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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2021

 

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

 

Harrow Health, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   45-0567010
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

102 Woodmont Blvd., Suite 610

Nashville, Tennessee

  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(s)   Name on exchange on which registered
Common Stock, $0.001 par value per share   HROW   The NASDAQ Global Market
8.625% Senior Notes due 2026   HROWL   The NASDAQ Global Market

 

Indicate 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 ☐

 

Indicate 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate 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.

 

  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. ☐

 

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

 

As of November 8, 2021, there were 26,902,763 shares of the registrant’s common stock, $0.001 par value, outstanding.

 

 

 

 
 

 

HARROW HEALTH, INC.

 

Table of Contents

 

    Page
Part I FINANCIAL INFORMATION 3
     
Item 1. Financial Statements (unaudited) 3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 40
     
Item 4. Controls and Procedures 40
     
Part II OTHER INFORMATION 41
     
Item 1. Legal Proceedings 41
     
Item 1A. Risk Factors 41
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 44
     
Item 3. Defaults Upon Senior Securities 44
     
Item 4. Mine Safety Disclosures 44
     
Item 5. Other Information 44
     
Item 6. Exhibits 44
     
  Signatures 45

 

2
 

 

PART I

FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

HARROW HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

   September 30,   December 31, 
   2021   2020 
   (unaudited)     
ASSETS        
Current assets          
Cash and cash equivalents, including restricted cash of $200  $57,856   $4,301 
Investment in Eton Pharmaceuticals   9,989    28,455 
Note receivable - Melt Pharmaceuticals   13,636    - 
Accounts receivable, net   4,158    2,662 
Inventories   3,925    3,962 
Prepaid expenses and other current assets   1,562    1,602 
Total current assets   91,126    40,982 
Property, plant and equipment, net   4,827    4,453 
Operating lease right-of-use assets   4,624    6,799 
Intangible assets, net   1,892    1,939 
Investment in Surface Ophthalmics   -    1,314 
Investment in Melt Pharmaceuticals   -    1,655 
Goodwill   332    332 
TOTAL ASSETS  $102,801   $57,474 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities          
Accounts payable and accrued expenses  $7,335   $3,932 
Accrued payroll and related liabilities   2,743    2,315 
Deferred revenue and customer deposits   3    66 
Current portion of paycheck protection program loan payable   -    1,259 
Current portion of loan payable, net of unamortized debt discount   -    2,639 
Current portion of operating lease liabilities   388    580 
Current portion of finance lease obligations   8    8 
Total current liabilities   10,477    10,799 
Operating lease liabilities, net of current portion   4,621    6,652 
Finance lease obligations   12    17 
Accrued expenses, net of current portion   -    800 
Paycheck protection program loan payable, net of current portion   -    708 
Loan payable, net of current portion and unamortized debt discount   71,457    11,670 
TOTAL LIABILITIES   86,567    30,646 
COMMITMENTS AND CONTINGENCIES   -       
STOCKHOLDERS’ EQUITY          
Common stock, $0.001 par value, 50,000,000 shares authorized, 26,902,763 and 25,749,875 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively   27    26 
Additional paid-in capital   104,551    104,557 
Accumulated deficit   (87,989)   (77,400)
TOTAL HARROW HEALTH STOCKHOLDERS’ EQUITY   16,589    27,183 
Noncontrolling interests   (355)   (355)
TOTAL EQUITY   16,234    26,828 
TOTAL LIABILITIES AND EQUITY  $102,801   $57,474 

 

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

 

3
 

 

HARROW HEALTH, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share data)

 

                 
   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2021   2020   2021   2020 
Revenues:                
Sales, net  $17,811   $14,385   $50,056   $34,244 
Other revenues   900    14    2,232    32 
Total revenues   18,711    14,399    52,288    34,276 
Cost of sales   (4,947)   (3,696)   (13,134)   (10,526)
Gross profit   13,764    10,703    39,154    23,750 
Operating expenses:                    
Selling, general and administrative   11,356    8,436    28,643    23,806 
Research and development   6,125    670    7,142    1,822 
Impairment of intangible assets   -    -    -    363 
Total operating expenses   17,481    9,106    35,785    25,991 
(Loss) income from operations   (3,717)   1,597    3,369    (2,241)
Other (expense) income:                    
Interest expense, net   (1,685)   (498)   (3,512)   (1,563)
Equity in losses of unconsolidated entities   (706)   (1,056)   (2,967)   (3,230)
Investment (loss) gain from Eton Pharmaceuticals, net   (2,220)   8,575    (8,639)   2,450 
Loss from early extinguishment of loan   -    -    (756)   - 
Gain on forgiveness of PPP loan   -    -    1,967    - 
Other (expense) income, net   -    5    (51)   24 
Total other (expense) income, net   (4,611)   7,026    (13,958)   (2,319)
Total net (loss) income including noncontrolling interests   (8,328)   8,623    (10,589)   (4,560)
Net loss attributable to noncontrolling interest   -    15    -    54 
Net (loss) income attributable to Harrow Health, Inc.  $(8,328)  $8,638   $(10,589)  $(4,506)
Preferred dividends and accretion of preferred stock issuance costs   -    -    (472)   - 
Net (loss) income attributable to common stockholders   (8,328)   8,638    (11,061)   (4,506)
Basic net (loss) income per share of common stock  $(0.31)  $0.33   $(0.42)  $(0.17)
Diluted net (loss) income per share of common stock  $(0.31)  $0.32   $(0.42)  $(0.17)
Weighted average number of shares of common stock outstanding, basic   27,112,531    25,921,573    26,626,722    25,880,554 
Weighted average number of shares of common stock outstanding, diluted   27,112,531    27,090,060    26,626,722    25,880,554 

 

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

 

4
 

 

HARROW HEALTH, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the period ended September 30, 2021 and 2020

(In thousands, except for share data)

 

                                     
                           Total        
   Preferred Stock   Common Stock   Additional      

Harrow

Health, Inc.

   Total
Noncontrolling
   Total 
       Par       Par   Paid-in   Accumulated   Stockholders’   Interest   Stockholders’ 
   Shares   Value   Shares   Value   Capital   Deficit   Equity   Equity   Equity 
Balance at June 30, 2020            -   $       -    25,649,171   $26   $102,889   $(87,187)  $15,728   $(332)  $15,396 
                                              
Issuance of common stock in connection with:                                             
Exercise of employee stock-based options   -    -    2,998    -    (8)   -    (8)   -    (8)
Stock-based payment for services provided             -         -         -         - 
Stock-based compensation expense   -    -    -    -    917    -    917    -    917 
Net income   -    -    -    -    -    8,638    8,638    (15)   8,623 
Balance at September 30, 2020   -   $-    25,652,169   $26   $103,798   $(78,549)  $25,275   $(347)  $24,928 

 

                           Total        
   Preferred Stock   Common Stock   Additional       Harrow
Health, Inc.
   Total
Noncontrolling
   Total 
       Par       Par   Paid-in   Accumulated   Stockholders’   Interest   Stockholders’ 
   Shares   Value   Shares   Value   Capital   Deficit   Equity   Equity   Equity 
Balance at June 30, 2021          -   $      -    26,893,896   $27   $102,837   $(79,661)  $23,203   $          (355)  $22,848 
                                              
Issuance of common stock in connection with:                                             
Exercise of employee stock-based options   -    -    8,867    -    17    -    17    -    17 
Stock-based compensation expense   -    -    -    -    1,697    -    1,697    -    1,697 
Net loss   -    -    -    -    -    (8,328)   (8,328)   -    (8,328)
Balance at September 30, 2021   -   $-    26,902,763   $27   $104,551   $(87,989)  $16,589   $(355)  $16,234 

 

                           Total        
   Preferred Stock   Common Stock   Additional       Harrow
Health, Inc.
   Total
Noncontrolling
   Total 
       Par       Par   Paid-in   Accumulated   Stockholders’   Interest   Stockholders’ 
   Shares   Value   Shares   Value   Capital   Deficit   Equity   Equity   Equity 
Balance at December 31, 2019       -   $      -    25,526,931   $26   $101,728   $(74,043)  $27,711   $(293)  $27,418 
                                              
Issuance of common stock in connection with:                                             
Exercise of employee stock-based options   -    -    3,251    -    (8)   -    (8)   -    (8)
Issuance of common stock related to vesting of RSUs             91,987    -    -    -    -    -    - 
Stock-based payment for services provided   -    -    30,000    -    83    -    83    -    83 
Stock-based compensation expense   -    -    -    -    1,995    -    1,995    -    1,995 
Net loss   -    -    -    -    -    (4,506)   (4,506)   (54)   (4,560)
Balance at September 30, 2020   -   $-    25,652,169   $26   $103,798   $(78,549)  $25,275   $(347)  $24,928 

 

                           Total        
   Preferred Stock   Common Stock   Additional       Harrow
Health, Inc.
   Total
Noncontrolling
   Total 
       Par       Par   Paid-in   Accumulated   Stockholders’   Interest   Stockholders’ 
   Shares   Value   Shares   Value   Capital   Deficit   Equity   Equity   Equity 
Balance at December 31, 2020   -   $-    25,749,875   $26   $104,557   $(77,400)  $27,183   $(355)  $26,828 
                                              
Issuance of common stock in connection with:                                             
Exercise of employee stock-based options   -    -    25,480    -    65    -    65    -    65 
Exercise of warrants   -    -    311,369    -    -    -    -    -    - 
Vesting of RSUs   -    -    1,207,500    1    (1)   -    -    -    - 
Shares withheld related to net share settlement of equity awards   -    -    (391,461)   -    (3,228)   -    (3,228)   -    (3,228)
Issuance of preferred shares, net of discount and issuance costs   440,000    -    -    -    10,655    -    10,655    -    10,655 
Redemption of preferred shares   (440,000)   -    -    -    (11,000)   -    (11,000)   -    (11,000)
Payment of preferred dividends   -    -    -    -    (127)   -    (127)   -    (127)
Stock-based compensation expense   -    -    -    -    3,630    -    3,630    -    3,630 
Net loss   -    -    -    -    -    (10,589)   (10,589)   -    (10,589)
Balance at September 30, 2021   -   $-    26,902,763   $27   $104,551   $(87,989)  $16,589   $(355)  $16,234 

 

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

 

5
 

 

HARROW HEALTH, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

   For the   For the 
   Nine Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2021   2020 
         
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss (including noncontrolling interests)  $(10,589)  $(4,560)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:          
Depreciation and amortization of property, plant and equipment   1,275    1,377 
Amortization of intangible assets   122    127 
Amortization of operating lease right-of-use assets   422    550 
Provision for bad debt expense   36    221 
Amortization of debt issuance costs and discount   480    354 
Gain on forgiveness of PPP loan   (1,967)   - 
Investment loss from Eton, net   8,639    (2,450)
Equity in losses of unconsolidated entities   2,967    3,230 
Interest income paid-in-kind from note receivable   (136)   - 
Loss on sale and disposal of assets   -    5 
Interest paid-in-kind on loan payable   -    348 
Impairment of long-lived assets   -    363 
Loss on early extinguishment of loan   706    - 
Stock-based payment of consulting services   -    83 
Stock-based compensation   3,630    1,995 
Changes in assets and liabilities:          
Accounts receivable   (1,532)   (407)
Inventories   37    (673)
Prepaid expenses and other current assets   (866)   (123)
Accounts payable and accrued expenses   2,983    (2,555)
Accrued payroll and related liabilities   428    1,575 
Deferred revenue and customer deposits   (63)   6 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   6,572    (534)
CASH FLOWS FROM INVESTING ACTIVITIES          
Net proceeds on sale investments   9,827    - 
Issuance of note receivable, Melt Pharmaceuticals   (12,592)   - 
Investment in patent and trademark assets   (75)   (111)
Purchases of property, plant and equipment   (1,649)   (780)
NET CASH USED IN INVESTING ACTIVITIES   (4,489)   (891)
CASH FLOWS FROM FINANCING ACTIVITIES          
Payments on finance lease obligations   (5)   (6)
Net proceeds from 8.625% notes payable, net of costs   71,073    - 
Principal and exit fee payments on SWK loan   (15,961)   (750)
Net proceeds from PPP loan payable   -    1,967 
Proceeds from SWK debt, net of costs   -    1,000 
Payment of taxes upon vesting of RSUs   (3,228)     
Proceeds from exercise of stock options   65    (8)
Sale of preferred stock, net of discount and issuance costs   10,655    - 
Repayment of preferred stock   (11,000)   - 
Payment of preferred stock dividends   (127)   - 
NET CASH PROVIDED BY FINANCING ACTIVITIES   51,472    2,203 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH   53,555    778 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period   4,301    4,949 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period  $57,856   $5,727 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH          
Cash and cash equivalents  $57,656   $5,527 
Restricted cash   200    200 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD  $57,856   $5,727 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid for income taxes  $-   $- 
Cash paid for interest  $2,603   $1,222 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Right-of-use asset obtained in exchange for lease obligation  $-   $936 
Net reduction in right-of-use assets and lease obligations due to modifications  $1,753   $- 
Issuance of common stock upon vesting of RSUs  $1   $- 
Melt accounts receivable transferred to note receivable  $908   $- 

 

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

 

6
 

 


HARROW HEALTH, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2021 and 2020

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

 

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

 

Company and Background

 

Harrow Health, Inc. (together with its subsidiaries, partially owned companies and royalty arrangements unless the context indicates or otherwise requires, the “Company” or “Harrow”) is an ophthalmic-focused healthcare company that specializes in the development, production and sale of innovative medications that offer unique competitive advantages and serve unmet needs in the marketplace through its subsidiaries and deconsolidated companies. The Company owns one of the nation’s leading ophthalmology-focused pharmaceutical businesses, ImprimisRx. In addition to wholly owning ImprimisRx, the Company also has non-controlling equity positions in Surface Ophthalmics, Inc. (“Surface”) and Melt Pharmaceuticals, Inc. (“Melt”), both companies that began as subsidiaries of Harrow. In 2020, Harrow created Visionology, Inc. (“Visionology”), which recently launched an online eye health platform business. Harrow also owns royalty rights in various drug candidates being developed by Surface and Melt.

 

Basis of Presentation

 

The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any other period. For further information, refer to the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

 

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

 

Harrow consolidates entities in which it has a controlling financial interest. The Company consolidates subsidiaries in which it holds and/or controls, directly or indirectly, more than 50% of the voting rights. All intercompany accounts and transactions have been eliminated in consolidation.

 

The condensed consolidated balance sheets at September 30, 2021 and December 31, 2020 and the condensed consolidated statements of operations, stockholders’ equity and cash flows for the periods ended September 30, 2021 and 2020 include our accounts and those of our wholly owned subsidiaries, as well as our majority owned subsidiaries Mayfield Pharmaceuticals, Inc. (“Mayfield”) and Stowe Pharmaceuticals, Inc. (“Stowe”).

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The following represents an update for the nine months ended September 30, 2021 to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

 

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.

 

Segments

 

The Company’s chief operating decision-maker is its Chief Executive Officer who makes resource allocation decisions and assesses performance based on financial information of our operating segments. The Company has identified two operating segments as reportable segments. See Note 16 for more information regarding the Company’s reportable segments.

 

7
 

 

Noncontrolling Interests

 

The Company recognizes any noncontrolling interest as a separate line item in equity in the condensed 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, such as decision-making rights, that are considered as well. The Company includes the amount of net loss attributable to noncontrolling interests in consolidated net loss on the face of the condensed consolidated statements of operations.

 

The Company provides in the condensed 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 interest 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.

 

Basic and Diluted Net Income (Loss) per Common Share

 

Basic net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per share is computed by dividing the net (loss) income attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants, outstanding during the period. Common equivalent shares (using the treasury stock method) from stock options, unvested restricted stock units (“RSUs”) and warrants were 5,657,046 and 5,447,716 at September 30, 2021 and September 30, 2020, respectively. For the three and nine months ended September 30, 2021 and the nine months ended September 30, 2020, the common equivalent shares are excluded in the calculation of diluted net loss per share because the effect is anti-dilutive. Included in the basic and diluted net (loss) income 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 September 30, 2021 and 2020 was 258,117 and 281,507, respectively.

 

The following table shows the computation of basic and diluted net (loss) income per share of common stock for the three and nine months ended September 30, 2021 and 2020:

 

                 
   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2021   2020   2021   2020 
                 
Numerator – net (loss) income attributable to Harrow Health, Inc. common stockholders  $(8,328)  $8,638   $(11,061)  $(4,506)
Denominator - weighted average number of shares outstanding, basic   27,112,531    25,921,573    26,626,722    25,880,554 
Net (loss) income per share, basic  $(0.31)  $0.33   $(0.42)  $(0.17)

 

For the three months ended September 30, 2020, the Company had net income. As a result, the Company computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period. Diluted common equivalent shares for the three months ended September 30, 2020, consisted of the following:

 

   For the Three Months Ended 
   September 30, 2020 
     
Diluted shares related to:     
Warrants   504,742 
Stock options   663,745 
Dilutive common equivalent shares   1,168,487 

 

8
 

 

The following table shows the computation of diluted net (loss) income per share of common stock for the three and nine months ended September 30, 2021 and 2020:

 

                 
   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2021   2020   2021   2020 
Numerator – net (loss) income attributable to Harrow Health, Inc.  $(8,328)  $8,638   $(11,061)  $(4,506)
Denominator – weighted average number of shares outstanding, basic   27,112,531    25,921,573    26,626,722    25,880,554 
Dilutive common equivalent shares   -    1,168,487    -    - 
Number of shares used for diluted earnings per share computation   27,112,531    27,090,060    26,626,722    25,880,554 
Net (loss) income per share, diluted  $(0.31)  $0.32   $(0.42)  $(0.17)

 

Investment in Eton Pharmaceuticals, Inc.

 

During the nine months ended September 30, 2021, the Company sold 1,518,000 shares of its Eton Pharmaceuticals, Inc. (“Eton”) common stock through an underwritten public offering at a public offering price of $7.00 per share (the “Eton Stock Sale”). The gross proceeds to the Company from the Eton Stock Sale were $10,626, before deducting underwriting discounts and commissions and other offering expenses payable by the Company of $799. During the nine months ended September 30, 2021, the Company recorded a realized loss of $1,406 related to the Eton Stock Sale.