affected by any of
these risks.

 Risks
Related to Economic Conditions and Operations of Our Business.

 We
may not be profitable in the future.

 As
of December 31, 2023, our accumulated deficit was $(133,904,000). Our current projections indicate that we will have operating income
and/or net income during 2024; however, these projections may not be correct and our plans could change. Also, we could incur increasing
operating losses in the foreseeable future for our commercialization activities, research and development, and our pharmaceutical compounding
business, which would impact net income. Recent changes to the accounting for equity investments require those investments to be measured
at fair market value, which may cause our earnings (losses) to become volatile as the stock prices of those equity investments fluctuate.
Although we have been generating revenue from our pharmaceutical operations, our ability to generate the revenues necessary to achieve
profitability will depend on many factors, including those discussed in this "Risk Factors" section. Our business plan and
strategies involve costly activities that are susceptible to failure, and, therefore, we may not be able to generate sufficient revenue
to support and sustain our business or reach the level of sales and revenues necessary to achieve and sustain profitability.

 We
may not receive sufficient revenue to fund our operations and recover our development costs.

 Our
business plan involves the preparation and sale of our proprietary formulations through our compounding pharmacies and outsourcing facilities,
along with the sale and marketing of FDA-approved products and drug candidates through third-party wholesaler and pharmacy channels.
We have limited experience operating pharmacies and commercializing compounded formulations and selling FDA-approved products, and we
may be unable to successfully manage this business or generate sufficient revenue to recover our development costs and operational expenses.
We may have only limited success in marketing and selling our products and formulations. Although we have established and plan to grow
our internal sales teams to market and sell our products and formulations and other non-proprietary products, we have limited experience
with such activities and may not be able to generate sufficient physician and patient interest in our products and formulations to generate
significant revenue from sales of these products. In addition, we are substantially dependent on our ImprimisRx compounding pharmacies
and outsourcing facilities, along with any pharmacy partners with which we may contract to compound and sell our formulations and products
using our quality standards and specifications, in a timely manner and sufficient volumes to accommodate the number of prescriptions
they receive. Our pharmacies may be unable to compound our formulations successfully, and we may be unable to acquire, build or enter
into arrangements with pharmacies or outsourcing facilities of sufficient size, reputation and quality to implement our business plan,
which would cause our business to suffer.

 We
may fail to realize the anticipated benefits of our recent and any future product acquisitions.

 The
success of our product acquisitions will depend on, among other things, our ability to successfully integrate the products into our commercial
platform, transfer the products NDAs, maintain payor reimbursement coverage, maintain an adequate supply of the products, market the
products to our existing customers and re-introduce TRIESENCE to the ophthalmic market. If we experience difficulties with the implementation
of plans with respect to our acquisitions, the anticipated benefits of recent or future acquisitions may not be realized fully or at
all, or may take longer to realize than expected. Integration efforts will also divert management's attention and resources. These
matters could have an adverse effect during any transition period and for an undetermined period after completion of the acquisitions.

 We
may not be able to correctly estimate our future operating expenses, which could lead to cash shortfalls.

 The
estimates of our future operating and capital expenditures are based upon our current business plan, our current operations and our current
expectations regarding the commercialization of our proprietary formulations. Our projections have varied significantly in the past as
a result of changes to our business model and strategy, our termination of efforts to pursue FDA approval of a drug candidate in November
2013, our acquisitions of compounding facilities and various product and corporate development opportunities since 2014, the expenses
associated with developing our pharmacy facilities into outsourcing facilities and registering them as such with the FDA and our recent
strategic shift to develop and commercialize FDA approved products. We may not accurately estimate the potential revenues and expenses
of our operations. If we are unable to correctly estimate the amount of cash necessary to fund our business, we could spend our available
financial resources much faster than we expect. If we do not have sufficient funds to continue to operate and develop our business, we
could be required to seek additional financing earlier than we expect, which may not be available when needed or at all, or be forced
to delay, scale back or eliminate some or all of our proposed operations.

 If
we do not successfully identify and acquire rights to new products and drug candidates and successfully integrate them into our operations,
our growth opportunities may be limited.

 We
plan to pursue the development of new FDA approved products and drug candidates which may include continued activities to develop and
commercialize current assets or, if and as opportunities arise, potential acquisitions of new intellectual property rights and assets.
We have historically relied, and we expect to continue to rely, primarily upon third parties to provide us with additional development
opportunities. We may seek to enter into acquisition agreements or licensing arrangements to obtain rights to develop new formulations
and FDA approved products in the future, but only if we are able to identify attractive products and formulations and negotiate acquisition
or license agreements on terms acceptable to us, which we may not be able to do. Moreover, we have limited resources to acquire additional
potential product development assets and integrate them into our business. Acquisition opportunities may involve competition among several
potential purchasers, which could include large multi-national pharmaceutical companies and other competitors that have access to greater
financial resources than we do. If we are unable to obtain rights to development and commercial opportunities from third parties and
we are unable to rely upon our compounding pharmacies and current and future relationships with pharmacists, physicians and other inventors
to provide us with additional development opportunities, our growth and prospects could be limited.

 Our
product development strategy is to focus on ophthalmology and eye care related products and formulations for which we believe there is
broad market potential, large unmet needs and/or unique value to physicians and patients and to develop and offer formulations and products
within these therapeutic areas that could afford us with gross and operating margins consistent with our current and historical figures.
However, our expectations and assumptions about market potential and patient needs may prove to be wrong, and we may invest capital and
other resources on products, drug candidates, and formulations that do not generate sufficient revenues for us to recoup our investment.

 We
may be unable to successfully develop and commercialize our proprietary formulations or any other assets we may acquire.

 We
have acquired assets related to compoundable formulations, drug products and drug candidates. We are currently pursuing development and
commercialization opportunities with respect to a number of these products, drug candidates and formulations, and we are in the process
of assessing certain of our other assets in order to determine whether to pursue their development or commercialization. In addition,
we expect to consider the acquisition of additional intellectual property rights or other assets in the future. Once we decide to pursue
a potential drug candidate, we develop a commercialization strategy for it, which may include marketing and selling the formulation in
compounded form through compounding pharmacies or outsourcing facilities, or pursuing FDA approval of the drug candidate. We may incorrectly
assess the risks and benefits of the commercialization options or we may not pursue a commercialization strategy that proves to be successful.
If we are unable to successfully commercialize one or more of our proprietary formulations, drug products and drug candidates, our operating
results would be adversely affected. Even if we are able to successfully sell one or more proprietary formulations, drug products and
drug candidates, we may never recoup our investment in acquiring or developing the formulations, drug products and drug candidates. Our
failure to identify and expend our resources and technologies with commercial potential and execute an effective commercialization strategy
for each of our formulations, drug products and drug candidates would negatively impact the long-term profitability of our business.

 We
may need additional capital in order to continue operating our business, and such additional funds may not be available when needed,
on acceptable terms, or at all.

 We
only recently started generating cash from operations, but we do not currently earn sufficient revenues to support our operations. We
may need significant additional capital to execute our business plan, execute on future acquisitions and fund our proposed business operations.
Additionally, our plans may change or the estimates of our operating expenses and working capital requirements could be inaccurate, we
may pursue acquisitions of FDA-approved products, drug candidates, pharmacies or other strategic transactions that involve large expenditures,
or we may experience growth more quickly or on a larger scale than we expect, any of which may result in the depletion of capital resources
more rapidly than anticipated and could require us to seek additional financing earlier than we expect to support our operations.

 We
have raised over $285,000,000 in gross proceeds through equity and debt financings since 2021. We may seek to obtain additional capital
through equity or debt financings, funding from corporate partnerships or licensing arrangements, sales of assets or other financing
transactions. If we issue additional equity or convertible debt securities to raise funds, our existing stockholders may experience substantial
dilution, and the newly issued equity or debt securities may have more favorable terms or rights, preferences and privileges senior to
those of our existing stockholders. If we raise additional funds through collaboration and licensing arrangements or sales of assets,
we may have to relinquish potentially valuable rights to our drug candidates or proprietary technologies, or grant licenses on terms
that are not favorable to us. If we raise funds by incurring additional debt, we may be required to pay significant interest expenses
and our leverage relative to our earnings or to our equity capitalization may increase. Obtaining commercial loans, assuming those loans
would be available, would increase our liabilities and future cash commitments and may impose restrictions on our activities, such as
the financial and operating covenants. Further, we may incur substantial costs in pursuing future capital and/or financing transactions,
including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required
to recognize non-cash expenses in connection with certain securities we may issue, such as options, convertible notes and warrants, which
would adversely impact our financial results.

 We
have in the past participated and may in the future participate in strategic transactions that could impact our liquidity, increase our
expenses and distract our management.

 From
time to time, we consider engaging in strategic transactions, such as out-licensing or in-licensing of compounds, drug candidates, drug
products or technologies, acquisitions of companies, and asset purchases. We may also consider a variety of different business arrangements
in the future, including strategic partnerships, joint ventures, spin-offs, carve-outs, restructurings, divestitures, business combinations
and investments. In addition, another entity may pursue us or certain of our assets or aspects of our operations as an acquisition target.
Any such transactions may require us to incur expenses specific to the transaction and not incident to our operations, may increase our
near- and long-term expenditures, may pose significant integration challenges, may require us to hire or otherwise engage personnel with
additional expertise, or may result in our selling or licensing of our assets or technologies under terms that may not prove profitable,
any of which could harm our operations and financial results. Such transactions may also entail numerous other operational and financial
risks, including, among others, exposure to unknown liabilities, disruption of our business and diversion of our management's time
and attention in order to develop acquired products, drug candidates, technologies or businesses.

 As
part of our efforts to complete any significant transaction, we would need to expend significant resources to conduct business, regulatory,
legal and financial due diligence, with the goal of identifying and evaluating material risks involved in the transaction. We may be
unsuccessful in ascertaining or evaluating all the risks and, as a result, we may not realize the expected benefits of the transaction,
whether due to unidentified risks, integration difficulties, regulatory setbacks or other events. We may incur material liabilities for
the past activities of any businesses we partner with or acquire. If any of these events occur, we could be subject to significant costs
and damage to our reputation, business, results of operations and financial condition.

 If
we are unable to establish, train and maintain an effective sales and marketing infrastructure, we will not be able to commercialize
our drug candidates successfully.

 We
have built an internal sales and marketing infrastructure to implement our business plan by developing internal sales teams and education
campaigns to market our proprietary formulations and FDA-approved drug products. We will need to expend significant resources to further
establish and grow this internal infrastructure and properly train sales personnel with respect to regulatory compliance matters. We
may also choose to engage or enter into other arrangements with third parties to provide sales and marketing services for us in place
of or to supplement our internal commercialization infrastructure. We may not be able to secure sales personnel or relationships with
third-party sales organizations that are adequate in number or expertise to successfully market and sell our proprietary formulations,
drug products and pharmacy services. Further, any third-party organizations we may seek to partner with or engage may not be able to
provide sales and marketing services in accordance with our expectations and standards, may be more expensive than we can afford or may
not be available on otherwise acceptable terms or at all. If we are unable to establish and maintain compliant and adequate sales and
marketing capabilities, through our own internal infrastructure or third-party services or other arrangements, we may be unable to sell
our formulations, drug products or services or generate meaningful revenues.

 Our
business and operations would suffer in the event of cybersecurity or other system failures.

 Despite
the implementation of security measures, our internal computer systems and those of any third parties with which we partner are vulnerable
to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
While we have not experienced any cybersecurity or system failure, accident or breach to date, if an event were to occur, it could result
in a material disruption of our operations, substantial costs to rectify or correct the failure, if possible, and potentially violation
of HIPAA and other privacy laws applicable to our operations. For example, the CCPA became effective on January 1, 2020 and gave California
residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing
and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations,
as well as a private right of action for data breaches that may increase data breach litigation. Although the CCPA includes exemptions
for certain clinical trials data, and HIPAA-protected health information, the law may increase our compliance costs and potential liability
with respect to other personal information we collect about California residents. The CCPA has prompted a number of proposals for new
federal and state privacy legislation. Other countries also have, or are developing, laws governing the collection, use and transmission
of personal information, such as the GDPR in the EU that became effective in May 2018 and the Personal Information Protection and Electronic
Documents Act that became effective in Canada in April 2000. We anticipate that over time we may expand our business to include operations
outside of the United States. With such expansion, we would be subject to increased governmental regulation in the EU countries in which
we might operate, including the GDPR. These laws and similar laws adopted in the future could increase our potential liability, increase
our compliance costs and adversely affect our business. If any disruption or security breach resulted in a loss of or damage to our data
or applications or inappropriate disclosure of confidential or protected information, we could incur liability, further development of
our proprietary formulations could be delayed, and our pharmacy operations could be disrupted, subject to restriction or forced to terminate
their operations, any of which could severely harm our business and prospects.

 We
depend upon consultants, outside contractors and other third-party service providers for key aspects of our business.

 We
are substantially dependent on consultants and other outside contractors and service providers for key aspects of our business. For instance,
we rely upon pharmacist, physician and research consultants and advisors to provide us with significant assistance in the evaluation
of product development opportunities, and we have engaged or supported, and expect to continue to engage or support, consultants, advisors,
contract manufacturers, clinical research organizations ("CROs"), and others to design, conduct, analyze and interpret the
results of any clinical or non-clinical trials or other studies in connection with the research and development of our products. If any
of our consultants or other service providers terminates its engagement with us, or if we are unable to engage highly qualified replacements
as needed on commercially reasonable terms, we may be unable to successfully execute our business plan. We must effectively manage these
third-party service providers to ensure that they successfully carry out their contractual obligations and meet expected deadlines. However,
these third parties often engage in other business activities and may not devote sufficient time and attention to our activities, and
we may have only limited contractual rights in connection with the conduct of the activities we have engaged the service providers to
perform. If we are unable to effectively manage our outsourced activities or if the quality, timeliness or accuracy of the services provided
by third-party service providers is compromised for any reason, our development activities may be extended, delayed or terminated, and
we may not be able to commercialize our formulations or advance our business.

 If
a compounded drug formulation provided through our compounding services leads to patient injury or death or results in a product recall,
we may be exposed to significant liabilities and reputational harm.

 The
success of our business, including our proprietary formulations and pharmacy operations, is highly dependent upon medical and patient
perceptions of us and the actual safety and quality of our products. We could be adversely affected if we, any other compounding pharmacies
or our formulations and technologies are subject to negative publicity. We could also be adversely affected if any of our formulations
or other products we sell, any similar products sold by other companies, or any products sold by other compounding pharmacies prove to
be, or are asserted to be, harmful to patients. For instance, if any of the components of approved drugs or other ingredients used to
produce our compounded formulations have quality or other problems that adversely affect the finished compounded preparations, our sales
could be adversely affected. Because of our dependence upon medical and patient perceptions, adverse publicity associated with illness
or other adverse effects resulting from the use or misuse of our products, any similar products sold by other companies, or any other
compounded formulations could have a material adverse impact on our business.

 To
assure compliance with USP guidelines, we have a policy whereby 100% of all sterile compound batches produced by our ImprimisRx compounding
pharmacies are tested prior to their delivery to patients and physicians both in-house and externally by an independent, FDA-registered
laboratory that has represented to us that it operates in compliance with current good laboratory practices. However, we could still
become subject to product recalls and termination or suspension of our state pharmacy licenses if we fail to fully implement this policy,
if the laboratory testing does not identify all contaminated products, or if our products otherwise cause or appear to have caused injury
or harm to patients. In addition, laboratory testing may produce false positives, which could harm our business and impact our pharmacy
operations and licensure even if the impacted formulations are ultimately found to be sterile and no patients are harmed by them. If
adverse events or deaths or a product recall, either voluntarily or as required by the FDA or a state board of pharmacy, were associated
with one of our proprietary formulations or any compounds prepared by our ImprimisRx compounding pharmacies or any pharmacy partner,
our reputation could suffer, physicians may be unwilling to prescribe our proprietary formulations or order any prescriptions from such
pharmacies, we could become subject to product and professional liability lawsuits, and our state pharmacy licenses could be terminated
or restricted. If any of these events were to occur, we may be subject to significant litigation or other costs and loss of revenue,
and we may be unable to continue our pharmacy operations and further develop and commercialize our proprietary formulations.

 We
carry product and professional liability insurance, which may be inadequate.

 Although
we have secured product and professional liability insurance for our pharmacy operations and the marketing and sale of our formulations,
our current or future insurance coverage may prove insufficient to cover any liability claims brought against us. Because of the increasing
costs of insurance coverage, we may not be able to maintain insurance coverage at a reasonable cost or at a level adequate to satisfy
liabilities that may arise.

 Business
disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

 Our
operations, and those of CROs, contractors and consultants, could be subject to power shortages, telecommunications failures, wildfires,
water shortages, floods, earthquakes, hurricanes, typhoons, fires, extreme weather conditions, public health crises, and other natural
or man-made disasters or business interruptions for which we are predominantly self-insured. The occurrence of any of these business
disruptions could seriously harm our operations and financial condition and increase our costs and expenses. Our ability to obtain clinical
supplies of our product candidates could be disrupted if the operations of our contract manufacturers or the contract manufacturers of
our development partners are affected by a man-made or natural disaster or other business interruption.

 We
sell our proprietary formulations primarily through pharmaceutical compounding facilities we own, but we may not be successful in our
efforts to integrate these businesses into our operations.

 We
currently have two compounding facilities in New Jersey. We may expand our pharmacy operations and personnel. We have developed "ImprimisRx"
as a uniform brand for our compounding facilities and ophthalmology focused pharmaceutical business. We have limited experience acquiring,
building or operating compounding pharmacies or other prescription dispensing facilities or commercializing our formulations through
ownership of or licensing arrangements with pharmacies. In addition, as we have in the past purchased and operated certain pharmaceutical
compounding businesses and pharmacies and subsequently divested or sold those associated assets, we may pursue similar strategies in
the future. Those things considered, we may experience difficulties implementing and/or executing on our compounding pharmacy strategy,
including difficulties that arise as a result of our lack of experience, and we may be unsuccessful and our plans may change materially.
For instance:

 we
 have experienced delays and increased costs in relation to expansion efforts;

 we
 may not be able to satisfy applicable federal and state licensing and other requirements for any of our pharmacy businesses in a
 timely manner or at all;

 changes
 to federal and state pharmacy regulations may restrict compounding operations or make them more costly;

 we
 may be unable to achieve or maintain a sufficient physician and patient customer base to sustain our pharmacy operations;

 market
 acceptance of compounding pharmacies generally may be curtailed or delayed; and

 we
 may not be able to enter into licensing or other arrangements with third-party pharmacies or outsourcing facilities when desired,
 on acceptable terms or at all.

 Moreover,
all our efforts to expand pharmacy operations will involve significant costs and other resources, which we may not be able to afford
and may disrupt our other operations and distract management and employees from the other aspects of our business. As a result, our business
could materially suffer if we are unable to further develop a group of unified compounding facilities and, even if we are successful,
we may be unable to generate sufficient revenue to recover our costs.

 We
are dependent on market acceptance of compounding pharmacies and compounded formulations, and physicians may be unwilling to prescribe,
and patients may be unwilling to use, our proprietary customizable compounded formulations.

 We
currently distribute our proprietary formulations through compounding pharmacies and an outsourcing facility. Formulations prepared and
dispensed by compounding pharmacies contain FDA-approved ingredients, but are not themselves approved by the FDA. Thus, our compounded
formulations have not undergone the FDA approval process and only limited data, if any, may be available about the safety and efficacy
of our formulations for any particular indication. Certain compounding pharmacies have been subject to widespread negative media coverage
in recent years, and the actions of these pharmacies have resulted in increased scrutiny of compounding pharmacy activities from the
FDA and state governmental agencies. For example, the FDA has issued formal requests to compounding pharmacies and outsourcing facilities
to conduct a recall of all non-expired, purportedly sterile drug products and to cease sterile compounding operations due to lack of
sterility assurance. As a result, some health care providers may be reluctant to purchase and use compounded drugs. Our growth and future
sales depend not only on our ability to demonstrate in the face of increased scrutiny the quality and safety of our pharmacies and outsourcing
facilities and our compliance with more stringent regulatory standards at the federal and state levels, but also on the continued acceptance
of compounded drugs and formulations, particularly outsourced compounded drugs and formulations, in the marketplace.

 An
incident similar to the fungal meningitis outbreak in 2012, which was caused by a compounding pharmacy employing a non-sterile-to-sterile
business model, could cause our customers to reduce their use of compounded formulations significantly or even stop using compounded
drugs altogether. States have in the past, and could in the future, enact regulations prohibiting or restricting the use of compounding
pharmacies and outsourcing facilities in response to such incidents. Such prohibitions or restrictions by states or reduced customer
demand as a result of an incident with compounded drugs and formulations could have a material adverse effect on our business, results
of operations and financial condition.

 In
August 2017, the FDA issued a MedWatch notification regarding our curcumin emulsion and two adverse events that had been associated with
the use of these emulsions by prescribing physicians. We issued a press release on August 7, 2017, clarifying certain facts regarding
the notice which outlined our belief that the adverse events associated with the two patients occurred due to an allergic reaction caused
by the products being inappropriately administered and obtained by the prescribing physician, and our use of curcumin and excipients
in our curcumin emulsion formulation met regulatory standards required for dispensing of the curcumin emulsion. In September 2017, the
FDA released a letter confirming that the alleged misuse of certain ingredients in our curcumin emulsions were due to mislabeling by
the underlying supplier, and not of our own misdoing. We no longer compound curcumin emulsion products. Separately, in December 2017,
we were issued a warning letter from the FDA alleging that, in its interpretation of our public communications, we had made false or
misleading claims and omitted risk and side effect information regarding certain of our ophthalmology focused compounded medications.
We immediately performed a full review of our public communications referenced in the warning letter and responded to the FDA in January
2018, notwithstanding our continued belief that our public communications were not in fact false and misleading, we remained in communication
with the FDA and took steps to address the items outlined in the FDA letter. The Company received another warning letter from the FDA
in June 2022 related to our alleged marketing activities. We immediately responded to the warning letter and the FDA sent the Company
notice in January 2023 that our corrective actions appear adequate. In June 2019, our outsourcing facility was issued a warning letter
related to an April 2017 inspection and our use of certain active pharmaceutical ingredients in our compounded medications. During September
2020 through January 2021, our New Jersey based outsourcing facility was inspected by the FDA (the "2020 Inspection") and
certain observations were made by the FDA in a Form 483. Five observations made during the 2020 Inspection were considered repeat observations
from a 2017 FDA inspection. In addition, during the 2020 Inspection, the FDA noted that we were compounding drugs for which there is
no change that produces for an individual patient a clinical difference, as determined by a prescribing practitioner between a compounded
drug and the comparable approved drug. We have responded to the FDA regarding all of their observations from the 2020 Inspection, including
providing documentation from prescribing clinicians that indicate a clinical difference between our compounded drugs and the comparable
approved drugs, while also committing to amend our order process to collect "medical necessity/clinical difference" information
for each order of our compounded drugs on a go-forward basis. Our pharmacy was inspected in August 2022, and received a Form 483 with
several observations from the FDA. In May 2023, our pharmacy received a warning letter related to the inspection that occurred in August
2022. The warning letter indicated that our corrective actions from the inspection had appeared to be adequate; however, the FDA could
not fully evaluate the adequacy of our actions because we did not include sufficient information or supporting documentation. As an example,
we stated that smoke studies related to airflow in our laminar airflow hoods had been redone to satisfy FDA requirements, however, we
did not provide the FDA with supporting documentation (such as smoke study protocol, updated detailed report and/or videos). We have
responded to this warning letter and provided the FDA with additional information requested.

 We
have worked and communicated, and will continue to work and communicate, with the FDA to assure that all allegations in the warning letters
and Form 483s have been addressed. We believe, to date, we have addressed all of the material items of concern in the FDA's Form
483, warning letters and those related to the MedWatch notification (and any other requirements observed by the FDA and noted to us),
and we do not believe there will be any further action taken by the FDA in these matters. We believe this is evidenced by the FDA registration
for our outsourcing facility which was most recently renewed in November 2022. Nonetheless, these items increased further scrutiny and
negative publicity on us as a company. As part of our commitment to actively work with regulators, at times, we have become aware of
concerns related to certain formulations, and as a result, discontinued compounding certain drug formulations in an attempt to help mitigate
potential regulatory risk. As a result of the MedWatch notice, warning letters and other regulatory notifications, some physicians may
be hesitant to prescribe and some patients may be hesitant to purchase and use non-FDA-approved compounded formulations, particularly
when an FDA-approved potential alternative is available. For other reasons, physicians may be unwilling to prescribe or patients may
be unwilling to use our proprietary compounded formulations, including, but not limited to, the following: legal prohibitions on our
ability to discuss the efficacy or safety of our formulations with potential users to the extent applicable data is available; our pharmacy
operations are primarily operating on a cash-pay basis and reimbursement may or may not be available from third-party payors, including
the government Medicare and Medicaid programs; and certain formulations are not required to be prepared and are not presently being prepared
in a manufacturing facility governed by cGMP requirements. Any failure by physicians, patients and/or third-party payors to accept and
embrace compounded formulations could substantially limit our market and cause our operations to suffer.

 A
breakdown of our information technology systems, or a cyberattack or information security breach could significantly compromise the confidentiality,
integrity and availability of our information technology systems, network-connected control systems and/or our data, interrupt the operation
of our business and/or affect our reputation.

 To
achieve our business objectives, we rely on sophisticated information technology systems, including hardware, software, technology infrastructure,
online sites and networks for both internal and external operations, mobile applications, cloud services and network-connected control
systems, some of which are managed, hosted, provided or serviced by third parties. Internal or external events that compromise the confidentiality,
integrity and availability of our systems and data may significantly interrupt the operation of our business, result in significant costs
and/or adversely affect our reputation.

 Our
information technology systems are highly integrated into our business, including our customer service infrastructure, R&D efforts,
clinical and commercial manufacturing processes and product sales and distribution processes. Further, as the large part of our employees
work remotely for some portion of their jobs, our reliance on our third-party information technology systems has increased substantially
and is expected to continue to increase. Remote and hybrid working arrangements can increase cybersecurity risks due to the challenges
associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
The complexity and interconnected nature of software, hardware and our systems make them vulnerable to breakdown or other service interruptions,
and to software errors or defects, misconfiguration and other security vulnerabilities. Upgrades or changes to our systems or the software
that we use have resulted and we expect, in the future, will result in the introduction of new cybersecurity vulnerabilities and risks.
Our systems are also subject to frequent perimeter network reconnaissance and scanning, phishing and other cyberattacks. As the cyber-threat
landscape evolves, these attacks are growing in frequency, sophistication, and intensity, and are becoming increasingly difficult to
detect and increasingly sophisticated in using techniques and tools—including artificial intelligence—that circumvent security
controls, evade detection and remove forensic evidence. Such attacks could include the use of harmful and virulent malware, including
ransomware or other denials of service, which can be deployed through various means, including the software supply chain, e-mail, malicious
websites and/or the use of social engineering/phishing.

 We
have experienced attacks against our network, although none that have had a material adverse impact to our business. There can be no
assurance that our efforts to guard against the wide and growing variety of potential attack techniques will be successful. Attacks such
as those experienced by government entities (including those that approve and/or regulate our products) and other multi-national companies,
including some of our peers, could leave us unable to utilize key business systems or access or protect important data, and could have
a material adverse effect on our ability to operate our business, including developing, gaining regulatory approval for, manufacturing,
selling and/or distributing our products. For example, in 2017, a pharmaceutical company experienced a cyberattack involving virulent
malware that significantly disrupted its operations, including its research and sales operations and the production of some of its medicines
and vaccines. As a result of the cyberattack, its orders and sales for certain products were negatively affected. In late 2020, SolarWinds
Corporation, a leading provider of software for monitoring and managing information technology infrastructure, disclosed that it had
suffered a cybersecurity incident whereby attackers had inserted malicious code into legitimate software updates for its products that
were installed by myriad private and government customers, enabling the attackers to access a backdoor to such systems. In 2022, Okta,
Inc., a provider of software that helps companies manage user authentication, disclosed that several hundred of its corporate customers
were vulnerable to a security breach that allowed attackers to access Okta's internal network. Although this breach did not have
a significant effect on our business, there can be no assurance that a similar future breach would not result in a material adverse effect
on our business or results of operations.

 Our
systems contain and use a high volume of sensitive data, including intellectual property, trade secrets and other proprietary business
information, financial information, regulatory information, strategic plans, sales trends and forecasts, litigation materials and/or
personal identifiable information belonging to us, our staff, our patients, customers and/or other parties. In some cases, we utilize
third-party service providers to collect, process, store, manage or transmit such data, which have increased our risk. Intentional or
inadvertent data privacy or security breaches (including cyberattacks) resulting from attacks or lapses by employees, service providers
(including providers of information technology-specific services), business partners, nation states (including groups associated with
or supported by foreign intelligence agencies), organized crime organizations, "hacktivists" or others, create risks that
our sensitive data may be exposed to unauthorized persons, our competitors or the public. System vulnerabilities and/or cybersecurity
breaches experienced by our third-party service providers constitute a substantial share of the information security risks to our business.
There can be no assurance that a cybersecurity incident would not result in a material adverse effect on our business or results of operations.
Further, the timeliness of our awareness of a cybersecurity incident affects our ability to respond to and work to mitigate the severity
of such events.

 Cyberattackers
are also increasingly exploiting vulnerabilities in commercially available software from shared or open-source code. We rely on third
party commercial software that have had and may have such vulnerabilities, but as use of open-source code is frequently not disclosed,
our ability to fully assess this risk to our systems is limited. There can be no assurances that a vulnerability in the software and
services that we use would not result in a material adverse effect on our business or results of operations.

 Domestic
and global government regulators, our business partners, suppliers with whom we do business, companies that provide us or our
partners with business services and companies we have acquired or may acquire face similar risks. Security breaches of their systems
or service outages have adversely affected systems and could, in the future, affect our systems and security, leave us without
access to important systems, products, raw materials, components, services or information, or expose our confidential data or
sensitive personal information. An extended service outage affecting these or other vendors, particularly where such vendor is the
single source from which we obtain the services, could have a material adverse effect on our business or results of operations. For
example, in February 2024, UnitedHealth Group announced that a suspected nation-state associated cyber security threat actor had
gained access to some of the Change Healthcare ("Change") information technology systems. Change is the largest
clearinghouse for medical claims in the U.S. While Harrow was not directly impacted by this cybersecurity incident, it was reported
that as a reaction to the cybersecurity incident, Change temporarily disconnected over 100 related payment systems and Change was
unable to process medical claims through its primary platforms. This resulted in the delays to the revenue and cash collection cycle
for several ASCs and physician offices, putting a strain on their cash resources. While temporary, the cash constraints for these
ASCs and physician offices, we believe, impacted sales of some of our products, such as IHEEZO, during this disrupted period of
time. In addition, we distribute our products in the United States primarily through three pharmaceutical wholesalers, and a
security breach that impairs the distribution operations of our wholesalers could significantly impair our ability to deliver our
products to healthcare providers and patients. There can be no assurance that our cybersecurity risk management program and
processes, including our policies, controls, or procedures, will be effective in protecting our information technology systems and
sensitive data.

 We
will continue to experience varying degrees of cyberattacks and other incidents in the future. Even though we continue to invest in the
monitoring, protection and resilience of our critical and/or sensitive data and systems, there can be no assurances that our efforts
will detect, prevent or fully recover systems or data from all breakdowns, service interruptions, attacks and/or breaches of our systems
that could adversely affect our business and operations and/or result in the loss or exposure of critical, proprietary, private, confidential
or otherwise sensitive data, which could result in material financial, legal business or reputational harm to us or negatively affect
our stock price. While we maintain cyber-liability insurance, our insurance is not sufficient to cover us against all losses that could
potentially result from a service interruption, breach of our systems or loss of our critical or sensitive data.

 We
are also subject to various laws and regulations globally regarding privacy and data protection, including laws and regulations relating
to the collection, storage, handling, use, disclosure, transfer and security of personal data. The legislative and regulatory environment
regarding privacy and data protection is continuously evolving and developing and the subject of significant attention globally. For
example, we are subject to the CCPA, which became effective in January 2020, which can result in substantial penalties for noncompliance.
The CCPA was amended in late 2020, to create the California Privacy Rights Act to create opt in requirements for the use of sensitive
personal data and the formation of a new dedicated agency for the enforcement of the law, the California Privacy Protection Agency. Similar
consumer privacy laws went into effect in Virginia, Colorado, Utah, Connecticut and Florida in 2023. Consumer privacy laws were also
passed in 11 other states, with the earliest effective dates later this year, and proposed in three additional states. Failure to comply
with these current and future laws could result in significant penalties and reputational harm and could have a material adverse effect
on our business and results of operations.

 Risks
Related to Government Regulations and Third-Party Policies

 Our
business is significantly impacted by state and federal statutes and regulations.

 Our
proprietary compounded formulations are comprised of active pharmaceutical ingredients that are components of drugs that have received
marketing approval from the FDA, although our proprietary compounded formulations have not themselves received FDA approval. FDA approval
is not required in order to market and sell our compounded formulations. We are pursuing FDA approval to market and sell drug candidates.
The marketing and sale of those drug candidates, FDA-approved drugs and compounded formulations are subject to and must comply with extensive
state and federal statutes and regulations governing those products and compounding pharmacies. These compounding statutes and regulations
include, among other things, restrictions on compounding for office use or in advance of receiving a patient-specific prescription or,
for outsourcing facilities, requirements regarding preparation, such as regular FDA inspections and cGMP requirements, prohibitions on
compounding drugs that are essentially copies of FDA-approved drugs, limitations on the volume of compounded formulations that may be
sold across state lines, and prohibitions on wholesaling or reselling. These and other restrictions on the activities of compounding
pharmacies and outsourcing facilities may significantly limit the market available for compounded formulations, compared to the market
available for FDA-approved drugs.

 Our
pharmacy business is impacted by federal and state laws and regulations governing the following: the purchase, distribution, management,
compounding, dispensing, reimbursement, marketing and labeling of prescription drugs and related services including: FDA and/or state
regulation affecting the pharmacy and pharmaceutical industries, including state pharmacy licensure and registration or permit standards;
rules and regulations issued pursuant to HIPAA and other state and federal laws related to the use, disclosure and transmission of health
information; and state and federal controlled substance laws. Our failure to comply with any of these laws and regulations could severely
limit or curtail our pharmacy operations, which would materially harm our business and prospects. Further, our business could be adversely
affected by changes in these or any newly enacted laws and regulations, and federal and state agency interpretations of the statutes
and regulations. Statutory or regulatory changes could require us to make changes to our business model and operations and/or could require
us to incur significantly increased costs to comply with such regulations.

 On
July 30, 2020, the FDA issued a notice for comments related to certain bulk drug substances to be removed from the 503B Bulk's
List (or Category 1 List). Included in this notice for comment were certain bulk drug substances which we currently use in some of our
compounded products. In the event one or more of these bulk substances are ultimately removed from the Category 1 List, we intend to
utilize commercially available versions of these substances or similar active pharmaceutical ingredients as replacements of the bulk
powders contained in our sterile products. In addition, nothing in the FDA's notice affects the dispensing of bulk powder-containing
products from our 503A pharmacy. Nonetheless, if all or some of the bulk drug substances we use are removed from the 503B Bulk's
List, this may result in a disruption in our operations, revenues and cash flows.

 On
October 27, 2020, the FDA announced availability of a final Memorandum of Understanding, Addressing Certain Distributions of Compounded
Human Drug Products Between the State Board of Pharmacy or Other Appropriate State Agency and the Food and Drug Administration (the
"Final MOU"). The Final MOU describes the responsibilities of a state board of pharmacy, or other appropriate state agency
that chooses to sign the Final MOU, in investigating and responding to complaints related to drug products compounded in such state and
distributed outside such state and in addressing the interstate distribution of inordinate amounts of compounded human drug products.
Additionally, as part of the Final MOU, the FDA refined the definition of "inordinate amount," a threshold for certain information
identification and sharing which does not place a limit on the distribution of compounded human drug products interstate by a pharmacy
located in a state that has entered into the Final MOU. Section 503A of the FDCA sets a 5% limit on compounded drugs distributed outside
the state by a pharmacist, pharmacy or physician located in a state that has not entered into the Final MOU.

 In
February 2022, the FDA said it would suspend implementation of the Final MOU and engage in a formal rulemaking process. During the rulemaking
process, the agency will not enter into new agreements with states based on the Final MOU. The FDA does not expect states that have signed
the Final MOU to carry out the activities described in the Final MOU. Thus, there is no reporting requirement for any pharmacy concerning
interstate shipments pursuant to Section 503A and will not be until the Final MOU is finalized through the rulemaking process, which
will include the engagement of a notice-and-comment and rulemaking period to implement certain provisions of Section 503A. The agency
indicated that the process may take "several years" to complete. In the same announcement, the FDA stated it does not intend
to enforce the statutory 5% limit on the distribution of compounded drugs out of the state in which they are compounded by compounders
located in states that do not sign the Final MOU for the duration of the rulemaking process.

 If
we or our partner facilities fail to comply with the Controlled Substances Act, FDCA, or similar state statutes and regulations, the
pharmacy facilities could be required to cease operations or become subject to restrictions that could adversely affect our business.

 State
pharmacy laws require pharmacy locations in those states to be licensed as an in-state pharmacy to dispense pharmaceuticals. In addition,
state controlled substance laws require registration and compliance with state pharmacy licensure, registration or permit standards promulgated
by the state's pharmacy licensing authority. Pharmacy and controlled substance laws often address the qualification of an applicant's
personnel, the adequacy of its prescription fulfillment and inventory control practices and the adequacy of its facilities. These laws
also subject pharmacies to oversight by state boards of pharmacy and other regulators that could impose burdensome requirements or restrictions
on operations if a pharmacy is found not in compliance with these laws. We believe that our compounding pharmacies are in material compliance
with applicable regulatory requirements. Further, if any of our compounding pharmacies fail to comply with regulatory requirements, they
could be forced to permanently or temporarily cease or limit their compounding operations, which would severely limit our ability to
market and sell our proprietary formulations and would materially harm our operations and prospects. Any noncompliance could also result
in complaints or adverse actions by other state boards of pharmacy. FDA inspection of a facility to determine compliance with the FDCA,
if not successful, may result in the loss of FDCA exemptions provided under Sections 503A and 503B, warning letters, injunctions, prosecution,
fines and loss of required government licenses, certifications and approvals, any of which could involve significant costs and could
cause us to be unable to realize the expected benefits of these pharmacies' operations. Additionally, the permanent injunction
entered on July 22, 2019, by the United States District Court of the Central District of California (the "Court") in the
Allergan litigation (also referenced in Item. 3 Legal Proceedings), enjoins the Company from engaging in activities that are inconsistent
with current FDA guidelines for 503A and 503B operations. While the Company believes its operations fully comply with the injunction,
if the Court were to find the Company to be in violation of the injunction, further sanctions, including fines and limitations on the
pharmacies' operations, could occur.

 If
we market any of our drug candidates in a manner that violates healthcare fraud and abuse laws, or if we violate government price reporting
laws, we may be subject to civil or criminal penalties.

 The
FDA enforces laws and regulations which require that the promotion of pharmaceutical products be consistent with the approved prescribing
information. While physicians may prescribe an approved product for a so-called "off label" use, it is unlawful for a pharmaceutical
company to promote its products in a manner that is inconsistent with its approved label, and any company which engages in such conduct
can subject that company to significant liability. Similarly, industry codes in the EU and other foreign jurisdictions prohibit companies
from engaging in off-label promotion, and regulatory agencies in various countries enforce violations of the code with civil penalties.
While we intend to ensure that our promotional materials are consistent with our label, regulatory agencies may disagree with our assessment
and may issue untitled letters, warning letters or may institute other civil or criminal enforcement proceedings. In addition to FDA
restrictions on marketing of pharmaceutical products, several other types of state and federal healthcare fraud and abuse laws have been
applied in recent years to restrict certain marketing practices in the pharmaceutical industry. These laws include the U.S. Anti-Kickback
Statute, U.S. False Claims Act and similar state laws. Because of the breadth of these laws and the narrowness of the safe harbors, it
is possible that some of our business activities could be subject to challenge under one or more of these laws.

 Our
sales depend on coverage and reimbursement from government and commercial third-party payors, and pricing and reimbursement pressures
have affected, and are likely to continue to affect, our profitability.

 Sales
of our branded products depend on the availability and extent of coverage and reimbursement from third-party payors, including government
healthcare programs and private insurance plans. Governments and private payors continue to pursue initiatives to manage drug utilization
and contain costs. Further, pressures on healthcare budgets from the pandemic, the economic downturn and inflation continue and are likely
to increase across the markets we serve. Payors are increasingly focused on costs, which have resulted, and are expected to continue
to result, in lower reimbursement rates for our branded products or narrower populations for which payors will reimburse. Continued intense
public scrutiny of the price of drugs and other healthcare costs, together with payor dynamics, have limited, and are likely to continue
to limit, our ability to set or adjust the price of our products based on their value, which can have a material adverse effect on our
business. In the United States, particularly over the past few years, a number of legislative and regulatory proposals have been introduced
and/or signed into law that attempt to lower drug prices. These include legislation promulgated by the IRA that enables the U.S. government
to set prices for certain drugs in Medicare, redesigns Medicare Part D benefits to shift a greater portion of the costs to manufacturers
and enables the U.S. government to impose penalties if drug prices are increased at a rate faster than inflation in addition to rebates
imposed on manufacturers associated with drug waste (which could potentially impact sales of TRIESENCE). Additional proposals focused
on drug pricing continue to be debated, and additional executive orders focused on drug pricing and competition are likely to be adopted
and implemented in some form. Government actions or ballot initiatives at the state level also represent a highly active area of policymaking
and experimentation, including pursuit of proposals that limit drug reimbursement under state run Medicaid programs based on reference
prices or permitting importation of drugs from Canada. Such state policies may also eventually be adopted at the federal level.

 We
are unable to predict which or how many policy, regulatory, administrative or legislative changes may ultimately be, or effectively estimate
the consequences to our business if, enacted and implemented. However, to the extent that payor actions further decrease or modify the
coverage or reimbursement available for our products, require that we pay increased rebates or shift other costs to us, limit or affect
our decisions regarding the pricing of or otherwise reduce the use of our products, such actions could have a material adverse effect
on our business and results of operations.

 Changing
U.S. federal coverage and reimbursement policies and practices have affected and are likely to continue to affect access to, pricing
of and sales of our products.

 A
substantial portion of our branded product portfolio relies on reimbursement from federal government healthcare programs and commercial
insurance plans regulated by federal and state governments. Our business has been and will continue to be affected by legislative actions
changing U.S. federal reimbursement policy. The IRA's drug pricing controls and Medicare redesign is likely to have a material
adverse effect on our sales (particularly for our branded products that are more substantially reliant on Medicare reimbursement), our
business and our results of operations. However, as the degree of impact from this legislation on our business depends on a number of
implementation decisions, the extent of the IRA's impact on our sales and, in turn, our business remains unclear.

 Changing
reimbursement and pricing actions in various states have negatively affected and may continue to negatively affect access to and have
affected and may continue to affect sales of our products.

 At
the state level, government actions or ballot initiatives can also affect how our branded products are covered and reimbursed and/or
create additional pressure on our pricing decisions. Existing and proposed state pricing laws have added complexity to the pricing of
drugs and may already be affecting industry pricing decisions. A number of states have adopted, and many other states are considering,
drug importation programs or other pricing actions, including proposals designed to require biopharmaceutical manufacturers to report
to the state proprietary pricing information or provide advance notice of certain price increases. For example, a California law requires
biopharmaceutical manufacturers to notify health insurers and government health plans at least 60 days before scheduled prescription
drug price increases that exceed certain thresholds. Similar laws exist in Oregon and Washington. Additional proposals directed at Medicaid
seek to penalize manufacturers for pricing drugs above a certain threshold or limit spending on biopharmaceutical products. States are
also seeking to change the way they pay for drugs for patients covered by state programs. New York has established a Medicaid drug spending
cap, and Massachusetts implemented a new review and supplemental rebate negotiation process. Six states (Colorado, Maine, New Hampshire,
Maryland, Oregon and Washington) have enacted laws that establish Prescription Drug Affordability Boards ("PDABs") to study
drug prices and identify drugs that pose affordability challenges, and in three states (Colorado, Maryland and Washington) include authority
for the state PDABs to set upper payment limits on certain drugs in state regulated plans. Other states may consider implementing similar
policies and laws. Additionally, Colorado, Florida, Maine, New Hampshire, New Mexico and Vermont have enacted laws, and several other
states have proposed bills, to implement importation of drugs from Canada. The FDA has met with representatives from Colorado, Florida,
Maine and New Mexico to discuss those states' proposed importation programs, and the FDA may be working towards approving such
plans. Other states could adopt similar approaches or could pursue different policy changes in a continuing effort to reduce their costs.
Ultimately, as with U.S. federal government actions, existing or future state government actions or ballot initiatives may also have
a material adverse effect on our product sales, business and results of operations.

 U.S.
commercial payor actions have affected and may continue to affect access to and sales of our products

 Payors,
including healthcare insurers, pharmacy benefit managers ("PBMs"), integrated healthcare delivery systems (vertically-integrated
organizations built from consolidations of healthcare insurers and PBMs) and group purchasing organizations, increasingly seek ways to
reduce their costs. With increasing frequency, payors are adopting benefit plan changes that shift a greater proportion of drug costs
to patients. Such measures include more limited benefit plan designs, high deductible plans, higher patient co-pay or coinsurance obligations
and more significant limitations on patients' use of manufacturer commercial co-pay assistance programs. Further, government regulation
of payors may affect these trends. For example, CMS finalized a policy for plan years starting on or after January 1, 2021 that has caused
commercial payors to more widely adopt co-pay accumulator adjustment programs. Payors, including PBMs, have sought, and continue to seek,
price discounts or rebates in connection with the placement of our branded products on their formularies or those they manage, and to
also impose restrictions on access to or usage of our branded products (such as step therapy), require that patients receive the payor's
prior authorization before covering the product, and/or chosen to exclude certain indications for which our products are approved. In
an effort to reduce barriers to access, we may reduce the net price of some of our branded products by providing greater discounts and
rebates to payors (including PBMs that administer Medicare Part D prescription drug plans), and we may introduce a set of new National
Drug Codes to make our branded products available at a lower list price. However, affordability of patient out-of-pocket co-pay cost
has limited and may continue to limit patient use. Further, despite these net and list price reductions, some payors may restrict, patient
access and may seek further discounts or rebates or take other actions, such as changing formulary coverage for some or all of our branded
products. These factors have limited, and may continue to limit, patient affordability and use, negatively affecting sales of our branded
products.

 Further,
significant consolidation in the health insurance industry has resulted in a few large insurers and PBMs, which places greater pressure
on pricing and usage negotiations with biopharmaceutical manufacturers, significantly increasing discount and rebate requirements and
limiting patient access and usage. For example, in the United States, as of the beginning of 2024, we believe the top five integrated
health plans and PBMs controlled approximately 92% of all pharmacy prescriptions. This high degree of consolidation among insurers and
PBMs and other payors, including through integrated healthcare delivery systems and/or with specialty or mail-order pharmacies and pharmacy
retailers, has increased the negotiating leverage such entities have over us and other biopharmaceutical manufacturers and has resulted
in greater price discounts, rebates and service fees realized by those payors from our business. CVS, Express Scripts and United Health
Group (among the top five integrated health plans and PBMs), each have Rebate Management Organizations that further increase their leverage
to negotiate deeper discounts. Ultimately, additional discounts, rebates, fees, coverage changes, plan changes, restrictions or exclusions
imposed by these commercial payors could have a material adverse effect on our product sales, business and results of operations. Policy
reforms advanced by Congress or the Biden administration that refine the role of PBMs in the U.S. marketplace could have downstream implications
or consequences for our business and how we interact with these entities.

 Guidelines
and recommendations published by various organizations can reduce the use of our branded products.

 Government
agencies promulgate regulations and guidelines directly applicable to us and to our products. Professional societies, practice management
groups, insurance carriers, physicians' groups, private health and science foundations and organizations involved in various diseases
also publish guidelines and recommendations to healthcare providers, administrators and payors, as well as patient communities. Recommendations
by government agencies or other groups and organizations may relate to such matters as usage, dosage, route of administration and use
of related therapies. In addition, a growing number of organizations are providing assessments of the value and pricing of biopharmaceutical
products, and even organizations whose guidelines have historically been focused on clinical matters have begun to incorporate analyses
of the cost effectiveness of various treatments into their treatment guidelines and recommendations. Value assessments may come from
private organizations that publish their findings and offer recommendations relating to the products' reimbursement by government
and private payors. Some companies and payors have announced pricing and payment decisions based in part on the assessments of private
organizations. In addition, government health technology assessment organizations in many countries make reimbursement recommendations
to payors in their jurisdictions based on the clinical effectiveness, cost-effectiveness and service effects of new, emerging and existing
medicines and treatments. Such health technology assessment organizations have recommended, and
may in the future recommend, reimbursement for certain of our products for a narrower indication than was approved by applicable regulatory
agencies or may recommend against reimbursement entirely. See "- Our sales depend on coverage and reimbursement from government
and commercial third-party payors, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability."
 Such recommendations or guidelines may affect our reputation, and any recommendations or guidelines that result in decreased use,
dosage or reimbursement of our products could have a material adverse effect on our product sales, business and results of operations.
In addition, the perception by the investment community or stockholders that such recommendations or guidelines will result in decreased
use and dosage of our products could adversely affect the market price of our common stock.

 Risks
Related to Competition

 There
are many competitive risks related to marketing and selling our proprietary formulations and operating our compounding pharmacy business.

 The
pharmaceutical and pharmacy industries are highly competitive. We compete against branded drug companies, generic drug companies, outsourcing
facilities and other compounding pharmacies. We are significantly smaller than some of our competitors. Currently we lack some of the
financial and other resources needed to develop, produce, distribute and market our proprietary formulations at a level to capture a
significant market share in these sectors. The drug products available through branded and generic drug companies with which our formulations
compete have been approved for marketing and sale by the FDA and are required to be manufactured in facilities compliant with cGMP standards.
Although we prepare our compounded formulations in accordance with the standards provided by USP <795> and USP <797> and
applicable state and federal law, our proprietary compounded formulations are not required to be, and have not been, approved for marketing
and sale by the FDA. As a result, some physicians may be unwilling to prescribe, and some patients may be unwilling to use, our formulations.
Additionally, under federal and state laws applicable to our current compounding pharmacy operations, we are not permitted to prepare
significant amounts of a specific formulation in advance of a prescription, compound quantities for office use or utilize a wholesaler
for distribution of our formulations; instead, our compounded formulations must be prepared and dispensed in connection with a physician
prescription for an individually identified patient. Pharmaceutical companies, on the other hand, are able to sell their FDA-approved
products to large pharmaceutical wholesalers, which can in turn sell to and supply hospitals and retail pharmacies. Even if we are successful
in registering certain of our facilities as outsourcing facilities, our business may not be scalable on the scope available to our competitors
that produce FDA-approved drugs, which may limit our potential for profitable operations. These facets of our operations may subject
our business to limitations our competitors with FDA-approved drugs may not face.

 In
November 2022, USP published finalized revisions to USP <795> and USP <797>, which had been previously proposed for public
comment in September 2021. The revisions include limitations on beyond use dating of sterile and preservative-free products and batch
sizes, among other changes. USP expects the published revisions to become effective November 1, 2023, however, regulatory bodies such
as state boards of pharmacy may adopt these changes at that time, or on different dates, on a case-by-case basis. While USP has no role
in enforcement, we believe the revisions to USP <797> in particular will likely cause two changes to our business, which in the
aggregate should have a neutral to positive revenue impact on Harrow: (i) a reduction in revenues generated from sales of formulations
compounded by our 503A pharmacy, and (ii) an increase in revenues from sales of formulations compounded in our 503B facility. Further,
we believe the changes to USP <797> will likely cause a reduction in the ability of local 503A pharmacies to produce compounded
formulations to serve local markets, and that these changes in policy affecting sterile compounded formulations, if adopted by the various
states, may increase demand for compounded formulations from larger vendors such as Harrow and cause further consolidation in the market
for compounded formulations as smaller 503A pharmacies see a reduction in revenues from certain segments of their formularies affected
by these changes.

 Our
future success depends in large part on our ability to maintain a competitive position with respect to biotechnology and related pharmaceutical
technologies.

 Biotechnology
and related pharmaceutical technologies have undergone and continue to be subject to rapid and significant change. Our future success
will depend in large part on our ability to maintain a competitive position with respect to these technologies. Products developed by
our competitors, including FDA-approved drugs and compounded formulations created by other pharmacies, could render our products and
technologies obsolete or unable to compete. Any products that we develop may become obsolete before we recover expenses incurred in their
development, which may require us to raise additional funds that may or may not be available. The competitive environment requires an
ongoing, extensive search for medical and technological innovations and the ability to develop and market these innovations effectively,
and we may not be competitive with respect to these factors. Other competitive factors include the safety and efficacy of a product,
the size of the market for a product, the timing of market entry relative to competitive products, the availability of alternative compounded
formulations or approved drugs, the price of a product relative to alternative products, the availability of third-party reimbursement,
the success of sales and marketing efforts, brand recognition and the availability of scientific and technical information about a product.
Although we believe we are positioned to compete favorably with respect to many of these factors, if our proprietary formulations are
unable to compete with the products of our competitors, we may never gain market share or achieve sustained profitability.

 Concentration
of sales at certain of our wholesaler distributors and consolidation of private payors may negatively affect our business.

 Certain
of our distributors, customers and payors have substantial purchasing leverage, due to the volume of our products they purchase or the
number of patient lives for which they provide coverage. The substantial majority of our U.S. branded product sales are made through
three pharmaceutical product wholesaler distributors: McKesson Corporation, AmerisourceBergen Corporation and Cardinal Health, Inc. These
distributors, in turn, sell our products to their customers, which include physicians or their clinics, ambulatory surgical centers,
hospitals and pharmacies. Similarly, as discussed above, there has been significant consolidation in the health insurance industry, including
that a small number of PBMs now oversee a substantial percentage of total covered lives in the United States. See " – Our
sales depend on coverage and reimbursement from government and commercial third-party payors, and pricing and reimbursement pressures
have affected, and are likely to continue to affect, our profitability." The three largest PBMs in the United States are now
part of major health insurance providers. The growing concentration of purchasing and negotiating power by these entities has, and may
continue to, put pressure on our pricing due to their ability to extract price discounts on our branded products, fees for other services
or rebates, negatively affecting our bargaining position, sales and/or profit margins. In addition, decisions by these entities to purchase
or cover less or none of our branded products in favor of competing products could have a material adverse effect on our branded product
sales, business and results of operations due to their purchasing volume. Further, if one of our significant wholesale distributors encounters
financial or other difficulties and becomes unable or unwilling to pay us all amounts that such distributor owes us on a timely basis,
or at all, it could negatively affect our business and results of operations. In addition, if one of our significant wholesale distributors
becomes insolvent or otherwise unable to continue its commercial relationship with us in its present form, it could significantly disrupt
our business and adversely affect our product sales, our business and results of operations unless suitable alternatives are timely found
or lost sales are absorbed by another distributor.

 If
we are unable to protect our proprietary rights, we may not be able to prevent others from using our intellectual property, which may
reduce the competitiveness and value of the related assets.

 Our
success will depend in part on our ability to obtain and maintain patent protection for our formulations and technologies and to prevent
third parties from infringing upon our proprietary rights. We must also operate without infringing upon patents and proprietary rights
of others, including by obtaining appropriate licenses to patents or other proprietary rights held by third parties, if necessary. The
primary means by which we will be able to protect our formulations and technologies from unauthorized use by third parties is to obtain
valid and enforceable patents that cover them. However, the applications we have filed or may file in the future may never yield patents
that protect our inventions and intellectual property assets. Failure to obtain patents that sufficiently cover our formulations and
technologies would limit our protection against other compounding pharmacies and outsourcing facilities, generic drug manufacturers,
pharmaceutical companies and other parties who may seek to copy our products, produce products substantially similar to ours or use technologies
substantially similar to those we own. We have made, and expect to continue to make, significant investments in certain of our proprietary
formulations prior to the grant of any patents covering these formulations, and we may not receive a sufficient return on these investments
if patent coverage or other appropriate intellectual property protection is not obtained and their competitiveness and value decreases.

 The
patent and intellectual property positions of pharmacies and pharmaceutical companies, including ours, are uncertain and involve complex
legal and factual questions. There is no guarantee that we have developed or obtained or will in the future develop or obtain the rights
to products or processes that are patentable, that patents will issue from any pending applications or that claims allowed will be sufficient
to protect the technology we have developed or may in the future develop or to which we have acquired or may in the future acquire development
rights. In addition, we cannot be certain that patents issued to us will not be challenged, invalidated, infringed or circumvented, including
by our competitors, or that the rights granted thereunder will provide competitive advantages to us. In certain instances, we have acquired
products that are patented and have been subject to prior litigation challenging the validity of certain patents related to those products.
In some situations, the litigation resulted in settlement agreements that have allowed generic manufacturers to license the patent rights
related to certain products and allowing the generic manufacturer to enter the market prior to patent expiration associated with the
branded product.

 We
also rely on unpatented trade secrets and know-how and continuing technological innovation in order to develop our products, formulations,
which we seek to protect, in part, by confidentiality agreements with our employees, consultants, collaborators and others, including
certain service providers. We also have invention or patent assignment agreements with our current employees and certain consultants.
Nonetheless, our employees and consultants may breach these agreements, and we may not have adequate remedies for the breach. Our trade
secrets may otherwise become known or be independently discovered by competitors or could be developed by a person not bound by an invention
assignment agreement with us, in which case we may have no rights to use the applicable invention.

 We
may face additional competition outside of the U.S. as a result of a lack of patent coverage in some territories and differences in patent
prosecution and enforcement laws in foreign counties.

 Filing,
prosecuting, defending and enforcing patents on our proprietary formulations throughout the world is extremely expensive. We do not currently
have patent protection outside of the U.S. that covers any of our proprietary formulations or other assets that we are currently pursuing.
Competitors may use our technologies to develop their own products in jurisdictions where we have not obtained patent protection.

 Even
if the international patent applications we have filed or may in the future file are issued or approved, it is likely that the scope
of protection provided by such patents would be different from, and possibly less than, the scope provided by corresponding U.S. patents.
As a result, patent rights we are able to obtain may not be sufficient to prevent generic competition. Further, the extent of our international
market opportunity may be dependent upon the enforcement of patent rights in various other countries. A number of countries in which
we could file patent applications have a history of weak enforcement and/or compulsory licensing of intellectual property rights. Moreover,
the legal systems of certain countries, particularly certain developing countries, do not favor the aggressive enforcement of patents
and other intellectual property protection, particularly those relating to biotechnology and/or pharmaceuticals, which would make it
difficult for us to stop a third party from infringing any of our intellectual property rights. Moreover, attempting to enforce our patent
rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business.

 Our
products, drug candidates and compounded formulations and technologies could potentially conflict with the rights of others.

 The
preparation or sale of our products, drug candidates and compounded formulations and use of our technologies may infringe on the patent
or other intellectual property rights of others. If our products infringe or conflict with the patent or other intellectual property
rights of others, third parties could bring legal actions against us claiming damages and seeking to enjoin our manufacturing and marketing
of our affected products. Patent litigation is costly and time consuming and may divert management's attention and our resources.
We may not have sufficient resources to bring any actions to a successful conclusion. If we are not successful in defending against these
legal actions should they arise, we may be subject to monetary liability or be forced to alter our products, cease some or all of our
operations relating to the affected products, or seek to obtain a license in order to continue manufacturing and marketing the affected
products, which may not be available on acceptable terms or at all.

 We
are dependent on our Chief Executive Officer, Mark L. Baum, and other key persons for the continued growth and development of our Company.

 Our
Chief Executive Officer, Mark L. Baum, along with other key persons, including, but not limited to, our Chief Financial Officer, Andrew
R. Boll, and Chief Executive Officer of ImprimisRx and Chief Commercial Officer, John P. Saharek, have played a primary role in creating
and developing our current business model. We are highly dependent on these executives for the implementation of our business plan and
the future development of our assets and our business, and the loss of their services and leadership could materially adversely impact
our Company.

 If
we are unable to attract and retain key personnel and consultants, we may be unable to maintain or expand our business.

 We
have been focusing on building our management, pharmacy, research and development, sales and marketing and other personnel to pursue
our current business model. To achieve our planned growth, we may have significant difficulty attracting and retaining necessary employees.
Because of the specialized nature of our business, the ability to develop products and to compete will remain highly dependent upon our
ability to attract and retain qualified pharmacy, scientific, technical and commercial employees and consultants. There is intense competition
to hire qualified personnel in our industry, and we may be unable to continue to attract and retain the qualified personnel necessary
for the development of our business. The loss of key employees or consultants or the failure to recruit or engage new employees and consultants
could have a material adverse effect on our business. In addition, any staffing interruptions resulting
from geopolitical actions, including war and terrorism, adverse public health developments, or natural disasters including earthquakes,
typhoons, floods and fires, could have a material adverse effect on our business.

 Risks
Related to Product Development, Regulatory Approval, Manufacturing and Commercialization

 If
we seek FDA approval to market and sell any of our drug candidates we may be unable to demonstrate the necessary safety and efficacy
to obtain such FDA approval.

 In
recent years, we have sought, and in the future, we, alone or with project partners, intend to seek, FDA regulatory approval to market
and sell one or more of our assets as an FDA-approved drug. Obtaining FDA approval to market and sell pharmaceutical products is costly,
time-consuming, uncertain and subject to unanticipated delays. The FDA or other regulatory agencies may not approve a drug candidate
on a timely basis or at all. Before we obtain FDA approval for the sale of any potential drug candidates, we will be required to demonstrate
through pre-clinical studies and clinical trials that it is safe and effective for each intended use, which we may not be able to do.
A failure to demonstrate safety and efficacy of a drug candidate to the FDA's satisfaction would result in our failure to obtain
FDA approval. Moreover, even if the FDA were to grant regulatory approval of a drug candidate, the approval may be limited to specific
therapeutic areas or limited as to its distribution, which could reduce revenue potential, and we will be subject to extensive and costly
post-approval requirements and oversight with respect to commercialization of the drug candidate.

 Even
if we receive regulatory approval for any of our drug candidates, we may not be able to successfully commercialize the product and the
revenue that we generate from its sales, if any, may be limited.

 If
approved for marketing, the commercial success of our drug candidates will depend upon each product's acceptance by the medical
community, including physicians, patients and health care payors. The degree of market acceptance for any of our drug candidates will
depend on a number of factors, including:

 demonstration
 of clinical safety and efficacy;

 relative
 convenience, dosing burden and ease of administration;

 the
 prevalence and severity of any adverse effects;

 the
 willingness of physicians to prescribe our drug candidates, and the target patient population to try new therapies;

 efficacy
 of our drug candidates compared to competing products;

 the
 introduction of any new products that may in the future become available targeting indications for which our drug candidates may
 be approved;

 new
 procedures or therapies that may reduce the incidences of any of the indications in which our drug candidates may show utility;

 pricing
 and cost-effectiveness;

 the
 inclusion or omission of our drug candidates in applicable therapeutic and vaccine guidelines;

 the
 effectiveness of our own or any future collaborators' sales and marketing strategies;

 limitations
 or warnings contained in approved labeling from regulatory authorities;

 our
 ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare
 and Medicaid, private health insurers and other third-party payors or to receive the necessary pricing approvals from government
 bodies regulating the pricing and usage of therapeutics; and

 the
 willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals.

 If
any of our drug candidates are approved, but do not achieve an adequate level of acceptance by physicians, health care payors, and patients,
we may not generate sufficient revenue and we may not be able to achieve or sustain profitability. Our efforts to educate the medical
community and third-party payors on the benefits of our drug candidates may require significant resources and may never be successful.

 In
addition, even if we obtain regulatory approvals, the timing or scope of any approvals may prohibit or reduce our ability to commercialize
our drug candidates successfully. For example, if the approval process takes too long, we may miss market opportunities and give other
companies the ability to develop competing products or establish market dominance. Any regulatory approval we ultimately obtain may be
limited or subject to restrictions or post-approval commitments that render our drug candidates not commercially viable. For example,
regulatory authorities may approve any of our drug candidates for fewer or more limited indications than we request, may not approve
the price we intend to charge for any of our drug candidates, may grant approval contingent on the performance of costly post-marketing
clinical trials, or may approve any of our drug candidates with a label that does not include the labeling claims necessary or desirable
for the successful commercialization of that indication. Further, the FDA or comparable foreign regulatory authorities may place conditions
on approvals or require risk management plans or a Risk Evaluation and Mitigation Strategy ("REMS") to assure the safe use
of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS; the FDA will not approve the
NDA without an approved REMS, if required. A REMS could include medication guides, physician communication plans, or elements to assure
safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA may also require a REMS
for an approved product when new safety information emerges. Any of these limitations on approval or marketing could restrict the commercial
promotion, distribution, prescription or dispensing of our drug candidates. Moreover, product approvals may be withdrawn for non-compliance
with regulatory standards or if problems occur following the initial marketing of the product. Any of the foregoing scenarios could materially
harm the commercial success of our drug candidates.

 Clinical
drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not
be predictive of future trial results.

 Clinical
testing of drug candidates is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur
at any time during the clinical trial process. The results of pre-clinical studies and early clinical trials may not be predictive of
the results of later-stage clinical trials. We cannot assure you that the FDA or comparable foreign regulatory authorities will view
the results as we do or that any future trials of any of our drug candidates will achieve positive results. Drug candidates in later
stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through pre-clinical studies
and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical
trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Any future clinical trial
results for our drug candidates may not be successful.

 In
addition, a number of factors could contribute to a lack of favorable safety and efficacy results for any of our drug candidates. For
example, such trials could result in increased variability due to varying site characteristics, such as local standards of care, differences
in evaluation period and surgical technique, and due to varying patient characteristics including demographic factors and health status.

 Even
if we obtain marketing approval for any of our drug candidates, we will be subject to ongoing obligations and continued regulatory review,
which may result in significant additional expense. Additionally, our drug candidates could be subject to labeling and other restrictions
and withdrawal from the market and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience
unanticipated problems with our drug candidates.

 Even
if we obtain regulatory approval for any of our drug candidates for an indication, the FDA or foreign equivalent may still impose significant
restrictions on their indicated uses or marketing or the conditions of approval, or impose ongoing requirements for potentially costly
and time-consuming post-approval studies, including Phase 4 clinical trials, and post-market surveillance to monitor safety and efficacy.
Our drug candidates will also be subject to ongoing regulatory requirements governing the manufacturing, labeling, packaging, storage,
distribution, safety surveillance, advertising, promotion, recordkeeping and reporting of adverse events and other post-market information.
These requirements include registration with the FDA, as well as continued compliance with current Good Clinical Practices regulations
("cGCPs") for any clinical trials that we conduct post-approval. In addition, manufacturers of drug products and their facilities
are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current cGMPs,
requirements relating to quality control, quality assurance and corresponding maintenance of records and documents.

 The
FDA has the authority to require a REMS as part of an NDA or after approval, which may impose further requirements or restrictions on
the distribution or use of an approved drug, such as limiting prescribing to certain physicians or medical centers that have undergone
specialized training, limiting treatment to patients who meet certain safe-use criteria or requiring patient testing, monitoring and/or
enrollment in a registry.

 With
respect to sales and marketing activities by us or any future partner, advertising and promotional materials must comply with FDA rules
in addition to other applicable federal, state and local laws in the United States and similar legal requirements in other countries.
In the United States, the distribution of product samples to physicians must comply with the requirements of the U.S. Prescription Drug
Marketing Act. Application holders must obtain FDA approval for product and manufacturing changes, depending on the nature of the change.
We may also be subject, directly or indirectly through our customers and partners, to various fraud and abuse laws, including, without
limitation, the U.S. Anti-Kickback Statute, U.S. False Claims Act, and similar state laws, which impact, among other things, our proposed
sales, marketing, and scientific/educational grant programs. If we participate in the U.S. Medicaid Drug Rebate Program, the Federal
Supply Schedule of the VA, or other government drug programs, we will be subject to complex laws and regulations regarding reporting
and payment obligations. All of these activities are also potentially subject to U.S. federal and state consumer protection and unfair
competition laws. Similar requirements exist in many of these areas in other countries.

 In
addition, if any of our drug candidates are approved for a particular indication, our product labeling, advertising and promotion would
be subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be
made about prescription products. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected
in the product's approved labeling. If we receive marketing approval for our drug candidates, physicians may nevertheless legally
prescribe our products to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such
off-label uses, we may become subject to significant liability and government fines. The FDA and other agencies actively enforce the
laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses
may be subject to significant sanctions. The federal government has levied large civil and criminal fines against companies for alleged
improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies
enter into consent decrees of permanent injunctions under which specified promotional conduct is changed or curtailed.

 If
we or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency,
problems with the facility where the product is manufactured, or we or our manufacturers fail to comply with applicable regulatory requirements,
we may be subject to the following administrative or judicial sanctions:

 restrictions
 on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;

 issuance
 of warning letters or untitled letters;

 clinical
 holds;

 injunctions
 or the imposition of civil or criminal penalties or monetary fines;

 suspension
 or withdrawal of regulatory approval;

 suspension
 of any ongoing clinical trials;

 refusal
 to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license
 approvals;

 suspension
 or imposition of restrictions on operations, including costly new manufacturing requirements; or

 product
 seizure or detention or refusal to permit the import or export of product.

 The
occurrence of any event or penalty described above may inhibit our ability to commercialize our drug candidates and generate revenue.
Adverse regulatory action, whether pre- or post-approval, can also potentially lead to product liability claims and increase our product
liability exposure.

 Delays
in the completion of, or the termination of, any clinical or non-clinical trials for any drug candidates for which we may seek FDA approval
could adversely affect our business.

 Clinical
trials are very expensive, time consuming, unpredictable and difficult to design and implement. The results of clinical trials may be
unfavorable, they may continue for several years, and they may take significantly longer to complete and involve significantly more costs
than expected. Delays in the commencement or completion of clinical testing could significantly affect product development costs and
plans with respect to any drug candidate for which we seek FDA approval. The commencement and completion of clinical trials can be delayed
and experience difficulties for a number of reasons, including delays and difficulties caused by circumstances over which we may have
no control. For instance, approvals of the scope, design or trial site may not be obtained from the FDA and other required bodies in
a timely manner or at all, agreements with acceptable terms may not be reached in a timely manner or at all with CROs to conduct the
trials, a sufficient number of subjects may not be recruited and enrolled in the trials, and third-party manufacturers of the materials
for use in the trials may encounter delays and problems in the manufacturing process, including failure to produce materials in sufficient
quantities or of an acceptable quality to complete the trials. If we were to experience delays in the commencement or completion of,
or if we were to terminate, any clinical or non-clinical trials we pursue in the future, the commercial prospects for the applicable
drug candidates may be limited or eliminated, which may prevent us from recouping our investment in research and development efforts
for the drug candidate and would have a material adverse effect on our business, results of operations, financial condition and prospects.

 We
may depend on the success of our drug candidates, and those we have royalty rights to, which have not yet demonstrated efficacy for their
target or any other indications. If we are unable to generate revenues from our drug candidates, our ability to create stockholder value
may be limited.

 Our
drug candidates are in various stages of clinical development. There is no guarantee that our clinical trials will be successful or that
we will continue clinical development in support of an approval from the FDA or comparable foreign regulatory authorities for any indication.
We note that most drug candidates never reach the clinical development stage and even those that do commence clinical development have
only a small chance of successfully completing clinical development and gaining regulatory approval. Therefore, aspects of our business
depend on the successful development, regulatory approval and commercialization of our drug candidates, which may never occur.

 If
we are not able to obtain required regulatory approvals for a drug candidate, we will not be able to commercialize such drug candidate
and our ability to generate revenues will be limited.

 We
must successfully complete clinical trials for our drug candidates before we can apply for marketing approval. Even if we complete our
clinical trials, it does not assure marketing approval. Our clinical trials may be unsuccessful, which would materially harm our business.
Even if our initial clinical trials are successful, we are required to conduct additional clinical trials to establish our drug candidates'
safety and efficacy, before an NDA or Biologics License Application ("BLA"), or their foreign equivalents can be filed with
the FDA or comparable foreign regulatory authorities for marketing approval of our drug candidates.

 Clinical
testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. Success in
early phases of pre-clinical and clinical trials does not ensure that later clinical trials will be successful, and interim results of
a clinical trial do not necessarily predict final results. A failure of one or more of our clinical trials can occur at any stage of
testing. We may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent
our ability to receive regulatory approval or commercialize our drug candidates. The research, testing, manufacturing, labeling, packaging,
storage, approval, sale, marketing, advertising and promotion, pricing, export, import and distribution of drug products are subject
to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, which regulations differ
from country to country. We are not permitted to market our drug candidates as prescription pharmaceutical products in the United States
until we receive approval of an NDA from the FDA, or in any foreign countries until we receive the requisite approval from such countries.
In the United States, the FDA generally requires the completion of clinical trials of each drug to establish its safety and efficacy
and extensive pharmaceutical development to ensure its quality before an NDA is approved. Regulatory authorities in other jurisdictions
impose similar requirements. Of the large number of drugs in development, only a small percentage result in the submission of an NDA
to the FDA and even fewer are eventually approved for commercialization. If our development efforts for our drug candidates, including
regulatory approval, are not successful for their planned indications, or if adequate demand for our drug candidates is not generated,
our business will be materially adversely affected.

 Our
success depends on the receipt of regulatory approval and the issuance of such regulatory approvals is uncertain and subject to a number
of risks, including the following:

 the
 results of toxicology studies may not support the filing of an investigational new drug application for our drug candidates;

 the
 FDA or comparable foreign regulatory authorities or Institutional Review Boards ("IRBs") may disagree with the design
 or implementation of our clinical trials;

 we
 may not be able to provide acceptable evidence of our drug candidates' safety and efficacy;

 the
 results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required
 by the FDA, the European Medicines Agency (the "EMA"), or other regulatory agencies for marketing approval;

 the
 dosing of our drug candidates in a particular clinical trial may not be at an optimal level;

 patients
 in our clinical trials may suffer adverse effects for reasons that may or may not be related to our drug candidates;

 the
 data collected from clinical trials may not be sufficient to support the submission of an NDA, BLA or other submission or to obtain
 regulatory approval in the United States or elsewhere;

 the
 FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers
 with which we contract for clinical and commercial supplies; and

 the
 approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering
 our clinical data insufficient for approval.

 Failure
to obtain regulatory approval for our drug candidates for the foregoing, or any other reasons, will prevent us from commercializing our
drug candidates, and our ability to generate revenue will be materially impaired. We cannot guarantee that regulators will agree with
our assessment of the results of the clinical trials we intend to conduct in the future or that such trials will be successful. The FDA,
EMA and other regulators have substantial discretion in the approval process and may refuse to accept any application or may decide that
our data is insufficient for approval and require additional clinical trials, or pre-clinical or other studies. In addition, varying
interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of our
drug candidates.

 Excluding
any activities through our ownership interest in Eton, we have not received regulatory approval to market our drug candidates in any
jurisdiction. We have only limited experience in filing the applications necessary to gain regulatory approvals and expect to rely on
consultants and CROs, with expertise in this area to assist us in this process. Securing regulatory approvals to market a product requires
the submission of pre-clinical, clinical, and/or pharmacokinetic data, information about product manufacturing processes and inspection
of facilities and supporting information to the appropriate regulatory authorities for each therapeutic indication to establish a drug
candidate's safety and efficacy for each indication. Our drug candidates may prove to have undesirable or unintended side effects,
toxicities or other characteristics that may preclude us from obtaining regulatory approval or prevent or limit commercial use with respect
to one or all intended indications.

 The
process of obtaining regulatory approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially
based upon, among other things, the type, complexity and novelty of the drug candidates involved, the jurisdiction in which regulatory
approval is sought and the substantial discretion of the regulatory authorities. Changes in regulatory approval policies during the development
period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for a submitted product application
may cause delays in the approval or rejection of an application. Regulatory approval obtained in one jurisdiction does not necessarily
mean that a drug candidate will receive regulatory approval in all jurisdictions in which we may seek approval, but the failure to obtain
approval in one jurisdiction may negatively impact our ability to seek approval in a different jurisdiction. Failure to obtain regulatory
marketing approval for our drug candidates in any indication will prevent us from commercializing the drug candidate, and our ability
to generate revenue will be materially impaired.

 Obtaining
and maintaining regulatory approval of our products and drug candidates in one jurisdiction does not mean that we will be successful
in obtaining regulatory approval of our products or drug candidates in other jurisdictions.

 Obtaining
and maintaining regulatory approval of our drug candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain
regulatory approval in any other jurisdiction, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a
negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a drug candidate,
comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the drug candidate
in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different
from those in the United States, including additional pre-clinical studies or clinical trials, as clinical studies conducted in one jurisdiction
may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a drug candidate
must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to
charge for our products is also subject to approval.

 Obtaining
foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and
costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory
requirements in international markets and/ or to receive applicable marketing approvals, our target market will be reduced and our ability
to realize the full market potential of our drug candidates will be harmed.

 Current
and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our drug candidates
and affect the prices we may obtain.

 In
the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes
regarding the healthcare system that could prevent or delay marketing approval for our drug candidates, restrict or regulate post-approval
activities and affect our ability to profitably sell our drug candidates. Legislative and regulatory proposals have been made to expand
post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We do not know whether additional
legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact
of such changes on the marketing approvals of our drug candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress
of the FDA's approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product
labeling and post-marketing testing and other requirements.

 In
the United States, the Medicare Modernization Act (the "MMA") changed the way Medicare covers and pays for pharmaceutical
products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology
based on average sales prices for drugs. In addition, this legislation authorized Medicare Part D prescription drug plans to use formularies
where they can limit the number of drugs that will be covered in any therapeutic class. As a result of this legislation and the expansion
of federal coverage of drug products, we expect that there will be additional pressure to contain and reduce costs. These cost reduction
initiatives and other provisions of this legislation could decrease the coverage and price that we receive for our drug candidates and
could seriously harm our business. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow
Medicare coverage policy and payment limitations in setting their own reimbursement rates, and any reduction in reimbursement that results
from the MMA may result in a similar reduction in payments from private payors.

 The
Health Care Reform Law is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare
spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries,
impose new taxes and fees on the health industry and impose additional health policy reforms. The Health Care Reform Law revised the
definition of "average manufacturer price" for reporting purposes, which could increase the amount of Medicaid drug rebates
to states. Further, the law imposed a significant annual fee on companies that manufacture or import branded prescription drug products.

 The
Health Care Reform Law remains subject to legislative efforts to repeal, modify or delay the implementation of the law. Efforts to date
have generally been unsuccessful. If the Health Care Reform Law is repealed or modified, or if implementation of certain aspects of the
Health Care Reform Law are delayed, such repeal, modification or delay may materially adversely impact our business, strategies, prospects,
operating results or financial condition. We are unable to predict the full impact of any repeal or modification in the implementation
of the Health Care Reform Law on us at this time.

 In
addition, other legislative changes have been proposed and adopted in the United States since the Health Care Reform Law was enacted.
We expect that additional federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that
federal and state governments will pay for healthcare products and services, and in turn could significantly reduce the projected value
of certain development projects and reduce or eliminate our profitability.

 Our
drug candidates may face competition sooner than expected.

 Our
success will depend in part on our ability to obtain and maintain patent protection for certain of our drug candidates and technologies
and to prevent third parties from infringing upon our proprietary rights. We must also operate without infringing upon patents and proprietary
rights of others, including by obtaining appropriate licenses to patents or other proprietary rights held by third parties, if necessary.
However, the applications we have filed or may file in the future may never yield patents that protect our inventions and intellectual
property assets. Failure to obtain patents that sufficiently cover our formulations and technologies would limit our protection against
compounding pharmacies, outsourcing facilities, generic drug manufacturers, pharmaceutical companies and other parties who may seek to
copy our products, produce products substantially similar to ours or use technologies substantially similar to those we own.

 We
also intend to seek data exclusivity or market exclusivity for our drug candidates provided under the FDCA and similar laws in other
countries. The FDCA provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical
investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential
to the approval of the application, for example, for new indications, dosages, or strengths of an existing drug. This three-year exclusivity
covers only the conditions associated with the new clinical investigations and does not prohibit the FDA from approving NDAs for drugs
containing the original active agent. Even if our drug candidates are considered to be reference products eligible for three years of
exclusivity under the FDCA, another company could market competing products if the FDA approves a full NDA for such product containing
the sponsor's own pre-clinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity
and potency of the products. Moreover, an amendment or repeal of the FDCA could result in a shorter exclusivity period for our drug candidates,
which would have a material adverse effect on our business.

 We
are and will be completely dependent on third parties to manufacture our branded drug products and drug candidates, and our commercialization
of our drug candidates could be halted, delayed or made less profitable if those third parties fail to obtain manufacturing approval
from the FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of our drug candidates or fail
to do so at acceptable quality levels or prices.

 We
do not currently have, nor do we plan to acquire, the capability or infrastructure to manufacture the active pharmaceutical ingredient
("API") in our drug candidates for use in our clinical trials or for commercial product. In addition, we do not have the
capability to manufacture any of our branded drug products and candidates as a finished drug product for commercial distribution. As
a result, we are and will be obligated to rely on contract manufacturers. Other than through our agreements with Novartis, we have not
entered into an agreement with any contract manufacturers for commercial supply and may not be able to engage a contract manufacturer
for commercial supply of any of our drug products and candidates on favorable terms to us, or at all.

 The
facilities used by our contract manufacturers to manufacture our drug products and candidates must be approved by the FDA or comparable
foreign regulatory authorities pursuant to inspections that will be conducted after we submit an NDA or BLA to the FDA or their equivalents
to other relevant regulatory authorities. We will not control the manufacturing process of, and will be completely dependent on, our
contract manufacturing partners for compliance with cGMPs for manufacture of both active drug substances and finished drug products.
These cGMP regulations cover all aspects of the manufacturing, testing, quality control and record keeping relating to our drug candidates.
If our contract manufacturers do not successfully manufacture material that conforms to our specifications and the strict regulatory
requirements of the FDA or others, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities.
If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our drug candidates
or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly
impact our ability to develop, obtain regulatory approval for or market our drug candidates, if approved.

 Our
contract manufacturers will be subject to ongoing periodic unannounced inspections by the FDA and corresponding state and foreign agencies
for compliance with cGMPs and similar regulatory requirements. We will not have control over our contract manufacturers' compliance
with these regulations and standards. Failure by any of our contract manufacturers to comply with applicable regulations could result
in sanctions being imposed on us, including fines, injunctions, civil penalties, failure to grant approval to market any of our drug
candidates, delays, suspensions or withdrawals of approvals, operating restrictions and criminal prosecutions, any of which could significantly
and adversely affect our business. In addition, we will not have control over the ability of our contract manufacturers to maintain adequate
quality control, quality assurance and qualified personnel. Failure by our contract manufacturers to comply with or maintain any of these
standards could adversely affect our ability to develop, obtain regulatory approval for or market any of our drug candidates.

 If,
for any reason, these third parties are unable or unwilling to perform, we may not be able to terminate our agreements with them, and
we may not be able to locate alternative manufacturers or formulators or enter into favorable agreements with them, and we cannot be
certain that any such third parties will have the manufacturing capacity to meet future requirements. If these manufacturers or any alternate
manufacturer of finished drug product experiences any significant difficulties in its respective manufacturing processes for our API
or finished products or should cease doing business with us, we could experience significant interruptions in the supply of any of our
drug candidates or may not be able to create a supply of our drug candidates at all. Were we to encounter manufacturing issues, our ability
to produce a sufficient supply of any of our drug candidates might be negatively affected. Our inability to coordinate the efforts of
our third-party manufacturing partners, or the lack of capacity available at our third-party manufacturing partners, could impair our
ability to supply any of our drug candidates at required levels. Because of the significant regulatory requirements that we would need
to satisfy in order to qualify a new bulk or finished product manufacturer, if we face these or other difficulties with our current manufacturing
partners, we could experience significant interruptions in the supply of any of our drug candidates if we decided to transfer the manufacture
of any of our drug candidates to one or more alternative manufacturers in an effort to deal with the difficulties.

 Any
manufacturing problem or the loss of a contract manufacturer could be disruptive to our operations and result in lost sales. Additionally,
we rely on third parties to supply the raw materials needed to manufacture our existing and potential products. Any business
interruptions resulting from geopolitical actions, including war and terrorism, adverse public health developments, or natural disasters
including earthquakes, typhoons, floods and fires, could affect our supply chain. Any reliance on suppliers may involve several
risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability
and quality. Any unanticipated disruption to a future contract manufacturer caused by problems at suppliers could delay shipment of any
of our drug candidates, increase our cost of goods sold and result in lost sales.

 We
cannot guarantee that our future manufacturing and supply partners will be able to reduce the costs of commercial scale manufacturing
of any of our drug candidates over time. If the commercial-scale manufacturing costs of any of our drug candidates are higher than expected,
these costs may significantly impact our operating results. In order to reduce costs, we may need to develop and implement process improvements.
However, in order to do so, we will need, from time to time, to notify or make submissions with regulatory authorities, and the improvements
may be subject to approval by such regulatory authorities. We cannot be sure that we will receive these necessary approvals or that these
approvals will be granted in a timely fashion. We also cannot guarantee that we will be able to enhance and optimize output in our commercial
manufacturing process. If we cannot enhance and optimize output, we may not be able to reduce our costs over time.

 We
expect to rely on third parties to conduct clinical trials for our drug candidates. If these third parties do not successfully carry
out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize any of
our drug candidates, and our business would be substantially harmed.

 We
expect to enter into agreements with third-party CROs to conduct and manage our clinical programs, including contracting with clinical
sites to perform our clinical studies. We plan to rely heavily on these parties for execution of clinical studies for our drug candidates
and will control only certain aspects of their activities. Nevertheless, we will be responsible for ensuring that each of our studies
is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on CROs and clinical
sites will not relieve us of our regulatory responsibilities. We and our CROs will be required to comply with cGCPs, which are regulations
and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign
regulatory authorities for any products in clinical development. The FDA and its foreign equivalents enforce these cGCP regulations through
periodic inspections of trial sponsors, principal investigators and trial sites. If we or our CROs fail to comply with applicable cGCPs,
the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities
may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection,
the FDA or other regulatory authorities will determine that any of our clinical trials comply with cGCPs. In addition, our clinical trials
must be conducted with products produced under cGMP regulations and will require a large number of test subjects. Our failure or the
failure of our CROs or clinical sites to comply with these regulations may require us to repeat clinical trials, which would delay the
regulatory approval process and could also subject us to enforcement action up to and including civil and criminal penalties.

 Although
we intend to design the clinical trials for our drug candidates in consultation with CROs, we expect that the CROs will manage all of
the clinical trials conducted at contracted clinical sites. As a result, many important aspects of our drug development programs would
be outside of our direct control. In addition, the CROs and clinical sites may not perform all of their obligations under arrangements
with us or in compliance with regulatory requirements. If the CROs or clinical sites do not perform clinical trials in a satisfactory
manner, breach their obligations to us or fail to comply with regulatory requirements, the development and commercialization of any of
our drug candidates for the subject indication may be delayed or our development program materially and irreversibly harmed. We cannot
control the amount and timing of resources these CROs and clinical sites will devote to our program or any of our drug candidates. If
we are unable to rely on clinical data collected by our CROs, we could be required to repeat, extend the duration of, or increase the
size of our clinical trials, which could significantly delay commercialization and require significantly greater expenditures.

 If
any of our relationships with these third-party CROs or clinical sites terminate, we may not be able to enter into arrangements with
alternative CROs or clinical sites. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines,
if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere
to our clinical protocols, regulatory requirements or for other reasons, any such clinical trials may be extended, delayed or terminated,
and we may not be able to obtain regulatory approval for or successfully commercialize our drug candidates. As a result, our financial
results and the commercial prospects for any of our drug candidates would be harmed, our costs could increase and our ability to generate
revenue could be delayed.

 Any
termination or suspension of, or delays in the commencement or completion of, any necessary studies of any of our drug candidates for
any indications could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial
prospects.

 The
commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to:

 the
 FDA or a comparable foreign regulatory authority failing to grant permission to proceed and placing the clinical study on hold;

 subjects
 for clinical testing failing to enroll or remain in our trials at the rate we expect;

 a
 facility manufacturing any of our drug candidates being ordered by the FDA or other government or regulatory authorities to temporarily
 or permanently shut down due to violations of cGMP requirements or other applicable requirements, or cross-contaminations of drug
 candidates in the manufacturing process;

 any
 changes to our manufacturing process that may be necessary or desired;

 subjects
 choosing an alternative treatment for the indications for which we are developing our drug candidates, or participating in competing
 clinical studies;

 subjects
 experiencing severe or unexpected drug-related adverse effects;

 reports
 from clinical testing on similar technologies and products raising safety and/or efficacy concerns;

 third-party
 clinical investigators losing their license or permits necessary to perform our clinical trials, not performing our clinical trials
 on our anticipated schedule or employing methods consistent with the clinical trial protocol, cGMP requirements, or other third parties
 not performing data collection and analysis in a timely or accurate manner;

 inspections
 of clinical study sites by the FDA, comparable foreign regulatory authorities, or IRBs finding regulatory violations that require
 us to undertake corrective action, result in suspension or termination of one or more sites or the imposition of a clinical hold
 on the entire study, or that prohibit us from using some or all of the data in support of our marketing applications;

 third-party
 contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations
 of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or any
 of the data produced by such contractors in support of our marketing applications;

 one
 or more IRBs refusing to approve, suspending or terminating the study at an investigational site, precluding enrollment of additional
 subjects, or withdrawing its approval of the trial; reaching agreement on acceptable terms with prospective CROs and clinical trial
 sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

 deviations
 of the clinical sites from trial protocols or dropping out of a trial;

 adding
 new clinical trial sites;

 the
 inability of the CRO to execute any clinical trials for any reason; and

 government
 or regulatory delays or "clinical holds" requiring suspension or termination of a trial.

development costs for any of our drug candidates will increase if we have delays in testing or approval or if we need to perform more
or larger clinical studies than planned. Additionally, changes in regulatory requirements and policies may occur and we may need to amend
study protocols to reflect these changes. Amendments may require us to resubmit our study protocols to the FDA, comparable foreign regulatory
authorities, and IRBs for reexamination, which may impact the costs, timing or successful completion of that study. If we experience
delays in completion of, or if we, the FDA or other regulatory authorities, the IRB, or other reviewing entities, or any of our clinical
study sites suspend or terminate any of our clinical studies of any of our drug candidates, its commercial prospects may be materially
harmed and our ability to generate product revenues will be delayed. Any delays in completing our clinical trials will increase our costs,
slow down our development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these
occurrences may harm our business, financial condition and prospects significantly. In addition, many of the factors that cause, or lead
to, termination or suspension of, or a delay in the commencement or completion of, clinical studies may also ultimately lead to the denial
of regulatory approval of our drug candidates. In addition, if one or more clinical studies are delayed, our competitors may be able
to bring products to market before we do, and the commercial viability of any of our drug candidates could be significantly reduced.

 Even
though we may apply for orphan drug designation for a drug candidate, we may not be able to obtain orphan drug marketing exclusivity.

 There
is no guarantee that the FDA, EMA or their foreign equivalents will grant any future application for orphan drug designation for any
of our drug candidates, which would make us ineligible for the additional exclusivity and other benefits of orphan drug designation.

 Under
the Orphan Drug Act, the FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is generally
a disease or condition that affects fewer than 200,000 individuals in the United States and for which there is no reasonable expectation
that the cost of developing and making a drug available in the Unites States for this type of disease or condition will be recovered
from sales of the product. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation,
the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan product designation does
not convey any advantage in or shorten the duration of regulatory review and approval process. In addition to the potential period of
exclusivity, orphan designation makes a company eligible for grant funding of up to $400,000 per year for four years to defray costs
of clinical trial expenses, tax credits for clinical research expenses and potential exemption from the FDA application user fee.

 If
a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such
designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other applications to market
the same drug for the same indication for seven years, except in limited circumstances, such as (i) the drug's orphan designation
is revoked; (ii) its marketing approval is withdrawn; (iii) the orphan exclusivity holder consents to the approval of another applicant's
product; (iv) the orphan exclusivity holder is unable to assure the availability of a sufficient quantity of drug; or (v) a showing of
clinical superiority to the product with orphan exclusivity by a competitor product. If a drug designated as an orphan product receives
marketing approval for an indication broader than what is designated, it may not be entitled to orphan drug exclusivity. There can be
no assurance that we will receive orphan drug designation for any of our drug candidates in the indications for which we think they might
qualify, if we elect to seek such applications.

 Although
we may pursue expedited regulatory approval pathways for a drug candidate, it may not qualify for expedited development or, if it does
qualify for expedited development, it may not actually lead to a faster development or regulatory review or approval process.

 Although
we believe there may be an opportunity to accelerate the development of certain of our drug candidates through one or more of the FDA's
expedited programs, such as fast track, breakthrough therapy, accelerated approval or priority review, we cannot be assured that any
of our drug candidates will qualify for such programs.

 For
example, a drug may be eligible for designation as a breakthrough therapy if the drug is intended, alone or in combination with one or
more other drugs, to treat a serious or life-threatening condition and preliminary clinical evidence indicates that the drug may demonstrate
substantial improvement over existing therapies on one or more clinically significant endpoints. Although breakthrough designation or
access to any other expedited program may expedite the development or approval process, it does not change the standards for approval.
If we apply for breakthrough therapy designation or any other expedited program for our drug candidates, the FDA may determine that our
proposed target indication or other aspects of our clinical development plans do not qualify for such expedited program. Even if we are
successful in obtaining a breakthrough therapy designation or access to any other expedited program, we may not experience faster development
timelines or achieve faster review or approval compared to conventional FDA procedures. Access to an expedited program may also be withdrawn
by the FDA if it believes that the designation is no longer supported by data from our clinical development program. Additionally, qualification
for any expedited review procedure does not ensure that we will ultimately obtain regulatory approval for such drug candidate.

 Risks
Related to the Notes

 We
have incurred significant indebtedness, which will require substantial cash to service and which subjects us to certain financial requirements
and business restrictions.

 Since
2021, we issued $115,250,000 aggregate principal amount of senior notes due in part in 2026 and in 2027 (the "Notes"). We
may incur additional indebtedness in the future. Our ability to make scheduled payments on our indebtedness depends on our future performance
and ability to raise additional capital, which is subject to economic, financial, competitive and other factors, some of which are beyond
our control. If we are unable to generate sufficient cash to service our debt, we may be required to adopt one or more alternatives,
such as selling assets, restructuring our debt or obtaining additional capital through equity sales or incurrence of additional debt
on terms that may be onerous or highly dilutive to our stockholders. Our ability to engage in any of these activities would depend on
the capital markets and our financial condition at such time, and we may not be able to do so when needed, on desirable terms or at all,
which could result in a default on our debt obligations. Additionally, our debt instruments contain, or from time to time may contain,
various restrictive covenants, including, among others, our obligation to deliver certain financial and other information, our obligation
to comply with certain notice and insurance requirements, and our inability, without prior consent, to dispose of certain of our assets,
incur certain additional indebtedness, enter into certain merger, acquisition or change of control transactions, pay certain dividends
or distributions on or repurchase any of our capital stock or incur any lien or other encumbrance on our assets, subject to certain permitted
exceptions. Any failure by us to comply with any of these covenants, subject to certain cure periods, or to make all payments under the
debt instruments when due, would cause us to be in default under the applicable debt instrument. In the event of any such default, lenders
may be able to foreclose on our assets that secure the debt or declare all borrowed funds, together with accrued and unpaid interest,
immediately due and payable, thereby potentially causing all of our available cash to be used to pay our indebtedness or forcing us into
bankruptcy or liquidation if we do not then have sufficient cash available. Any such event or occurrence could severely and negatively
impact our operations and prospects.

 The
indenture under which the Notes were issued contains limited protection for holders of the Notes.

 The
indenture under which the Notes were issued offers limited protection to holders of the Notes. The terms of the indenture and the Notes
do not restrict our or any of our subsidiaries' ability to engage in, or otherwise be a party to, a variety of corporate transactions,
circumstances or events that could have an adverse impact on the holders of the Notes. In particular, the terms of the indenture and
the Notes do not place any restrictions on our or our subsidiaries' ability to:

 issue
 debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations
 that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore
 rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness
 of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities,
 indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries
 and therefore rank structurally senior to the Notes with respect to the assets of our subsidiaries;

 pay
 dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities subordinated in right of
 payment to the Notes;

 sell
 assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);

 enter
 into transactions with affiliates;

 create
 liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;

 make
 investments; or

 create
 restrictions on the payment of dividends or other amounts to us from our subsidiaries.

 In
addition, the indenture does not include any protection against certain events, such as a change of control, leveraged recapitalization,
"going private" transaction (which may result in a significant increase of our indebtedness), restructuring or similar transactions.
Furthermore, the terms of the indenture and the Notes do not protect holders of the Notes in the event that we experience changes (including
significant adverse changes) in our financial condition, results of operations or credit ratings, as they do not require that we or our
subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow, or liquidity. Also,
an event of default or acceleration under our other indebtedness would not necessarily result in an event of default under the Notes.

 Our
ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Notes may
have important consequences for the holders of the Notes, including making it more difficult for us to satisfy our obligations with respect
to the Notes or negatively affecting the trading value of the Notes.

 Other
debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional
covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for
and trading levels and prices of the Notes.

 An
increase in market interest rates could result in a decrease in the value of the Notes.

 In
general, as market interest rates rise, notes bearing interest at a fixed rate decline in value. Consequently, if the market interest
rates increase, the market value of the Notes may decline. We cannot predict the future level of market interest rates.

 A
lack of an active trading market for the Notes could adversely affect the market price of the Notes or limit a holder's ability
to sell them.

 The
Notes are listed on Nasdaq under the symbols "HROWL" and "HROWM". Although the Notes are listed, we cannot provide
any assurances that an active trading market will be maintained for the Notes or that a holder will be able to sell the Notes. If the
Notes are traded, they may trade at a discount from their initial offering price depending on prevailing interest rates, the market for
similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors.
The underwriters of the Notes may make a market in the Notes, but they are not obligated to do so. The underwriters may discontinue any
market-making in the Notes at any time at their sole discretion. Accordingly, we cannot assure a holder that a liquid trading market
will develop for the Notes, that a holder will be able to sell the Notes at a particular time or that the price received will be favorable.
To the extent an active trading market is not maintained, the liquidity and trading price for the Notes may be harmed. Accordingly, a
holder may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.

 The
rating for the Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.

 We
have obtained a rating for the Notes. Ratings only reflect the views of the issuing rating agency or agencies and such ratings could
at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency. A rating is not a recommendation
to purchase, sell or hold the Notes. Ratings do not reflect market prices or suitability of a security for a particular investor and
the rating of the Notes may not reflect all risks related to us and our business, or the structure or market value of the Notes. We may
elect to issue other securities for which we may seek to obtain a rating in the future. If we issue other securities with ratings lower
than market expectations or that are subsequently lowered or withdrawn, the market for or the market value of the Notes could be adversely
affected.

 We
could enter into various transactions that could increase the amount of our outstanding debt or adversely affect our capital structure
or credit rating.

 Subject
to certain limited exceptions, the terms of the Notes do not prevent us from entering into a variety of acquisition, divestiture, refinancing,
recapitalization or other highly leveraged transactions. As a result, we could enter into any such transaction even though the transaction
could increase the total amount of our outstanding indebtedness, adversely affect our capital structure or credit rating or otherwise
adversely affect the holders of the Notes.

 Risks
Related to Our Common Stock

 If
we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results, which could
cause our stock price to fall.

 Effective
internal controls are necessary for us to provide reliable financial results. If we cannot provide reliable financial results, our consolidated
financial statements could be misstated, our reputation may be harmed and the trading price of our common stock could decline. As we
discuss in Item 9A of this Annual Report, our management concluded that our internal controls over financial reporting were effective
as of December 31, 2023. However, our controls over financial processes and reporting may not continue to be effective or we may identify
material weaknesses or significant deficiencies in our internal controls in the future. Any failure to remediate any future material
weaknesses or successfully implement required new or improved controls, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our consolidated financial statements or other public disclosures. Inferior
internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect
on the trading price of our common stock.

 A
consistently active trading market for shares of our common stock may not be sustained.

 Historically,
trading in our common stock has been sporadic and volatile and our common stock has been "thinly-traded." There have been,
and may in the future be, extended periods when trading activity in our shares is minimal, compared to a seasoned issuer with a large
and steady volume of trading activity. The market for our common stock is also characterized by significant price volatility compared
to seasoned issuers, and we expect that such volatility may continue. As a result, the trading of relatively small quantities of shares
may disproportionately influence the market price of our common stock. A consistently active and liquid trading market in our common
stock may never develop or be sustained.

 Our
stock price may be volatile.

 The
market price of our common stock is likely to be highly volatile and could fluctuate widely in response to various factors, many of which
are beyond our control, including our ability to execute our business plan; operating results that fall below expectations; industry
or regulatory developments; investor perception of our industry or our prospects; economic and other external factors; and the other
risk factors discussed in this "Risk Factors" section.

 In
addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of
our common stock.

 We
have the right to issue shares of preferred stock without obtaining stockholder approval. If we were to issue preferred stock, it may
have rights, preferences and privileges superior to those of our common stock.

 We
are authorized to issue 5,000,000 shares of "blank check" preferred stock, with such rights, preferences and privileges as
may be determined from time to time by our board of directors. Our board of directors is empowered, without stockholder approval, to
issue preferred stock at any time in one or more series and to fix the dividend rights, dissolution or liquidation preferences, redemption
prices, conversion rights, voting rights and other rights, preferences and privileges for any series of our preferred stock that may
be issued. The issuance of shares of preferred stock, depending on the rights, preferences and privileges attributable to the preferred
stock, could reduce the voting rights and powers of our common stockholders and the portion of our assets allocated for distribution
to our common stockholders in a liquidation event, and could also result in dilution to the book value per share of our common stock.
The preferred stock could also be utilized, under certain circumstances, as a method for raising additional capital or discouraging,
delaying or preventing a change in control of our Company.

 We
have not paid dividends in the past and do not expect to pay dividends in the future. Any return on an investment will be limited to
any appreciation in the value of our common stock.

 We
have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. Any payment of dividends
on our common stock would depend on contractual restrictions, as well as our earnings, financial condition and other business and economic
factors as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a
return on your investment will only occur if our stock price appreciates.

 Offers
or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 The
sale of substantial amounts of our common stock in the public market, or the perception that sales could occur, may cause the market
price of our common stock to fall. Sales could occur upon the expiration of any statutory holding period, such as under Rule 144 under
the Securities Act of 1933, as amended, applicable to outstanding shares, upon expiration of any lock-up periods applicable to outstanding
shares, upon our issuance of shares upon the exercise of outstanding options or warrants, or upon our issuance of shares pursuant offerings
of our equity securities. The availability for sale of a substantial number of shares of our common stock, whether or not sales have
occurred or are occurring, also could make it more difficult for us to raise additional financing through the sale of equity or equity-related
securities in the future, when needed, on acceptable terms or at all.

 Unstable
market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

 From
time to time, global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished
liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and
uncertainty about economic stability. Our general business strategy may be adversely affected by any such economic downturn, volatile
business environment and continued unpredictable and unstable market conditions. If the equity and credit markets deteriorate, it may
make any debt or equity financing more difficult to complete, more costly, and more dilutive. In the event the Company or one of its
subsidiaries needed to access additional capital, failure to secure financing in a timely manner and on favorable terms could have a
material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon development
plans. In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive
an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget.

 ITEM
1B. UNRESOLVED STAFF COMMENTS

 Not
applicable.

 ITEM
1C. CYBERSECURITY

 We
are subject to cybersecurity threats that could have a material adverse impact on our results of operations, financial condition and
cash flows, as well as our operations—including our manufacturing and marketing capabilities. We operate a risk-based cybersecurity
program which is designed to: (i) ensure the security, confidentiality, integrity and availability of our information and systems; (ii)
protect against anticipated or actual cyber threats to our information and systems; and (iii) protect against unauthorized access and/or
use of our information and systems. Overall cybersecurity risk reporting is integrated with our enterprise risk management program, is
included in discussions with the Audit Committee of our board of directors and disclosed where appropriate. Our information technology
and cybersecurity function is headed by our Chief Executive Officer ("CEO"), and Director of Information Technology, who
are responsible for managerial oversight of our cybersecurity program. Our Director of Information Technology reports directly to the
Chief Executive Officer of ImprimisRx and Chief Commercial Officer, who reports directly to our CEO.

 We
utilize a layered approach in assessing, identifying, evaluating and managing material risks from cybersecurity threats, and leverage
outside partners to gain intelligence on threats. We take input from industry activities, third party assessments and internal simulations
and continuously adjust our protection mechanisms to be effective. We also assess operational and data security risks associated with
our use of third-party service providers, understanding where failure points may exist within our supply chain operations and data protections.
If we learn of a cybersecurity incident at a third-party service provider, our information technology department will maintain communication
with that third-party service provider and communicate any cybersecurity incidents to the Director of Information Technology and CEO.
All Harrow employees receive information security training (including data protection and fraud awareness) on an annual basis, and we
use industry standard technology to monitor systems for anomalous behavior. We also require employees in certain roles to complete additional
role-based, specialized cybersecurity trainings. In the event an incident were to occur, a Security Incident Response Team would be convened
that consists of members from many functions, including legal counsel, the Director of Information Technology and the CEO.

 Our
Board of Directors has the ultimate oversight of the Company's risks—including cybersecurity risks—with our Audit Committee
assisting the Board of Directors in its oversight of cyber and information security risks. Members of management that possess information
security certifications and many years of experience work with our legal, finance and corporate governance functions to identify, define
and report cybersecurity risks, policies and procedures and incident response plans. The Audit Committee receives updates on our cybersecurity
program from management on a regular basis and more frequently as determined to be necessary or advisable. Updates to the Audit Committee
include policies, processes, procedures and any significant developments related to the identification, mitigation and remediation of
cybersecurity risks, as well as effectiveness and changes in our ability to monitor, protect, detect and respond to incidents, risk reviews
and industry news briefings. The Audit Committee also ensures that management provides a cyber and information security update to the
Board of Directors at least annually. Finally, in the event a material cybersecurity incident were to occur, the CEO and Director of
Information Technology would brief the Audit Committee which would then be responsible for assessing the materiality of the incident
and making the determination of materiality and any related disclosure.

 We
face a number of cybersecurity risks in connection with our business. Although we have numerous controls to protect against common attacks,
some attacks may still be effective. Our controls are designed to detect, triage and eradicate these attacks. While we carry a cyber
insurance policy to help cover investigation and mitigation expenses, it may be subject to limitations and be insufficient to cover all
expenses that may result from a cybersecurity incident. Although the risks from cybersecurity threats, including as a result of any previous
cybersecurity incidents, have not materially affected or are reasonably likely to materially affect us, including our business strategy,
results of operations or financial condition, such incidents could have a material adverse effect in the future as cyberattacks continue
to increase in frequency and sophistication.

 For
more information about the cybersecurity risks and other information technology and data privacy risks we face, see Item 1A. Risk
Factors and the subsection titled A breakdown of our information technology systems, or a cyberattack or information security
breach could significantly compromise the confidentiality, integrity and availability of our information technology systems, network-connected
control systems and/or our data, interrupt the operation of our business and/or affect our reputation.

 ITEM
2. PROPERTIES

 We
lease approximately 38,200 square feet of lab, warehouse, and office space in Ledgewood, New Jersey, in three separate suites. The current
lease term expires on July 31, 2027 and includes options to extend the lease term through 2037. This space serves as an outsourcing facility
and pharmacy for ImprimisRx.

 We
lease approximately 5,500 square feet of office space in Nashville, Tennessee. The current lease term expires on December 31, 2024. This
office serves as our corporate headquarters.

 We
lease approximately 5,800 square feet of office space in Carlsbad, California. The current lease term began January 1, 2022 and expires
on March 31, 2025 and includes an option to extend the lease term through March 2028. This office generally supports the certain marketing
and administrative functions.

 We
lease approximately 11,600 square feet of lab and office space in Nashville, Tennessee. The current lease term commenced in June 2022
and expires in June 2027. This office generally serves as our customer service center and analytical laboratory.

 ITEM
3. LEGAL PROCEEDINGS

 See
Note 18 to our consolidated financial statements included in this Annual Report for information on various legal proceedings, which is
incorporated into this Item by reference.

 ITEM
4. MINE SAFETY DISCLOSURES

 Not
applicable.

 PART
II

 ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Market
Information

 Our
common stock is listed on The Nasdaq Stock Market LLC under the symbol "HROW" and the Notes are listed on The Nasdaq Stock
Market LLC under the symbols "HROWL" and "HROWM."

 Holders

 As
of March 18, 2024, there were approximately 67 stockholders of record (excluding an indeterminable number of stockholders whose shares
are held in street or "nominee" name) of our common stock.

 Dividends

 We
have not paid any dividends on our common stock since our inception and do not expect to pay dividends on our common stock in the foreseeable
future.

 Purchase
of Equity Securities

 We
did not purchase any of our equity securities during the fourth quarter of 2023.

 Recent
Sales of Unregistered Securities

 None.

 ITEM
6. [RESERVED]

 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated
financial statements and the related notes contained in this Annual Report on Form 10-K (this "Annual Report"). Our consolidated
financial statements have been prepared and, unless otherwise stated, the information derived therefrom as presented in this discussion
and analysis is presented, in accordance with accounting principles generally accepted in the United States (GAAP). In addition to historical
information, the following discussion contains forward-looking statements based upon our current views, expectations and assumptions
that are subject to risks and uncertainties. Actual results may differ substantially from those expressed or implied by any forward-looking
statements due to a number of factors, including, among others, the risks described in the "Risk Factors" section and elsewhere
in this Annual Report.

 As
used in this discussion and analysis, unless the context indicates otherwise, the terms the "Company," "Harrow"
"we," "us" and "our" refer to Harrow, Inc. and its consolidated subsidiaries, including Imprimis
RxNJ, LLC, Imprimis NJOF, LLC, ImprimisRx, LLC, Harrow IP, LLC and Harrow Eye, LLC.

 Overview

 We
are a leading eyecare pharmaceutical company engaged in the discovery, development, and commercialization of innovative ophthalmic pharmaceutical
products for the U.S. market. 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. We own commercial
rights to one of the largest portfolios of branded ophthalmic pharmaceutical products in North
America, all of which are marketed under the Harrow name. We also own and operate ImprimisRx, one of the nation's leading
ophthalmology-focused pharmaceutical-compounding businesses. In addition, we have a non-controlling
equity interest in Melt Pharmaceuticals, Inc. ("Melt"), and two other companies that began as subsidiaries of Harrow and
were subsequently carved-out of our corporate structure and deconsolidated from our financial statements.

 Factors
Affecting Our Performance

 We
believe the primary factors affecting our performance are our ability to increase revenues of our branded pharmaceutical products, proprietary
compounded formulations and certain non-proprietary products, grow and gain operating efficiencies in our operations, potential regulatory-related
restrictions, optimize pricing and obtain reimbursement options for our drug products, and continue to pursue development and commercialization
opportunities for certain of our ophthalmology and other assets that we have not yet made commercially available. We believe we have
built a tangible and intangible infrastructure that will allow us to scale revenues efficiently in the near and long-term. All of these
activities will require significant costs and other resources, which we may not have or be able to obtain from operations or other sources.
See "Liquidity and Capital Resources" below.

 Recent
Developments

 The
following describes certain developments in 2023 and 2024 to date that are important to understand our financial condition and results
of operations. See the notes to our consolidated financial statements included in this Annual Report for additional information about
each of these developments.

 Apotex
- Canadian Out-License

 In
February 2024, we entered into a license and supply agreement with Apotex Inc. ("Apotex"). Under the terms of the agreement,
Apotex licensed exclusive rights and marketing authorizations of the following products in the Canadian market from Harrow: VERKAZIA
(cyclosporine ophthalmic emulsion) 0.1% and Cationorm PLUS. Apotex was also granted a license for products Apotex will pursue approval
for in Canada: VEVYE (cyclosporine ophthalmic solution) 0.1%, IHEEZO (chloroprocaine hydrochloride ophthalmic gel) 3%, and ZERVIATE (cetirizine
ophthalmic solution) 0.24% (with VERKAZIA and Cationorm Plus, collectively, the "Apotex Products"). In exchange, Apotex will
make payments to Harrow for milestones related to manufacturing arrangements, regulatory and commercial achievements, in addition to
royalties on net sales of the Apotex Products.

 VEVYE
U.S. Launch

 In
January 2024, we launched VEVYE (cyclosporine ophthalmic solution) 0.1%, the first and only water-free cyclosporine dissolved in a semifluorinated
alkane approved to treat both the signs and symptoms of dry eye disease, in the U.S. We partnered with various entities including PhilRx,
Apollo Care and PARx Solutions to enhance our market and patient access program for VEVYE.

 Melt
Loan Settlement

 In
December 2023, we terminated the Loan and Security Agreement (the "Loan Agreement"), dated as of September 1, 2021, as amended,
by and between us, as lender, and Melt, as borrower, which provided for a senior secured term loan with an initial aggregate principal
amount of $13,500,000 bearing interest at 12.50% per annum. As of the date of termination, approximately $18,400,000 remained outstanding
under the Loan Agreement. Pursuant to the terms of a Settlement and Payoff Agreement, dated as of December 28, 2023, by and between us
and Melt (the "Settlement Agreement"), we received 2,260,000 shares of Melt's Series B-1 Preferred Stock and 74,256
shares of Melt's Series B Preferred Stock in consideration for the full payment of all amounts outstanding under the Loan Agreement.
The Settlement Agreement contains customary representations, warranties and releases of the parties and requires the parties to enter
into a registration rights agreement providing us with rights consistent with other holders of preferred stock of Melt.

 IHEEZO
Reimbursement, Launch and Studies

 In
February 2023, we announced that the Centers for Medicare & Medicaid Services ("CMS") had issued a permanent, product
specific J-code for IHEEZO (J2403) which became effective under the Healthcare Procedure Coding System (HCPCS) on April 1, 2023, which
physicians can use for reimbursement purposes of that product. New drugs approved by the U.S. Food and Drug Administration ("FDA")
that are used in surgeries performed in hospital outpatient departments or ambulatory surgical centers may receive a transitional pass-through
reimbursement under Medicare, provided they meet certain criteria, including a "not insignificant" cost criterion. Pass-through
status allows for separate payment (i.e., outside the packaged payment rate for the surgical procedure) under Medicare Part B, which
consists of Medicare reimbursement for a drug based on a defined formula for calculating the minimum fee that a manufacturer may charge
for the drug. Under current regulations of CMS, pass-through status applies for a period of three years; which is measured from the date
Medicare makes its first pass-through payment for the product. Following the three-year period, the product would be incorporated into
the cataract bundled payment system, which could significantly reduce the pricing for that product. Temporary pass-through reimbursement
for IHEEZO was awarded by CMS and made effective in April 2023.

 We
are also working to ensure our continued access to the Medicare market for the ambulatory surgery center (ASC), hospital and outpatient
department (HOPD), and in-office use market for IHEEZO. In this regard, we are designing and intend to execute, during 2024, clinical
studies to build data sets that could be presented to Centers for Medicare & Medicaid Services (CMS) to extend our temporary pass-through
period for IHEEZO in ASCs and HOPDs. We also met with CMS in January 2024 to request clarification related to its anesthesia billing
policy which has historically not allowed for the separate billing of anesthesia services in the physician's office. During the
meeting we requested that CMS clarify that J-Code 2403, IHEEZO's permanent J-Code, is appropriate to be billed for the anesthesia
product itself (i.e., IHEEZO in our case) in the physician office setting. As of the date of this Annual Report, we had not received
feedback from CMS following our meeting in January 2024.

 At
the beginning of April 2023, we initiated a regional and targeted launch of IHEEZO (chloroprocaine HCL ophthalmic gel) 3%. In early May
2023, our full commercial launch of IHEEZO occurred, with the product being highlighted by our commercial team at the ASCRS (American
Society of Cataract and Refractive Surgery) Annual Meeting.

 Recently
we invested in an in-vivo (in human) study to compare the effects of IHEEZO with povidone-iodine (PVI) compared to a low-viscosity tetracaine
ophthalmic solution with PVI. The primary intent of the study is to show that IHEEZO does not act as a "barrier" to PVI,
which had otherwise been shown with other ocular anesthetic gels. Findings from the study are positive and showed that IHEEZO demonstrated
a similar barrier risk to tetracaine (e.g., a non-gel anesthetic).

of VEVYE TM U.S. and Canadian Commercial Rights

 In
July 2023, we acquired commercial rights of VEVYE for the U.S. and Canadian markets (the "VEVYE Acquisition"). VEVYE, which
is dispensed topically in a unique ten microliter per one drop and is labeled for twice-daily (BID) dosing, is the first and only cyclosporine-based
product indicated for the treatment of both signs and symptoms of dry eye disease (DED). VEVYE was approved on May 30, 2023 by the FDA.
We acquired the commercial rights to VEVYE by entering into a license agreement with Novaliq GmbH ("Novaliq"). As consideration,
we made initial payments to Novaliq totaling $8,000,000 and will pay low double-digit royalties on net sales of VEVYE along with potential
commercial milestone payments. In February 2024, we agreed to license rights for VEVYE in Canada to Apotex.

of Certain U.S. and Canadian Commercial Rights to Santen and Eyevance Products

 In
July 2023, we entered into an Asset Purchase Agreement with Eyevance Pharmaceuticals, LLC and a License Agreement with Santen S.A.S.
(collectively, the "Santen Agreements"), each a subsidiary of Santen Pharmaceuticals Co., Ltd. (collectively, "Santen").
Pursuant to the Santen Agreements, we acquired the exclusive commercial rights to assets associated with the following ophthalmic products
(collectively, the "Santen Products"), in the U.S.: FLAREX (fluorometholone acetate ophthalmic suspension) 0.1%, NATACYN
(natamycin ophthalmic suspension) 5%, TOBRADEX ST (tobramycin and dexamethasone ophthalmic suspension) 0.3%/0.05%, ZERVIATE
(cetirizine ophthalmic solution) 0.24%, and FRESHKOTE. In the U.S. and Canada: VERKAZIA (cyclosporine ophthalmic emulsion)
0.1%, and in Canada: Cationorm PLUS.

 The
transactions pursuant to the Santen Agreements are referred to in this Annual Report as the "Santen Products Acquisition."

 Under
the terms of the Santen Agreements, we made an initial one-time payment of $8,000,000. In addition, the Santen Agreements provide for
various one-time milestone payments associated with certain manufacturing-related events as well as low-double digit royalty payments
on net sales of VERKAZIA and high-single digit royalty payments on net sales of Cationorm PLUS. Under the Santen Agreements, we also
assumed certain obligations associated with other third parties that require royalties on sales of FRESHKOTE and ZERVIATE. Immediately
following the closing and subject to certain conditions, prior to the transfer of the Santen Product NDAs and other marketing authorizations
to us, Santen continued to sell the Santen Products on our behalf and transfer the net profit from the sale of the Santen Products to
us. In October 2023, we completed the transfer of the U.S. NDAs and rights of the Santen Products. The Canadian marketing authorizations
of VERKAZIA and Cationorm PLUS will be transferred to Apotex during 2024.

Stock Offering

 In
July 2023, we closed a public offering of shares of our common stock at an offering price of $17.75 per share (the "Offering").
We sold 3,887,324 shares of our common stock in the Offering, resulting in us receiving aggregate net proceeds of $64,520,000, after
deducting underwriting discounts and commissions and other offering expenses of $4,480,000.

 Oaktree
Credit and Guaranty Agreement

 On
March 27, 2023, we entered into a Credit Agreement and Guaranty (the "Oaktree Loan") with Oaktree Fund Administration, LLC,
as administrative agent for the lenders (together, "Oaktree"), providing for a loan to us with a principal amount of up to
$100,000,000. Upon entering into the Oaktree Loan, we drew a principal amount of $65,000,000 from the Oaktree Loan and used the net proceeds
to repay all amounts owed by us pursuant to the BR Loan (as defined below). No remaining amounts are due under the BR Loan, and no exit
or prepayment fees were paid as a result of the payoff of the BR Loan. The additional principal loan amount of up to $35,000,000 available
under the Oaktree Loan (the "Tranche B") will be made available to the Company upon the commercialization of TRIESENCE.

 On
July 18, 2023, we 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, and we made other changes related to the Santen Products
Acquisition. Upon satisfaction of certain conditions to funding, we drew down a principal amount of $12,500,000 (the "Loan Increase")
on August 1, 2023 to fund the initial one-time payment associated with the Santen Products Acquisition and for other working capital
and general corporate purposes. No other material changes to the Oaktree Loan were provided in the Oaktree Amendment. Following entry
into the Oaktree Amendment and the funding of the Loan Increase upon closing of the Santen Products Acquisition, we have drawn down a
total principal loan amount of $77,500,000 under the Oaktree Loan and an additional Tranche B loan amount of up to $35,000,000 remains
available to us upon the commercialization of TRIESENCE, provided, that if Tranche B is not drawn by the Company on or before March 27,
2024, the amount available under Tranche B will decrease to $30,000,000.

 The
Oaktree Loan is secured by nearly all of the assets, including intellectual property, of the Company and its material subsidiaries. The
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. The Oaktree Loan requires interest-only payments through its term (there is no amortization of the principal amount or
excess cash flow sweeps during the term of the Oaktree Loan).

of ILEVRO, NEVANAC, VIGAMOX, MAXIDEX and TRIESENCE

 In
December 2022, we entered into an Asset Purchase Agreement (the "Purchase Agreement") with Novartis Technology, LLC and Novartis
Innovative Therapies AG (together, "Novartis"), pursuant to which the Company agreed to purchase from Novartis the exclusive
commercial rights to assets associated with the following ophthalmic products (collectively the "NVS 5 Products") in the
U.S. (the "NVS 5 Acquisition"):

 ILEVRO
 (nepafenac ophthalmic suspension) 0.3%, a non-steroidal, anti-inflammatory eye drop indicated for pain and inflammation associated
 with cataract surgery.

 NEVANAC
 (nepafenac ophthalmic suspension) 0.1%, a non-steroidal, anti-inflammatory eye drop indicated for pain and inflammation associated
 with cataract surgery.

 VIGAMOX
 (moxifloxacin hydrochloride ophthalmic solution) 0.5%, a fluoroquinolone antibiotic eye drop for the treatment of bacterial conjunctivitis
 caused by susceptible strains of organisms.

 MAXIDEX
 (dexamethasone ophthalmic suspension) 0.1%, a steroid eye drop for steroid-responsive inflammatory conditions of the palpebral and
 bulbar conjunctiva, cornea, and anterior segment of the globe.

 TRIESENCE
 (triamcinolone acetonide injectable suspension) 40 mg/ml, a steroid injection for the treatment of certain ophthalmic diseases and
 for visualization during vitrectomy.

 We
closed the NVS 5 Acquisition on January 20, 2023. Under the terms of the Purchase Agreement, we made a one-time payment of $130,000,000
at closing, with up to another $45,000,000 due in a milestone payment related to the timing of the commercial availability of TRIESENCE.
Pursuant to the Purchase Agreement and various ancillary agreements, immediately following the closing and subject to certain conditions,
for a period that lasted approximately nine months, and prior to the transfer of the NVS 5 Products new drug applications (the "NDAs")
to us, Novartis continued to sell the NVS 5 Products on our behalf and transferred the net profit from the sale of the NVS 5 Products
to us. Novartis has agreed to supply certain NVS 5 Products to the Company for a period of time after the NDAs are transferred to us
and to assist with technology transfer of the NVS 5 Products manufacturing to other third-party manufacturers, if needed.

 On
April 28, 2023, we transferred the NDAs for ILEVRO, NEVANAC and MAXIDEX. In July 2023, we transferred the NDA for VIGAMOX, and the
NDA for TRIESENCE was transferred in November 2023. The milestone payment due upon commercial availability for TRIESENCE decreased
from $45,000,000 to $37,000,000 on January 20, 2024. We expect Novartis to produce a performance process qualification
("PPQ") batch during April 2024. If this PPQ batch is successful, our manufacturing partners will need to complete two
additional, consecutive and successful PPQ batches (an aggregate of three PPQ batches) of TRIESENCE before the product can be
released for commercial use. We believe it is possible TRIESENCE could be re-launched before the end of 2024 if these PPQ batches
are successful, at which point the $37,000,000 milestone payment will become due to Novartis.

 HROWM
– Senior Notes Offering

 In
December 2022, the Company entered into an underwriting agreement with B. Riley Securities, Inc., as representative of the several underwriters
named therein, pursuant to which we agreed to sell $35,000,000 aggregate principal amount of 11.875% Senior Notes due 2027 (the "2027
Notes") plus up to an additional $5,250,000 aggregate principal amount of 2027 Notes pursuant to an option granted to the underwriters
to purchase additional 2027 Notes. In January 2023, the underwriters exercised their option to purchase the additional $5,250,000 aggregate
principal amount of 2027 Notes.

 B.
Riley Loan and Security Agreement – Paid

 On
December 14, 2022, we entered into a Loan and Security Agreement (the "BR Loan") with B. Riley Commercial Capital, LLC, as
administrative agent for the lenders from time to time party thereto. The proceeds of the BR Loan were used to finance the NVS 5 Acquisition.

 The
BR Loan provided for a loan facility of up to $100,000,000 to the Company with a maturity date of December 14, 2025, at an interest rate
of 10.875% per annum. The BR Loan was secured by an intellectual property security agreement and by all assets of the Company and its
material subsidiaries. In January 2023, the Company drew $59,750,000 of the BR Loan simultaneously with the consummation of the NVS 5
Acquisition, and subsequently paid back the BR Loan in March 2023 at the time of closing the Oaktree Loan. No remaining amounts are due
under the BR Loan, and no exit or prepayment fees were paid as a result of the payoff of the BR Loan.

 Results
of Operations

 The
following period-to-period comparisons of our financial results are not necessarily indicative of results for any future period.

 Comparison
of Years Ended December 31, 2023 and 2022

 Our
revenues include amounts recorded from sales of proprietary compounded formulations, sales of branded products to wholesalers through
a third-party logistics facility, commissions from third parties and revenues received from royalty payments owed to us pursuant to out-license
arrangements.

 The
following presents our revenues for the years ended December 31, 2023 and 2022:

 $

 2023

 2022

 Product sales, net

 $
 117,447,000

 $
 83,524,000

 $
 33,923,000

 Commission revenues

 -

 3,866,000

 (3,866,000
)

 Transfer of acquired product sales/profit

 12,746,000

 1,205,000

 11,541,000

 Total revenues

 $
 130,193,000

 $
 88,595,000

 $
 41,598,000

 The
increase in revenues between periods was related to an increase in sales of our branded ophthalmology products, as well as an increase
in the transfer of acquired products sales and profits related to the NVS 5 Acquisition and Santen Products Acquisition. This increase
in 2023 was offset slightly by a decrease in commissions attributable to sales of DEXYCU (which agreement terminated January 1,
2023) and a decrease in sales from our non-ophthalmology compounded products as a result of our sale of those assets in the fourth quarter
of 2022. During the year ended December 31, 2023, revenues, including transfer of acquired product sales and profits, from branded products
totaled $50,258,000, as compared to $2,716,000 in the prior year.

 Cost
of Sales

 Our
cost of sales includes direct and indirect costs to manufacture formulations and sell products, including active pharmaceutical ingredients,
personnel costs, packaging, storage, royalties, shipping and handling costs, manufacturing equipment and tenant improvements depreciation,
the write-off of obsolete inventory, amortization of acquired product NDAs, and other related expenses.

 The
following presents our cost of sales for the years ended December 31, 2023 and 2022:

 $

 2023

 2022

 Cost of sales

 $
 39,640,000

 $
 25,383,000

 $
 14,257,000

 The
increase in our cost of sales was largely attributable to the amortization of acquired product NDAs which totaled $9,314,000 for the
year ended December 31, 2023, compared to $1,364,000 during the prior year, offset by lesser increases in expenses associated with unit
volumes sold and increased direct and indirect costs associated with production of our products.

 Gross
Profit and Margin

 $

 2023

 2022

 Gross profit

 $
 90,553,000

 $
 63,212,000

 $
 27,341,000

 Gross margin

 69.6
 %

 71.3
 %

 (1.7
)%

 The
decrease in gross margin between the years ended December 31, 2023 and 2022 was primarily attributable to amortization of acquired NDAs
from the NVS 5 Acquisition, beginning in January 2023.

 Selling,
General and Administrative Expenses

 Our
selling, general and administrative expenses include personnel costs, including wages and stock-based compensation, corporate facility
expenses, and investor relations, consulting, insurance, filing, legal and accounting fees and expenses as well as costs associated with
our marketing activities and sales of our proprietary compounded formulations and other non-proprietary pharmacy products and formulations.

 The
following presents our selling, general and administrative expenses for the years ended December 31, 2023 and 2022:

 $

 2023

 2022

 Selling, general and administrative

 $
 83,090,000

 $
 58,243,000

 $
 24,847,000

 The
increase in selling, general and administrative expenses between periods was primarily attributable to an increase in stock-based
compensation expense, including new expenses associated with performance stock units ("PSUs") granted in April 2023 of
$7,722,000 for the year ended December 31, 2023, compared to the prior year. Other areas of increased expenses included $3,257,000
related to new regulatory costs and enhancements and a $6,844,000 increase in expenses related to the addition of new employees in
sales, marketing and other departments to support current and expected growth, including the transition of the Santen Products, and
the commercial launch of IHEEZO in April 2023 and VEVYE in December 2023.

 Research
and Development Expenses

 Our
research and development ("R&D") expenses primarily included personnel costs, including wages and stock-based compensation,
expenses related to the development of intellectual property, investigator-initiated research and evaluations, formulation development,
acquired in-process R&D and other costs related to the clinical development of our assets.

 The
following presents our R&D expenses for the years ended December 31, 2023 and 2022:

 $

 2023

 2022

 Research and development

 $
 6,652,000

 $
 3,050,000

 $
 3,602,000

 The
increase in R&D expenses between periods was primarily attributable to increased activity related to product acquisitions, product
launches, clinical and medical support.

and Disposal of Long-Lived Assets

the year ended December 31, 2023, we recorded a charge of $548,000, of which, $380,000 was related to the impairment of licenses, trademarks,
patents and patent applications and $168,000 was related to equipment that was no longer in service.

Expense, net

expense, net was $21,324,000 during the year ended December 31, 2023, compared to $7,244,000 during the year ended December 31, 2022.
The increase was primarily due to an increase in the principal balance of our loans throughout the two periods presented.

 Equity
in Losses of Unconsolidated Entities

the years ended December 31, 2023 and 2022, we recorded a loss of $0 and $11,133,000, respectively, for our share of losses based on
our ownership of Melt and Surface.

Gain (Loss) from Eton

 We
recorded a gain of $3,092,000 related to the change in fair market value of our investment in Eton's common stock for the year
ended December 31, 2023. We recorded a loss of $2,914,000 related to our investment in Eton's common stock for the year ended December
31, 2022.

 Gain
on Sale of Non-Ophthalmology Assets

the year ended December 31, 2022, we recorded a gain on the sale of our non-ophthalmology assets to Innovation Compounding Pharmacy,
LLC of $5,259,000.

 Loss
on Early Extinguishment of Debt

the year ended December 31, 2023, we recorded a loss on extinguishment of debt of $5,465,000, related to the payoff of the BR Loan.

 Other
Income (Expense), net

the year ended December 31, 2023 we recorded other expense, net of $444,000 related primarily to transition services and write-off of
inventories associated with the divestment of our non-ophthalmology business, and a charge related to equipment that was no longer in
service. During the year ended December 31, 2022, we recorded other income, net of $102,000 related to the transition services provided
as part of our non-ophthalmology related compounding product line.

 Tax
Expense

the years ended December 31, 2023 and 2022, we recorded income tax expense of $701,000 and $75,000, respectively.

 The
following table presents our net loss for the years ended December 31, 2023 and 2022:

 2023

 2022

 $
 (24,411,000
)

 $
 (14,086,000
)

 Net loss per share, basic and diluted

 $
 (0.75
)

 $
 (0.51
)

 Liquidity
and Capital Resources

 Liquidity

 Our
cash on hand at December 31, 2023 was $74,085,000, compared to $96,270,000 at December 31, 2022.

 As
of the date of this Annual Report, we believe that cash and cash equivalents of $74,085,000 at December 31, 2023 will be sufficient to
sustain our planned level of operations and capital expenditures for at least the next 12 months. In addition, we may consider the sale
of certain assets including, but not limited to, part of, or all of, our investments in Eton, Surface, and Melt. However, we may pursue
acquisitions of products, drug candidates or other strategic transactions that involve large expenditures or we may experience growth
more rapidly or on a larger scale than we expect, any of which could result in the depletion of capital resources more rapidly than anticipated
and could require us to seek additional financing to support our operations.

 We
expect to use our current cash position and funds generated from our operations and any financing to pursue our business plan, which
includes developing and commercializing products, drug candidates, compounded formulations and technologies, integrating and developing
our operations, pursuing potential future strategic transactions as opportunities arise, including potential acquisitions of additional
drug products, drug candidates, and/or assets or technologies, pharmacies, outsourcing facilities, drug company and manufacturers, and
otherwise fund our operations. We may also use our resources to conduct clinical trials or other studies in support of our formulations
or any drug candidate for which we pursue FDA approval, to pursue additional development programs or to explore other development opportunities.

 Net
Cash Flows

 The
following provides detailed information about our net cash flows for the years ended December 31, 2023 and 2022:

 For the Years Ended

 2023

 2022

 Net cash provided by (used in):

 Operating activities

 $
 3,840,000

 $
 1,705,000

 Investing activities

 (152,553,000
)

 (1,743,000
)

 Financing activities

 126,528,000

 54,141,000

 Net change in cash and cash equivalents

 (22,185,000
)

 54,103,000

 Cash and cash equivalents at beginning of the year

 42,167,000

 Cash and cash equivalents at end of the year

 $
 74,085,000

 $

 Operating
Activities

 Net
cash provided by operating activities was $3,840,000 in 2023, compared to $1,705,000 in the prior year. Operating cash flow improved
despite the increased net loss due to increased non-cash charges in 2023 compared to the prior year. Notably an increase in amortization
expense of intangible assets to $10,082,000 for the year ended December 31, 2023 compared to $1,578,000 in 2022, an increase in amortization
of debt issuance costs and debt discounts to $4,097,000 for the year ended December 31, 2023 compared to $782,000 in 2022, an increase
in expense related to stock-based compensation to $15,696,000 for the year ended December 31, 2023 compared to $7,974,000 in 2022, as
well as $5,465,000 related to loss on extinguishment of our B. Riley senior debt.

 Investing
Activities

 Net
cash used in investing activities in 2023 and 2022 was $(152,553,000) and $(1,743,000), respectively. Cash used in investing activities
in 2023 was primarily associated with the NVS 5 Acquisition, Santen Products Acquisition and VEVYE Acquisition. Cash used in investing
activities during the 2022 period was primarily associated with equipment and software purchases and upgrades along with investments
in our intellectual property portfolio, offset by cash received on the sale of our non-ophthalmic assets.

 Financing
Activities

 Net
cash provided by financing activities in 2023 and 2022 was $126,528,000 and $54,141,000, respectively. Cash provided by financing activities
during the year ended December 31, 2023 was primarily related to proceeds received from the sale of the 2027 Notes, the Oaktree Loan
and Oaktree Amendment, and the Offering, offset by payment of payroll taxes upon vesting of PSUs in exchange for shares withheld from
employees. Net cash provided by financing activities during the year ended December 31, 2022 was
primarily related to net proceeds from the sale of the 2027 Notes and sale of common stock.

 Sources
of Capital

 Our
principal sources of cash consist of cash provided by operating activities, and in 2023 and 2022, proceeds from the sale of the 2027
Notes, the Offering and the Oaktree Loan and Oaktree Amendment. We may also sell some or all of our ownership interests in Surface, Melt
or our other subsidiaries, along with some or all of the remaining portion of our Eton common stock.

 We
may acquire new products, product candidates and/or businesses and, as a result, we may need significant additional capital to support
our business plan and fund our proposed business operations. We may receive additional proceeds from the exercise of stock purchase warrants
that are currently outstanding. We may also seek additional financing from a variety of sources, including other equity or debt financings,
funding from corporate partnerships or licensing arrangements, sales of assets or any other financing transaction. If we issue equity
or convertible debt securities to raise additional funds, our existing stockholders may experience substantial dilution, and the newly
issued equity or debt securities may have more favorable terms or rights, preferences and privileges senior to those of our existing
stockholders. If we raise additional funds through collaboration or licensing arrangements or sales of assets, we may be required to
relinquish potentially valuable rights to our product candidates or proprietary technologies or formulations, or grant licenses on terms
that are not favorable to us. If we raise funds by incurring additional debt, we may be required to pay significant interest expenses
and our leverage relative to our earnings or to our equity capitalization may increase. Obtaining commercial loans, assuming they would
be available, would increase our liabilities and future cash commitments and may impose restrictions on our activities, such as the financial
and operating covenants. Further, we may incur substantial costs in pursuing future capital and/or financing transactions, including
investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to
recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which would adversely
impact our financial results.

 We
may be unable to obtain financing when necessary as a result of, among other things, our performance, general economic conditions, conditions
in the pharmaceuticals and pharmacy industries, or our operating history,. In addition, the fact that we have a limited history of profitability
could further impact the availability or cost to us of future financings. As a result, sufficient funds may not be available when needed
from any source or, if available, such funds may not be available on terms that are acceptable to us. If we are unable to raise funds
to satisfy our capital needs when needed, then we may need to forego pursuit of potentially valuable development or acquisition opportunities,
we may not be able to continue to operate our business pursuant to our business plan, which would require us to modify our operations
to reduce spending to a sustainable level by, among other things, delaying, scaling back or eliminating some or all of our ongoing or
planned investments in corporate infrastructure, business development, sales and marketing and other activities, or we may be forced
to discontinue our operations entirely.

 Critical
Accounting Policies

 We
rely on the use of estimates and make assumptions that impact our financial condition and results. These estimates and assumptions are
based on historical results and trends as well as our forecasts of how results and trends might change in the future. Although we believe
that the estimates we use are reasonable, actual results could differ materially from these estimates.

 We
believe that the accounting policies described below are critical to understanding our business, results of operations and financial
condition because they involve the use of more significant judgments and estimates in the preparation of our consolidated financial statements.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that
are highly uncertain at the time the estimate is made, and any changes in the assumptions used in making the accounting estimates that
are reasonably likely to occur could materially impact our consolidated financial statements.

 Revenue
Recognition and Deferred Revenue

 We
account for contracts with customers in accordance with ASC 606, Revenues from Contracts with Customers. We have three primary
streams of revenue (four in 2022): (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, (2) revenue
recognized from a commission agreement with a third party in 2022, (3) revenue recognized from transfer of acquired product sales and
profits, and (4) revenue recognized from intellectual property licenses.

 We
sell prescription medications directly through our pharmacy, outsourcing facility and 3PL partner. Revenue from our pharmacy services
includes: (i) the portion of the price the client pays directly to us, net of any volume-related or other discounts paid back to the
client, (ii) the price paid to us by individuals, and (iii) customer copayments made directly to the pharmacy network. Sales taxes are
not included in revenue. Following the core principles of ASC 606, the Company has identified the following:

 1.

 Identify
 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.

 2.

 Identify
 the performance obligations in the contract: Obligations for fulfillment of our 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. We have elected to
 treat its shipping and handling activities as a fulfillment cost.

 3.

 Determine
 the transaction price: The transaction price is based on an amount that reflects the consideration to which we expect 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. We utilize the services of a third-party professional services
 firm to estimate rebates and chargebacks associated with sales of our branded products. The 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.

 4.

 Allocate
 the transaction price to the performance obligations in the contract: Because there is only one performance obligation for product
 sales, no allocation is necessary.

 5.

 Recognize
 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.

 Commission

 We
have entered into an agreement whereby it is paid a fee calculated based on sales we generate from a pharmaceutical product that is owned
by a third party. The revenue earned from this arrangement is recognized, at which point there is no future performance obligation required
by us and no consequential continuing involvement on our part to recognize the associated revenue.

From Transfer of Acquired Product Sales and Profits

 We
entered into agreements whereby we purchased the exclusive commercial rights to assets associated with certain ophthalmic products from
other pharmaceutical companies (the "Sellers"). During a temporary, transition period, the Sellers continue to manufacture
and market these products and transfer the net profit from the sale of the products to us. The revenue we recognized from the transfer
of net profit was recognized at the time profit from the product sales were calculated by the Sellers and confirmed by us, typically
on a monthly basis, at which point there is no future performance obligation required and no consequential continuing involvement on
our part to recognize the associated revenue. On a quarterly basis, the Sellers invoiced us for all credits and reimbursements ("Chargebacks")
made to customers related to the products. We used historical actual experience to estimate Chargebacks associated with the net sales
and profit transferred. The estimated Chargebacks are recorded as a reduction in revenues from transfer of acquired product sales and
profits in our consolidated statements of operations, and recorded as a reduction to accounts receivable in the consolidated balance
sheets, at the time the revenue is recognized.

Property License Revenues

 We
currently hold five intellectual property licenses and related agreements pursuant to which we have agreed to license or sell to a customer
with the right to access our intellectual property. License arrangements may consist of non-refundable upfront license fees, data transfer
fees, research reimbursement payments, exclusive license rights to patented or patent pending compounds, technology access fees, and
various performance or sales milestones. These arrangements can be multiple-element arrangements, the revenue of which is recognized
at the point in time that the performance obligation is met.

 Non-refundable
fees that are not contingent on any future performance and require no consequential continuing involvement on our part are recognized
as revenue when the license term commences and the licensed data, technology, compounded drug preparation and/or other deliverables are
delivered. Such deliverables may include physical quantities of compounded drug preparations, design of the compounded drug preparations
and structure-activity relationships, the conceptual framework and mechanism of action, and rights to the patents or patent applications
for such compounded drug preparations. We defer recognition of non-refundable fees if it has continuing performance obligations without
which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee and
that are separate and independent of our performance under the other elements of the arrangement. In addition, if our continued involvement
is required, through research and development services that are related to its proprietary know-how and expertise of the delivered technology
or can only be performed by us, then such non-refundable fees are deferred and recognized over the period of continuing involvement.
Guaranteed minimum annual royalties are recognized on a straight-line basis over the applicable term.

 Debt
Issuance Costs and Debt Discount

 Debt
issuance costs and the debt discount are recorded net of notes payable in the consolidated balance sheets. Amortization of debt issuance
costs and the debt discount is calculated using the effective interest method over the term of the related debt and is recorded in interest
expense in the accompanying consolidated statements of operations. At December 31, 2022, we recorded deferred financing costs of $1,950,000
related to the B. Riley Loan and Security Agreement (the "BR Loan"), which was recorded as a debt issuance cost and net of
the related BR Loan when it funded in January 2023 (see the accompany Note 13 to our consolidated financial statements).

Property

 The
costs of acquiring intellectual property rights to be used in the research and development process, including licensing fees and milestone
payments, are charged to research and development expense as incurred in situations where we have not identified an alternative future
use for the acquired rights, and are capitalized in situations where we have identified an alternative future use for the acquired rights.
Patents and trademarks are recorded at cost and capitalized at a time when the future economic benefits of such patents and trademarks
become more certain (see subheading "Goodwill and Intangible Assets" below). If costs are not capitalized they are expensed
as incurred.

 Income
Taxes

 As
part of the process of preparing our consolidated financial statements, we must estimate the actual current tax assets and liabilities
and assess permanent and temporary differences that result from differing treatment of items for tax and accounting purposes. The temporary
differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. We must assess
the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery
is not more likely than not, a valuation allowance must be established which reduces the amount of deferred tax assets recorded on the
consolidated balance sheets. To the extent we establish a valuation allowance or increase or decrease this allowance in a period, the
impact will be included in income tax expense in the consolidated statements of operations.

 We
account for income taxes under the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC") 740, Income Taxes. As of December 31, 2023 and 2022, there was $2,853,000 and $0, respectively, of unrecognized
tax benefits included in the consolidated balance sheets that would, if recognized, affect the effective tax rate. Our practice is to
recognize interest and/or penalties related to income tax matters in income tax expense. We had an accrual for interest or penalties
of $40,000 and $0 in the consolidated balance sheets at December 31, 2023 and 2022, respectively, and have recognized interest and/or
penalties in the consolidated statements of operations for the years ended December 31, 2023 and 2022 of $40,000 and $0, respectively.
We are subject to taxation in the United States, California, New Jersey,
Tennessee and various other states. Our tax years since 2000 may be subject to examination by the federal and state tax authorities due to
the carryforward of unutilized net operating losses.

in Melt Pharmaceuticals, Inc. – Related Party

 We
own 3,500,000 shares of common stock and 2,334,256 shares of preferred stock of Melt (representing in aggregate approximately 47% of
the equity interests as of December 31, 2023). We analyze our investment in Melt and related agreements on a regular basis to evaluate
its position of variable interests in Melt. We have determined that we do not have the ability to control Melt, however we have the ability
to exercise significant influence over the operating and financial decisions of Melt and uses the equity method of accounting for this
investment. Under this method, we recognize earnings and losses in Melt in its consolidated financial statements and adjusts the carrying
amount of its investment in Melt accordingly. Any intra-entity profits and losses are eliminated. During the year ended December 31,
2021, we reduced the carrying value of our investment in Melt to $0 as a result of recording our share of equity losses in Melt since
its deconsolidation in 2019. As of December 31, 2022, and at the time of entering into the Melt Loan Agreement (see Note 5 to our consolidated
financials statements), we owned 100% of Melt's indebtedness. Following the reduction of the carrying value of our common stock
investment in Melt to $0, we began recording 100% of the equity method losses of Melt, based on its ownership of Melt's total indebtedness.
In addition, we treated interest paid in kind on the Melt Loan Agreement as an in-substance capital contribution and reduced our investment
in Melt accordingly, rather than recording interest income.

 On
a quarterly basis, we assess whether there are any indicators that the carrying value of our equity method investments may be other than
temporarily impaired. Indicators include financial condition, operating performance, and near-term prospects of the investee. To the
extent indicators suggest that a loss in value may have occurred, we will evaluate both quantitative and qualitative factors to determine
if the loss in value is other than temporary. If a potential loss in value is determined to be other than temporary, we will recognize
an impairment loss based on the estimated fair value of the equity method investments. During the year ended December 31, 2023, the Melt
Loan Agreement (as defined in Note 5 to our consolidated financial statements) was settled in exchange for Melt preferred stock (see
the Note 5 to our consolidated financial statements for loan settlement disclosure). We reduced the Melt Loan Agreement and subsequent
preferred stock investment in Melt to $0 as a result of recording our share of equity losses of Melt. We have no other investments in
Melt and no other requirements to advance funds to Melt.

 The
following table summarizes our investments in Melt as of December 31, 2023:

 Cost Basis

 Share of Equity
Method Losses

 Net Carrying value

 Common stock

 $
 5,810,000

 $
 (5,810,000
)

 $
 -

 Preferred stock

 18,397,000

 (18,397,000
)

 -

 $
 24,207,000

 $
 (24,207,000
)

 $
 -

 The
following table summarizes our investments in Melt as of December 31, 2022:

 Cost
 Basis

 Share of Equity
Method Losses

 Paid-in-Kind

 In-substance
Capital Contributions

 Net
Carrying value

 Common stock

 $
 5,810,000

 $
 (5,810,000
)

 $
 -

 $
 -

 $
 -

 Loan

 13,500,000

 (13,500,000
)

 2,484,000

 (2,484,000
)

 -

 $
 19,310,000

 $
 (19,310,000
)

 $
 2,484,000

 $
 (2,484,000
)

 $
 -

 At
December 31, 2023 and 2022, we recorded $89,000 and $139,000, respectively, due from Melt for reimbursable expenses and amounts due under
a Management Services Agreement, which are included in prepaid expenses and other current assets in the accompanying consolidated balance
sheets.

 See
the Note 5 to our consolidated financial statements for more information and related party disclosure regarding Melt.

 Goodwill
and Intangible Assets

and trademarks are recorded at cost and capitalized at a time when the future economic benefits of such patents and trademarks become
more certain. At that time, we capitalize third-party legal costs and filing fees associated with obtaining and prosecuting claims related
to its patents and trademarks. Once the patents have been issued, we amortize these costs over the shorter of the legal life of the patent
or its estimated economic life, generally 20 years, using the straight-line method. Acquired product rights, including new drug applications
("NDAs"), are amortized over their estimated useful lives, generally 4-15 years, based on a straight-line method. Trademarks
are an indefinite-lived intangible asset and are assessed for impairment based on future projected cash flows as further described below.

 We
review our goodwill and indefinite-lived intangible assets for impairment as of January 1 of each year and when an event or a change
in circumstances indicates the fair value of a reporting unit may be below its carrying amount. Events or changes in circumstances considered
as impairment indicators include but are not limited to the following:

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

 adverse economic and industry trends;

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

 expectations
 that a reporting unit will be sold or otherwise disposed.

 The
goodwill impairment test consists of a two-step process as follows:

 Step
1. We compare the fair value of each reporting unit to its carrying amount, including the existing goodwill. The fair value of each reporting
unit is determined using a discounted cash flow valuation analysis. The carrying amount of each reporting unit is determined by specifically
identifying and allocating the assets and liabilities to each reporting unit based on headcount, relative revenues or other methods as
deemed appropriate by management. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired,
and we then perform the second step of the impairment test to measure the impairment loss. If the fair value of a reporting unit exceeds
its carrying amount, no further analysis is required.

 Step
2. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to the
excess, limited to the total amount of goodwill allocated to that reporting unit.

 As
a result of its assessment in 2023, we concluded that goodwill is not impaired as of December 31, 2023.

of Other Long-Lived Assets

 Other
long-lived assets, such as property, plant and equipment, purchased intangibles subject to amortization and patents and trademarks, are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant
adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount
originally expected for the acquisition of an asset. Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount
of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying
amount of the asset exceeds the fair value of the asset. The fair value of the asset is based on the discounted value of its estimated
future cash flows. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower
of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group
classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the consolidated balance
sheet, if material.

 As
a result of its assessment in 2023, we recorded an impairment charge of $380,000 related to the impairment of certain licenses, trademarks,
patents and patent applications (see the Note 11 to our consolidated financial statements).

 Stock-Based
Compensation

 All
stock-based payments to employees, directors and consultants, including grants of stock options, warrants, restricted stock units ("RSUs"),
performance stock units ("PSUs) and restricted stock, are recognized in the consolidated financial statements based upon their
estimated fair values. We use the Black-Scholes-Merton option pricing model and Monte Carlo simulation model to estimate the fair value
of stock-based awards. The estimated fair value is determined at the date of grant. The financial statement effect of forfeitures is
estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates.

 Off-Balance
Sheet Arrangements

 Since
our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of
structured finance, special purpose entities or variable interest entities. We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 Not
applicable.

 ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 The
financial statements and supplementary data required by this item are included in this Annual Report beginning on page F-1 immediately
following the signature page hereto and are incorporated herein by reference.

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 None.

 ITEM
9A. CONTROLS AND PROCEDURES

 Disclosure
Controls and Procedures

 Our
management, under the supervision and with the participation of our Chief Executive Officer ("CEO"), our principal executive
officer, and our Chief Financial Officer ("CFO"), our principal financial and accounting officer, conducted an evaluation
of the effectiveness of our disclosure controls and procedures as of December 31, 2023, the end of the period covered by this Annual
Report, pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

 In
connection with that evaluation, our CEO and CFO concluded that, as of December 31, 2023, our disclosure controls and procedures were
effective. For the purpose of this review, disclosure controls and procedures means controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms. These disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under
the Exchange Act is accumulated and communicated to management, including our principal executive officer, principal financial officer
and principal accounting officer, as appropriate to allow timely decisions regarding required disclosure.

 Management's
Annual Report on Internal Control over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of,
our CEO and CFO and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. Our management, under the supervision and with the participation of our CEO and CFO, conducted an evaluation of
the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations. Based on such evaluation, management concluded that our internal control
over financial reporting was effective as of December 31, 2023.

 This
Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting, in accordance with applicable SEC rules that permit us to provide only management's report in the annual
report.

 Changes
in Internal Control over Financial Reporting

 There
has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the
year ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect our internal control over financial
reporting.

 Inherent
Limitations on Effectiveness of Controls

 Our
management, including our CEO and CFO, do not expect that our disclosure controls or our internal control over financial reporting will
prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error
or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls
can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the
controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of
any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of
changes in conditions or deterioration in the degree of compliance with policies or procedures.

 ITEM
9B. OTHER INFORMATION

 None.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not
applicable.

 PART
III

 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 The
information required by this item is incorporated by reference to the information set forth under the captions "Election of Directors,"
"Executive Officers," "Corporate Governance," "Corporate Governance — Delinquent Section 16(a) Reports,"
and "Corporate Governance — Code of Business Conduct and Ethics" in the Company's Proxy Statement for the 2024
Annual Meeting of Stockholders.

 ITEM
11. EXECUTIVE COMPENSATION

 The
information required by this item is incorporated by reference to the information set forth under the captions "Executive Compensation"
and "Director Compensation" in the Company's Proxy Statement for the 2024 Annual Meeting of Stockholders.

 ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 The
information required by this item is incorporated by reference to the information set forth under the captions "Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters" and "Executive Compensation — Securities
Authorized for Issuance Under Equity Compensation Plans" in the Company's Proxy Statement for the 2024 Annual Meeting of
Stockholders.

 ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 The
information required by this item is incorporated by reference to the information set forth under the captions "Corporate Governance
— Transactions with Related Persons" and "Corporate Governance — Director Independence" in the Company's
Proxy Statement for the 2024 Annual Meeting of Stockholders.

 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 The
information required by this item is incorporated by reference to the information set forth under the caption "Ratification of
Selection of Independent Registered Public Accounting Firm" in the Company's Proxy Statement for the 2024 Annual Meeting
of Stockholders.

 PART
IV

 ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a)

 List
 of the following documents filed as part of the report:

 (1)

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

 (2)

 All
 financial statement schedules are omitted because they are not applicable or the required information is shown in the consolidated
 financial statements or the notes thereto.

 (3)

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

 (b)

 Exhibits:

 EXHIBIT

 Exhibit
No.

 Description

 2.1

 Agreement and Plan of Merger, dated as of September 17, 2007, by and among Imprimis Pharmaceuticals, Inc., Transdel Pharmaceuticals Holdings, Inc. and Trans-Pharma Acquisition Corp. Incorporation (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on September 21, 2007).

 3.1

 Amended and Restated Certificate of Incorporation, as amended (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on September 29, 2023).

 3.2

 Amended and Restated Bylaws of Harrow, Inc. (incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on September 29, 2023).

 4.1*

 Description of the Company's Securities

 4.2

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

 4.3

 First Supplemental Indenture dated April 20, 2021 between Harrow, Inc. and U.S. Bank National Association, as Trustee (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on April 20, 2021).

 4.4

 Form of 8.625% Senior Note due 2026 (incorporated herein by reference to Exhibit 4.3 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on April 20, 2021).

 4.5

 Second Supplemental Indenture dated December 20, 2022 between Harrow, Inc. and U.S. Bank Trust Company, National Association (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on December 20, 2022).

 4.6

 Form of 11.875% Senior Note due 2027 (incorporated herein by reference to Exhibit 4.3 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on December 20, 2022).

 10.1

 Form of Directors and Officers Indemnification Agreement (incorporated herein by reference to Exhibit 10.8 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on September 21, 2007)

 10.2#

 Imprimis Pharmaceuticals, Inc. Amended and Restated 2007 Stock Incentive and Awards Plan (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on May 8, 2013)

 10.3#

 Amendment No. 1 to Imprimis Pharmaceuticals, Inc. Amended and Restated 2007 Incentive Stock and Awards Plan (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on November 6, 2013)

 10.4#

 Form of Incentive Stock Option Agreement (incorporated herein by reference to Exhibit 10.12 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on September 21, 2007)

 10.5#

 Form of Non-Qualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.13 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on September 21, 2007)

 10.6#

 Form of Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on May 8, 2013)

 10.7#

 Employment Agreement, dated as of April 25, 2016, by and between Imprimis Pharmaceuticals, Inc. and Mark L. Baum (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2016)

 10.8#

 Employment Agreement, dated as of April 25, 2016, by and between Imprimis Pharmaceuticals, Inc. and Andrew R. Boll (incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2016)

 10.9#

 Employment Agreement, dated as of April 25, 2016, by and between Imprimis Pharmaceuticals, Inc. and John P. Saharek (incorporated herein by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2016)

 10.10

 License Agreement dated April 1, 2017 between Imprimis Pharmaceuticals, Inc. and Richard L. Lindstrom, M.D. (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on April 6, 2017)

 10.11#

 Consulting Agreement dated May 1, 2017 between Eton Pharmaceuticals, Inc. and Mark L. Baum (incorporated herein by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on August 10, 2017)

 10.12#

 Consulting Agreement dated May 1, 2017 between Eton Pharmaceuticals, Inc. and Andrew R. Boll (incorporated herein by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on August 10, 2017)

 10.13#

 Consulting Agreement dated May 1, 2017 between Eton Pharmaceuticals, Inc. and John P. Saharek (incorporated herein by reference to Exhibit 10.10 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on August 10, 2017)

 10.14#

 Consulting Agreement dated October 27, 2017 between Surface Pharmaceuticals, Inc. and Mark L. Baum (incorporated herein by reference to Exhibit 10.53 to the Annual Report on Form 10-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on March 8, 2017)

 10.15#

 Consulting Agreement dated October 27, 2017 between Surface Pharmaceuticals, Inc. and Andrew R. Boll (incorporated herein by reference to Exhibit 10.54 to the Annual Report on Form 10-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on March 8, 2017)

 10.16#

 Consulting Agreement dated October 27, 2017 between Surface Pharmaceuticals, Inc. and John P. Saharek (incorporated herein by reference to Exhibit 10.55 to the Annual Report on Form 10-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on March 8, 2017)

 10.17

 Asset Purchase and License Agreement dated September 28, 2017 between Imprimis Pharmaceuticals, Inc. and Surface Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on May 15, 2018)

 10.18

 Amended and Restated Asset Purchase and License Agreement dated April 10, 2018 between Imprimis Pharmaceuticals, Inc. and Surface Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on May 15, 2018)

 10.19

 Amended and Restated License Agreement dated April 10, 2018 between Imprimis Pharmaceuticals, Inc. and Richard L. Lindstrom, M.D. (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on August 6, 2018)

 10.20

 Consulting Agreement dated March 1, 2018 between Surface Pharmaceuticals, Inc. and Richard L. Lindstrom, M.D. (incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on August 6, 2018)

 10.21#

 Consulting Agreement dated May 1, 2018 between Melt Pharmaceuticals, Inc. and Mark L. Baum (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on November 13, 2018)

 10.22#

 Consulting Agreement dated May 1, 2018 between Melt Pharmaceuticals, Inc. and Andrew R. Boll (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on November 13, 2018)

 10.23#

 Consulting Agreement dated May 1, 2018 between Melt Pharmaceuticals, Inc. and John P. Saharek (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on November 13, 2018)

 10.24

 Asset Purchase Agreement dated December 11, 2018 between Harrow, Inc. (fka Imprimis Pharmaceuticals, Inc.) and Melt Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on February 5, 2019)

 10.25#

 Consulting Agreement dated June 3, 2019 between Mayfield Pharmaceuticals, Inc. and Mark L. Baum (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on August 14, 2019)

 10.26#

 Consulting Agreement dated June 3, 2019 between Mayfield Pharmaceuticals, Inc. and Andrew R. Boll (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on August 14, 2019)

 10.27#

 Consulting Agreement dated June 3, 2019 between Mayfield Pharmaceuticals, Inc. and John P. Saharek (incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on August 14, 2019)

 10.28#

 Consulting Agreement dated February 13, 2020 between Stowe Pharmaceuticals, Inc. and Mark L. Baum (incorporated herein by reference to Exhibit 10.64#* to the Annual Report on Form 10-K of Harrow, Inc. filed with the Securities and Exchange Commission on March 13, 2020).

 10.29#

 Consulting Agreement dated February 13, 2020 between Stowe Pharmaceuticals, Inc. and Andrew R. Boll (incorporated herein by reference to Exhibit 10.65#* to the Annual Report on Form 10-K of Harrow, Inc. filed with the Securities and Exchange Commission on March 13, 2020).

 10.30#

 Consulting Agreement dated February 13, 2020 between Stowe Pharmaceuticals, Inc. and John P. Saharek (incorporated herein by reference to Exhibit 10.66#* to the Annual Report on Form 10-K of Harrow, Inc. filed with the Securities and Exchange Commission on March 13, 2020).

 10.31

 Commercial Alliance Agreement between Eyepoint Pharmaceuticals, Inc. and ImprimisRx, LLC dated August 1, 2020 (incorporated herein by reference to Exhibit 10.1*# to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on November 9, 2020).

 10.32

 Expansion Term Letter Agreement dated December 6, 2021 between Eyepoint Pharmaceuticals, Inc. and ImprimisRx, LLC (incorporated herein by reference to Exhibit 10.50 to the Annual Report on Form 10-K of Harrow, Inc. filed with the Securities and Exchange Commission on March 10, 2022)

 10.33

 Mutual Termination Agreement dated October 7, 2022 between ImprimisRx and EyePoint Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on November 14, 2022)

 10.34

 License and Supply Agreement dated July 25, 2021 between Harrow, Inc. and Sintetica, S.A. (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on August 10, 2021)

 10.35#

 Harrow, Inc. 2017 Incentive Stock and Awards Plan (incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form S-8 of Imprimis Pharmaceuticals, Inc. filed with the Securities and Exchange Commission on August 25, 2017)

 10.36#

 First Amendment to the Harrow, Inc. 2017 Incentive Stock and Awards Plan (incorporated herein by reference to Appendix A to Harrow, Inc.'s Definitive Proxy Statement filed with the Securities and Exchange Commission on April 23, 2021)

 10.37

 Loan and Security Agreement dated September 1, 2021 among Harrow, Inc. and Melt Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on September 2, 2021)

 10.38

 First Amendment to Loan and Security Agreement dated April 8, 2022 between Harrow, Inc. and Melt Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on November 14, 2022)

 10.39

 Second Amendment to Loan and Security Agreement dated September 21, 2022 between Harrow, Inc. and Melt Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on November 14, 2022)

 10.40

 Asset Purchase Agreement dated December 17, 2021 between Harrow, Inc. and Novartis Technology, LLC and Novartis Ophthalmics AG (incorporated herein by reference to Exhibit 10.51 to the Annual Report on Form 10-K of Harrow, Inc. filed with the Securities and Exchange Commission on March 10, 2022).

 10.41

 Asset Purchase Agreement dated December 13, 2022 between Harrow, Inc. and Novartis Technology, LLC and Novartis Innovative Therapies AG (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Harrow, Inc. filed with the Securities and Exchange Commission on December 14, 2022).

 10.42

 Loan and Security Agreement dated December 14, 2022 between Harrow, Inc. and B. Riley Commercial Capital LLC (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on May 11, 2023).

 10.43

 Credit and Guaranty Agreement dated March 27, 2023 between Harrow, Inc. and Oaktree Fund Administration, LLC (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on May 11, 2023).

 10.44

 First Amendment to Credit Agreement and Guaranty dated July 18, 2023 to the Credit Agreement and Guaranty dated March 27, 2023 between Harrow, Inc. and Oaktree Fund Administration, LLC (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on August 9, 2023).

 10.45

 Second Amendment to License and Supply Agreement dated August 4, 2023 between Harrow IP, LLC and Sintetica S.A (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Harrow, Inc. filed with the Securities and Exchange Commission on November 13, 2023).

 10.46*

 Third Amendment to License and Supply Agreement dated February 6, 2024 between Harrow IP, LLC and Sintetica S.A

 21.1*

 List of Subsidiaries

 23.1*

 Consent of Independent Registered Public Accounting Firm

 24.1*

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

 31.1*

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

 31.2*

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

 32.1**

 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Mark L. Baum, Chief Executive Officer.

 32.2**

 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Andrew R. Boll, Chief Financial Officer.

 97*

 Harrow, Inc. Policy Regarding the Mandatory Recovery of Compensation.

 101.INS*

 101.SCH*

 101.CAL*

 101.DEF*

 101.LAB*

 101.PRE*

 The
 cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2020 has been formatted in Inline

 #

 Management
 contract or compensatory plan or arrangement.

 *

 Filed
 herewith.

 **

 Furnished
 herewith.

 +

 Confidential
 treatment has been granted with respect to portions of this exhibit pursuant to Rule 24b-2 of the Exchange Act and these confidential
 portions have been redacted from the filing that is incorporated herein by reference. A complete copy of this exhibit, including
 the redacted terms, has been separately filed with the Securities and Exchange Commission.

 ITEM
16. FORM 10-K SUMMARY

 None.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 INC.

 By:

 /s/
 Mark L. Baum

 Mark
 L. Baum

 Chief
 Executive Officer (Principal Executive Officer)

 Date:

 March

 POWER
OF ATTORNEY

 KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark L. Baum and Andrew R. Boll,
and each of them individually, as his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to any or all amendments to this Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents or any of them the full power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the foregoing, as full to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or his substitutes, may lawfully do or cause to be done by
virtue thereof.

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/
 Mark L. Baum

 Chief
 Executive Officer and Chairman of the Board

 March

 Mark
 L. Baum

 (Principal
 Executive Officer)

 /s/
 Andrew R. Boll

 Chief
 Financial Officer and Corporate Secretary

 March

 Andrew
 R. Boll

 (Principal
 Accounting and Financial Officer)

 /s/
 Adrienne L. Graves

 March

 Adrienne
 L. Graves

 /s/
 Teresa F. Sparks

 March

 Teresa
 F. Sparks

 /s/
 Lauren P. Silvernail

 March

 Lauren
 P. Silvernail

 /s/
 Perry J. Sternberg

 March

 Perry
 J. Sternberg

 /s/
 Martin Makary

 March

 Martin
 Makary

 FINANCIAL
STATEMENTS

 Harrow,
Inc.

to Consolidated Financial Statements

 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 170)

 Consolidated Balance Sheets at December 31, 2023 and 2022

 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

 Notes to the Consolidated Financial Statements

 F- 1

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Stockholders and Board of Directors

Harrow, Inc.

 Opinion
on the Consolidated Financial Statements

 We
have audited the accompanying consolidated balance sheets of Harrow, Inc. and subsidiaries (the "Company") as of December
31, 2023 and 2022, the related consolidated statements of operations, stockholders' equity and cash flows for each of the two years
in the period ended December 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the
period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

 Basis
for Opinion

 These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

 Critical
Audit Matter

 The
critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication
of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts
or disclosures to which it relates.

 F- 2

Sales Deductions – Branded Products

 Critical
Audit Matter Description

 As
described in Note 3 to the consolidated financial statements, revenues from branded product sales are recognized net of accruals for
estimated rebates, wholesaler chargebacks, discounts, copay assistance and other deductions (collectively, "sales deductions"), which are established
at the time of sale. Management's estimate of sales deductions for branded products is based on the inventory levels in the distribution
channel as provided by wholesalers, as well as the actual average selling price for each product which is impacted by changes in customer
mix, changes in negotiated terms with customers, and changes in the volume of purchases. In addition, management utilizes the services
of a third-party professional services firm to estimate rebates and chargebacks associated with sales of its branded products.

 We
identified the estimates of accruals for sales deductions as a critical audit matter given the limited sales history of the Company's
branded products and the significant judgment required by management with respect to the measurement uncertainty, as the calculation
of the sales deductions includes assumptions such as average selling price, purchasing trends of wholesalers and historical branded product
sales used to predict future sales. This required a high degree of auditor judgment and an increased extent of audit effort in applying
the procedures related to management's assumptions.

 How
the Critical Audit Matter Was Addressed in the Audit

 To
test management's estimated branded product sales deductions, we obtained management's calculations for the respective estimates
and performed the following procedures, among others. We tested management's estimation process for determining accruals for product
sales deductions by developing an independent expectation of the estimated accrual rates, including comparison of rates used in management's
analysis to external industry data, historical actual information, and executed third-party contracts. We evaluated management's
historic ability to accurately estimate the sales deduction accruals by retrospectively comparing historically recorded accruals to the
actual amounts that were ultimately claimed by the wholesalers. In addition, we assessed subsequent events to determine whether there
was any new information that would require adjustment to the accruals.

 /s/
 KMJ Corbin & Company LLP

 We
have served as the Company's auditor since 2007.

 Irvine,
California

 March

 F- 3

INC.

 CONSOLIDATED
BALANCE SHEETS

 31, 2023

 31, 2022

 ASSETS

 Current assets

 Cash and cash
 equivalents

 $
 74,085,000

 $

 Investment in Eton Pharmaceuticals

 8,681,000

 5,589,000

 Accounts receivable, net

 36,261,000

 6,249,000

 10,867,000

 6,541,000

 Prepaid
 expenses and other current assets

 9,588,000

 3,611,000

 Total current assets

 139,482,000

 118,260,000

 Property, plant and equipment, net

 3,521,000

 3,486,000

 Capitalized software costs, net

 2,138,000

 2,112,000

 Deferred financing costs

 -

 1,950,000

 Operating lease right-of-use assets, net

 6,785,000

 7,513,000

 Intangible assets, net

 159,906,000

 23,725,000

 Goodwill

 332,000

 332,000

 TOTAL
 ASSETS

 $
 312,164,000

 $
 157,378,000

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities

 -

 Accounts payable and accrued
 expenses

 $
 24,581,000

 $
 13,771,000

 Accrued rebates and copay
 assistance

 18,432,000

 -

 Accrued payroll and related
 liabilities

 5,450,000

 4,025,000

 Deferred revenue and customer
 deposits

 113,000

 Current
 portion of operating lease obligations

 806,000

 723,000

 Total current liabilities

 49,344,000

 18,632,000

 Operating lease obligations, net of current
 portion

 6,524,000

 7,332,000

 Accrued expenses, net of current portion

 2,713,000

 -

 Notes payable, net of
 unamortized debt discount and issuance costs

 183,172,000

 104,174,000

 TOTAL
 LIABILITIES

 241,753,000

 130,138,000

 Commitments and contingencies

 -

 -

 STOCKHOLDERS' EQUITY

 Common stock, $ 0.001 par value, 50,000,000
 shares authorized, 35,168,260 and 29,901,530 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

 35,000

 30,000

 Additional paid-in capital

 204,635,000

 137,058,000

 Accumulated
 deficit

 ( 133,904,000
)

 ( 109,493,000
)

 TOTAL HARROW, INC. STOCKHOLDERS'
 EQUITY

 70,766,000

 27,595,000

 Noncontrolling
 interests

)

)

 TOTAL
 STOCKHOLDERS' EQUITY

 70,411,000

 27,240,000

 TOTAL
 LIABILITIES AND STOCKHOLDERS' EQUITY

 $
 312,164,000

 $
 157,378,000

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

 F- 4

INC.

 CONSOLIDATED
STATEMENTS OF OPERATIONS

 2023

 2022

 For the Years Ended

 31,

 2023

 2022

 Revenues:

 Product sales,
 net

 $
 117,447,000

 $
 83,524,000

 Other
 revenues

 12,746,000

 5,071,000

 Total revenues

 130,193,000

 88,595,000

 Cost of sales

 ( 39,640,000
)

 ( 25,383,000
)

 Gross profit

 90,553,000

 63,212,000

 Operating expenses:

 Selling, general and administrative

 83,090,000

 58,243,000

 Research and development

 6,652,000

 3,050,000

 of intangible assets

 380,000

 -

 Total operating expenses

 90,122,000

 61,293,000

 Income from operations

 431,000

 1,919,000

 Other (expense) income:

 Interest expense, net

 ( 21,324,000
)

 ( 7,244,000
)

 Equity in losses of unconsolidated
 entities

 -

 ( 11,133,000
)

 Investment gain (loss)
 from Eton Pharmaceuticals

 3,092,000

 ( 2,914,000
)

 Loss on extinguishment
 of debt

 ( 5,465,000
)

 -

 Gain on sale of non-ophthalmology

 -

 5,259,000

 Other
 (expense) income, net

 ( 444,000
)

 102,000

 Total other expense,
 net

 ( 24,141,000
)

 ( 15,930,000
)

 Loss before income tax provision

 ( 23,710,000
)

 ( 14,011,000
)

 Income
 tax provision

 ( 701,000
)

 ( 75,000
)

 Net loss attributable
 to Harrow, Inc.

 $
)

 $
)

 Basic and diluted net
 loss per share of common stock

 $
 ( 0.75
)

 $
 ( 0.51
)

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

 32,616,777

 27,460,968

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

 F- 5

INC.

 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY

 For
the Years Ended December 31, 2023 and 2022

 Total

 Total

 Stock

 Additional

 Harrow,
 Inc.

 Noncontrolling

 Total

 Par

 Paid-in

 Accumulated

 Stockholders'

 Stockholders'

 Shares

 Value

 Capital

 Deficit

 Equity

 Equity

 Equity

 Balance at December 31, 2021

 26,902,763

 $
 27,000

 $
 106,666,000

 $
 ( 95,407,000
)

 $
 11,286,000

 $
)

 $
 10,931,000

 Issuance of common stock in connection with:

 Exercise of consultant stock-based options

 19,679

 -

 55,000

 -

 55,000

 -

 55,000

 Exercise of employee stock-based options

 221,086

 1,000

 586,000

 -

 587,000

 -

 587,000

 Exercise of warrants

 306,347

 -

 -

 -

 -

 -

 -

 Vesting of RSUs

 185,000

 1,000

 ( 1,000
)

 -

 -

 -

 -

 Shares withheld related
 to net share settlement of equity awards

 ( 109,771
)

 ( 1,000
)

 ( 875,000
)

 -

 ( 876,000
)

 -

 ( 876,000
)

 Issuance of common shares from public offering,
 net of offering costs

 2,376,426

 2,000

 22,653,000

 -

 22,655,000

 -

 22,655,000

 Stock-based compensation expense

 -

 -

 -

 -

 -

 -

 -

)

)

 -

)

 Balance at December 31, 2022

 29,901,530

 $
 30,000

 $
 137,058,000

 $
 ( 109,493,000
)

 $
 27,595,000

 $
)

 $
 27,240,000

 Balance

 29,901,530

 $
 30,000

 $
 137,058,000

 $
 ( 109,493,000
)

 $
 27,595,000

 $
)

 $
 27,240,000

 Issuance of common stock in connection with:

 Public offering, net of
 offering costs

 3,887,324

 4,000

 64,516,000

 -

 64,520,000

 -

 64,520,000

 Exercise of consultant stock-based options

 10,000

 -

 85,000

 -

 85,000

 -

 85,000

 Exercise of employee stock-based options

 235,975

 -

 294,000

 -

 294,000

 -

 294,000

 Vesting of RSUs and PSUs

 1,847,876

 2,000

 ( 2,000
)

 -

 -

 -

 -

 Shares withheld related
 to net share settlement of equity awards

 ( 714,445
)

 ( 1,000
)

 ( 13,012,000
)

 -

 ( 13,013,000
)

 -

 ( 13,013,000
)

 Stock-based compensation expense

 -

 -

 -

 -

 -

 -

 -

)

)

 -

)

 Balance at December 31, 2023

 35,168,260

 $
 35,000

 $
 204,635,000

 $
 ( 133,904,000
)

 $
 70,766,000

 $
)

 $
 70,411,000

 Balance

 35,168,260

 $
 35,000

 $
 204,635,000

 $
 ( 133,904,000
)

 $
 70,766,000

 $
)

 $
 70,411,000

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

 F- 6

INC.

 CONSOLIDATED
STATEMENTS OF CASH FLOWS

 2023

 2022

 For the Years Ended

 31,

 2023

 2022

 CASH FLOWS FROM OPERATING ACTIVITIES

 $
)

 $
)

 Adjustments to reconcile
 net loss to net cash provided by operating activities:

 Depreciation and amortization
 of property, plant and equipment and software development costs

 1,530,000

 1,477,000

 Amortization of intangible

 10,082,000

 1,578,000

 Amortization of operating
 lease right-of-use assets

 728,000

 610,000

 Provision for credit losses

 332,000

 81,000

 Amortization of debt issuance
 costs and debt discount

 4,097,000

 782,000

 Investment (gain) loss
 from investment in Eton

 ( 3,092,000
)

 2,914,000

 Equity in losses of unconsolidated
 entities

 -

 11,133,000

 Loss on disposal of equipment

 168,000

 69,000

 Impairment of intangible

 380,000

 -

 Loss on extinguishment
 of debt

 5,465,000

 -

 Stock-based compensation

 Gain on sale of non-ophthalmology

 -

 ( 5,259,000
)

 Changes in assets and liabilities:

 Accounts receivable

 ( 30,344,000
)

 ( 1,860,000
)

 ( 4,326,000
)

 ( 2,324,000
)

 Prepaid expenses and other
 current assets

 ( 5,647,000
)

 ( 3,350,000
)

 Accounts payable, accrued
 expenses, accrued rebates and copay assistance

 31,795,000

 933,000

 Accrued payroll and related
 liabilities

 1,425,000

 936,000

 Deferred
 revenue and customer deposits

 ( 38,000
)

 97,000

 NET CASH PROVIDED BY
 OPERATING ACTIVITIES

 3,840,000

 1,705,000

 CASH FLOWS FROM INVESTING ACTIVITIES

 Proceeds from sale of non-ophthalmology

 -

 6,000,000

 Investment in patent and
 trademark assets

 ( 18,000
)

 ( 176,000
)

 Proceeds from sale of property,
 plant and equipment

 -

 30,000

 Purchase of product NDAs,
 marketing authorizations and patents

 ( 151,075,000
)

 ( 5,000,000
)

 Purchases
 of property, plant and equipment

 ( 1,460,000
)

 ( 2,597,000
)

 NET CASH USED IN INVESTING
 ACTIVITIES

 ( 152,553,000
)

 ( 1,743,000
)

 CASH FLOWS FROM FINANCING ACTIVITIES

 Proceeds from 11.875% notes
 payable, net of costs

 4,961,000

 31,738,000

 Proceeds from Oaktree Loan,
 net of costs

 73,552,000

 -

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

 ( 13,013,000
)

 ( 876,000
)

 Proceeds from exercise
 of stock options

 379,000

 642,000

 Proceeds from B Riley senior
 secured note, net of costs

 55,879,000

 -

 Repayment of B. Riley senior
 secured note

 ( 59,750,000
)

 -

 Proceeds from public offering
 of common stock, net of offering costs

 64,520,000

 22,655,000

 Payments
 on finance lease obligations

 -

 ( 18,000
)

 NET CASH PROVIDED BY
 FINANCING ACTIVITIES

 126,528,000

 54,141,000

 NET CHANGE IN CASH AND CASH EQUIVALENTS

 ( 22,185,000
)

 54,103,000

 CASH
 AND CASH EQUIVALENTS, beginning of year

 42,167,000

 CASH
 AND CASH EQUIVALENTS, end of year

 $
 74,085,000

 $

 SUPPLEMENTAL DISCLOSURE
 OF CASH FLOW INFORMATION:

 Cash
 paid for income taxes

 $
 -

 $

 Cash
 paid for interest

 $
 18,887,000

 $
 6,480,000

 SUPPLEMENTAL DISCLOSURES
 OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 Reclassification
 of deferred financing costs

 $
 1,950,000

 $
 -

 Accrual
 of exit fee related to Oaktree Loan

 $
 2,713,000

 $
 -

 Insurance
 premium financed

 $
 873,000

 $
 906,000

 Purchase
 of intangible asset included in accounts payable and accrued expenses

 $
 -

 $
 5,000,000

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

 $
 299,000

 $
 123,000

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

 $
 -

 $
 2,188,000

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

 F- 7

INC.

 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For
the Years Ended December 31, 2023 and 2022

 NOTE
1. ORGANIZATION

 Harrow,
Inc. (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. market. 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. that are marketed under
its Harrow name. The Company also owns and operates ImprimisRx, one of the nation's leading ophthalmology-focused pharmaceutical-compounding
businesses.

 The
Company owns non-controlling equity interests in Surface Ophthalmics, Inc. ("Surface") and Melt Pharmaceuticals, Inc. ("Melt"),
both companies that began as subsidiaries of Harrow. Harrow also owns royalty rights in various drug candidates being developed by Surface
and Melt.

 Effective
September 29, 2023, the Company changed its corporate name from Harrow Health, Inc. to Harrow, Inc. pursuant to a Certificate of Amendment
to the Company's Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware.

 NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Basis
of Presentation

 Harrow
has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United
States of America ("GAAP"). The accompanying consolidated financial statements include the accounts of the Company and its
wholly owned 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 intercompany accounts and transactions have been eliminated in consolidation.

 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.

 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 as a result
of regulatory guidelines or inspections, this may have a material impact on the Company's financial condition, liquidity and results
of operations.

 F- 8

 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 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 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.

 Accounts
receivable at December 31, 2023 and 2022 are net of allowances for credit losses of $ 371,000 and $ 73,000, respectively. The 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 December 31, 2023 and 2022:

OF ACCOUNTS RECEIVABLE ALLOWANCE OF CREDIT LOSS

 Balance at January 1, 2023

 $
 73,000

 Change in expected credit
 losses

 332,000

 Write-offs,
 net of recoveries

 ( 34,000
)

 Balance at December 31, 2023

 $
 371,000

 Business
Combinations and Asset Acquisitions

 The
Company evaluates acquisitions of assets and other similar transactions to assess whether the transaction should be accounted for as
a business combination or asset acquisition by first applying a screen to determine if substantially all of the fair value of the gross
assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction
is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether the Company has acquired
inputs, process, and output, which would meet the requirements of a business. If determined to be a business combination, the Company
accounts for the transaction under the acquisition method of accounting as indicated in Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC").

 ASC
805, Business Combinations, requires the acquiring entity in a business combination to recognize the fair value of all assets
acquired, liabilities assumed, and any non-controlling interest in the acquiree and establishes the acquisition date as the fair value
measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including any
contingent assets and liabilities, and any non-controlling interest in the acquiree based on the fair value estimates as of the date
of acquisition. The Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration
paid over the fair value of the identified net assets acquired.

 The
consideration for the Company's business acquisitions may include future payments that are contingent upon the occurrence of a
particular event or events. The obligation for such contingent consideration payments are recorded at fair value on the acquisition date.
The contingent consideration obligations are then evaluated each reporting period. Changes in the fair value of contingent consideration,
other than changes due to payments, would be recognized as a gain or loss and recorded in the consolidated statement of operations.

 F- 9

 If
determined to be an asset acquisition, the Company accounts for the transaction under ASC 805-50, Business Combinations – Related
Issues, which requires the acquiring entity in an asset acquisition to recognize assets acquired and liabilities assumed based on
the cost to the acquiring entity or a relative fair value basis, which includes transaction costs in addition to consideration given.
No gain or loss is recognized as of the date of acquisition unless the fair value of non-cash assets given as consideration differs from
the assets' carrying amounts on the acquiring entity's financial statements. Consideration transferred that is non-cash will
be measured based on either the cost (which shall be measured based on the fair value of the consideration given) or the fair value of
the assets acquired, and liabilities assumed, whichever is more clearly evident and more reliably measurable. The obligation for contingent
consideration payments is recorded when probable and reasonably estimable. Contingent consideration recognized is included in the initial
cost of the assets acquired and any subsequent changes in the recorded amount of contingent consideration are recognized as an adjustment
to the cost basis of the acquired assets and allocated to the acquired assets based on the relative fair value at the date of acquisition.
Goodwill is not recognized in an asset acquisition and any excess consideration transferred over the fair value of the net assets acquired
is allocated to the identifiable assets based on relative fair values.

 Noncontrolling
Interests

 The
Company recognizes any noncontrolling interest as a separate line item in equity in the consolidated financial statements. A noncontrolling
interest represents the portion of equity ownership in a less-than-wholly-owned subsidiary not attributable to the Company. Generally,
any interest that holds less than 50% of the outstanding voting shares is deemed to be a noncontrolling interest; however, there are
other factors that are considered as well, such as decision-making rights. When applicable, and in prior periods, the Company includes
the amount of net loss attributable to noncontrolling interests in consolidated net loss on the face of the consolidated statements of
operations.

 The
Company provides in the consolidated statements of stockholders' equity a reconciliation at the beginning and the end of the period
of the carrying amount of total equity, equity attributable to the parent, and equity attributable to the noncontrolling interests that
separately discloses:

 1.

 net
 income or loss;

 2.

 transactions
 with owners acting in their capacity as owners, showing separately contributions from and distributions to owners; and

 3.

 each
 component of other income or loss.

 The
noncontrolling interests in the consolidated balance sheets as of December 31, 2023 and 2022, relate to consolidated subsidiaries that
the Company owns a controlling interest in, but not 100% of the equity interests, and that no longer have active operations, assets and
related financial activity.

 Revenue
Recognition and Deferred Revenue

 The
Company recognizes revenue at the time of transfer of promised goods or services to customers in an amount that reflects the consideration
to which the Company expects to be entitled in exchange for those goods or services (see Note 3).

 Cost
of Sales

 Cost
of sales includes direct and indirect costs to manufacture formulations and other products sold, including active pharmaceutical ingredients,
personnel costs, packaging, storage, royalties, shipping and handling costs, depreciation and amortization of certain intangible assets
and the write-off of obsolete inventory.

 Research
and Development

 Research
and development ("R&D") expenses consist of expenses incurred in performing research and development activities, including
salaries and benefits, other overhead expenses, and costs related to clinical trials, contract services and outsourced contracts. We
expense all costs related to R&D as they are incurred.

 F- 10

 Upfront
and milestone payments related to the acquisition and licensing of technology for drug and product candidates that are not yet approved
by the FDA are considered acquisition of in process R&D and expensed as R&D in the period in which the expense occurs.

 Debt
Issuance Costs and Debt Discount

 Debt
issuance costs and the debt discount are recorded net of notes payable in the consolidated balance sheets. Amortization of debt issuance
costs and the debt discount is calculated using the effective interest method over the term of the related debt and is recorded in interest
expense in the accompanying consolidated statements of operations. At December 31, 2022, the Company recorded deferred financing costs
of $ 1,950,000 related to the B. Riley Loan and Security Agreement (the "BR Loan"), which was recorded as a debt issuance
cost and net of the related BR Loan when it funded in January 2023 (see Note 13).

Property

 The
costs of acquiring intellectual property rights to be used in the research and development process, including licensing fees and milestone
payments, are charged to research and development expense as incurred in situations where the Company has not identified an alternative
future use for the acquired rights, and are capitalized in situations where we have identified an alternative future use for the acquired
rights. Patents and trademarks are recorded at cost and capitalized at a time when the future economic benefits of such patents and trademarks
become more certain (see "Goodwill and Intangible Assets" below). If costs are not capitalized they are expensed as incurred.

 Income
Taxes

 As
part of the process of preparing the Company's consolidated financial statements, the Company must estimate the actual current
tax assets and liabilities and assess permanent and temporary differences that result from differing treatment of items for tax and accounting
purposes. The temporary differences result in deferred tax assets and liabilities, which are included within the consolidated balance
sheets. The Company must assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the
extent the Company believes that recovery is not more likely than not, a valuation allowance must be established which reduces the amount
of deferred tax assets recorded on the consolidated balance sheets. To the extent the Company establishes a valuation allowance or increase
or decrease this allowance in a period, the impact will be included in income tax expense in the consolidated statements of operations.

 The
Company accounts for income taxes under the provisions of Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") 740, Income Taxes. As of December 31, 2023 and 2022, there was $ 2,853,000
and $ 0,
respectively, of unrecognized tax benefits included in the consolidated balance sheets that would, if recognized, affect the
effective tax rate. The Company's practice is to recognize interest and/or penalties related to income tax matters in income
tax expense. The Company had no accrual for interest or penalties in its consolidated balance sheets at December 31, 2023 and 2022,
and has not recognized interest and/or penalties in the consolidated statements of operations for the years ended December 31, 2023
and 2022. The Company is subject to taxation in the United States, California,
New Jersey, Tennessee, and various other states. The Company's tax years since 2000 may be subject to examination by the
federal and state tax authorities due to the carryforward of unutilized net operating losses.

 Cash
and Cash Equivalents

 Cash
equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.

 F- 11

 Concentrations
of Credit Risk

 The
Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance
Corporation ("FDIC") provides basic deposit coverage with limits up to $ 250,000 per owner. The Company believes the majority
of its cash deposits are covered under FDIC limits, however there are various accounts in which the Company has deposits in excess of
FDIC limits.

in Eton Pharmaceuticals, Inc.

 The
Company's investment in Eton Pharmaceuticals, Inc. ("Eton") consists of common stock with a readily determinable fair
value which is carried at fair value with changes in fair value recognized in earnings. In accordance with ASC 321, Investments —
Equity Securities, the Company recorded an unrealized holding gain/(loss) from its Eton common stock position of $ 3,092,000 and $ ( 2,914,000),
during the years ended December 31, 2023 and 2022, respectively, related to the change in fair market value of its investment in Eton
during the measurement period.

 As
of December 31, 2023 and 2022, the Company owned 1,982,000 shares of Eton common stock, which represents less than 10 % of the equity
interests of Eton. At December 31, 2023 and 2022, the fair market value of Eton's common stock was $ 4.38 and $ 2.82 per share, respectively.
As of December 31, 2023 and 2022, the fair market value of the Company's investment in Eton was $ 8,681,000 and $ 5,589,000, respectively.

 Accounts
Receivable

 Accounts
receivable are stated net of allowances for credit losses and contractual adjustments. The accounts receivable balance primarily includes
amounts due from customers the Company has invoiced or from third-party providers (e.g., insurance companies and governmental agencies),
but for which payment has not been received. Our gross product revenues are subject to a variety of contractual deductions, which generally
are estimated and recorded in the same period that the revenues are recognized. These deductions represent estimates of the related obligations
and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on gross sales for a reporting
period. Accounts receivable at December 31, 2023 are presented net of allowances for credit losses of $ 371,000 and $ 14,875,000 for contractual
adjustments (in aggregate $ 15,146,000) and at December 31, 2022, net of allowances for credit losses of $ 73,000 and $ 706,000 for contractual
adjustments (in aggregate $ 779,000).

are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. The Company evaluates the
carrying value of inventories on a regular basis, based on the price expected to be obtained for products in their respective markets
compared with historical cost. Write-downs of inventories are considered to be permanent reductions in the cost basis of inventories.

 The
Company also regularly evaluates its inventories for excess quantities and obsolescence (expiration), taking into account such factors
as historical and anticipated future sales or use in production compared to quantities on hand and the remaining shelf life of products
and active pharmaceutical ingredients on hand. The Company establishes reserves for excess and obsolete inventories as required based
on its analyses.

in Melt Pharmaceuticals, Inc. – Related Party

 The
Company owns 3,500,000 shares of common stock and 2,334,256 shares of preferred stock of Melt (representing in aggregate approximately
 47 % of the equity interests as of December 31, 2023). The Company analyzes its investment in Melt and related agreements on a regular
basis to evaluate its position of variable interests in Melt. The Company has determined that it does not have the ability to control
Melt, however it has the ability to exercise significant influence over the operating and financial decisions of Melt and uses the equity
method of accounting for this investment. Under this method, the Company recognizes earnings and losses in Melt in its consolidated financial
statements and adjusts the carrying amount of its investment in Melt accordingly. Any intra-entity profits and losses are eliminated.
During the year ended December 31, 2021, the Company reduced the carrying value of its investment in Melt to $ 0 as a result of the Company
recording its share of equity losses in Melt since its deconsolidation in 2019. As of December 31, 2022, and at the time of entering
into the Melt Loan Agreement (see Note 5), the Company owned 100 % of Melt's indebtedness. Following the reduction of the carrying
value of the Company's common stock investment in Melt to $ 0, the Company began recording 100 % of the equity method losses of Melt,
based on its ownership of Melt's total indebtedness. In addition, the Company treated interest paid in kind on the Melt Loan Agreement
as an in-substance capital contribution and reduced its investment in Melt accordingly, rather than recording interest income.

 F- 12

 On
a quarterly basis, management assesses whether there are any indicators that the carrying value of the Company's equity method
investments may be other than temporarily impaired. Indicators include financial condition, operating performance, and near-term prospects
of the investee. To the extent indicators suggest that a loss in value may have occurred, the Company will evaluate both quantitative
and qualitative factors to determine if the loss in value is other than temporary. If a potential loss in value is determined to be other
than temporary, the Company will recognize an impairment loss based on the estimated fair value of the equity method investments. During
the year ended December 31, 2023, the Melt Loan Agreement (as defined in Note 5) was settled in exchange for Melt preferred stock (see
Note 5 for loan settlement disclosure). The Company reduced the Melt Loan Agreement and subsequent preferred stock investment in Melt
to $ 0 as a result of the Company recording its share of equity losses of Melt. The Company has no other investments in Melt and no other
requirements to advance funds to Melt.

 The
following table summarizes the Company's investments in Melt as of December 31, 2023:

 SCHEDULE OF INVESTMENT

 Cost
Basis

 Share
 of Equity
Method Losses

 Net
Carrying value

 Common stock

 $
 5,810,000

 $
 ( 5,810,000
)

 $
 -

 Preferred stock

 18,397,000

 ( 18,397,000
)

 -

 $
 24,207,000

 $
 ( 24,207,000
)

 $
 -

 The
following table summarizes the Company's investments in Melt as of December 31, 2022:

 Cost

 Basis

 Share
 of Equity
Method Losses

 Paid-in-Kind

 In-substance

Capital Contributions

 Net

Carrying value

 Common stock

 $
 5,810,000

 $
 ( 5,810,000
)

 $
 -

 $
 -

 $
 -

 Loan

 13,500,000

 ( 13,500,000
)

 2,484,000

 ( 2,484,000
)

 -

 $
 19,310,000

 $
 ( 19,310,000
)

 $
 2,484,000

 $
 ( 2,484,000
)

 $
 -

 At
December 31, 2023 and 2022, the Company recorded $ 89,000 and $ 139,000, respectively, due from Melt for reimbursable expenses and amounts
due under a Management Services Agreement between the Company and Melt (the "Melt MSA"), which are included in prepaid expenses
and other current assets in the accompanying consolidated balance sheets.

 See
Note 5 for more information and related party disclosure regarding Melt.

in Surface Ophthalmics, Inc. – Related Party

 The
Company owns 3,500,000 common shares of Surface (representing approximately 20 % of Surface's equity interests following the closing
of a round of financing completed by Surface in July 2021) and uses the equity method of accounting for this investment, as management
has determined that the Company has the ability to exercise significant influence over the operating and financial decisions of Surface.
Under this method, the Company recognizes earnings and losses in Surface in its consolidated financial statements and adjusts the carrying
amount of its investment in Surface accordingly. The Company's share of earnings and losses are based on the Company's ownership
interest of Surface. Any intra-entity profits and losses are eliminated. During the year ended December 31, 2021, the Company reduced
its common stock investment in Surface to $ 0 as a result of the Company recording its share of equity losses of Surface. The Company
has no other investments in Surface and no other requirements to advance funds to Surface.

 F- 13

 The
following table summarizes the Company's investment in Surface as of December 31, 2023 and 2022:

 SCHEDULE OF INVESTMENT

 Cost

Basis

 Share
 of Equity Method Losses

 Net

Carrying value

 stock

 $
 5,320,000

 $
 ( 5,320,000
)

 $
 -

 See
Note 6 for more information and related party disclosure regarding Surface.

 Property,
Plant and Equipment

 Property,
plant and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated using
the straight-line method over the estimated useful life of the asset. Leasehold improvements and finance lease equipment are amortized
over the estimated useful life or remaining lease term, whichever is shorter. Computer hardware and furniture and equipment are depreciated
over three to five years.

 Capitalized
Software Costs

 The
Company capitalizes certain costs related to the development of internal-use software. Costs incurred during the application development
phase are capitalized only when the Company believes it is probable the development will result in new or additional functionality. The
types of costs capitalized during the application development phase include consulting fees for third-party developers working on these
projects. Costs related to the preliminary project stage and post-implementation activities are expensed as incurred. Internal-use software
is amortized on a straight-line basis over the estimated useful life of the asset, which ranges from two to five years. When internal-use
software that was previously capitalized is abandoned, the cost less the accumulated amortization, if any, is recorded as amortization
expense. Fully amortized capitalized internal-use software costs are removed from their respective accounts.

 Goodwill
and Intangible Assets

and trademarks are recorded at cost and capitalized at a time when the future economic benefits of such patents and trademarks become
more certain. At that time, the Company capitalizes third-party legal costs and filing fees associated with obtaining and prosecuting
claims related to its patents and trademarks. Once the patents have been issued, the Company amortizes these costs over the shorter of
the legal life of the patent or its estimated economic life, generally 20 years, using the straight-line method. Acquired product rights,
including new drug applications ("NDAs"), are amortized over their estimated useful lives, generally 4 - 15 years, based on
a straight-line method. Trademarks are an indefinite-lived intangible asset and are assessed for impairment based on future projected
cash flows as further described below.

 The
Company reviews its goodwill and indefinite-lived intangible assets for impairment as of January 1 of each year and when an event or
a change in circumstances indicates the fair value of a reporting unit may be below its carrying amount. Events or changes in circumstances
considered as impairment indicators include but are not limited to the following:

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

 adverse economic and industry trends;

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

 expectations
 that a reporting unit will be sold or otherwise disposed.

 F- 14

 The
goodwill impairment test consists of a two-step process as follows:

 Step
1. The Company compares the fair value of each reporting unit to its carrying amount, including the existing goodwill. The fair value
of each reporting unit is determined using a discounted cash flow valuation analysis. The carrying amount of each reporting unit is determined
by specifically identifying and allocating the assets and liabilities to each reporting unit based on headcount, relative revenues or
other methods as deemed appropriate by management. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered
impaired and the Company then performs the second step of the impairment test to measure the impairment loss. If the fair value of a
reporting unit exceeds its carrying amount, no further analysis is required.

 Step
2. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to the
excess, limited to the total amount of goodwill allocated to that reporting unit.

 As
a result of its assessment in 2023, the Company concluded that goodwill is not impaired as of December 31, 2023.

of Other Long-Lived Assets

 Other
long-lived assets, such as property, plant and equipment, purchased intangibles subject to amortization and patents and trademarks, are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant
adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount
originally expected for the acquisition of an asset. Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount
of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying
amount of the asset exceeds the fair value of the asset. The fair value of the asset is based on the discounted value of its estimated
future cash flows. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower
of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group
classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the consolidated balance
sheet, if material.

 As
a result of its assessment in 2023, the Company recorded an impairment charge of $ 380,000 related to the impairment of certain licenses,
trademarks, patents and patent applications (see Note 11).

 Leases

 At
the inception of a contract the Company determines if the arrangement is, or contains, a lease. Operating lease right-of-use ("ROU")
assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation
to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on
the present value of lease payments over the lease term. Lease expense is recognized on a straight-line basis over the lease term.

 The
Company has made certain accounting policy elections whereby it (i) does not recognize ROU assets or lease liabilities for short-term
leases (those with original terms of 12-months of less) and (ii) combines lease and non-lease elements of its operating leases as a single
lease component. As of December 31, 2023 and 2022, the Company did not have any finance leases.

 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:

 Level
 1: 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.

 F- 15

 Level
 2: 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.

 Level
 3: 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.

 At
December 31, 2023 and 2022, the Company measured its investment in Eton on a recurring basis. The Company's investment in Eton
is classified as Level 1 as the fair value is determined using quoted market prices in active markets for the same securities. As of
December 31, 2023 and 2022, the fair market value of the Company's investment in Eton was $ 8,681,000 and $ 5,589,000, respectively.

 The
Company's 2026 Notes (as defined in Note 13) are carried at face value, including the unamortized premium, less unamortized debt
issuance costs, the 2027 Notes (as described in Note 13) are carried at face value less unamortized debt issuance costs, and the Oaktree
Loan (as defined in Note 13) is carried at face value less the original issue discount and unamortized debt issuance costs on the consolidated
balance sheets and the Company presents fair value for disclosure purposes only. The 2026 Notes and 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. The Oaktree 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.

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

OF ESTIMATED FAIR VALUE

 31,

 2023

 2022

 Carrying
 Value

 Fair
 Value

 Carrying
 Value

 Fair
 Value

 2026 Notes

 $
 73,218,000

 $
 70,260,000

 $
 72,436,000

 $
 71,550,000

 2027 Notes

 $
 37,413,000

 $
 40,363,000

 $
 31,738,000

 $
 35,112,000

 Oaktree Loan

 $
 72,541,000

 $
 76,627,000

 $
 -

 $
 -

 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 maturities of these
instruments. Based on borrowing rates currently available to the Company, the carrying values of the operating lease liabilities approximate
their respective fair values.

 Stock-Based
Compensation

 All
stock-based payments to employees, directors and consultants, including grants of stock options, warrants, restricted stock units ("RSUs"),
performance stock units ("PSUs) and restricted stock, are recognized in the consolidated financial statements based upon their
estimated fair values. The Company uses the Black-Scholes-Merton option pricing model and Monte Carlo simulation model to estimate the
fair value of stock-based awards. The estimated fair value is determined at the date of grant. The financial statement effect of forfeitures
is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates.

 Basic
and Diluted Net Loss per Common Share

 Basic
net loss per common share is computed by dividing net loss attributable to Harrow, Inc. for the year by the weighted average number of
common shares outstanding during the year. Diluted net loss per share is computed by dividing the net loss attributable to Harrow, Inc.
for the year by the weighted average number of common and common equivalent shares, such as stock options, RSUs, PSUs, and warrants,
outstanding during the year.

 F- 16

stock equivalents (using the treasury stock or "if converted" method) from stock options, unvested RSUs, and unvested PSUs
were 4,642,259 and 5,089,420 at December 31, 2023 and 2022, respectively, and are excluded in the calculation of diluted net loss per
share for the periods presented, because the effect is anti-dilutive for that time period. Included in the basic and diluted net loss
per share calculation were RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until
the director resigns. The number of shares underlying vested RSUs at December 31, 2023 and 2022 was 215,539 and 319,859, respectively.

 The
following table shows the computation of basic and diluted net loss per share of common stock for the years ended December 31, 2023 and
2022:

OF BASIC AND DILUTED EARNINGS PER COMMON SHARE

 For
 the Years Ended December 31,

 2023

 2022

 Numerator
 – net loss attributable to Harrow, Inc.

 $
)

 $
)

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

 32,616,777

 27,460,968

 Net
 loss per share, basic and diluted

 $
 ( 0.75
)

 $
 ( 0.51
)

 Recently
Adopted Accounting Pronouncements

 In
September 2016, FASB issued Accounting Standards Update ("ASU") 2016-13, Measurement of Credit Losses on Financial Instruments.
This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and
requires consideration of a broader range of reasonable and supportable information for credit loss estimates on certain types of financial
instruments, including trade receivables. In addition, new disclosures are required. The ASU, as subsequently amended, is effective for
the Company for the fiscal years beginning after December 15, 2022. The Company adopted ASU 2016-13 on January 1, 2023. Based on the
composition of the Company's accounts receivable, investment portfolio, and other financial assets, including current market conditions
and historical credit loss activity, the adoption of this standard did not have a material impact on the Company's consolidated
financial statements or disclosures. Specifically, the Company's estimate of expected credit losses as of January 1, 2023, using
its expected credit loss evaluation process described above, resulted in no adjustments to the provision for credit losses and no cumulative-effect
adjustment to accumulated deficit on the adoption date of the standard.

 Accounting
Guidance Issued but Not Adopted at December 31, 2023

 In
August 2023, FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial
Measurement, which applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture)
and requires joint ventures to initially measure all contributions received upon formation at fair value. The new guidance does not impact
accounting by the venturers. The new guidance is applicable to joint venture entities with a formation date on or after January 1, 2025
on a prospective basis. Joint ventures formed prior to the effective date may elect to apply the new guidance retrospectively back to
their original formation date. The Company will apply the guidance in ASU 2023-05 prospectively to any future arrangements meeting the
definition of a joint venture.

 In
October 2023, the FASB issued 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.

 F- 17

 In
November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which
enhances the disclosures required for operating segments in the Company's annual and interim consolidated financial statements.
ASU 2023-07 is effective for the Company in our annual reporting for fiscal 2024 and for interim period reporting beginning in fiscal
2025 on a retrospective basis, with all required disclosures to be made for all prior periods presented in the consolidated financial
statements. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial
statements.

 In
December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which enhances the
disclosures required for income taxes in the Company's annual consolidated financial statements. Notably, this ASU requires entities
to disclose specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that
meet a quantitative threshold. ASU 2023-09 is effective for the Company in its annual reporting for fiscal 2025 on a prospective basis.
Early adoption and retrospective reporting are permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated
financial statements.

 Reclassifications

 Certain
prior period items and amounts have been reclassified to conform to the classifications used to prepare the consolidated financial statements
for the current period. These reclassifications had no material impact on the Company's consolidated financial position, results
of operations, or cash flows as previously reported.

 NOTE
3. REVENUES

 The
Company accounts for contracts with customers in accordance with ASC 606, Revenues from Contracts with Customers. The Company
has three primary streams of revenue (four in 2022): (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, (2) revenue recognized from a commission agreement with a third party in 2022, (3) revenue recognized from transfer of acquired
product sales and profits, and (4) revenue recognized from intellectual property licenses.

 The
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
following:

 1.

 Identify
 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.

 2.

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

 3.

 Determine
 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. The 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.

 F- 18

 4.

 Allocate
 the transaction price to the performance obligations in the contract: Because there is only one performance obligation for product
 sales, no allocation is necessary.

 5.

 Recognize
 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.

 Commission

 The
Company has entered into an agreement whereby it is paid a fee calculated based on sales the Company generates from a pharmaceutical
product that is owned by a third party. The revenue earned from this arrangement is recognized, at which point there is no future performance
obligation required by the Company and no consequential continuing involvement on the Company's part to recognize the associated
revenue.

From Transfer of Acquired Product Sales and Profits

 The
Company has entered into agreements whereby it purchased the exclusive commercial rights to assets associated with certain ophthalmic
products from other pharmaceutical companies (the "Sellers"). During a temporary, transition period, the Sellers continue
to manufacture and market these products and transfer the net profit from the sale of the products to the Company. The revenue recognized
by the Company from the transfer of net profit was recognized at the time profit from the product sales were calculated by the Sellers
and confirmed by the Company, typically on a monthly basis, at which point there is no future performance obligation required by the
Company and no consequential continuing involvement on the Company's part to recognize the associated revenue. On a quarterly basis,
the Sellers invoice the Company for all credits and reimbursements ("Chargebacks") made to customers related to the products.
The Company uses historical actual experience to estimate Chargebacks associated with the net sales and profit transferred. The estimated
Chargebacks are recorded as a reduction in revenues from transfer of acquired product sales and profits in the Company's consolidated
statements of operations, and recorded as a reduction to accounts receivable in the consolidated balance sheets, at the time the revenue
is recognized.

Property License Revenues

 The
Company currently holds five intellectual property licenses and related agreements pursuant to which the Company has agreed to license
or sell to a customer with the right to access the Company's intellectual property. License arrangements may consist of non-refundable
upfront license fees, data transfer fees, research reimbursement payments, exclusive license rights to patented or patent pending compounds,
technology access fees, and various performance or sales milestones. These arrangements can be multiple-element arrangements, the revenue
of which is recognized at the point in time that the performance obligation is met.

 Non-refundable
fees that are not contingent on any future performance by the Company and require no consequential continuing involvement on the part
of the Company are recognized as revenue when the license term commences and the licensed data, technology, compounded drug preparation
and/or other deliverables are delivered. Such deliverables may include physical quantities of compounded drug preparations, design of
the compounded drug preparations and structure-activity relationships, the conceptual framework and mechanism of action, and rights to
the patents or patent applications for such compounded drug preparations. The Company defers recognition of non-refundable fees if it
has continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable
fee has no utility to the licensee and that are separate and independent of the Company's performance under the other elements
of the arrangement. In addition, if the Company's continued involvement is required, through research and development services
that are related to its proprietary know-how and expertise of the delivered technology or can only be performed by the Company, then
such non-refundable fees are deferred and recognized over the period of continuing involvement. Guaranteed minimum annual royalties are
recognized on a straight-line basis over the applicable term.

 F- 19

 Revenue
disaggregated by revenue source for the years ended December 31, 2023 and 2022, consists of the following:

 SCHEDULE OF DISAGGREGATED REVENUE

 For
 the Years Ended

 2023

 2022

 Product sales,
 net

 $
 117,447,000

 $
 83,524,000

 Commissions

 -

 3,866,000

 Transfer
 of acquired product sales/profits

 12,746,000

 1,205,000

 Total
 revenues

 $
 130,193,000

 $
 88,595,000

 Deferred
revenue and customer deposits at December 31, 2023 and 2022, were $ 75,000 and $ 113,000, respectively. All deferred revenue and customer
deposit amounts at December 31, 2022 were recognized as revenue during the year ended December 31, 2023.

 NOTE
4. RECENT PRODUCT ACQUISITIONS, LICENSES AND DIVESTITURES

of VEVYE TM U.S. and Canadian Commercial Rights

 In
July 2023, the Company acquired commercial rights of VEVYE (cyclosporine ophthalmic solution) 0.1 %, an ophthalmic drug product, for the
U.S. and Canadian markets (the "VEVYE Acquisition"). The Company acquired the commercial rights to VEVYE by entering into
a license agreement with Novaliq GmbH ("Novaliq"). As consideration, the Company made initial payments to Novaliq totaling
$ 8,000,000 and will pay low double-digit royalties on net sales of VEVYE along with potential commercial milestone payments.

 The
Company accounted for the VEVYE Acquisition as an acquisition of assets and capitalized the initial payments of $ 8,000,000 and costs
of $ 70,000 associated with the transaction.

of Certain U.S. and Canadian Commercial Rights to Santen and Eyevance Products

 In
July 2023, the Company entered into an Asset Purchase Agreement with Eyevance Pharmaceuticals, LLC and a License Agreement with Santen
S.A.S. (collectively, the "Santen Agreements"), each a subsidiary of Santen Pharmaceuticals Co., Ltd. (collectively, "Santen").
Pursuant to the Santen Agreements, the Company acquired the exclusive commercial rights to assets associated with the following ophthalmic
products (collectively, the "Santen Products"): FLAREX, NATACYN, ZERVIATE, VERKAZIA and FRESHKOTE in the U.S., and VERKAZIA
and CATIONORM PLUS in Canada.

 The
transactions pursuant to the Santen Agreements are referred to in these notes as the "Santen Products Acquisition."

 Under
the terms of the Santen Agreements, the Company made an initial one-time payment of $ 8,000,000. In addition, the Santen Agreements provide
for various one-time contingent milestone payments associated with certain manufacturing-related events as well as low-double digit royalty
payments on net sales of VERKAZIA and high-single digit royalty payments on net sales of CATIONORM PLUS. Under the Santen Agreements,
the Company also assumed certain obligations associated with other third parties that require mid-single digit royalties on sales of
FRESHKOTE and ZERVIATE. Immediately following the closing and subject to certain conditions, prior to the transfer of the Santen Products
NDAs and other marketing authorizations to the Company, Santen continued to sell the Santen Products on the Company's behalf and
transfer the net profit from the sale of the Santen Products to the Company. In October 2023, we completed the transfer of the U.S. NDAs
and rights of the Santen Products.

 The
assets acquired in the Santen Products Acquisition are identifiable intangible asset groups in similar asset classes and all directly
related to the product NDAs and marketing authorizations acquired. The developed technology is within one major intangible asset class.
No workforce/employees were included in the Santen Products Acquisition and the Company is required to utilize its own business inputs/processes
to transfer and commercialize the Santen Products.

 F- 20

 The
Company incurred $ 139,000 in costs associated with the Santen Products Acquisition, and including such acquisition costs, the payment
of $ 8,000,000 at closing and a near term milestone of $ 500,000. The total purchase price of the Santen Products Acquisition was $ 8,639,000
and was accounted for as an asset acquisition. At the time of the Santen Products Acquisition and as of December 31, 2023, the remaining
contingent consideration due was not considered probable and reasonably estimable and therefore, no amount was included in the purchase
price of the Santen Products Acquisition. At the time the contingent consideration due becomes probable and reasonably estimable the
additional consideration, if any, paid will be allocated to all of the assets on a pro rata basis based on their initial estimated fair
values as a percent of the total purchase price.

of ILEVRO, NEVANAC, VIGAMOX, MAXIDEX, and TRIESENCE

 In
December 2022, the Company entered into an Asset Purchase Agreement (the "NVS 5 APA") with Novartis Technology, LLC and Novartis
Innovative Therapies AG (together, "Novartis"), pursuant to which the Company agreed to purchase from Novartis the exclusive
commercial rights to assets associated with the following ophthalmic products (collectively the "NVS 5 Products") in the
U.S. (the "NVS 5 Acquisition"): ILEVRO, NEVANAC, VIGAMOX, MAXIDEX, and TRIESENCE.

 Under
the terms of the NVS 5 APA, the Company made a one-time payment of $ 130,000,000 at closing in January 2023, with up to another $ 45,000,000
due in a milestone payment related to the timing of the commercial availability of TRIESENCE. The milestone payment due upon commercial
availability for TRIESENCE decreased from $ 45,000,000 to $ 37,000,000 on January 20, 2024. Pursuant to the NVS 5 APA and various ancillary
agreements, immediately following the closing and subject to certain conditions and prior to the transfer of the NVS 5 Products NDAs
to the Company, Novartis continued to sell the NVS 5 Products on the Company's behalf and transfer the net profit from the sale
of the NVS 5 Products to the Company. Novartis has agreed to supply certain NVS 5 Products to the Company for a period of time after
the NDAs are transferred and to assist with technology transfer of the NVS 5 Products manufacturing to other third-party manufacturers,
if needed.

 The
assets acquired in the NVS 5 Acquisition are identifiable intangible asset groups in similar asset classes and all directly related to
the five product NDAs acquired. The developed technology is within one major intangible asset class. No workforce/employees were included
in the NVS 5 Acquisition and the Company is required to utilize its own business inputs/processes to transfer and commercialize the NVS
5 Products and NDAs.

 The
Company incurred $ 558,000 in costs associated with the NVS 5 Acquisition and including such acquisition costs and the payment of $ 130,000,000
at closing. The total purchase price of the NVS 5 Acquisition was $ 130,558,000 and was accounted for as an asset acquisition. At the
time of the NVS 5 Acquisition and as of December 31, 2023, the contingent consideration due related to the commercial availability of
TRIESENCE was not considered probable and reasonably estimable and, therefore, no amount was included in the purchase price of the NVS
5 Acquisition. At the time the contingent consideration due related to the commercial availability of TRIESENCE becomes probable and
reasonably estimable the additional consideration, if any, paid will be allocated to all of the assets on a pro rata basis based on their
initial estimated fair values as a percent of the total purchase price. The Company does not consider any amounts related to TRIESENCE
to be in-process research and development (IPR&D) as considered within the scope of ASC 730, Research and Development.

 Divestiture
of Non-Ophthalmic Assets

 In
October 2022, wholly-owned subsidiaries of the Company (collectively, "Imprimis") entered into an Asset Purchase Agreement
(the "RPC Agreement") with Innovation Compounding Pharmacy, LLC (the "Buyer"). Under the terms of the RPC Agreement,
Imprimis agreed to sell substantially all of its assets associated with its non-ophthalmology related compounding product line, including
but not limited to, certain intellectual property rights, customer lists, databases, and formulations (the "RPC Assets").
The Buyer agreed to make offers of employment to nine of the Company's employees that were responsible for the sales activities
associated with the RPC Assets. Under the terms of the RPC Agreement, the Buyer paid Imprimis an aggregate cash amount of $ 6,000,000
in October 2022. In addition, the Buyer is obligated to pay up to $ 4,500,000 to Imprimis based on mutually agreed upon revenue milestones
during the calendar year 2023 (the "Contingent Amount"). During the year ended December 31, 2022, no amount related to the
Contingent Amount was recognized by the Company. The Company will recognize a gain related to the Contingent Amount if/when the contingency
(in this case, revenue thresholds for 2023) become likely and reasonably estimable. The Company is currently engaged in discussions with
RPC related to the contingent payment amount, if any.

 F- 21

 In
connection with the RPC Agreement, Imprimis entered into a separate transition services agreement (the "RPC TSA") with the
Buyer related to providing ongoing services associated with the RPC Assets, such as procuring and dispensing prescription orders, providing
accounting and billing services and collecting accounts receivable. Imprimis provided transition services to the Buyer for approximately
nine months following the effective date of the RPC Agreement and expects to wind down transition services in subsequent periods. The
Company collected and will continue to collect cash on behalf of the Buyer for revenue generated by sales of RPC Assets from October
2022 through the transition period and the Company is obligated to transfer cash generated by such sales to the Buyer. The Company's
consolidated balance sheet as of December 31, 2023 includes accounts receivable of $ 49,000 for cash to be collected on behalf of the
Buyer for sales of RPC Assets through December 31, 2023.

 There
were no amounts due from the Buyer for reimbursement of services performed under the RPC TSA as of December 31, 2023. The receivable
amount of $ 49,000 along with $ 8,000 of payments received from accounts receivable but not yet paid were recorded within accounts payable
and accrued expenses on the consolidated balance sheet as of December 31, 2023, and represents a payable to the Buyer of $ 57,000. The
Company recorded a loss from the RPC TSA and disposition and sale of certain related assets and unusable inventory of $ 330,000 during
the year ended December 31, 2023, which is presented in other expense, net on the consolidated statements of operations.

 The
Company determined that the disposal of the related net assets does not qualify for reporting as discontinued operations because it does
not represent a strategic shift that has or will have a major effect on the Company's operations and financial results. During
the year ended December 31, 2022, the Company recognized a net gain on the sale of the non-ophthalmology related compounding assets as
follows:

OF NET GAIN ON SALE OF ASSETS

 Gross consideration

 $
 6,000,000

 Closing and transaction
 costs

 55,000

 Net
 proceeds

 5,945,000

 Book value of assets transferred:

 Customer
 relations intangible asset

 686,000

 Gain
 on sale of non-ophthalmology assets

 $
 5,259,000

 License
and Supply Agreement for IHEEZO

 In
July 2021, the Company entered into a License and Supply Agreement (the "Sintetica Agreement") with Sintetica S.A. ("Sintetica"),
pursuant to which Sintetica granted the Company the exclusive license and marketing rights to its patented ophthalmic drug candidate
("IHEEZO") in the U.S. and Canada.

 Pursuant
to the Sintetica Agreement, the Company agreed to pay Sintetica a per unit transfer price to supply IHEEZO, along with a per unit royalty
for units sold. The Company is required to pay Sintetica up to $ 18,000,000 in one-time milestone payments including a $ 5,000,000 payment
(the "Upfront Payment") due within 30 days of signing the Sintetica Agreement and the balance of payments due upon achievement
of certain regulatory and commercial milestones. Under the terms of the Sintetica Agreement, Sintetica is responsible for regulatory
filings for IHEEZO in the U.S. The Upfront Payment along with an additional milestone payment of $ 3,117,000 was paid and recorded as
R&D expenses during the year ended December 31, 2021. During the year ended December 31, 2022, $ 10,000,000 was paid or accrued under
the Sintetica Agreement following the FDA approval of the United States NDA for IHEEZO, and was capitalized as an intangible asset. In
August 2023, the Company amended the Sintetica Agreement to allow for early payment of commercial related milestones associated with
sales of IHEEZO in exchange for a $ 550,000 reduction in all of the remaining milestone amounts due. The Company then paid Sintetica $ 4,450,000.
As of December 31, 2023, no milestone amounts are due under the Sintetica Agreement.

 Subject
to certain limitations, the Sintetica Agreement has a ten-year term, and allows for a ten-year extension if certain sales thresholds
are met.

 F- 22

 NOTE
5. INVESTMENT IN MELT PHARMACEUTICALS, INC. AND AGREEMENTS – RELATED PARTY TRANSACTIONS

 In
December 2018, the Company entered into an asset purchase agreement with Melt (the "Melt APA"). Pursuant to the terms of
the Melt APA, Melt was assigned certain intellectual property and related rights from the Company to develop, formulate, make, sell,
and sub-license certain Company conscious sedation and analgesia related formulations (collectively, the "Melt Products").
Under the terms of the Melt APA, Melt is required to make mid-single digit royalty payments to the Company on net sales of the Melt Products
while any patent rights remain outstanding, as well as other conditions.

 In
February 2019, the Company entered into the Melt MSA, whereby the Company provided to Melt certain administrative services and support,
including bookkeeping, web services and human resources related activities, and Melt was required to pay the Company a monthly amount
of $ 10,000. The Melt MSA was terminated effective July 1, 2023. During the year ended December 31, 2023, and 2022, the Company recorded
$ 89,000 and $ 91,000, respectively, due from Melt for reimbursable expenses and amounts payable pursuant to the Melt MSA, which are included
in prepaid expenses and other current assets in the accompanying consolidated balance sheets. As
of December 31, 2023 and 2022, the Company was due $ 228,000 and $ 139,000, respectively, from Melt for reimbursable expenses and amounts
due under the Melt MSA. Melt did not make any payments to the Company during the year ended December 31, 2022. The Company made
a cash advance to Melt of $ 500,000 and Melt repaid the $ 500,000 cash advance during the year ended December 31, 2023.

the year ended December 31, 2023, Melt sold 2,421,904 shares of its Series B Preferred Stock and raised over $ 20,586,000 in gross proceeds
from third party investors.

 The
Company's Chief Executive Officer, Mark L. Baum, was previously a member of the Melt board of directors until his resignation during
the year ended December 31, 2021. Mr. Baum re-joined the Melt board of directors in January 2023. At the time Mr. Baum re-joined, the
Melt board of directors consisted of five members, including Mr. Baum, who is the only representative of the Company on Melt's
board of directors.

 Melt
Note Receivable – Settled and Terminated in 2023

 On
September 1, 2021, the Company entered into a loan and security agreement in the principal amount of $ 13,500,000 (the "Melt Loan
Agreement"), as lender, with Melt, as borrower. Amounts borrowed under the Melt Loan Agreement bore interest at 12.50 % per annum,
which interest could have been paid in-kind at the option of Melt until the maturity date. The Melt Loan Agreement permitted Melt to
pay interest only on the principal amount loaned thereunder through the term and all amounts owed were previously due and payable on
September 1, 2022. In April 2022, the Company entered into a First Amendment and in September 2022, a Second Amendment (together, the
"Amendments") to the Melt Loan Agreement. The Amendments (i) extended the maturity date of the Melt Loan Agreement to September
1, 2023, which could have been extended further to September 1, 2026 upon Melt completing a qualifying financing of a minimum amount
of $ 10,000,000 from third-party investors, (ii) added conditions related to minimum cash amounts following a qualifying financing, and
(iii) clarified the definition of material adverse effects. Melt could have elected to prepay all, but not less than all, of the amounts
owed prior to the maturity date at any time without penalty. The net funds received by Melt excluded $ 908,000 owed to the Company for
reimbursable expenses and amounts due under the Melt MSA prior to the effective date of the note receivable.

 In
connection with the Melt Loan Agreement, the Company and Melt entered into a Right of First Refusal Agreement providing the Company with
the right, but not the obligation, to match any offer received by Melt associated with the commercial rights to any of Melt's drug
candidates for a period of five years following the effective date of the Melt Loan Agreement.

 On
December 28, 2023, the Company terminated the Melt Loan Agreement. As of the date of termination, approximately $ 18,395,000 remained
outstanding under the Melt Loan Agreement. Pursuant to the terms of a Settlement and Payoff Agreement, dated as of December 28, 2023,
by and between the Company and Melt (the "Settlement Agreement"), the Company received 2,260,000 shares of Melt's Series
B-1 Preferred Stock and 74,256 shares of Melt's Series B Preferred Stock (which both series have similar rights and preferences)
in consideration for the full payment of all amounts outstanding under the Melt Loan Agreement. The Settlement Agreement contains customary
representations, warranties and releases of the parties and requires the parties to enter into a registration rights agreement providing
the Company with rights consistent with other holders of preferred stock of Melt. The Company concluded the Settlement Agreement is in
substance a funding of the Company's share of prior unrecorded losses and, therefore, those suspended losses must be recognized
first against the value of the new preferred stock investments. This resulted in reducing the carrying value of the Company's investment
in Melt, including the carrying value of the Preferred Stock received, to zero (the consideration received in the form of an equivalent
fair value of Melt's Preferred Stock to settle the full outstanding note receivable balance of $ 18,400,000 is essentially offset
by an equal amount of the funding of prior unrecorded losses). Accordingly, this settlement transaction had no quantitative effect on
either the Company's consolidated balance sheet or consolidated statement of operations for the year ended December 31, 2023.

 F- 23

 In
accordance with ASC 323, Investments – Equity Method and Joint Ventures, the carrying amount of the note receivable and
other investments in Melt have been reduced by the Company's allocated share of Melt's losses based on its ownership of Melt
and its total indebtedness (see Note 2).

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

OF CONDENSED INCOME STATEMENT

 For
 the Years Ended

 2023

 2022

 Revenues, net

 $
 -

 $
 -

 Loss from operations

 $
 ( 7,581,000
)

 $
 ( 12,443,000
)

 $
 ( 11,271,000
)

 $
 ( 14,446,000
)

 The
unaudited condensed balance sheet information of Melt is summarized below:

OF CONDENSED BALANCE SHEET

 31,

 2023

 2022

 Current assets

 $
 13,404,000

 $
 655,000

 Non-current assets

 -

 107,000

 Total assets

 $
 13,404,000

 $
 762,000

 Total liabilities

 $
 3,922,000

 $
 19,056,000

 Total preferred stock
 and stockholders' equity (deficit)

 9,482,000

 ( 18,294,000
)

 Total liabilities
 and stockholders' equity

 $
 13,404,000

 $
 762,000

 NOTE
6. INVESTMENT IN SURFACE OPHTHALMICS, INC. AND AGREEMENTS - RELATED PARTY TRANSACTIONS

 The
Company entered into an asset purchase and license agreement with Surface in 2017 and amended it in April 2018 (the "Surface License
Agreements"). Pursuant to the terms of the Surface License Agreements, the Company assigned and licensed to Surface certain intellectual
property and related rights associated with Surface's drug candidates (collectively, the "Surface Products"). Surface
is required to make mid-single digit royalty payments to the Company on net sales of the Surface Products while any patent rights remain
outstanding.

 As
of December 31, 2023, the Company owned 3,500,000 shares of Surface common stock. Adrienne Graves and Perry J. Sternberg, directors of
the Company, also are directors of Surface. Mark L. Baum, who is the Company's Chief Executive Officer, was previously a member
of the Surface board of directors and resigned from his position as a director of Surface on March 31, 2023.

the year ended December 31, 2021, the Company reduced its common stock investment in Surface to $ 0 as a result of the Company recording
its share of equity losses of Surface. The Company has no requirements to advance funds to Surface and no obligations to fund its future
operating losses, if any. Therefore, the Company's future financial results will not be negatively affected by Surface's
ongoing operations.

 F- 24

 NOTE
7. 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 December 31, 2023 and 2022 was as follows:

OF INVENTORIES

 31,

 2023

 2022

 Raw materials

 $
 5,477,000

 $
 3,707,000

 Work in progress

 54,000

 38,000

 Finished goods

 5,336,000

 2,796,000

 Total inventories

 $
 10,867,000

 $
 6,541,000

 NOTE
8. PREPAID EXPENSES AND OTHER CURRENT ASSETS

 Prepaid
expenses and other current assets at December 31, 2023 and 2022 consisted of the following:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

 31,

 2023

 2022

 Prepaid insurance

 $
 1,241,000

 $
 858,000

 Prepaid computer software related expenses

 1,613,000

 1,165,000

 Other prepaid expenses

 906,000

 937,000

 Receivable due from Melt

 228,000

 139,000

 Prepaid PDUFA fees

 3,438,000

 394,000

 Deferred Oaktree commitment fee (see Note
 13)

 409,000

 -

 Deposits and other
 current assets

 1,753,000

 118,000

 Total
 prepaid expenses and other current assets

 $
 9,588,000

 $
 3,611,000

 NOTE
9. PROPERTY, PLANT AND EQUIPMENT

 Property,
plant and equipment, net at December 31, 2023 and 2022 consisted of the following:

OF PROPERTY, PLANT AND EQUIPMENT

 31,

 2023

 2022

 Property, plant and equipment, net:

 Computer
 hardware

 $
 1,322,000

 $
 979,000

 Furniture and equipment

 936,000

 860,000

 Lab and pharmacy equipment

 4,564,000

 4,259,000

 Leasehold
 improvements

 6,771,000

 6,449,000

 Property, plant and equipment,
 gross

 13,593,000

 12,547,000

 Accumulated depreciation
 and amortization

 ( 10,072,000
)

 ( 9,061,000
)

 Property,
 plant and equipment, net

 $
 3,521,000

 $
 3,486,000

the years ended December 31, 2023 and 2022, the Company disposed of property, plant and equipment with a net book value of $ 168,000 and
$ 69,000, respectively, related to the discontinued use of certain lab equipment, which is included in other expense, net in the consolidated
statements of operations. The Company recorded depreciation and amortization expense of $ 1,055,000 and $ 1,253,000 during the years ended
December 31, 2023 and 2022, respectively.

 F- 25

 NOTE
10. CAPITALIZED SOFTWARE COSTS

 Capitalized
software costs at December 31, 2023 and 2022 consisted of the following:

OF CAPITALIZED SOFTWARE COSTS

 31,

 2023

 2022

 Capitalized software costs

 Capitalized
 internal-use software development costs

 $
 2,780,000

 $
 1,413,000

 Acquired
 third-party software license for internal-use

 159,000

 159,000

 Total gross capitalized
 software for internal-use

 2,939,000

 1,572,000

 Accumulated amortization

 ( 1,268,000
)

 ( 793,000
)

 Capitalized internal-use
 software in process

 467,000

 1,333,000

 Total capitalized software costs net

 $
 2,138,000

 $
 2,112,000

 The
Company recorded amortization expense of $ 475,000 and $ 224,000 during the years ended December 31, 2023 and 2022, respectively.

 NOTE
11. INTANGIBLE ASSETS AND GOODWILL

 The
Company's intangible assets at December 31, 2023 consisted of the following:

OF INTANGIBLE ASSETS

 Amortization

 Net

 periods

 Accumulated

 Carrying

 (in years)

 Cost

 amortization

 value

 7 - 19 years

 $
 984,000

 $
 ( 253,000
)

 $
 ( 276,000
)

 $
 455,000

 Licenses

 7 - 20 years

 100,000

 ( 30,000
)

 ( 22,000
)

 48,000

 Trademarks

 Indefinite

 281,000

 -

 ( 82,000
)

 199,000

 Acquired NDAs

 4 - 15 years

 170,353,000

 ( 11,300,000
)

 -

 159,053,000

 Customer relationships

 3 - 15 years

 596,000

 ( 516,000
)

 -

 80,000

 Trade name

 5 years

 ( 5,000
)

 -

 70,000

 Non-competition clause

 3 - 4 years

 50,000

 ( 50,000
)

 -

 -

 State pharmacy licenses

 25 years

 8,000

 ( 7,000
)

 -

 1,000

 $
 172,447,000

 $
 ( 12,161,000
)

 $
 ( 380,000
)

 $
 159,906,000

the year ended December 31, 2023, the Company recorded a charge of $ 380,000 related to the impairment of certain licenses, trademarks,
patents and patent applications. The Company determined that the sum of the expected undiscounted cash flows attributable to these intangible
assets was less than their carrying value and that an impairment charge was required. Accordingly, the Company calculated the estimated
fair value of the intangible assets based on the present value of the expected cash flows over their estimated lives. The impairment
amount was calculated by deducting the present value of the expected cash flows from the carrying value. Significant estimates and assumptions
used by the Company included sales and expense growth rates, and discounted projected cash flows. The estimates and assumptions used
in our assessment represent a Level 3 measurement because they are supported by little or no market activity and reflect the Company's
own assumptions in measuring fair value. The assumptions used in the impairment analysis are inherently subject to uncertainty and, therefore,
changes in these assumptions could have a significant impact on the concluded fair value.

 F- 26

 The
Company's intangible assets at December 31, 2022 consisted of the following:

 Amortization

 Net

 periods

 Accumulated

 Carrying

 (in years)

 Cost

 amortization

 Sold

 value

 7 - 19 years

 $
 980,000

 $
 ( 161,000
)

 $
 -

 $
 819,000

 Licenses

 20 years

 100,000

 ( 23,000
)

 -

 77,000

 Trademarks

 Indefinite

 267,000

 -

 -

 267,000

 Acquired NDAs

 10 years

 23,720,000

 ( 1,363,000
)

 -

 22,357,000

 Customer relationships

 3 - 15 years

 1,519,000

 ( 759,000
)

 ( 626,000
)

 134,000

 Trade name

 5 years

 ( 5,000
)

 -

 70,000

 Non-competition clause

 3 - 4 years

 50,000

 ( 50,000
)

 -

 -

 State pharmacy licenses

 25 years

 8,000

 ( 7,000
)

 -

 1,000

 $
 26,719,000

 $
 ( 2,368,000
)

 $
 ( 626,000
)

 $
 23,725,000

the year ended December 31, 2022, the Company recorded a net reduction to customer relationships intangible assets of $ 626,000 related
to customer relationships that were associated with the non-ophthalmology assets sold by the Company. The amount was reflected net of
the gross proceeds received related to the sale of the Company's non-ophthalmology assets (see Note 4).

 See
Note 4 related to other intangible assets acquired and divested during the years ended December 31, 2023 and 2022.

 Amortization
expense for intangible assets for the years ended December 31, 2023 and 2022 were as follows:

OF AMORTIZATION EXPENSES FOR INTANGIBLE ASSETS

 For
 the Years Ended

 2023

 2022

 $
 84,000

 $
 86,000

 Licenses

 7,000

 16,000

 Acquired NDAs

 9,937,000

 1,363,000

 Customer relationships

 54,000

 113,000

 Amortization of intangible

 $
 10,082,000

 $
 1,578,000

 Estimated
future amortization expense for the Company's intangible assets at December 31, 2023 is as follows:

OF ESTIMATED FUTURE AMORTIZATION EXPENSE

 Years ending

 2024

 $
 13,658,000

 2025

 13,658,000

 2026

 13,658,000

 2027

 13,309,000

 2028

 12,961,000

 Thereafter

 92,463,000

 Intangible assets

 $
 159,707,000

 There
were no changes in the carrying value of the Company's goodwill during the years ended December 31, 2023 and 2022.

 NOTE
12. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 Accounts
payable and accrued expenses at December 31, 2023 and 2022 consisted of the following:

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 2023

 2022

 31,

 2023

 2022

 Accounts payable

 $
 21,424,000

 $
 6,440,000

 Accrued insurance premium

 873,000

 575,000

 Accrued IHEEZO milestone payments (see Note
 4)

 -

 5,000,000

 Accrued RPC transition payments (see Note
 4)

 57,000

 453,000

 Accrued exit fee for note payable (see Note
 13)

 2,713,000

 -

 Accrued litigation settlements

 249,000

 49,000

 Accrued interest
 (see Note 13)

 1,978,000

 1,254,000

 Total accounts payable and accrued expenses

 $
 27,294,000

 $
 13,771,000

 Less: current portion

 ( 24,581,000
)

 ( 13,771,000
)

 Non-current total
 accrued expenses

 $
 2,713,000

 $
 -

 F- 27

 The
Company financed all insurance policies for the policy terms of August 17, 2023 through August 16, 2024 and August 17, 2022 through August
16, 2023. The financing agreements have an interest rate of 7.48 % and 4.13 % per annum, respectively, and require nine monthly payments
of $ 169,000 and eight monthly payments of $ 114,000, respectively.

 NOTE
13. DEBT

 Oaktree
Loan Due 2026

 In
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"), 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
"B. Riley Loan") – see subheading B. Riley Loan and Security Agreement – Paid in Full within this Note
13. The additional principal loan amount of up to $ 35,000,000 available under the Oaktree Loan ("Tranche B") will be made
available to the Company upon the commercialization of TRIESENCE. If Tranche B is not drawn by the Company on or before March 27, 2024,
the amount available under Tranche B will be decreased to $ 30,000,000. While undrawn, the Company is required to pay a commitment fee
related to Tranche B amount equal to 2 % per annum, payable quarterly. This fee is recorded within prepaid expenses and other current
assets and is being amortized on a straight-line basis over the access period.

 The
Oaktree Loan is secured by nearly all of the assets, including intellectual property, of the Company and its material subsidiaries. The
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 11.83 % at December 31, 2023). From proceeds, the Company paid fees, offering expenses, and the Oaktree Loan
was issued at an original issue discount, resulting in an aggregate discount of $ 3,415,000. The Oaktree Loan also carries an exit fee
equal to 3.5 % of the aggregate principal amount owed, payable at maturity, and the Company accrued $ 2,275,000 related to the exit fee.
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, January 19, 2026.

 In
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, and the Company made other changes related
to the Santen Products Acquisition (see Note 4). Upon satisfaction of certain conditions to funding, the Company drew down a principal
amount of $ 12,500,000 (the "Loan Increase") to fund the initial one-time payment associated with the Santen Products Acquisition
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 the Santen Products
Acquisition, the Company has drawn down a total principal loan amount of $ 77,500,000 under the Oaktree Loan. The Oaktree Loan exit fee
was increased from $ 2,275,000 to $ 2,713,000 pursuant to the Oaktree Amendment. As of December 31, 2023, the Company has recorded in accrued
expenses the total exit fee liability of $ 2,713,000.

 The
Oaktree Loan contains customary guarantees and covenants, including financial covenants related to minimum liquidity and minimum net
revenues. As of December 31, 2023, the Company was in compliance with the financial covenants. As of the end of the fiscal quarter ending
December 31, 2024, if the Company's Total Leverage Ratio (as defined in the Oaktree Loan) is greater than or equal to five times,
but less than seven times, the Company will be required to issue to Oaktree warrants to purchase 375,000 shares of the Company's
common stock, and if the Total Leverage Ratio is greater than or equal to seven times, the Company will be required to issue to Oaktree
warrants to purchase an additional 375,000 shares of the Company's common stock (equaling 750,000 shares in aggregate). If the
Total Leverage Ratio as of the end of the fiscal quarter ending December 31, 2024 is less than five times, no warrants will be issued
to Oaktree. Based on current projections, the Company does not expect to issue any warrants related to the Oaktree Loan.

 F- 28

expense related to the Oaktree Loan totaled $ 8,804,000 for the year ended December 31, 2023, and included the amortization of debt issuance
costs and discount of $ 1,680,000 and amortization of deferred commitment fees of $ 543,000.

 HROWM
- 11.875% Senior Notes Due 2027

 In
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.

 The
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. Interest
on the 2027 Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year, commencing on January
31, 2023. 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.

 At
any time prior to December 31, 2024, the Company may, at its option, redeem the 2027 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 2027 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 2027 Notes for cash in whole or
in part at any time at its option (i) on or after December 31, 2024 and 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 $ 5,516,000 and $ 140,000 for the years ended December 31, 2023 and 2022, respectively, and included
the amortization of debt issuance costs and discount of $ 736,000 and $ 0, respectively.

 Our
Chief Executive Officer, Mark L. Baum, Chief Financial Officer, Andrew R. Boll, and former directors R. Lawrence Van Horn and Dr. Richard
Lindstrom, in the aggregate, purchased $ 950,000 in principal amount of the 2027 Notes at the time of their offering.

 F- 29

 HROWL
– 8.625% Senior Notes Due 2026

 In
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 April 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 our 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, commencing on July 31, 2021. The 2026 Notes will mature on April
30, 2026. The issuance costs were recorded as a debt discount and are being amortized as interest expense, net of the amortization of
the premium on note issuance, over the term of the 2026 Notes using the effective interest rate method.

 Prior
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
our option on or after February 1, 2026 and prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid
interest to, but excluding, the date of redemption. On and after any redemption date, interest will cease to accrue on the redeemed Notes.
The 2026 Notes trade on the Nasdaq Stock Market LLC under the symbol "HROWL".

expense related to the 2026 Notes totaled $ 7,251,000 and $ 7,238,000 for the years ended December 31, 2023 and 2022, respectively, and
included amortization of debt issuance costs and discount of $ 782,000, and $ 782,000 for the years ended December 31, 2023 and 2022, respectively.

 B.
Riley Loan and Security Agreement – Paid in Full

 On
December 14, 2022 (the "Effective Date"), the Company entered into a Loan and Security Agreement (the "BR Loan")
with B. Riley Commercial Capital, LLC, as administrative agent for the lenders. The BR Loan provided for a loan facility of up to $ 100,000,000
to the Company with a maturity date of December 14, 2025 (the "Maturity Date"), at an interest rate of 10.875 % per annum.

 In
January 2023, $ 59,750,000 of principal amount was funded pursuant to the BR Loan simultaneously with the consummation of the NVS 5 Acquisition
(see Note 4). In March 2023, the Company repaid all amounts owed under the BR Loan, in connection with the Oaktree Loan, and no exit
or prepayment fees were paid as a result of the payoff of the BR Loan pursuant to a side letter agreement among the parties.

expense related to the BR Loan totaled $ 1,565,000 for the year ended December 31, 2023, and included amortization of debt issuance costs
and debt discount of $ 356,000. The Company recorded a loss of $ 5,465,000 related to the early extinguishment of debt associated with
the BR Loan.

 A
summary of the Company's debt at December 31, 2023 and 2022 is described as follows:

OF LONG TERM DEBT

 2023

 2022

 8.625% Senior Notes due April 2026

 $
 75,000,000

 $
 75,000,000

 11.875% Senior Notes due December 2027

 40,250,000

 35,000,000

 Oaktree Loan due January
 2026

 77,500,000

 -

 Notes payable gross

 192,750,000

 110,000,000

 Less: Unamortized debt
 discount and issuance costs

 ( 9,578,000
)

 ( 5,826,000
)

 Notes payable net

 $
 183,172,000

 $
 104,174,000

 F- 30

 For
the years ended December 31, 2023 and 2022, the total effective interest rate of the Company's debt was 10.93 %, and 8.97 %, respectively.

 At
December 31, 2023, future minimum payments under the Company's debt were as follows:

OF FUTURE MINIMUM PAYMENT UNDER NOTES PAYABLES

 Amount

 2024

 $
 21,201,000

 2025

 20,590,000

 2026

 159,896,000

 2027

 45,030,000

 Total minimum payments

 246,717,000

 Less: amount representing
 interest payments

 ( 53,967,000
)

 Notes payable, gross

 192,750,000

 Less: unamortized discount,
 net of premium

 ( 9,578,000
)

 Notes payable, net of
 unamortized discount

 $
 183,172,000

 NOTE
14. LEASES

 The
Company leases office and laboratory space under the non-cancelable operating leases listed below. These lease agreements have remaining
terms between one to five years and contain various clauses for renewal at the Company's option.

 An
 operating lease for 5,789 square feet of office space in Carlsbad, California, which commenced in January 2022 that expires in March
 2025.

 An
 operating lease for 38,153 square feet of lab, warehouse and office space in Ledgewood, New Jersey that expires in July 2027, with
 an option to extend the term for two additional five-year periods. This lease was amended, effective July 2020, to extend the term
 of the original lease and add 1,400 of additional square footage to the lease, amended again in May 2021 to extend the term of the
 lease to July 2027 and add 8,900 square feet of space, and amended in May 2023 to add another 2,861 square feet of space to the existing
 lease, which the Company took possession of in January 2024.

 An
 operating lease for 5,500 square feet of office space in Nashville, Tennessee that expires in December 2024.

 An
 operating lease for 11,552 square feet of lab and office space in Nashville, Tennessee which commenced in September 2022 and expires
 in September 2027.

 At
December 31, 2023 and 2022, the weighted-average discount rate and the weighted-average remaining lease term for the operating leases
held by the Company were 6.6 % and 6.6 % and 10.4 years and 10.9 years, respectively.

the years ended December 31, 2023 and 2022, cash paid for amounts included for the operating lease liabilities was $ 1,231,000 and $ 925,000,
respectively, and the Company recorded operating lease expense of $ 1,232,000 and $ 1,117,000, respectively, included in selling, general
and administrative expenses.

 Future
lease payments under operating leases as of December 31, 2023 were as follows (excluding lease transactions entered into in 2024):

OF FUTURE LEASE PAYMENT UNDER OPERATING LEASES

 Operating
 Leases

 2024

 $
 1,261,000

 2025

 1,093,000

 2026

 1,114,000

 2027

 972,000

 2028

 657,000

 Thereafter

 5,173,000

 Total minimum lease payments

 10,270,000

 Less: amount representing
 imputed interest payments

 ( 2,940,000
)

 Total operating lease liabilities

 7,330,000

 Less: current portion,
 operating lease liabilities

 ( 806,000
)

 Operating lease obligations,
 net of current portion

 $
 6,524,000

 F- 31

 NOTE
15. STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

 Preferred
Stock

 At
December 31, 2023 and 2022, the Company had 5,000,000 shares of preferred stock, $ 0.001 par value, authorized and no shares of preferred
stock issued and outstanding.

Stock

 At
each of December 31, 2023 and 2022, the Company had 50,000,000 shares of common stock, $ 0.001 par value, authorized.

 Issuances
During the Year Ended December 31, 2023

the year ended December 31, 2023:

 the
 Company closed a public offering of shares of its common stock at an offering price of $ 17.75 per share (the "Offering").
 The Company sold 3,887,324 shares of its common stock in the Offering, resulting in the Company receiving aggregate net proceeds
 of $ 64,520,000, after deducting underwriting discounts and commissions and other offering expenses of $ 4,480,000;

 the
 Company settled 1,567,913 outstanding PSUs as a result of the achievement of the total stockholder returns ("TSR") targets
 set forth in equity incentive awards (the "PSU Agreements") previously issued to members of the Company's management
 team in 2021 (the "2021 Awards"). The 2021 Awards were separated into four tranches and required that the Company achieve
 and maintain certain levels of TSR ranging from 50 % to 175 % per share during the five-year period following the grant date. TSR was
 based on the aggregate of: (i) the percent increase of the closing price of the Company's common stock from July 22, 2021;
 and (ii) any dividends or like stockholder distributions as specified in the PSU Agreements. In connection with the settlement of
 the 2021 Awards, an aggregate of 616,984 shares of the Company's common stock was withheld by Harrow for payroll tax obligations
 totaling $ 11,273,000;

 the
 Company issued 168,963 shares of its common stock underlying RSUs held by directors that ceased providing services to the Company.
 The RSUs had previously vested, including 21,620 RSUs during the year ended December 31, 2023, but the issuance and delivery of the
 shares were deferred until the director ceased providing services to the Company;

 the
 Company issued 65,148 shares of common stock and received proceeds of $ 379,000 upon the exercise of options to purchase 65,148 shares
 of common stock with exercise prices ranging from $ 1.70 to $ 8.50 per share;

 the
 Company issued 62,367 shares of common stock to Mark L. Baum, the Company's Chief Executive Officer, upon the cashless exercise
 of options to purchase 180,000 shares at an exercise price of $ 8.99 per share. The Company withheld from Mr. Baum 77,167 shares as
 consideration for the cashless exercise and an additional 40,466 shares for payroll tax obligations totaling $ 849,000;

 F- 32

 the
 Company issued 55,558 shares of common stock to Andrew R. Boll, the Company's Chief Financial Officer, upon the cashless exercise
 of options to purchase 90,000 shares at an exercise price of $ 6.00 per share. The Company withheld from Mr. Boll 25,521 shares as
 consideration for the cashless exercise and an additional 8,921 shares for payroll tax obligations totaling $ 189,000;

 the
 Company issued 10,222 shares of common stock to John Saharek, the Company's Chief Commercial Officer, upon the cashless exercise
 of options to purchase 20,000 shares at an exercise price of $ 4.16 per share. The Company withheld from Mr. Saharek 6,485 shares
 as consideration for the cashless exercise and an additional 3,293 shares for payroll tax obligations totaling $ 41,000;

 upon
 vesting of 23,000 RSUs granted in January 2020 to Andrew R. Boll, the Company's Chief Financial Officer, the Company issued
 13,398 shares of common stock to Mr. Boll, net of 9,602 shares of common stock withheld for payroll tax withholdings totaling $ 142,000;

 upon
 vesting of 88,000 RSUs granted in January 2020 to Mark L. Baum, the Company's Chief Executive Officer, the Company issued 52,821
 shares of common stock to Mr. Baum, net of 35,179 shares of common stock withheld for payroll tax withholdings totaling $ 519,000;
 and

 43,023
 shares of the Company's common stock underlying RSUs issued to directors vested, but the issuance and delivery of these shares
 were deferred until the applicable director ceased providing services to the Company.

 Issuances
During the Year Ended December 31, 2022

the year ended December 31, 2022:

 the
 Company issued 53,594 shares of common stock to Mark L. Baum, the Company's Chief Executive Officer, upon the cashless exercise
 of options to purchase 125,000 shares at an exercise price of $ 2.40 per share. The Company withheld from Mr. Baum 36,014 shares as
 consideration for the cashless exercise and an additional 35,392 shares for payroll tax obligations totaling $ 295,000;

 the
 Company issued 306,347 shares of its common stock upon the cashless exercise of warrants to purchase 373,847 shares of common stock
 with an exercise price of $ 2.08 per share;

 the
 Company issued 4,054 shares of common stock to a consultant upon the cashless exercise of options to purchase 15,995 shares at an
 exercise price of $ 7.07 per share. The Company withheld 11,941 shares as consideration for the cashless exercise;

 the
 Company issued 15,625 shares of common stock to a consultant and received net proceeds of $ 55,000 upon the exercise of options to
 purchase 15,625 shares of common stock at an exercise price of $ 3.50 per share;

 the
 Company issued 132,100 shares of common stock and received net proceeds of $ 587,000 upon the exercise of options to purchase 132,100
 shares of common stock with exercise prices between $ 1.70 to $ 8.40 per share;

 185,000
 RSUs granted at various dates to employees of the Company vested, and the Company issued 110,621 shares of common stock to the employees,
 net of 74,379 shares of common stock withheld for payroll tax withholdings totaling $ 581,000; and

 35,693
 shares of the Company's common stock underlying RSUs issued to directors vested, but the issuance and delivery of these shares
 are deferred until the applicable director resigns.

 F- 33

 Stock
Option Plan

 On
September 17, 2007, the Company's Board of Directors and stockholders adopted the Company's 2007 Incentive Stock and Awards
Plan, which was subsequently amended on November 5, 2008, February 26, 2012, July 18, 2012, May 2, 2013 and September 27, 2013 (as amended,
the "2007 Plan"). The 2007 Plan reached its term in September 2017, and we can no longer issue additional awards under this
plan, however, options previously issued under the 2007 Plan will remain outstanding until they are exercised, reach their maturity or
are otherwise cancelled/forfeited. On June 13, 2017, the Company's Board of Directors and stockholders adopted the Company's
2017 Incentive Stock and Awards Plan which was subsequently amended on June 3, 2021 (as amended, the "2017 Plan" together
with the 2007 Plan, the "Plans"). As of December 31, 2023, the 2017 Plan provides for the issuance of a maximum of 6,000,000
shares of the Company's common stock. The purpose of the Plans are to attract and retain directors, officers, consultants, advisors
and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such
persons in the Company's development and financial success. Under the Plans, the Company is authorized to issue incentive stock
options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options, restricted
stock units and restricted stock. The Plans are administered by the Compensation Committee of the Company's Board of Directors.
The Company had 405,612 shares available for future issuances under the 2017 Plan at December 31, 2023.

 Stock
Options

 A
summary of stock option activity under the Plan for the year ended December 31, 2023 is as follows:

OF STOCK OPTION PLAN ACTIVITY

 of shares

 Avg.
 Price

 Avg. Remaining
 Contractual
 Life

 Aggregate
 Intrinsic
 Value

 Options outstanding –
 January 1, 2023

 3,027,701

 $
 5.90

 Options granted

 135,500

 $
 17.81

 Options exercised

 ( 355,148
)

 $
 7.36

 Options cancelled/forfeited

 ( 96,736
)

 $
 7.49

 Options outstanding
 – December 31, 2023

 2,711,317

 $
 6.25

 4.00

 $
 14,303,000

 Options exercisable

 2,432,826

 $
 5.55

 3.45

 $
 13,760,000

 Options vested and
 expected to vest

 2,673,670

 $
 6.15

 3.93

 $
 14,243,000

 A
summary of stock option activity under the Plan for the year ended December 31, 2022 is as follows:

 of shares

 Avg.
 Price

 Avg. Remaining
 Contractual
 Life

 Aggregate
 Intrinsic
 Value

 Options outstanding –
 January 1, 2022

 3,039,546

 $
 5.52

 Options granted

 351,250

 $
 7.71

 Options exercised

 ( 288,720
)

 $
 3.65

 Options cancelled/forfeited

 ( 74,375
)

 $
 7.46

 Options outstanding
 – December 31, 2022

 3,027,701

 $
 5.90

 4.48

 $
 26,822,000

 Options exercisable

 2,457,769

 $
 5.51

 3.97

 $
 22,731,000

 Options vested and
 expected to vest

 3,026,942

 $
 5.90

 4.48

 $
 26,817,000

 The
aggregate intrinsic value in the table above represents the total pre-tax amount of the proceeds, net of exercise price, which would
have been received by option holders if all option holders had exercised and immediately sold all options with an exercise price lower
than the market price on December 31, 2023 and 2022, based on the closing price of the Company's common stock of $ 11.20 and $ 14.76,
respectively, on that date.

 The
intrinsic value of the options exercised in 2023 and 2022 was $ 4,580,000 and $ 2,008,000, respectively.

 F- 34

the year ended December 31, 2023, 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 10 years. Vesting terms for options granted to employees during
the year ended December 31, 2023 generally included one of the following vesting schedules: 25% of the shares subject to the option vest
and become exercisable on the first anniversary of the grant date and the remaining 75% of the shares subject to the option vest and
become exercisable quarterly in equal installments thereafter over three years; and 100% of the shares subject to the option vest on
a quarterly basis in equal installments over three years. Certain option awards provide for accelerated vesting if there is a change
in control (as defined in the Plans) and in the event of certain modifications to the option award agreement.

 The
fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The Company calculates
expected volatility based solely on the historical volatilities of the common stock of the Company. The expected term of options granted
was determined in accordance with the "simplified approach," as the Company has limited, relevant, historical data on employee
exercises and post-vesting employment termination behavior. The expected risk-free interest rate is based on the U.S. Treasury yield
for a period consistent with the expected term of the option in effect at the time of the grant. The financial statement effect of forfeitures
is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates. For option grants to
employees and directors, the Company assigns a forfeiture factor of 10 %. These factors could change in the future, which would affect
the determination of stock-based compensation expense in future periods. Utilizing these assumptions, the fair value is determined at
the date of grant.

 The
table below illustrates the fair value per share determined using the Black-Scholes-Merton option pricing model with the following assumptions
used for valuing options granted to employees:

 SCHEDULE OF FAIR VALUE ASSUMPTIONS

 2023

 2022

 Weighted-average fair value of
 options granted

 $
 11.49

 $
 4.72

 Expected terms (in years)

 6.11

 6.11

 Expected volatility

 – 70
 %

 – 72
 %

 Risk-free interest rate

 3.59
 – 4.80
 %

 1.54
 – 3.70
 %

 Dividend yield

 -

 -

 The
following table summarizes information about stock options outstanding and exercisable at December 31, 2023:

 SCHEDULE OF STOCK
OPTION OUTSTANDING AND EXERCISABLE

 Options
 Outstanding

 Options
 Exercisable

 Range
 of
 Prices

 Outstanding

 Remaining
 Contractual
 Life in Years

 Price

 Exercisable

 Price

 $
 1.47
 - $ 1.73

 295,852

 3.95

 $
 1.72

 295,852

 $
 1.72

 $
 2.23

 285,000

 3.09

 $
 2.23

 285,000

 $
 2.23

 $
 2.40
 - $ 2.60

 24,068

 3.02

 $
 2.58

 24,068

 $
 2.58

 $
 3.95

 310,000

 2.25

 $
 3.95

 310,000

 $
 3.95

 $
 4.49
 - $ 5.72

 100,225

 5.47

 $
 5.54

 94,416

 $
 5.53

 $
 6.30

 285,000

 5.14

 $
 6.30

 285,000

 $
 6.30

 $
 6.75
 - $ 7.26

 103,312

 8.04

 $
 6.96

 39,625

 $
 6.96

 $
 7.30

 274,500

 6.01

 $
 7.30

 274,500

 $
 7.30

 $
 7.37
 - $ 7.79

 229,187

 3.99

 $
 7.52

 172,818

 $
 7.50

 $
 7.87
 - $ 25.86

 804,173

 3.27

 $
 9.59

 651,547

 $
 7.93

 $
 1.47
 - $ 25.86

 2,711,317

 4.00

 $
 6.25

 2,432,826

 $
 5.55

 F- 35

 As
of December 31, 2023, there was approximately $ 1,966,000 of total unrecognized compensation expense related to unvested stock options
granted under the Plan. That expense is expected to be recognized over the weighted-average remaining vesting period of 2.77 years. The
stock-based compensation for all stock options was $ 782,000 and $ 1,130,000 during the years ended December 31, 2023 and 2022, respectively.

 Performance
Stock Units

 Grants
During the Year Ended December 31, 2023

 In
April 2023, the Company granted an aggregate of 1,567,913 PSUs to members of its senior management including Mark Baum, Chief Executive
Officer, Andrew Boll, Chief Financial Officer, and John Saharek, Chief Commercial Officer, which are subject to the satisfaction of certain
market-based and continued service conditions (the "2023 PSUs"). The vesting of the 2023 PSUs require (i) a minimum of a
two-year service period, and (ii) during a five-year term, the achievement and maintenance of Company common stock price targets for
ten consecutive trading days ranging between $ 25.00 to $ 50.00 per share, separated into four separate tranches as described further in
the table below.

OF PERFORMANCE STOCK UNITS

 Tranche

 Number of Shares

 Target Share Price*

 Tranche 1

 223,988

 $
 25.00

 Tranche 2

 335,981

 $
 35.00

 Tranche 3

 447,975

 $
 45.00

 Tranche 4

 559,969

 $
 50.00

 *

 Target
 Share Price assumes that no dividends or like distributions are made to stockholders of the Company. If such distributions are made,
 the Target Share Price would decrease accordingly, to the benefit of the employee, to account for the dividend/distribution as a
 part of the Target Share Price.

 The
aggregate fair value of the 2023 PSUs was $ 29,106,000 using a Monte Carlo Simulation with a five-year life, 65 % volatility and a risk
free interest rate of 10.34 %. This amount is being amortized over a two-year derived service period.

 A
summary of the Company's PSU activity and related information for the year ended December 31, 2023 is as follows:

OF PERFORMANCE STOCK UNITS ACTIVITY

 of PSUs

 Average Grant Date Fair Value

 PSUs unvested – January 1, 2023

 $
 6.45

 PSUs granted

 $
 18.56

 PSUs vested

 ( 1,567,913
)

 $
 6.45

 PSUs cancelled/forfeited

 -

 $
 -

 PSUs unvested – December 31, 2023

 $
 18.56

 Grants
During the Year Ended December 31, 2022

 No
PSUs were issued during the year ended December 31, 2022. A summary of the Company's PSU
activity and related information for the year ended December 31, 2022 is as follows:

 of PSUs

 Average Grant

 Date Fair Value

 PSUs unvested – January 1, 2022

 $
 6.45

 PSUs granted

 -

 -

 PSUs vested

 -

 -

 PSUs cancelled/forfeited

 -

 -

 PSUs unvested – December 31, 2022

 $
 6.45

 F- 36

 As
of December 31, 2023, the total unrecognized compensation expense related to unvested PSUs was approximately $ 18,191,000 which is expected
to be recognized over a weighted-average period of 1.26 years, based on estimated vesting schedules. The stock-based compensation for
PSUs was $ 13,753,000 and $ 5,056,000 during the years ended December 31, 2023 and 2022, respectively.

 Restricted
Stock Units

 RSU
awards are granted subject to certain vesting requirements and other restrictions, including performance and market-based vesting criteria.
The grant date fair value of the RSUs, which has been determined based upon the market value of the Company's common stock on the
grant date, is expensed over the vesting period of the RSUs.

 Grants
During the Year Ended December 31, 2023

the year ended December 31, 2023, the Company's board of directors were granted 41,301 time-based vesting RSUs with a fair market
value of $ 800,000, which vest in equal quarterly installments over one year. The Company also granted 86,873 time-based vesting RSUs
with a fair market value of $ 697,000 to certain employees, which vest in full on the third anniversary of the grant date.

 A
summary of the Company's RSU activity and related information for the year ended December 31, 2023 is as follows:

OF RESTRICTED STOCK UNITS ACTIVITY

 of RSUs

 Grant
 Date

 Fair Value

 RSUs unvested – January
 1, 2023

 493,806

 $
 7.99

 RSUs granted

 128,174

 $
 11.68

 RSUs vested

 ( 175,643
)

 $
 8.67

 RSUs cancelled/forfeited

 ( 83,308
)

 $
 6.84

 RSUs unvested at
 December 31, 2023

 363,029

 $
 9.23

 Grants
During the Year Ended December 31, 2022

the year ended December 31, 2022, the Company's board of directors were granted 65,615 RSUs with a fair market value of $ 500,000,
which vest in equal quarterly installments over one year.

 A
summary of the Company's RSU activity and related information for the year ended December 31, 2022 is as follows:

 of RSUs

 Grant
 Date

 Fair Value

 RSUs unvested – January
 1, 2022

 665,288

 $
 7.57

 RSUs granted

 65,615

 $
 7.62

 RSUs vested

 ( 237,098
)

 $
 6.67

 RSUs cancelled/forfeited

 -

 $
 -

 RSUs unvested at
 December 31, 2022

 493,806

 $
 7.99

 As
of December 31, 2023, the total unrecognized compensation expense related to unvested RSUs was approximately $ 1,234,000 which is expected
to be recognized over a weighted-average period of 0.68 years, based on estimated vesting schedules. The stock-based compensation for
RSUs was $ 1,161,000 and $ 1,788,000 during the years ended December 31, 2023 and 2022, respectively.

 F- 37

 The
Company recorded total stock-based compensation (including issuance of common stock for services and accrual for stock-based compensation)
related to equity instruments granted to employees, directors and consultants as follows:

OF STOCK BASED COMPENSATION GRANTED TO EMPLOYEES, DIRECTORS AND CONSULTANTS

 2023

 2022

 For the Year
 Ended December 31,

 2023

 2022

 Employees – selling, general
 and administrative

 $
 13,279,000

 $
 6,669,000

 Employees – R&D

 1,662,000

 689,000

 Directors – selling, general and administrative

 688,000

 462,000

 Consultants –
 selling, general and administrative

 67,000

 154,000

 Total

 $

 $

 NOTE
16. INCOME TAXES

 The
Company is subject to taxation in the United States, California, New Jersey, Tennessee and various other states. The Company's income tax provision consists of the following for the years ended December
31, 2023 and 2022 are summarized below:

OF PROVISION FOR INCOME TAXES

 2023

 2022

 31,

 2023

 2022

 Current:

 $
 -

 $
 -

 State

 701,000

 Total current

 701,000

 Deferred:

 -

 -

 State

 -

 -

 Total deferred

 -

 -

 Income tax provision

 $
 701,000

 $

 A
reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Company's loss before income tax provision
to the income tax provision is as follows:

OF INCOME TAX PROVISION

 2023

 2022

 31,

 2023

 2022

 U.S. federal statutory tax rate

 21.00
 %

 21.00
 %

 State tax benefit, net

 0.77
 %

 ( 2.82
)%

 Rate change

 ( 8.02
)%

 -
 %

 Employee stock-based compensation

 19.93
 %

 1.34
 %

 Excess employee remuneration

 ( 30.83
)%

 ( 28.15
)%

 Melt loan settlement

 ( 4.52
)%

 -
 %

 Other

 ( 0.43
)%

 ( 0.18
)%

 Uncertain tax positions

 ( 11.71
)%

 -
 %

 Research and development tax credit

 0.53
 %

 -
 %

 Provision-to-return true-ups

 1.72
 %

 2.06
 %

 Other true-ups

 2.97
 %

 -
 %

 Change in valuation
 allowance

 5.71
 %

 6.22
 %

 Effective income
 tax rate

 ( 2.88
)%

 ( 0.53
)%

 F- 38

 Deferred
tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred
tax assets are as follows:

OF DEFERRED TAX ASSETS AND LIABILITIES

 2023

 2022

 31,

 2023

 2022

 Deferred tax assets (liabilities):

 NOL

 $
 4,669,000

 $
 9,401,000

 Depreciation and amortization

 1,637,000

 2,387,000

 Other

 854,000

 349,000

 Research and development
 credits

 220,000

 90,000

 Deferred stock compensation

 1,059,000

 945,000

 Basis difference in
 Eton

 ( 583,000
)

 ( 1,684,000
)

 Basis difference in
 Melt investments

 3.405,000

 4,240,000

 Federal benefit of state
 ASC740-10 reserves

 88,000

 -

 Limitation Under 163(j)

 2,893,000

 536,000

 Section 174 capitalized
 expenses

 1,261,000

 594,000

 ASC 842 lease liability

 1,710,000

 2,427,000

 ASC
 842 ROU asset

 ( 1,582,000
)

 ( 2,263,000
)

 Total
 deferred tax assets, net

 15,631,000

 17,022,000

 Valuation allowance

 ( 15,631,000
)

 ( 17,022,000
)

 Net deferred tax

 $
 -

 $
 -

 Realization
of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net
deferred tax assets have been fully offset by a valuation allowance. The valuation allowance decreased by approximately $ 1,391,000 and
$ 1,182,000 during 2023 and 2022, respectively.

 As
of December 31, 2023, the Company had federal and state net operating loss carryforwards of approximately $ 8,596,000 and $ 26,134,000,
respectively, which will begin to expire in 2036, unless previously utilized, and will begin to expire for state purposes in 2028. In
addition, the Company has federal net operating loss carryforward of $4,936,000 generated after 2017 that can be carried over indefinitely
and may be used to offset up to 80% of federal taxable income.

 As
of December 31, 2023 the Company had federal and state research and development credit carryforwards of approximately $ 177,000 and $ 54,000,
respectively, which will begin to expire in 2031, unless previously utilized. For state purposes, the state research and development
credit carryforwards can be carried over indefinitely.

 Utilization
of the net operating losses and research and development carryforwards may be subject to a substantial annual limitation due to ownership
change limitations that might have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code
of 1986, as amended (the "Code"), as well as similar state and foreign provisions. These ownership changes may limit the
amount of NOL and R&D credit carryforward that can be utilized annually to offset future taxable income and tax. Respectively. In
general, an "ownership change" as defined by Section 382 of the Code results from a transaction or series of transactions
over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by
certain stockholders or public groups. Since the Company's formation, the Company has raised capital through the issuance of capital
stock on several occasions which, combined with the purchasing stockholders' subsequent disposition of those shares, may have resulted
in such an ownership change, or could result in an ownership change in the future upon subsequent disposition.

 As
of December 31, 2023, the Company determined that it had net operating loss carryforwards of approximately $ 12,500,000
and state net operating loss carryforwards of approximately $ 9,400,000
restricted under IRC Section 382 of the Internal Revenue Code related to a 2011 change in ownership. Section 382 of the Internal
Revenue Code limits the utilization of net operating losses when ownership changes, as defined by that section, occur. Due to the
Section 382 limitation, and the length of time available to fully utilize the net operating loss carryforwards, the Company removed
these NOLs from deferred tax assets with a corresponding reduction of the valuation allowance. Similarly, under IRC Section 383
which limits the utilization of credits when ownership changes occur, the Company removed approximately $ 300,000
of federal credit and $ 300,000
of state credits from deferred tax assets with a corresponding reduction of the valuation allowance.

 F- 39

 As
of December 31, 2023, the Company had approximately $ 2,853,000
 of unrecognized tax benefits of which $ 2,853,000
if fully recognized, would decrease its effective
tax rate. There were interest or penalties accrued of $ 40,000
 relating to unrecognized tax benefits as of December
31, 2023.

 A
reconciliation of the change in the unrecognized tax benefits balance from January 1, 2023 to December 31, 2023 is as follows:

OF UNRECOGNIZED TAX BENEFITS

 & State Tax

 Balance at January 1, 2023

 $
 -

 Additions for tax positions
 related to current year

 36,000

 Additions for tax positions
 related to prior years

 2,817,000

 Balance at December
 31, 2023

 $
 2,853,000

 NOTE
17. EMPLOYEE SAVINGS PLAN

 The
Company has established an employee savings plan pursuant to Section 401(k) of the Internal Revenue Code, effective January 1, 2014.
The plan allows participating employees to deposit into tax deferred investment accounts up to 100 % of their salary, subject to annual
limits. The Company makes certain matching contributions to the plan in amounts up to 4 % of the participants' annual cash compensation,
subject to annual limits. The Company contributed approximately $ 594,000 and $ 397,000 to the plan during the years ended December 31,
2023 and 2022, respectively.

 NOTE
18. COMMITMENTS AND CONTINGENCIES

 Legal

 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 I, 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.

 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 the 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 matter (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.

 F- 40

 Certain
recent developments concerning the Company's legal proceedings it believes are or were material to its business and other matters
are discussed below:

 Ocular
Science, Inc. et. al

 In
July 2021, ImprimisRx, LLC, a subsidiary of the Company, filed a lawsuit against Ocular Science, Inc. and OSRX, Inc. (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 is violating the Lanham Act with false advertising. The Court granted cross motions for summary judgement on each party's
Lanham Act claims thus leaving only ImprimisRx, LLC's copyright infringement, trademark infringement and unfair competition claims
for trial. ImprimisRx, LLC is seeking damages from OSRX. The Company expects the trial to take place in August 2024.

and Professional Liability

and professional liability litigation represents an inherent risk to all firms in the pharmaceutical and pharmacy industry. We utilize
traditional third-party insurance policies with regard to our product and professional liability claims. Such insurance coverage at any
given time reflects current market conditions, including cost and availability, when the policy is written.

 Indemnities

 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
consolidated balance sheets.

 Sales
and Marketing Agreements

 The
Company has entered various sales and marketing agreements with certain organizations, to provide sales and marketing representation
services to ImprimisRx in select geographies in the U.S., in connection with the Company's ophthalmic compounded formulations.

 Under
the terms of the sales and marketing agreements, the Company is required to make commission payments generally equal to 10 % to 14 % of
net sales for products above and beyond the initial existing sales amounts. In addition, the Company is required to make periodic milestone
payments to certain organizations in shares of the Company's restricted common stock if net sales in the assigned territory reach
certain future levels by the end of their terms, as applicable. The Company incurred $ 196,000 and $ 4,274,000 under these agreements for
commission expenses during the years ended December 31, 2023 and 2022, respectively, which are included in selling, general and administrative
expenses.

 F- 41

 Other
Asset Purchase, License and Related Agreements

 The
Company has acquired and sourced intellectual property rights related to certain proprietary innovations from certain inventors and related
parties (the "Inventors") through multiple asset purchase agreements, license agreements, strategic agreements and commission
agreements. In general, these agreements provide that the Inventors will cooperate with the Company in obtaining patent protection for
the acquired intellectual property and that the Company will use commercially reasonable efforts to research, develop and commercialize
a product based on the acquired intellectual property. In addition, the Company has acquired a right of first refusal on additional intellectual
property and drug development opportunities presented by these Inventors.

 In
consideration for the acquisition of the intellectual property rights, the Company is obligated to make payments to the Inventors based
on the completion of certain milestones, generally consisting of: (1) a payment payable within 30 days after the issuance of the first
patent in the United States arising from the acquired intellectual property (if any); (2) a payment payable within 30 days after the
Company files the first investigational new drug application ("IND") with the U.S. Food and Drug Administration ("FDA")
for the first product arising from the acquired intellectual property (if any); (3) for certain of the Inventors, a payment payable within
30 days after the Company files the first new drug application with the FDA for the first product arising from the acquired intellectual
property (if any); and (4) certain royalty payments based on the net receipts received by the Company in connection with the sale or
licensing of any product based on the acquired intellectual property (if any), after deducting (among other things) the Company's
development costs associated with such product. If, following five years after the date of the applicable asset purchase agreement, the
Company either (a) for certain of the Inventors, has not filed an IND or, for the remaining Inventors, has not initiated a study where
data is derived, or (b) has failed to generate royalty payments to the Inventors for any product based on the acquired intellectual property,
the Inventors may terminate the applicable asset purchase agreement and request that the Company re-assign the acquired technology to
the Inventors. At December 31, 2023 and 2022, $ 106,000 and $ 228,000 were accrued in accounts payable and accrued expenses related to
these agreements. During the years ended December 31, 2023 and 2022, $ 811,000 and $ 910,000, respectively, were incurred under these agreements
as royalty expenses, which are included in selling, general and administrative expenses.

 Klarity
License Agreement – Related Party

 In
April 2017, the Company entered into a license agreement (the "Klarity License Agreement") with Richard L. Lindstrom, M.D.,
a former member of its Board of Directors. Pursuant to the terms of the Klarity License Agreement, the Company licensed certain intellectual
property and related rights from Dr. Lindstrom to develop, formulate, make, sell, and sub-license the topical ophthalmic solution Klarity
designed to protect and rehabilitate the ocular surface (the "Klarity Product").

 Under
the terms of the Klarity License Agreement, the Company is required to make royalty payments to Dr. Lindstrom ranging from 3% to 6% of
net sales, dependent upon the final formulation of the Klarity Product sold. In addition, the Company is required to make certain milestone
payments to Dr. Lindstrom including: (i) an initial payment of $ 50,000 upon execution of the Klarity License Agreement, (ii) a second
payment of $ 50,000 following the first $ 50,000 in net sales of the Klarity Product; and (iii) a final payment of $ 50,000 following the
first $ 100,000 in net sales of the Klarity Product. All of the above referenced milestone payments were payable at the Company's
election in cash or shares of the Company's restricted common stock. Dr. Lindstrom was paid $ 292,000 and $ 274,000 in cash during
the years ended December 31, 2023 and 2022, respectively, and was due an additional $ 67,000 and $ 71,000 at December 31, 2023 and 2022,
respectively. The Company incurred $ 287,000 and $ 315,000 for royalty expenses related to the Klarity License Agreement during the years
ended December 31, 2023 and 2022, respectively, which are included in selling, general and administrative expenses.

 Injectable
Asset Purchase Agreement – Related Party

 In
December 2019, the Company entered into an asset purchase agreement (the "Lindstrom APA") with Dr. Lindstrom, a former member
of its Board of Directors. Pursuant to the terms of the Lindstrom APA, the Company acquired certain intellectual property and related
rights from Dr. Lindstrom to develop, formulate, make, sell, and sub-license an ophthalmic injectable product (the "Lindstrom Product").

 Under
the terms of the Lindstrom APA, the Company is required to make royalty payments to Dr. Lindstrom ranging from 2% to 3% of net sales,
dependent upon the final formulation and patent protection of the Lindstrom Product sold. In addition, the Company is required to make
certain milestone payments to Dr. Lindstrom including an initial payment of $ 33,000 upon execution of the Lindstrom APA. Dr. Lindstrom
was paid $ 35,000 and $ 32,000 in cash during the years ended December 31, 2023 and 2022, respectively, and was due $ 6,000 and $ 9,000 at
December 31, 2023 and 2022, respectively. The Company incurred $ 32,000 and $ 33,000 for royalty expenses related to the Lindstrom APA
during the years ended December 31, 2023 and 2022, respectively, which are included in selling, general and administrative expenses.

 F- 42

 Presbyopia
Asset Purchase Agreement – Related Party

 In
December 2019, the Company entered into an asset purchase agreement (the "Presbyopia APA") with Richard L. Lindstrom, M.D.,
a former member of its Board of Directors. Pursuant to the terms of the Presbyopia APA, the Company acquired certain intellectual property
and related rights from Dr. Lindstrom to develop, formulate, make, sell, and sub-license an ophthalmic topical product to treat presbyopia
(the "Presbyopia Product").

 Under
the terms of the Presbyopia Product, the Company is required to make royalty payments to Dr. Lindstrom ranging from 2% to 4% of net sales,
dependent upon the final formulation and patent protection of the Presbyopia Product sold. Dr. Lindstrom was paid $ 0 in cash during the
years ended December 31, 2023 and 2022, and was due $ 0 at December 31, 2023 and 2022. The Company incurred $ 0 for royalty expenses related
to the Presbyopia APA during the years ended December 31, 2023 and 2022.

 Eyepoint
Commercial Alliance Agreement - Terminated

 In
August 2020, the Company, through its wholly owned subsidiary ImprimisRx, LLC, entered into a Commercial Alliance Agreement (the "Dexycu
Agreement") with Eyepoint Pharmaceuticals, Inc. ("Eyepoint"), pursuant to which Eyepoint granted the Company the non-exclusive
right to co-promote DEXYCU (dexamethasone intraocular suspension) 9% for the treatment of post-operative inflammation
following ocular surgery in the U.S. Pursuant to the
 Dexycu Agreement, Eyepoint paid the Company a fee calculated based on the quarterly sales
of DEXYCU in excess of predefined volumes to specific customers of the Company in the U.S. Under the terms of the Dexycu
Agreement, the Company agreed to use commercially reasonable efforts to promote and market DEXYCU in the U.S.

 Pursuant
to a mutual termination agreement entered into on October 7, 2022 the Dexycu Agreement terminated
on January 1, 2023. During the years ended December 31, 2023 and 2022, the Company recorded $ 0 and $ 3,866,000, respectively, in commission
revenues related to the Dexycu Agreement.

 NOTE
19. SEGMENTS AND CONCENTRATIONS

 The
Company operates its business on the basis of a single reportable segment, which is the business of discovery, development, and commercialization
of innovative ophthalmic therapies. The Company's chief operating decision-maker is the Chief Executive Officer, who evaluates
the Company as a single operating segment.

 Concentrations

 The
Company has three and two products that each comprised more than 10% of total revenues during the years ended December 31, 2023 and 2022,
respectively. These products collectively accounted for 38 % and 34 % of revenues, respectively.

 As
of December 31, 2023 and 2022, accounts receivable from a single customer accounted for 80 % and 0 % of total accounts receivable, respectively.
For the years ended December 31, 2023 and 2022, revenues from a single customer accounted for 29 % and 0 % of total revenues, respectively.

 The
Company receives its active pharmaceutical ingredients from three main suppliers. These suppliers collectively accounted for 64 % of active
pharmaceutical ingredient purchases during the year ended December 31, 2023, and 61 % during the year ended December 31, 2022.

 NOTE
20. SUBSEQUENT EVENTS

 In
February 2024, 45,000 RSUs granted in February 2021 to Andrew R. Boll, the Company's Chief Financial Officer, vested, and 26,520
shares the Company's common stock were issued to Mr. Boll, net of 18,480 shares of common stock withheld for payroll tax withholdings
totaling $ 197,000.

 In
February 2024, 150,000 RSUs granted in February 2021 to Mark L. Baum, the Company's Chief Executive Officer, vested, and 90,164
shares the Company's common stock were issued to Mr. Baum, net of 59,836 shares of common stock withheld for payroll tax withholdings
totaling $ 638,000.

 In
February 2024, 30,000 RSUs granted in February 2021 to John Saharek, the Company's Chief Commercial Officer, vested, and 17,384
shares the Company's common stock were issued to Mr. Saharek, net of 12,616 shares of common stock withheld for payroll tax withholdings
totaling $ 135,000.

 In
February 2024, 50,000 RSUs granted in February 2021 to employees, vested, and 32,452 shares the Company's common stock were issued,
net of 17,548 shares of common stock withheld for payroll tax withholdings totaling $ 187,000.

 In
February and March 2024, the Company issued 27,862 shares of common stock and received proceeds of $ 220,000 upon the exercise of options
to purchase 27,862 shares of common stock with exercise prices between $ 6.75 to $ 8.75 per share.

 F- 43