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2019-01-01
2019-06-30
0001360214
us-gaap:RestrictedStockUnitsRSUMember
HROW:BoardOfDirectorsMember
2019-04-01
2019-06-30
0001360214
us-gaap:SubsequentEventMember
2019-07-01
2019-08-14
0001360214
us-gaap:SubsequentEventMember
2019-08-14
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
xbrli:pure
HROW:Segment
utr:sqft
HARROW HEALTH, INC.
10-Q
2019-06-30
false
--12-31
Non-accelerated Filer
50000000
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125000
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s intangible assets at June 30, 2019 consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: center">Amortization</td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: center">periods</td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: center">Accumulated</td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: center">Net</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">(in years)</td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Cost</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">amortization</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Impairment</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Carrying value</td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 12%">Patents</td><td style="width: 2%"> </td>
<td style="width: 22%; text-align: center">17-19 years</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">962</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(64</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">898</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Licenses</td><td> </td>
<td style="text-align: center">20 years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(5</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">45</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Trademarks</td><td> </td>
<td style="text-align: center">Indefinite</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">332</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">332</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Customer relationships</td><td> </td>
<td style="text-align: center">3-15 years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,998</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,115</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,868</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Trade name</td><td> </td>
<td style="text-align: center">5 years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Non-competition clause</td><td> </td>
<td style="text-align: center">3-4 years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">294</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(274</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(20</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">State pharmacy licenses</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center; padding-bottom: 1.5pt">25 years</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">45</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(28</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">11</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,697</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,479</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(64</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">3,154</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Amortization
expense for intangible assets for the three and six months ended June 30, 2019 was as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For the Three Months Ended June 30,</p></td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For the Six Months Ended June 30,</p></td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 28%">Patents</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">11</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 14%; text-align: right">6</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">15</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">13</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Licenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Customer relationships</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">51</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">102</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Trade name</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Non-competition clause</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">State pharmacy licenses</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">1</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">63</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">57</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">125</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">117</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Estimated
future amortization expense for the Company’s intangible assets at June 30, 2019 is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 55%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Remainder of 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">128</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">252</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">252</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">252</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">252</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt; text-align: left">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,018</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">3,154</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
13000
250000
6000
125000
25138958
24339610
25138958
24339610
0001360214
Q2
65157000
49451000
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49451000
18109000
9524000
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5061000
294000
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1680000
1382000
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150000
2342000
800000
800000
640000
1505000
8980000
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4947000
4443000
4443000
5199000
5199000
465000
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50000
37000
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197000
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114000
22000
26000
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2482009
2725605
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57933
50471
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5.10
5.25
6.17
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5.83
5.25
2.04
3.97
6.16
8.01
42.80
5.21
P5Y7M17D
9621000
6091000
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0.64
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1.47
2.76
5.61
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42.80
1.70
42.80
2.60
4.66
6.30
8.99
3.20
2725605
816936
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440350
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5030
P5Y7M10D
P7Y2M19D
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1461723
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3.99
6.04
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1275680
1431360
223860
2.16
2.83
2.20
2206973
1174918
1.70
4.09
1032055
2015-05-11
2016-08-16
2016-12-27
2017-07-19
125000
40000
394532
615386
1174918
1.79
3.75
1.79
2.08
2.01
1.79
1.79
1.79
1155000
1359000
906000
150000
99000
1166000
85000
108000
367000
608000
268000
573000
75000
35000
24000
2019
The Company is required to make royalty payments to Dr. Lindstrom ranging from 3% - 6% of net sales, dependent upon the final formulation of the Klarity Product sold.
68180
247000
2529000
247000
35065000
24751000
17577000
8584000
16683000
11021000
16683000
8291000
6227000
8291000
9123000
8228000
9123000
5225000
4157000
5225000
1215000
159000
658000
263000
810000
72000
533000
127000
16791000
13267000
11519000
86000
8248000
6779000
5804000
43000
10236000
1414000
-1653000
3146000
-1319000
-1334000
-716000
-671000
263000
314000
-707000
587000
830000
885000
388000
564000
268000
818000
-33000
309000
-169000
-785000
-700000
565000
550000
-1228000
251000
641000
53000
4193000
6838000
200000
200000
3993000
3970000
1053000
1006000
8000
4000
179000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
unaudited condensed results of operations information of Surface is summarized below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">For the</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Six Months Ended</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Revenues, net</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 71%; text-align: left">Loss from operations</td><td style="width: 2%"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="width: 25%; border-bottom: Black 1.5pt solid; text-align: right">1,680</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net loss</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,680</td><td style="text-align: left">)</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
unaudited condensed results of operations information of Melt is summarized below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">For the</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">Six months ended</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">June 30, 2019</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Revenues, net</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 71%; text-align: left">Loss from operations</td><td style="width: 2%"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="width: 25%; border-bottom: Black 1.5pt solid; text-align: right">1,382</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net loss</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,382</td><td style="text-align: left">)</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
unaudited condensed balance sheet information of Surface is summarized below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Current assets</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">18,061</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Non current assets</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">48</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total assets</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">18,109</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total liabilities</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">532</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total stockholders’ equity</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">17,577</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total liabilities and stockholders’ equity</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">18,109</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
unaudited condensed balance sheet information of Melt is summarized below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">June 30,</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Current assets</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">9,521</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Non current assets</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total assets</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,524</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total liabilities</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">940</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total preferred stock and stockholders’ equity</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">8,584</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total liabilities and stockholders’ equity</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,524</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following represents an update for the three and six months ended June 30, 2019 to the significant accounting policies described
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Liquidity</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has incurred significant operating losses and negative cash flows from operations since its inception. The Company incurred
net income (loss) of $8,980 and $(991) for the six months ended June 30, 2019 and 2018, respectively, and had an accumulated deficit
of $65,231 and $74,211 as of June 30, 2019 and December 31, 2018, respectively. In addition, the Company used cash in operating
activities of $(632) for the six months ended June 30, 2019, while during the six months ended June 30, 2018, operating
activities provided cash of $400.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">While
there is no assurance, management of the Company believes existing cash resources and restricted cash of $4,193 at June 30, 2019,
will be sufficient to sustain the Company’s planned level of operations for at least the next twelve months. However, estimates
of operating expenses and working capital requirements could be incorrect, and the Company could use its cash resources faster
than anticipated. Further, some or all of the ongoing or planned activities may not be successful and could result in further
losses.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company may seek to increase liquidity and capital resources through a variety of means which may include, but are not limited
to: the sale of assets, investments and/or businesses, obtaining financing through the issuance of equity, debt, or convertible
securities; and working to increase revenue growth through sales. There is no guarantee that the Company will be able to obtain
capital when needed on terms management deems acceptable, or at all.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Segments</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s chief operating decision-maker is its Chief Executive Officer who makes resource allocation decisions and assesses
performance based on financial information presented on as operating segments. The Company has identified two operating segments
as reportable segments. See Note 15 for more information regarding the Company’s reportable segments.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Noncontrolling
Interests</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 income (loss) attributable to noncontrolling interests in consolidated net income (loss) on the face of the
condensed consolidated statements of operations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(1)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">net
</font><font style="font: 10pt Times New Roman, Times, Serif">income or loss;</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(2)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">transactions
with owners acting in their capacity as owners, showing separately contributions from and distributions to owners; and</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(3)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">each
component of other income or loss.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Basic
and Diluted Net Income (Loss) per Common Share</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
net income (loss) per common share is computed by dividing income (loss) attributable to common stockholders for the period by
the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is computed by dividing
the income (loss) attributable to common stockholders for the period by the weighted average number of common and common equivalent
shares, such as stock options and warrants, outstanding during the period.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
and diluted net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during
the period. Common stock equivalents (using the treasury stock or “if converted” method) from deferred acquisition
obligations, convertible note payable, stock options, unvested restricted stock units (“RSUs”) and warrants were 5,331,883
and 10,245,280 at June 30, 2019 and 2018, respectively, and, except for the six months ended June 30, 2019 and the
three months ended June 30, 2018, are excluded from the calculation of diluted net income (loss) per share for the periods
presented, because the effect is anti-dilutive. Included in the basic and diluted net income (loss) per share calculation were
RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until the director resigns.
The number of shares underlying vested RSUs at June 30, 2019 and 2018 was 304,873 and 168,513, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table shows the computation of basic net income (loss) per share of common stock for the three and six months ended
June 30, 2019 and 2018:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended<br />
June 30,</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For
the Six Months Ended</p>
<p style="margin-top: 0; margin-bottom: 0">June 30,</p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-bottom: 2.5pt">Numerator – net income (loss) attributable to Harrow Health, Inc.</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(2,378</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">2,522</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">8,980</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(991</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Denominator – weighted average number of shares outstanding, basic</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,190,794</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,030,012</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share, basic</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.09</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.12</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.36</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.05</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the six months ended June 30, 2019 and the three months ended June 30, 2018, 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 those periods. Diluted common equivalent shares for the six months ended June 30, 2019 and the three months
ended June 30, 2018, consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">For the</td><td> </td><td> </td>
<td colspan="2" style="text-align: center">For the</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">Three Months<br />
Ended</td><td> </td><td> </td>
<td colspan="2" style="text-align: center"><p style="margin-top: 0; margin-bottom: 0">Six Months</p>
<p style="margin-top: 0; margin-bottom: 0">Ended</p></td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Diluted shares related to:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 56%; padding-left: 10pt">Warrants</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 18%; text-align: right">1,093,006</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 18%; text-align: right">1,028,780</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Stock options and RSUs</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">891,631</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">637,891</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dilutive common equivalent shares</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,984,637</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,666,671</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table shows the computation of diluted net income (loss) per share of common stock for the three and six months ended
June 30, 2019 and 2018:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For
the Three Months Ended<br /> June 30,</p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For the Six Months Ended</p>
<p style="margin-top: 0; margin-bottom: 0">June 30,</p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-bottom: 2.5pt">Numerator – net income (loss) attributable to Harrow Health, Inc.</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(2,378</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">2,522</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">8,980</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(991</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Denominator – weighted average number of shares outstanding, basic</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,190,794</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,030,012</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dilutive common equivalents</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,984,637</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,666,671</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Number of shares used for diluted earnings per share computation</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">23,175,431</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">26,696,683</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share, diluted</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.09</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.11</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.34</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.05</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investment
in Eton Pharmaceuticals, Inc. – Related Party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company owns 3,500,000 shares of Eton common stock, which represents approximately 19.7% of the equity and voting interests of
Eton as of June 30, 2019. At June 30, 2019, the fair market value of Eton’s common stock was $7.90 per share, the closing
share price of Eton common stock on June 28, 2019, the last trading day of the period ended June 30, 2019. In accordance with
the Accounting Standards Update (“ASU”) 2016-01, <i>Financial Instruments-Overall (Subtopic 825-10): Recognition
and Measurement of Financial Assets and Financial Liabilities</i>, for the three months ended June 30, 2019, the Company recorded
an investment loss from its Eton common stock position of $350, related to the change in fair market value of the Company’s
investment in Eton during the measurement period. For the six months ended June 30, 2019, the Company recorded an investment gain
from its Eton common stock position of $6,230, related to the change in fair market value of the Company’s investment in
Eton during the measurement period. As of June 30, 2019, the fair market value of the Company’s investment in Eton was $27,650.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
November 2018, the Company entered into a lock-up agreement that prohibits the sale of any of its Eton common stock until November
2019 without the approval of National Securities Corporation, the underwriter of Eton’s initial public offering of its
common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Mark
Baum, the Company’s Chief Executive Officer, is a member of the board of directors of Eton.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investment
in Melt Pharmaceuticals, Inc. – Related Party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2018, the Company formed Melt as a wholly owned subsidiary. In January and March of 2019, Melt entered into definitive stock
purchase agreements (collectively, the “Melt Series A Preferred Stock Agreement”) with certain investors and closed
on the purchase and sale of Melt’s Series A Preferred Stock (the “Melt Series A Stock”), totaling approximately
$11,400 of proceeds (collectively the “Melt Series A Round”) at a purchase price of $5.00 per share. As a result,
the Company lost voting and ownership control of Melt and ceased consolidating Melt’s financial statements. In connection
with the Melt Series A Preferred Stock Agreement, Melt also entered into a Registration Rights Agreement and agreed to use commercially
reasonable efforts to file, or confidentially submit, a registration statement on Form S-1 with the United States Securities and
Exchange Commission by September 30, 2020 relating to an initial public offering of its common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
the time of deconsolidation, the Company recorded a gain of $5,810 and adjusted the carrying value in Melt to reflect the increased
valuation of Melt and the Company’s new ownership interest in accordance with Accounting Standard Codification (“ASC”)
810-10-40-4(c), <i>Consolidation</i>.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company owns 3,500,000 common shares (which is approximately 44% of the equity interest as of June 30, 2019) of Melt and uses
the equity method of accounting for this investment, as management has determined that the Company has the ability to exercise
significant influence over the operating and financial decisions of Melt. Under this method, the Company recognizes earnings and
losses of Melt in its consolidated financial statements and adjusts the carrying amount of its investment in Melt accordingly.
The Company’s share of earnings and losses are based on the Company’s ownership interest of Melt. Any intra-entity
profits and losses are eliminated. During the three and six months ended June 30, 2019, the Company recorded equity in net loss
of Melt of $326 and $611, respectively. As of June 30, 2019, the carrying value of the Company’s investment in Melt was
$5,199.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">See
Note 4 for more information and related party disclosure regarding Melt.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investment
in Surface Pharmaceuticals, Inc. – Related Party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2017, the Company formed Surface as a wholly owned subsidiary. In May and July 2018, Surface entered into a definitive stock
purchase agreement with an institutional investor for the purchase of Surface’s Series A Preferred Stock (the “Surface
Series A Stock”) and closed on the sale, resulting in total proceeds to Surface of approximately $21,000. At the time of
the first closing in May 2018, the Company lost voting and ownership control of Surface and it ceased consolidating Surface’s
financial statements. The Surface Series A Stock (i) was issued at a purchase price of $3.30 per share; (ii) will vote together
with the common stock and all other shares of stock of Surface having general voting power; (iii) will be entitled to the number
of votes equal to the number of shares of preferred stock held; (iv) will hold liquidation preference over all other equity interests
in Surface; and (v) will have mandatory conversion requirements into Surface common stock upon events including an underwritten
initial public offering (“IPO”) of Surface common stock or similar transaction.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
the time of deconsolidation, the Company recorded a gain of $5,320 and adjusted the carrying value in Surface to reflect the increased
valuation of Surface and the Company’s new ownership interest in accordance with ASC 810-10-40-4(c), <i>Consolidation</i>.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company owns 3,500,000 common shares (which is approximately 30% of the equity interest as of June 30, 2019) of Surface and uses
the equity method of accounting for this investment, as management has determined that the Company has the ability to exercise
significant influence over the operating and financial decisions of Surface. Under this method, the Company recognizes earnings
and losses of Surface in its consolidated financial statements and adjusts the carrying amount of its investment in Surface accordingly.
The Company’s share of earnings and losses are based on the Company’s ownership interest of Surface. Any intra-entity
profits and losses are eliminated. The Company recorded equity in net loss of Surface of $261 and $504 during the three and six
months ended June 30, 2019. The Company recorded equity in net loss of Surface of $102 during the three and six months ended
June 30, 2018. As of June 30, 2019, the carrying value of the Company’s investment in Surface was $4,443.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">See
Note 5 for more information and related party disclosure regarding Surface.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Recently
Adopted Accounting Pronouncements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, <i>Leases</i> (Topic 842). This new
guidance was initiated as a joint project with the International Accounting Standards Board to simplify lease accounting and improve
the quality of and comparability of financial information for users. This new guidance would eliminate the concept of off-balance
sheet treatment for “operating leases” for lessees for the vast majority of lease contracts. Under ASU No. 2016-02,
at inception, a lessee must classify all leases with a term of over one year as either finance or operating, with both classifications
resulting in the recognition of a defined “right-of-use” asset and a lease liability on the balance sheet. However,
recognition in the income statement will differ depending on the lease classification, with finance leases recognizing the amortization
of the right-of-use asset separate from the interest on the lease liability and operating leases recognizing a single total lease
expense. Lessor accounting under ASU No. 2016-02 would be substantially unchanged from the previous lease requirements under GAAP.
ASU No. 2016-02 took effect for public companies in fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years. On January 1, 2019, the Company adopted Topic 842 using the modified retrospective transition method
with no impact to stockholders’ equity. As of June 30, 2019, the Company held on its condensed consolidated balance sheet
$6,069 for the right-of-use asset and $6,472 for the related lease liability related to operating leases. The difference between
the right of use asset and related lease liability is predominantly deferred rent and other related lease expenses under the new
lease accounting standard. For additional information regarding how the Company is accounting for leases under Topic 842, refer
to Note 12.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Recently
Issued Accounting Pronouncements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
January 2017, the FASB issued ASU 2017-04, <i>Intangibles-Goodwill and Other</i>. This guidance simplifies the accounting for
goodwill impairment for all entities by requiring impairment charges to be based on the first step in the current two-step impairment
test under ASC 350. The updated standard eliminates the requirement to calculate a goodwill impairment charge using Step 2. If
a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference.
The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for
reporting periods beginning after December 31, 2019 on a prospective basis, and early adoption is permitted. The Company does
not expect ASU 2017-04 to have a material effect on the Company’s financial position, results of operations and cash flows.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
3. REVENUES</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for contracts with customers in accordance with ASC 606, <i>Revenues from Contracts with Customers</i>. The Company
has two primary streams of revenues: (1) revenues recognized from our sale of products within our pharmacy services and (2) revenues
recognized from intellectual property license and asset purchase agreements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Product
Revenues from Pharmacy Services</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company sells prescription drugs directly through our pharmacy and outsourcing facility network. Revenues from our pharmacy services
divisions includes: (i) the portion of the price the client pays directly to us, net of any volume-related or other discounts
paid back to the client, (ii) the price paid to us by individuals, and (iii) customer copayments made directly to the pharmacy
network. Sales taxes are not included in revenue. Following the core principle of ASC 606, we have identified the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="width: 0.5in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">1.</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Identify
the contract(s) with a customer: A contract exists with a customer at the time the prescription or order is received by the
Company.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">2.</td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Identify
the performance obligations in the contract: The order received contains the performance obligations to be met, in almost
all cases the product the customer is wishing to receive. If we are unable to be meet the performance obligation, the customer
is notified.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">3.</td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Determine
the transaction price: the transaction price is based on the product being sold to the customer, and any related customer
discounts. These amounts are pre-determined and built into our order management software.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">4.</td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Allocate
the transaction price to the performance obligations in the contract: The transaction price associated with the product(s)
being ordered is allocated according to the pre-determined amounts.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">5.</td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Recognize
revenue when (or as) the entity satisfies a performance obligation: At the time of shipment from the pharmacy or outsourcing
facility, the performance obligation has been met.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following revenue recognition policy has been established for the pharmacy services division:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Revenues
generated from prescription or office use drugs sold by our pharmacies and outsourcing facility are recognized when the prescription
is shipped. At the time of shipment, the pharmacy services division has performed substantially all of its obligations under its
client contracts and does not experience a significant level of returns or reshipments. Determination of criteria (3) and (4)
is based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability
of those amounts. The Company records reductions to revenue for discounts at the time of the initial sale. Estimated returns and
allowances and other adjustments are provided for in the same period during which the related sales are recorded and are based
on actual returns history. The rate of returns is analyzed annually to determine historical returns experience. If the historical
data we use to calculate these estimates do not properly reflect future returns, then a change in the allowance would be made
in the period in which such a determination is made and revenues in that period could be materially affected. The Company will
defer any revenues received for a product that has not been delivered or is subject to refund until such time that the Company
and the customer jointly determine that the product has been delivered and no refund will be required.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Intellectual
Property License Revenues</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company currently holds five intellectual property license and related agreements in which the Company has promised to grant a
license or sale which provides a customer with the right to access the Company’s intellectual property. License arrangements
may consist of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive license rights
to patented or patent pending compounds, technology access fees, and various performance or sales milestones. These arrangements
can be multiple element arrangements, the revenue of which is recognized at the point of time the performance obligation is met.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Non-refundable
fees that are not contingent on any future performance by the Company and require no consequential continuing involvement on the
part of the Company are recognized as revenue when the license term commences and the licensed data, technology, compounded drug
preparation and/or other deliverable is delivered. Such deliverables may include physical quantities of compounded drug preparations,
design of the compounded drug preparations and structure-activity relationships, the conceptual framework and mechanism of action,
and rights to the patents or patent applications for such compounded drug preparations. The Company defers recognition of non-refundable
fees if it has continuing performance obligations without which the technology, right, product or service conveyed in conjunction
with the non-refundable fee has no utility to the licensee and that are separate and independent of the Company’s performance
under the other elements of the arrangement. In addition, if the Company’s continued involvement is required, through research
and development services that are related to its proprietary know-how and expertise of the delivered technology or can only be
performed by the Company, then such non-refundable fees are deferred and recognized over the period of continuing involvement.
Guaranteed minimum annual royalties are recognized on a straight-line basis over the applicable term.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Revenue
disaggregated by revenue source for the three and six months ended June 30, 2019 and 2018, consists of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the Three Months Ended</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30,</b></font></p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the Six Months Ended</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30,</b></font></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 32%; text-align: left">Product sales, net</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">13,509</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">10,374</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">25,792</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">19,229</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">License revenues</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">7</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">10</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">14</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">20</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Total revenues</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,516</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">10,384</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">25,806</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">19,249</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Deferred
revenue and customer deposits at June 30, 2019 and December 31, 2018, was $224 and $119, retrospectively. All deferred revenue
and customer deposit amounts at December 31, 2018 were recognized as revenue during the six months ended June 30, 2019.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
5. INVESTMENT IN SURFACE PHARMACEUTICALS, INC. AND AGREEMENTS - RELATED PARTY TRANSACTIONS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company entered into an asset purchase and license agreement in 2017, and amended it in April 2018 (the “Surface
License Agreements”) with Surface. Pursuant to the terms of the Surface License Agreements, the Company assigned and licensed
to Surface certain intellectual property and related rights to develop, formulate, make, sell, and sub-license formulations of
certain topical eye drop formulations that utilize a proprietary delivery vehicle and a proprietary doxycycline capsule (collectively,
the “Surface Products”). Surface is required to make royalty payments to the Company of four to six percent (4%-6%)
of net sales of the Surface Products while any patent rights remain outstanding.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
January 2018, the Company and Surface entered into an amended Management Services Agreement (the “Surface MSA”), whereby
the Company provided to Surface certain administrative services and support, including bookkeeping, web services and human resources
related activities, and Surface paid the Company a monthly amount of $10. The Surface MSA was terminated effective July 31, 2018.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, the Company was due $50 from Surface for reimbursable expenses and amounts due under the Surface MSA and included
in prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, the Company owned 3,500,000 shares of Surface common stock (approximately 30% of the issued and outstanding
equity interests). The Company’s director, Richard L. Lindstrom and the Company’s Chief Executive Officer, Mark L.
Baum, are directors of Surface. In addition, the Company’s Chief Financial Officer, Andrew R. Boll, was a director of Surface
and resigned as a director of Surface concurrent with the sale of the Surface Series A Stock. Several employees and a director
of the Company (including Mr. Baum, Dr. Lindstrom and Mr. Boll) entered into consulting agreements and provided consulting services
to Surface. Surface is required to make royalty payments to Dr. Lindstrom of three percent (3%) of net sales of certain Surface
products while certain patent rights remain outstanding. Dr. Lindstrom is also a principal of Flying L Partners, an affiliate
of the funding investor who purchased the Surface Series A Stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
unaudited condensed results of operations information of Surface is summarized below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">For the</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Six Months Ended</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Revenues, net</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 71%; text-align: left">Loss from operations</td><td style="width: 2%"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="width: 25%; border-bottom: Black 1.5pt solid; text-align: right">1,680</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net loss</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,680</td><td style="text-align: left">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
unaudited condensed balance sheet information of Surface is summarized below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Current assets</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">18,061</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Non current assets</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">48</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total assets</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">18,109</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total liabilities</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">532</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total stockholders’ equity</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">17,577</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total liabilities and stockholders’ equity</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">18,109</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
6. INVENTORIES</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Inventories
are comprised of finished compounded formulations, over-the-counter and prescription retail pharmacy products, commercial pharmaceutical
products, related laboratory supplies and active pharmaceutical ingredients. The composition of inventories as of June 30, 2019
and December 31, 2018 was as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left">Raw materials</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">1,758</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">1,119</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Work in progress</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">264</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Finished goods</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">630</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">709</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total inventories</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,652</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,834</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
7. PREPAID EXPENSES AND OTHER CURRENT ASSETS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Prepaid
expenses and other current assets consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: left">Prepaid insurance</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">65</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">328</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Other prepaid expenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">434</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">334</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Receivable due from Surface</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">50</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Receivable due from Melt</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">714</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Deposits and other current assets</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">138</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">125</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total prepaid expenses and other current assets</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,401</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">837</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.75in"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
8. PROPERTY, PLANT AND EQUIPMENT </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property,
plant and equipment consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31, 2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Property, plant and equipment, net:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 50%; text-align: left; padding-left: 10pt">Computer software and hardware</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">1,743</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">1,662</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Furniture and equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">420</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">397</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Lab and pharmacy equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,416</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,184</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Leasehold improvements</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,612</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,496</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,191</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,739</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Accumulated depreciation and amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,245</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,364</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: right; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,946</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">6,375</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three and six months ended June 30, 2019, depreciation related to the property, plant and equipment was $491 and $968,
respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
9. INTANGIBLE ASSETS AND GOODWILL</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s intangible assets at June 30, 2019 consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: center">Amortization</td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: center">periods</td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: center">Accumulated</td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: center">Net</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">(in years)</td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Cost</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">amortization</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Impairment</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Carrying value</td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 12%">Patents</td><td style="width: 2%"> </td>
<td style="width: 22%; text-align: center">17-19 years</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">962</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(64</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">898</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Licenses</td><td> </td>
<td style="text-align: center">20 years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(5</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">45</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Trademarks</td><td> </td>
<td style="text-align: center">Indefinite</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">332</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">332</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Customer relationships</td><td> </td>
<td style="text-align: center">3-15 years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,998</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,115</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,868</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Trade name</td><td> </td>
<td style="text-align: center">5 years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Non-competition clause</td><td> </td>
<td style="text-align: center">3-4 years</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">294</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(274</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(20</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">State pharmacy licenses</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center; padding-bottom: 1.5pt">25 years</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">45</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(28</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">11</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,697</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,479</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(64</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">3,154</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Amortization
expense for intangible assets for the three and six months ended June 30, 2019 was as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For the Three Months Ended June 30,</p></td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For the Six Months Ended June 30,</p></td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 28%">Patents</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">11</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 14%; text-align: right">6</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">15</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">13</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Licenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Customer relationships</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">51</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">102</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Trade name</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Non-competition clause</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">State pharmacy licenses</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">1</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">63</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">57</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">125</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">117</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Estimated
future amortization expense for the Company’s intangible assets at June 30, 2019 is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 55%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Remainder of 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">128</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">252</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">252</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">252</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">252</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt; text-align: left">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,018</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">3,154</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">There
have been no changes in the carrying value of the Company’s goodwill during the three and six months ended June 30, 2019.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts
payable and accrued expenses consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31, 2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 54%; text-align: left">Accounts payable</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 19%; text-align: right">5,957</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 19%; text-align: right">4,966</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Accrued litigation settlement (see Note 14)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">733</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">640</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Deferred rent</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">388</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Accrued interest</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">253</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">256</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Accrued exit fee for note payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">800</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">800</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total accounts payable and accrued expenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,743</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,050</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Current portion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,943</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,250</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Non-current total accrued expenses</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">800</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">800</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
11. DEBT</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>SWK
Refinance – May 2019</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
May 2019, the Company entered into a joinder and amendment (the “Amendment”) to its term loan and security agreement
dated as of July 19, 2017 (the “SWK Loan”), with SWK Funding LLC and its partners (the “Lender”), as lender
and collateral agent. A summary of the material changes contained in the Amendment are as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="width: 0.25in; text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0.25in; text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="width: 94%; text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif">The
interest rate calculation that the loan bears is now equal to the three-month London Inter-Bank Offered Rate (subject to a
minimum of 2.00%), plus an applicable margin of 10.00% (the “Margin Rate”); provided that, if, two days prior
to a payment date, the Company provides the Lender evidence that the Company has achieved a leverage ratio as of such date
of less than 4.00:1:00, the Margin Rate shall equal 9.00%; and if the Company has achieved a leverage ratio as of such date
of less than 3.00:1:00, the Margin Rate shall equal 7.00%;</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif">Leverage
ratio in the Amendment means, as of any date of determination, the ratio of: (a) indebtedness as of such date to (b) EBITDA
(as defined in the SWK Loan), of the Company for the immediately preceding twelve (12) month period, adding-back (i) actual
litigation expenses for the immediately preceding twelve (12) month period, minus (ii) actual litigation expenses for the
immediately preceding three (3) month period multiplied by four (4);</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif">The
definition of the first amortization date was changed to May 14, 2020, permitting the Company to pay interest only on the
principal amount loaned for the next four payments (payments are due on a quarterly basis) following the Amendment; and</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif">Subject
to the satisfaction of certain revenue and market capitalization requirements and conditions, the Lender agreed to make available
to the Company an additional principal amount of up to $5,000.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
addition to the terms described above, the Amendment joined the Company’s recently created subsidiaries to the SWK Loan
and added definitions related to excluded subsidiaries that are not considered co-borrowers and are subsidiaries of the Company
which the Company believes it will eventually deconsolidate from its financials and lose 50% or more of the equity interests of
the subsidiary.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Related
to the Amendment, the Company incurred expenses related to legal and lender costs of $282 that are included in debt discount and
will be amortized over the term of the SWK Loan.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2019, future minimum payments under the Company’s note payable were as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Remainder of 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">1,216</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,696</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,121</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,828</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">2023</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">7,330</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total minimum payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,191</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: amount representing interest</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,941</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Notes payable, gross</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,250</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,505</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,745</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion, net of unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(247</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Note payable, net of current portion and unamortized debt discount</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,498</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three and six months ended June 30, 2019, debt discount amortization related to note payable was $125 and $250, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
12. LEASES</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company adopted Topic 842 on January 1, 2019. Topic 842 allows the Company to elect a package of practical expedients, which include:
(i) an entity need not reassess whether any expired or existing contracts are or contain leases; (ii) an entity need not reassess
the lease classification for any expired or existing leases; and (iii) an entity need not reassess any initial direct costs for
any existing leases. Another practical expedient allows the Company to use hindsight in determining the lease term when considering
lessee options to extend or terminate the lease and to purchase the underlying asset. The Company has elected to utilize the package
of practical expedients and has not elected the hindsight methodology in its implementation of Topic 842.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect
adjustment to the condensed consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With
the adoption of Topic 842, the Company’s condensed consolidated balance sheet now contains the following line items: Right-of-use
assets, Operating lease liabilities—short-term and Operating lease liabilities—long-term.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company determined that it held the following significant operating leases of office and laboratory space as of January 1, 2019:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">An
operating lease for 10,200 square feet of office space in San Diego, California that expires in December 2021, with an option
to extend the term for a five-year period;</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">An
operating lease for 4,500 square feet of office and lab space in Irvine, California that expires in December 2020, with an
option to extend the term for up to two five-year periods. The Company expects this lease will be assigned if the sale of
Park closes (see Note 16); and</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">An
operating lease for 25,000 square feet of lab, warehouse and office space in Ledgewood, New Jersey that expires in July 2024,
with an option to extend the term for two additional five-year periods.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
extensions within the San Diego, California and Ledgewood, New Jersey operating lease agreements were included within the Company’s
calculation of the new lease standard as the Company is reasonably certain it will exercise its option to extend these leases.
The Company has elected to not recognize right-of-use assets and lease liabilities arising from short-term leases, which are leases
that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying
asset that the lessee is reasonably certain to exercise.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
previously classified capital leases are now classified as finance leases under the new standard. The Company has determined that
the identified finance leases did not contain non-lease components and require no further allocation of the total lease cost.
The Company has determined that the identified operating leases did contain non-lease components and elected an accounting policy
to combine non-lease and lease components to determine the total lease cost. Additionally, the operating agreements in place did
not contain information to determine the rate implicit in the leases. As such, the Company calculated the incremental borrowing
rate based on the assumed remaining lease term for each lease in order to calculate the present value of the remaining lease payments.
At June 30, 2019, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating
leases held by the Company were 6.36% and 12.11 years, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Upon
adoption of Topic 842, the Company recorded a $6,325 increase in operating lease right-of-use assets, a $388 decrease in accounts
payable and accrued expenses and a $6,712 increase in operating lease liability. The Company did not record any cumulative effect
adjustments to opening stockholders’ equity. As of June 30, 2019, right-of-use assets and liabilities arising from operating
leases were $6,069 and $6,472, respectively. During the three and six months ended June 30, 2019, cash paid for amounts included
for the operating lease liabilities was $230 and $448 and the Company recorded operating lease expense of $232
and $464 included in selling, general and administrative expenses, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Future
lease payments under operating leases as of June 30, 2019 were as follows<b>: </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Operating Leases</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Remainder of 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">457</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">930</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">809</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">824</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">843</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt; text-align: left">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,304</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total minimum lease payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,167</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Less: amount representing interest payments</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,695</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total operating lease liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,472</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion, operating lease liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(496</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt">Operating lease liabilities, net of current portion</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,976</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company also has two additional finance leases that are included in its lease accounting but are not considered significant.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Future
lease payments under non-cancelable finance leases as of June 30, 2019 were as follows<b>: </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Finance Leases</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Remainder of 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">368</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">2023</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">10</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total minimum lease payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">405</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: amount representing interest payments</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Present value of future minimum lease payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">399</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">399</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion, net of unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(370</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Finance lease obligation, net of current portion</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">29</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2019, the weighted average incremental borrowing rate and the weighted average remaining lease term for the finance leases
held by the Company were 9.71% and 0.70 years, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three and six months ended June 30, 2019, debt discount amortization related to a finance lease obligation was $6 and $13,
respectively, and included in interest expense, net.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three and six months ended June 30, 2019, depreciation expense related to the equipment held under the finance lease obligations
was $73 and $146, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three and six months ended June 30, 2019, cash paid and expense recognized for interest expense related to the finance lease
obligation was $4 and $15, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Future
minimum lease payments under operating leases and future minimum finance lease payments as of December 31, 2018 were as follows
(in thousands):</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">Finance Leases</td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">Operating Leases</td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left">2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">751</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">797</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">857</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">742</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">320</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">330</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">196</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">751</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">3,242</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Less: Amounts representing interest</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Amounts representing unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(16</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Total obligation under capital leases</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">720</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Current portion of capital leases</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(720</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Long term capital lease obligation</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">-</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
14. COMMITMENTS AND CONTINGENCIES </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Dr.
Sobol </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
December 2016, Louis L. Sobol, M.D. (“Sobol”) filed a lawsuit in the U.S. District Court for the Eastern District
of Michigan, Southern Division against the Company, asserting claims on behalf of himself and an as-yet-uncertified class of consumers.
The claims allege violations under the Telephone Consumer Protection Act, 47 U.S.C. § 227 via the Company’s alleged
transmittal of advertisements to its clients via facsimile. In February 2019, prior to a ruling on class certification, the Company
entered into a proposed settlement agreement to award the class up to $1,400 in damages. The Court approved the proposed settlement
agreement in the spring of 2019 and on or about August 14, 2019, the Court will make a final ruling on the total damage award.
As a result of the low claim rate of approximately 1.4%, the Company does not expect total damages to exceed $640, which was accrued
as an expense during the year ended December 31, 2018 (see Note 10).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Allergan
USA</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
September 2017, Allergan USA, Inc. (“Allergan”) filed a lawsuit in the U.S. District Court for the Central District
of California against the Company, primarily claiming violations under the federal Lanham Act and California’s Sherman Act.
The Court granted in part and denied in part each parties’ motions for summary judgement, resolving all issues except for
whether Allergan was entitled to damages related to the Company’s purported Lanham Act violations. The parties went to trial
in May 2019 to litigate damages related to the Lanham Act, and a jury found the Company liable for only $48 in lost profit damages,
which was accrued as an expense during the period ended June 30, 2019 (see Note 10). In July 2019, the Court entered a permanent
injunction, the scope of which is limited to compounded drugs prepared in, dispensed from within, or shipped to the state of California.
The injunction requires the Company to: (1) only dispense drugs from a 503(a) facility with a “Valid Prescription Order”;
(2) abide by the FDA’s anticipatory compounding guidelines; and (3) only use bulk drug substances identified on a list established
by the Secretary of Health and Human Services or FDA’s interim “Category 1” list. The Company believes its was
already in compliance with the order, prior to the injunction being ordered.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Novel
Drug Solutions et al.</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2018, Novel Drug Solutions, LLC and Eyecare Northwest, PA, (collectively “NDS”) filed a lawsuit against the
Company in the U.S. District Court of Delaware asserting claims for breach of contract. The claims stem from an asset purchase
agreement between the Company and NDS entered into in 2013 (the “NDS APA”). In July 2019, NDS filed a second
amended complaint which added a claim related to its purported termination of the NDS APA. On August 12, 2019, the Company
notified NDS of its acceptance of their purported termination of the NDS APA. The Company does not expect the termination of the
NDS APA to affect its operations or revenues. The Company believes the claims are meritless and has previously and will continue
to dispute all claims asserted against it and intends to vigorously defend against these allegations. Nonetheless, the Company
cannot predict the eventual outcome of this litigation and, it could result in substantial costs, losses and a diversion of management’s
resources and attention, which could harm the Company’s business and the value of its common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>California
Board of Pharmacy</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
March 2018, the California Board of Pharmacy filed an accusation against Park related to a compounded formulation the Company
believes was legally dispensed and was, without its knowledge, inappropriately administered to a patient unknown to Park, by the
prescribing healthcare professional. Park filed a response to the accusation and requested a formal hearing. In April 2019, Park
agreed to and the California State Board of Pharmacy approved terms of a settlement agreement (the “Settlement Agreement”)
that became effective on May 29, 2019. Pursuant to the terms of the Settlement Agreement, Park is required to surrender its California
pharmacy license by August 27, 2019; provided however, in the event of a sale of Park, the California State Board of Pharmacy
agreed to expedite the issuance of a temporary license to the Park acquiror. The Company recently entered into an agreement to
sell the Park business and is actively working on the transfer of the Park license to the acquiror (see Note 16). If a sale is
not completed, the Company expects its New Jersey-based pharmacy to retain approximately half of the Park business and
revenues.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Product
and Professional Liability</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Product
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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>John
Erick et al.</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
January 2018, John Erick and Deborah Ferrell, successors-in-interest and heirs of Jade Erick, (collectively “Erick”)
filed a lawsuit in the San Diego County Superior against Kim Kelly, ND, MPH asserting claims related to death of Jade Erick. In
April 2018, Erick filed an amendment to the lawsuit, naming us as a co-defendant. In September 2018, co-defendant Dr. Kelly filed
a cross-complaint against the Company and various Spectrum entities. The cross-complaint seeks indemnity and contribution from
the Company and Spectrum. The Company answered the claims filed by Dr. Kelly in October 2018. The case is currently in the discovery
phase. The Company believes the claims are meritless and has previously and will continue to dispute all claims asserted against
it and intends to vigorously defend against these allegations. Nonetheless, the Company cannot predict the eventual outcome of
this litigation, it could result in substantial costs, losses and a diversion of management’s resources and attention, which
could harm the Company’s business and the value of its common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Anna
Sue Gaukel et al.</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
June 2019, Anna Sue Gaukel and Lawrence Gaukel served the Company with a lawsuit filed in state court in Idaho against Imprimis
Pharmaceuticals, Inc. asserting class action allegations and product liability claims related to Mrs. Gaukel’s doctor’s
use of a compounded drug injection in each of her eyes. In June 2019, the Company removed the case to Federal Court and subsequently
answered the complaint. The case is in the early phase. The Company believes the claims are meritless and has previously and will
continue to dispute all claims asserted against it and intends to vigorously defend against these allegations. Nonetheless, the
Company cannot predict the eventual outcome of this litigation, it could result in substantial costs, losses and a diversion of
management’s resources and attention, which could harm the Company’s business and the value of its common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>General
and Other</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
the ordinary course of business, the Company may face various claims brought by third parties and it may, from time to time, make
claims or take legal actions to assert its rights, including intellectual property disputes, contractual disputes and other commercial
disputes. Any of these claims could subject the Company to litigation.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Indemnities</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
addition to the indemnification provisions contained in the Company’s governing documents, the Company generally enters
into separate indemnification agreements with each of the Company’s directors and officers. These agreements require the
Company, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’
fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of
the individual’s status or service as the Company’s director or officer, other than liabilities arising from willful
misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual
in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification
by the Company. The Company also indemnifies its lessors in connection with its facility leases for certain claims arising from
the use of the facilities. These indemnities do not provide for any limitation of the maximum potential future payments the Company
could be obligated to make. Historically, the Company has not incurred any payments for these obligations and, therefore, no liabilities
have been recorded for these indemnities in the accompanying condensed consolidated balance sheets.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Klarity
License Agreement – Related Party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company entered into a license agreement in April 2017 and as amended in April 2018, (the “Klarity License Agreement”)
with Richard L. Lindstrom, M.D., a member of its Board of Directors. Pursuant to the terms of the Klarity License Agreement, the
Company licensed certain intellectual property and related rights from Dr. Lindstrom to develop, formulate, make, sell, and sub-license
the topical ophthalmic solution Klarity used to protect and rehabilitate the ocular surface (the “Klarity Product”).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Under
the terms of the Klarity License Agreement, the Company is required to make royalty payments to Dr. Lindstrom ranging from 3%
- 6% of net sales, dependent upon the final formulation of the Klarity Product sold. In addition, the Company is required to make
certain milestone payments to Dr. Lindstrom including: (i) an initial payment of $50 upon execution of the Klarity License Agreement,
(ii) a second payment of $50 following the first $50 in net sales of the Klarity Product; and (iii) a final payment of $50 following
the first $100 in net sales of the Klarity Product. All of the above referenced milestone payments are payable at the Company’s
election in cash or shares of the Company’s restricted common stock. Payments totaling $22 and $37 were made during the
three and six months ended June 30, 2019, respectively. $26 and $48 was incurred as royalty expense during the three and six months
ended and included in accounts payable to Dr. Lindstrom at June 30, 2019.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Sales
and Marketing Agreements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
2017, the Company entered various sales and marketing agreements with certain organizations, to provide exclusive sales and marketing
representation services to Harrow in select geographies in the U.S., in connection with our ophthalmic compounded formulations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Under
the terms of the sales and marketing agreements, the Company is required to make commission payments equal to 10% - 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. $0 and $75 of stock-based payments were made and
$640 and $1,182 were incurred under these agreements for commission expenses during the three and six months ended June 30, 2019,
respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Asset
Purchase, License and Related Agreements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 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. $274 and $465 and $114 and $197 were incurred under these agreements as
royalty expenses for the three and six months ended June 30, 2019 and 2018, respectively, and $274 and $114 were
included in accounts payable at June 30, 2019 and 2018, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
15. SEGMENT INFORMATION AND CONCENTRATIONS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Beginning
on January 1, 2019, the Company began evaluating performance of the Company based on operating segments. Segment performance for
its two operating segments are based on segment contribution. The Company’s reportable segments consist of (i) its commercial
stage pharmaceutical compounding business (Pharmaceutical Compounding), generally including the operations of ImprimisRx and Park
businesses; and (ii) its start-up operations associated with pharmaceutical drug development business (Pharmaceutical
Drug Development). Segment contribution for the segments represents net revenues less cost of sales, research and development,
selling and marketing expenses, and select general and administrative expenses. The Company does not evaluate the following items
at the segment level:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Selling,
general and administrative expenses that result from shared infrastructure, including certain expenses associated with legal
matters, public company costs (e.g. investor relations), board of directors and principal executive officers and other like
shared expenses.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Operating
expenses within selling, general and administrative expenses that result from the impact of corporate initiatives. Corporate
initiatives primarily include integration, restructuring, acquisition and other shared costs.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Other
select revenues and operating expenses including R&D expenses, amortization, and asset sales and impairments, net as not
all such information has been accounted for at the segment level, or such information has not been used by all segments.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total
assets including capital expenditures.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company defines segment net revenues as pharmaceutical compounded drug sales, licenses and other revenue derived from related
agreements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Cost
of sales within segment contribution includes direct and indirect costs to manufacture formulations and sell products, including
active pharmaceutical ingredients, personnel costs, packaging, storage, royalties, shipping and handling costs, manufacturing
equipment and tenant improvements depreciation, the write-off of obsolete inventory and other related expenses.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Selling,
general and administrative expenses consist mainly of personnel-related costs, marketing and promotion costs, distribution costs,
professional service costs, insurance, depreciation, facilities costs, transaction costs, and professional services costs which
are general in nature and attributable to the segment.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27.8pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Segment
net revenues, segment operating expenses and segment contribution information consisted of the following for the three and six
months ended June 30, 2019:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27.8pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended June 30, 2019</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">Pharmaceutical</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">Pharmaceutical</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Compounding</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Drug Development</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Total</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left">Net revenues</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">13,516</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">13,516</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Cost of sales</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(5,225</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">                   -</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(5,225</td><td style="text-align: left; padding-bottom: 1.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Gross profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,291</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,291</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Operating expenses:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Selling, general and administrative</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,804</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">43</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,847</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Research and development</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">533</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">127</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">660</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Segment contribution</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">1,954</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">(170</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">1,784</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Corporate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,342</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Research and development</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">150</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">59</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Operating loss</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">(767</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="text-align: center; border-bottom: Black 1.5pt solid">For the Six Months Ended June 30, 2019</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">Pharmaceutical</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">Pharmaceutical</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Compounding</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Drug Development</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Total</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left">Net revenues</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">25,806</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">25,806</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Cost of sales</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(9,123</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(9,123</td><td style="text-align: left; padding-bottom: 1.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Gross profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16,683</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16,683</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Operating expenses:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Selling, general and administrative</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,519</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">86</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,605</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Research and development</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">658</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">263</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">921</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Segment contribution</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">4,506</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">(349</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">4,157</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Corporate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,061</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Research and development</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">294</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">125</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Operating loss</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt">                  </td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">(1,323</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company categorizes revenues by geographic area based on selling location. All operations are currently located in the U.S.; therefore,
total revenues are attributed to the U.S. All long-lived assets at June 30, 2019 and December 31, 2018 are located in the U.S.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company sells its compounded formulations to a large number of customers. There were no customers who comprised more than 10%
of the Company’s total pharmacy sales for the three and six months ended June 30, 2019 and 2018.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><br />
The Company receives its active pharmaceutical ingredients from three main suppliers. These suppliers collectively accounted for
69% and 65% of active pharmaceutical ingredient purchases during the three and six months ended June 30, 2019, respectively,
and 54% and 52% during the three and six months ended June 30, 2018, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
16. SUBSEQUENT EVENTS </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has performed an evaluation of events occurring subsequent to June 30, 2019 through the filing date of this Quarterly
Report. Based on its evaluation, no events other than those described below need to be disclosed.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">From July 1, 2019 through the date of the
filing of this Quarterly Report, the Company issued 25,135 shares of its common stock related to the cashless exercise of 32,532
common stock warrants with an exercise price of $1.79.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 0; text-align: justify">From July 1, 2019 through the date of the filing of this Quarterly Report, the Company
issued 1,872 shares of its common stock upon the exercise of 1,872 options to purchase common stock, with exercise prices ranging
from $1.70 to $3.20 per share, and received net proceeds of $5.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Park
Sale</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
July 2019, Park entered into an Asset Purchase Agreement (the “Park APA”) with Noice. U<font style="background-color: white">nder
the terms of the </font>Park APA<font style="background-color: white">, Park has agreed to sell substantially all of its assets
associated with its non-ophthalmology pharmaceutical compounding business, including but not limited to, </font>trademarks, copyrights,
inventories, equipment, customer lists, databases, permits, licenses, and assignment of <font style="background-color: white">the
Company’s lease obligation for its Irvine, California based pharmacy, for a total purchase price of $8,000 (the “Purchase
Price”).</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Related
to the Park APA, Noice entered into a loan agreement with Park equal to the Purchase Price (the “Sellers Note”). The
Sellers Note will bear interest at 9.5% per annum and will be secured by all the assets of Noice. Noice will make ninety-six (96)
monthly cash payments to the Company over the eight years following the closing. The first twenty-four months of the Sellers Note
will require interest only payments of $63, with a principal payment of $2,000 due on September 15, 2021. Beginning on October
15, 2021, monthly payments will include interest and amortization of the principal balance and be equal to $119. The Sellers Note
includes a warrant that becomes exercisable in five years and is equal to 19.9% of the ownership interests of Noice.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
closing of the Park APA is dependent on the California State Board of Pharmacy issuing a temporary pharmacy and sterile license
permit to Noice, which Noice has applied for. If the license is issued, the closing is expected to occur on or before August 27,
2019, subject to other customary terms and conditions. If the sale is closed, the Park business will be classified as discontinued
operations in future periods.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Mayfield
License</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
July 2019, Mayfield entered into a License Agreement (the “TGV License”) with TGV-Health, LLC and TGV-Gyneconix, LLC
(collectively, “TGV”), to acquire intellectual property rights for use in the women’s health field, related
to Mayfield’s proprietary drug candidate MAY-66. The TGV License provides that TGV will cooperate with Mayfield in transferring
all embodiments of the intellectual property (including know-how) related to the TGV License, assist in obtaining and protecting
its patent rights for the acquired intellectual property and that Mayfield will use commercially reasonable efforts to research,
develop and commercialize products based on the acquired intellectual property. In connection with the TGV License, Mayfield is
obligated to make royalty payments to TGV equal to a low single digit percentage of net sales received by Mayfield in connection
with the sale or licensing of any product based on the licensed intellectual property. In addition, Mayfield issued 300,000 shares
of its common stock to TGV and is required to make certain milestone payments to TGV over the development of MAY-66 and any related
products based on the licensed intellectual property.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Stowe
License</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
July 2019, Stowe entered into a License Agreement (the “Stowe License”) with TGV-Health, LLC and TGV- Ophthalnix,
LLC (collectively, “TGV-O”), to acquire intellectual property rights for use in the ophthalmology and otic health
field, related to Stowe’s proprietary drug candidate STE-006. The Stowe License provides that TGV-O will cooperate
with Stowe in transferring all embodiments of the intellectual property (including know-how) related to the Stowe License, assist
in obtaining and protecting its patent rights for the acquired intellectual property and that Stowe will use commercially reasonable
efforts to research, develop and commercialize products based on the acquired intellectual property. In connection with the Stowe
License, Stowe is obligated to make royalty payments to TGV-O equal to a low single digit percentage of net sales received by
Stowe in connection with the sale or licensing of any product based on the licensed intellectual property. In addition, Stowe
agreed to issue 1,750,000 shares of its common stock to TGV-O and is required to make certain milestone payments to TGV-O over
the development of STE-006 and any related products based on the licensed intellectual property.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Liquidity</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has incurred significant operating losses and negative cash flows from operations since its inception. The Company incurred
net income (loss) of $8,980 and $(991) for the six months ended June 30, 2019 and 2018, respectively, and had an accumulated deficit
of $65,231 and $74,211 as of June 30, 2019 and December 31, 2018, respectively. In addition, the Company used cash in operating
activities of $(632) for the six months ended June 30, 2019, while during the six months ended June 30, 2018, operating
activities provided cash of $400.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">While
there is no assurance, management of the Company believes existing cash resources and restricted cash of $4,193 at June 30, 2019,
will be sufficient to sustain the Company’s planned level of operations for at least the next twelve months. However, estimates
of operating expenses and working capital requirements could be incorrect, and the Company could use its cash resources faster
than anticipated. Further, some or all of the ongoing or planned activities may not be successful and could result in further
losses.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company may seek to increase liquidity and capital resources through a variety of means which may include, but are not limited
to: the sale of assets, investments and/or businesses, obtaining financing through the issuance of equity, debt, or convertible
securities; and working to increase revenue growth through sales. There is no guarantee that the Company will be able to obtain
capital when needed on terms management deems acceptable, or at all.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Basic
and Diluted Net Income (Loss) per Common Share</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
net income (loss) per common share is computed by dividing income (loss) attributable to common stockholders for the period by
the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is computed by dividing
the income (loss) attributable to common stockholders for the period by the weighted average number of common and common equivalent
shares, such as stock options and warrants, outstanding during the period.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic
and diluted net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during
the period. Common stock equivalents (using the treasury stock or “if converted” method) from deferred acquisition
obligations, convertible note payable, stock options, unvested restricted stock units (“RSUs”) and warrants were 5,331,883
and 10,245,280 at June 30, 2019 and 2018, respectively, and, except for the six months ended June 30, 2019 and the
three months ended June 30, 2018, are excluded from the calculation of diluted net income (loss) per share for the periods
presented, because the effect is anti-dilutive. Included in the basic and diluted net income (loss) per share calculation were
RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until the director resigns.
The number of shares underlying vested RSUs at June 30, 2019 and 2018 was 304,873 and 168,513, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table shows the computation of basic net income (loss) per share of common stock for the three and six months ended
June 30, 2019 and 2018:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended<br />
June 30,</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For
the Six Months Ended</p>
<p style="margin-top: 0; margin-bottom: 0">June 30,</p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-bottom: 2.5pt">Numerator – net income (loss) attributable to Harrow Health, Inc.</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(2,378</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">2,522</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">8,980</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(991</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Denominator – weighted average number of shares outstanding, basic</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,190,794</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,030,012</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share, basic</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.09</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.12</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.36</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.05</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the six months ended June 30, 2019 and the three months ended June 30, 2018, 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 those periods. Diluted common equivalent shares for the six months ended June 30, 2019 and the three months
ended June 30, 2018, consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">For the</td><td> </td><td> </td>
<td colspan="2" style="text-align: center">For the</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">Three Months<br />
Ended</td><td> </td><td> </td>
<td colspan="2" style="text-align: center"><p style="margin-top: 0; margin-bottom: 0">Six Months</p>
<p style="margin-top: 0; margin-bottom: 0">Ended</p></td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Diluted shares related to:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 56%; padding-left: 10pt">Warrants</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 18%; text-align: right">1,093,006</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 18%; text-align: right">1,028,780</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Stock options and RSUs</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">891,631</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">637,891</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dilutive common equivalent shares</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,984,637</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,666,671</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table shows the computation of diluted net income (loss) per share of common stock for the three and six months ended
June 30, 2019 and 2018:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For
the Three Months Ended<br /> June 30,</p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For the Six Months Ended</p>
<p style="margin-top: 0; margin-bottom: 0">June 30,</p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-bottom: 2.5pt">Numerator – net income (loss) attributable to Harrow Health, Inc.</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(2,378</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">2,522</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">8,980</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(991</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Denominator – weighted average number of shares outstanding, basic</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,190,794</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,030,012</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dilutive common equivalents</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,984,637</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,666,671</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Number of shares used for diluted earnings per share computation</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">23,175,431</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">26,696,683</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share, diluted</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.09</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.11</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.34</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.05</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Recently
Adopted Accounting Pronouncements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, <i>Leases</i> (Topic 842). This new
guidance was initiated as a joint project with the International Accounting Standards Board to simplify lease accounting and improve
the quality of and comparability of financial information for users. This new guidance would eliminate the concept of off-balance
sheet treatment for “operating leases” for lessees for the vast majority of lease contracts. Under ASU No. 2016-02,
at inception, a lessee must classify all leases with a term of over one year as either finance or operating, with both classifications
resulting in the recognition of a defined “right-of-use” asset and a lease liability on the balance sheet. However,
recognition in the income statement will differ depending on the lease classification, with finance leases recognizing the amortization
of the right-of-use asset separate from the interest on the lease liability and operating leases recognizing a single total lease
expense. Lessor accounting under ASU No. 2016-02 would be substantially unchanged from the previous lease requirements under GAAP.
ASU No. 2016-02 took effect for public companies in fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years. On January 1, 2019, the Company adopted Topic 842 using the modified retrospective transition method
with no impact to stockholders’ equity. As of June 30, 2019, the Company held on its condensed consolidated balance sheet
$6,069 for the right-of-use asset and $6,472 for the related lease liability related to operating leases. The difference between
the right of use asset and related lease liability is predominantly deferred rent and other related lease expenses under the new
lease accounting standard. For additional information regarding how the Company is accounting for leases under Topic 842, refer
to Note 12.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Recently
Issued Accounting Pronouncements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
January 2017, the FASB issued ASU 2017-04, <i>Intangibles-Goodwill and Other</i>. This guidance simplifies the accounting for
goodwill impairment for all entities by requiring impairment charges to be based on the first step in the current two-step impairment
test under ASC 350. The updated standard eliminates the requirement to calculate a goodwill impairment charge using Step 2. If
a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference.
The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for
reporting periods beginning after December 31, 2019 on a prospective basis, and early adoption is permitted. The Company does
not expect ASU 2017-04 to have a material effect on the Company’s financial position, results of operations and cash flows.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table shows the computation of basic net income (loss) per share of common stock for the three and six months ended
June 30, 2019 and 2018:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended<br />
June 30,</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For
the Six Months Ended</p>
<p style="margin-top: 0; margin-bottom: 0">June 30,</p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-bottom: 2.5pt">Numerator – net income (loss) attributable to Harrow Health, Inc.</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(2,378</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">2,522</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">8,980</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(991</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Denominator – weighted average number of shares outstanding, basic</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,190,794</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,030,012</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share, basic</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.09</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.12</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.36</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.05</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Revenue
disaggregated by revenue source for the three and six months ended June 30, 2019 and 2018, consists of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the Three Months Ended</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30,</b></font></p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the Six Months Ended</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30,</b></font></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 32%; text-align: left">Product sales, net</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">13,509</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">10,374</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">25,792</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">19,229</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">License revenues</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">7</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">10</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">14</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">20</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Total revenues</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,516</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">10,384</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">25,806</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">19,249</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The composition of inventories as of June 30, 2019
and December 31, 2018 was as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left">Raw materials</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">1,758</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">1,119</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Work in progress</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">264</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Finished goods</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">630</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">709</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total inventories</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,652</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,834</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Prepaid
expenses and other current assets consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: left">Prepaid insurance</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">65</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">328</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Other prepaid expenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">434</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">334</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Receivable due from Surface</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">50</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Receivable due from Melt</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">714</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Deposits and other current assets</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">138</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">125</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total prepaid expenses and other current assets</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,401</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">837</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property,
plant and equipment consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31, 2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Property, plant and equipment, net:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 50%; text-align: left; padding-left: 10pt">Computer software and hardware</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">1,743</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">1,662</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Furniture and equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">420</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">397</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Lab and pharmacy equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,416</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,184</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Leasehold improvements</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,612</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,496</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,191</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,739</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Accumulated depreciation and amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,245</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,364</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: right; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,946</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">6,375</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts
payable and accrued expenses consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31, 2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 54%; text-align: left">Accounts payable</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 19%; text-align: right">5,957</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 19%; text-align: right">4,966</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Accrued litigation settlement (see Note 14)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">733</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">640</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Deferred rent</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">388</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Accrued interest</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">253</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">256</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Accrued exit fee for note payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">800</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">800</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total accounts payable and accrued expenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,743</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,050</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Current portion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,943</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,250</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Non-current total accrued expenses</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">800</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">800</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
June 30, 2019, future minimum payments under the Company’s note payable were as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Remainder of 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">1,216</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,696</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,121</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,828</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">2023</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">7,330</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total minimum payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,191</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: amount representing interest</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,941</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Notes payable, gross</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,250</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,505</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,745</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion, net of unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(247</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Note payable, net of current portion and unamortized debt discount</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,498</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
summary of stock option activity under the Plans for the six months ended June 30, 2019 is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 11pt; text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of shares</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Avg. Exercise Price</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"> Weighted Avg. Remaining Contractual Life</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Aggregate Intrinsic Value</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%">Options outstanding - January 1, 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 11%; text-align: right">2,482,009</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">5.10</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%; font-size: 11pt"> </td>
<td style="width: 1%; font-size: 11pt; text-align: left"> </td><td style="width: 11%; font-size: 11pt; text-align: right"> </td><td style="width: 1%; font-size: 11pt; text-align: left"> </td><td style="width: 2%; font-size: 11pt"> </td>
<td style="width: 1%; font-size: 11pt; text-align: left"> </td><td style="width: 11%; font-size: 11pt; text-align: right"> </td><td style="width: 1%; font-size: 11pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Options granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">352,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">6.17</td><td style="text-align: left"> </td><td style="font-size: 11pt"> </td>
<td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt; text-align: right"> </td><td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt"> </td>
<td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt; text-align: right"> </td><td style="font-size: 11pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Options exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(57,933</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">3.72</td><td style="text-align: left"> </td><td style="font-size: 11pt"> </td>
<td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt; text-align: right"> </td><td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt"> </td>
<td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt; text-align: right"> </td><td style="font-size: 11pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Options cancelled/forfeited</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(50,471</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt">$</td><td style="text-align: right; padding-bottom: 1.5pt">5.83</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; padding-bottom: 1.5pt"> </td>
<td style="font-size: 11pt; text-align: left; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; text-align: right; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; text-align: left; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; padding-bottom: 1.5pt"> </td>
<td style="font-size: 11pt; text-align: left; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; text-align: right; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt">Options outstanding - June 30, 2019</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">2,725,605</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">5.25</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt">5.61</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">9,621</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Options exercisable</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">1,461,723</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">4.69</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt">5.98</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">6,091</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt">Options vested and expected to vest</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">2,607,104</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">5.21</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt">5.63</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">9,323</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following
assumptions used for valuing options granted to employees:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 74%; text-align: left">Weighted-average fair value of options granted</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 22%; text-align: right">3.64</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Expected terms (in years)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5.8 - 6.1</font></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Expected volatility</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">64%
- 67</font></td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Risk-free interest rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.19% - 2.68</font></td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table summarizes information about stock options outstanding and exercisable at June 30, 2019:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.75in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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<td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Options Outstanding</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Options Exercisable</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Weighted</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Average</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Weighted</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Weighted</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Remaining</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Average</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Average</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Number</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt">Contractual</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Exercise</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Number</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Exercise</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid; font-size: 9pt; text-align: left"><font style="font-size: 9pt">Range of Exercise Prices</font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Outstanding</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Life
in Years</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Price</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Exercisable</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Price</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font-size: 9pt">
<td style="width: 29%; font-size: 9pt"><font style="font-size: 9pt">$1.47 - $2.60</font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 10%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">816,936</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 11%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">7.22</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="width: 10%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">2.04</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 10%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">526,237</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="width: 10%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">2.12</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White; font-size: 9pt">
<td style="font-size: 9pt"><font style="font-size: 9pt">$2.76 - $4.66</font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">495,496</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">6.68</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">3.97</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">441,452</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">3.99</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font-size: 9pt">
<td style="font-size: 9pt"><font style="font-size: 9pt">$5.61 - $6.30</font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">440,350</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">8.41</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">6.16</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">122,159</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">6.04</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White; font-size: 9pt">
<td style="font-size: 9pt"><font style="font-size: 9pt">$6.64 - $8.99</font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">967,793</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">2.44</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">8.01</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">366,845</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">8.24</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font-size: 9pt">
<td style="text-align: left; padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt">$42.80</font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="border-bottom: Black 1.5pt solid; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="border-bottom: Black 1.5pt solid; text-align: right; font-size: 9pt"><font style="font-size: 9pt">5,030</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">1.12</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="padding-bottom: 1.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">42.80</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="border-bottom: Black 1.5pt solid; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="border-bottom: Black 1.5pt solid; text-align: right; font-size: 9pt"><font style="font-size: 9pt">5,030</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="padding-bottom: 1.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">42.80</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White; font-size: 9pt">
<td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt">$1.47 - $42.80</font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right; font-size: 9pt"><font style="font-size: 9pt">2,725,605</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">5.61</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="padding-bottom: 2.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">5.25</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right; font-size: 9pt"><font style="font-size: 9pt">1,461,723</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="padding-bottom: 2.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">4.69</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
summary of the Company’s RSU activity and related information for the six months ended June 30, 2019 is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of RSUs</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Average Grant Date Fair Value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 50%">RSUs unvested - January 1, 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 21%; text-align: right">1,275,680</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">2.16</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">RSUs granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">223,860</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">6.43</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">RSUs vested</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(68,180</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">2.20</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">RSUs cancelled/forfeited</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt">RSUs unvested at June 30, 2019</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,431,360</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left">$</td><td style="padding-bottom: 2.5pt; text-align: right">2.83</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
summary of warrant activity for the six months ended June 30, 2019 is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of Shares Subject to Warrants Outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Avg. Exercise Price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%">Warrants outstanding - January 1, 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">2,206,973</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">1.91</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,032,055</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1.79</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Expired</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt">Warrants outstanding and exercisable - June 30, 2019</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,174,918</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left">$</td><td style="padding-bottom: 2.5pt; text-align: right">2.01</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Weighted average remaining contractual life of the outstanding warrants in years - June 30, 2019</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">3.51</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
list of the warrants outstanding as of June 30, 2019 is included in the following table:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Warrants</td><td style="font-weight: bold; text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Exercise</b></font></td><td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center">Expiration</td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left; border-bottom: Black 1.5pt solid">Warrant Series</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Issue Date</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Outstanding</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif"><b>Price</b></font></td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Date</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 21%; text-align: left">Lender warrants</td><td style="width: 2%"> </td>
<td style="width: 19%; text-align: center">5/11/2015</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">125,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 15%; text-align: right">1.79</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 17%; text-align: center">5/11/2025</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Settlement warrants</td><td> </td>
<td style="text-align: center">8/16/2016</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">40,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">3.75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">8/16/2021</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">PIPE investor and placement agent warrants</td><td> </td>
<td style="text-align: center">12/27/2016</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">394,532</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1.79</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">12/27/2019</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Lender warrants</td><td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center">7/19/2017</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">615,386</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt">$</td><td style="text-align: right; padding-bottom: 1.5pt">2.08</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center">7/19/2024</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: center"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">1,174,918</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"></td><td style="text-align: right; padding-bottom: 2.5pt"></td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: center"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company recorded stock-based compensation related to equity instruments granted to employees, directors and consultants as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid">For the Six Months Ended</td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left">Employees - selling, general and administrative</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">268</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">573</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">906</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">1,166</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Directors - selling, general and administrative</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">35</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">150</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">85</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Consultants - selling, general and administrative</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">24</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">99</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">108</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">367</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">608</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,155</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,359</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
25806000
25792000
14000
19249000
19229000
20000
25806000
13516000
10384000
13509000
10374000
7000
10000
13516000
18006000
13426000
9058000
6851000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
13. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Common
Stock</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
March 2019, the Company issued 15,000 shares of its restricted common stock, with a fair value of $75, as consideration for commission
expenses incurred during the six months ended June 30, 2019.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2019, the Company issued 20,955 shares of its common stock upon the cashless exercise of 57,933
options to purchase common stock, with exercise prices ranging from $1.70 to $4.09 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2019, the Company issued 663,338 shares of its common stock upon the cashless exercise of 932,000
warrants to purchase common stock with an exercise price of $1.79 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2019, the Company issued 100,055 shares of its common stock upon the exercise of 100,055 warrants
to purchase common stock with an exercise price of $1.79 per share, and received net proceeds of $179.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2019, 68,180 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 director resigns.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Stock
Option Plan </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 (the “2017 Plan” together with the 2007 Plan, the
“Plans”). As of June 30, 2019, the 2017 Plan provides for the issuance of a maximum of 2,000,000 shares of the Company’s
common stock. The purpose of the Plans are to attract and retain directors, officers, consultants, advisors and employees whose
services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in
the Company’s development and financial success. Under the Plans, the Company is authorized to issue incentive stock options
intended to qualify under Section 422 of the Internal Revenue Code, non-qualified stock options, restricted stock units and restricted
stock. The Plans are administered by the Compensation Committee of the Company’s Board of Directors. The Company had 997,280
shares available for future issuances under the 2017 Plan at June 30, 2019.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Stock
Options</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
summary of stock option activity under the Plans for the six months ended June 30, 2019 is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 11pt; text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of shares</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Avg. Exercise Price</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"> Weighted Avg. Remaining Contractual Life</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Aggregate Intrinsic Value</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%">Options outstanding - January 1, 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 11%; text-align: right">2,482,009</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">5.10</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%; font-size: 11pt"> </td>
<td style="width: 1%; font-size: 11pt; text-align: left"> </td><td style="width: 11%; font-size: 11pt; text-align: right"> </td><td style="width: 1%; font-size: 11pt; text-align: left"> </td><td style="width: 2%; font-size: 11pt"> </td>
<td style="width: 1%; font-size: 11pt; text-align: left"> </td><td style="width: 11%; font-size: 11pt; text-align: right"> </td><td style="width: 1%; font-size: 11pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Options granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">352,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">6.17</td><td style="text-align: left"> </td><td style="font-size: 11pt"> </td>
<td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt; text-align: right"> </td><td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt"> </td>
<td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt; text-align: right"> </td><td style="font-size: 11pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Options exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(57,933</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">3.72</td><td style="text-align: left"> </td><td style="font-size: 11pt"> </td>
<td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt; text-align: right"> </td><td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt"> </td>
<td style="font-size: 11pt; text-align: left"> </td><td style="font-size: 11pt; text-align: right"> </td><td style="font-size: 11pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Options cancelled/forfeited</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(50,471</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt">$</td><td style="text-align: right; padding-bottom: 1.5pt">5.83</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; padding-bottom: 1.5pt"> </td>
<td style="font-size: 11pt; text-align: left; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; text-align: right; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; text-align: left; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; padding-bottom: 1.5pt"> </td>
<td style="font-size: 11pt; text-align: left; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; text-align: right; padding-bottom: 1.5pt"> </td><td style="font-size: 11pt; text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt">Options outstanding - June 30, 2019</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">2,725,605</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">5.25</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt">5.61</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">9,621</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Options exercisable</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">1,461,723</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">4.69</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt">5.98</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">6,091</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt">Options vested and expected to vest</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">2,607,104</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">5.21</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt">5.63</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt">$</td><td style="text-align: right; padding-bottom: 2.5pt">9,323</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 June 28, 2019, based on the closing price of the Company’s common stock of $8.70 on
that date.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2019, the Company granted stock options to certain employees and a consultant. The stock options
were granted with an exercise price equal to the current market price of the Company’s common stock, as reported by the
securities exchange on which the common stock was then listed, at the grant date and have contractual terms of 10 years. Vesting
terms for options granted to employees and consultants during the six months ended June 30, 2019 typically 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; 100% of the shares subject to the option vest on a quarterly basis in equal installments over three
years; and 90% of the shares subject to the option vest and become exercisable on the second month after the grant date and the
remaining 10% of the shares subject to the option vest and become exercisable quarterly in equal installments thereafter over
the next 11 months. Certain option awards provide for accelerated vesting if there is a change in control (as defined in the Plan)
and in the event of certain modifications to the option award agreement.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. Beginning
on April 1, 2018, the Company began calculating expected volatility based solely on the historical volatilities of the common
stock of the Company. In the past, the expected volatility was based on the historical volatilities of the common stock of the
Company and comparable publicly traded companies, the Company previously utilized this methodology based on its estimate that
it had limited relevant historical data regarding the volatility of its stock price on which to base a meaningful estimate of
expected volatility. The expected term of options granted to employees and directors 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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following
assumptions used for valuing options granted to employees:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 74%; text-align: left">Weighted-average fair value of options granted</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 22%; text-align: right">3.64</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Expected terms (in years)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5.8 - 6.1</font></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Expected volatility</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">64%
- 67</font></td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Risk-free interest rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.19% - 2.68</font></td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table summarizes information about stock options outstanding and exercisable at June 30, 2019:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.75in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Options Outstanding</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Options Exercisable</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Weighted</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Average</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Weighted</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Weighted</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Remaining</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Average</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Average</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Number</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt">Contractual</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Exercise</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Number</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; font-size: 9pt"><font style="font-size: 9pt">Exercise</font></td><td style="font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; font-size: 9pt">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid; font-size: 9pt; text-align: left"><font style="font-size: 9pt">Range of Exercise Prices</font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Outstanding</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Life
in Years</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Price</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Exercisable</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td><td style="font-weight: bold; padding-bottom: 1.5pt; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid; font-size: 9pt"><font style="font-size: 9pt">Price</font></td><td style="padding-bottom: 1.5pt; font-weight: bold; font-size: 9pt; text-align: center"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font-size: 9pt">
<td style="width: 29%; font-size: 9pt"><font style="font-size: 9pt">$1.47 - $2.60</font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 10%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">816,936</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 11%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">7.22</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="width: 10%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">2.04</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 10%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">526,237</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="width: 2%; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="width: 10%; text-align: right; font-size: 9pt"><font style="font-size: 9pt">2.12</font></td><td style="width: 1%; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White; font-size: 9pt">
<td style="font-size: 9pt"><font style="font-size: 9pt">$2.76 - $4.66</font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">495,496</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">6.68</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">3.97</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">441,452</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">3.99</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font-size: 9pt">
<td style="font-size: 9pt"><font style="font-size: 9pt">$5.61 - $6.30</font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">440,350</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">8.41</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">6.16</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">122,159</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">6.04</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White; font-size: 9pt">
<td style="font-size: 9pt"><font style="font-size: 9pt">$6.64 - $8.99</font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">967,793</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">2.44</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">8.01</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">366,845</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="text-align: right; font-size: 9pt"><font style="font-size: 9pt">8.24</font></td><td style="text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font-size: 9pt">
<td style="text-align: left; padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt">$42.80</font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="border-bottom: Black 1.5pt solid; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="border-bottom: Black 1.5pt solid; text-align: right; font-size: 9pt"><font style="font-size: 9pt">5,030</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">1.12</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="padding-bottom: 1.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">42.80</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="border-bottom: Black 1.5pt solid; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="border-bottom: Black 1.5pt solid; text-align: right; font-size: 9pt"><font style="font-size: 9pt">5,030</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 1.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="padding-bottom: 1.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">42.80</font></td><td style="padding-bottom: 1.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White; font-size: 9pt">
<td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt">$1.47 - $42.80</font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right; font-size: 9pt"><font style="font-size: 9pt">2,725,605</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">5.61</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="padding-bottom: 2.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">5.25</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right; font-size: 9pt"><font style="font-size: 9pt">1,461,723</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td><td style="padding-bottom: 2.5pt; font-size: 9pt"><font style="font-size: 9pt"> </font></td>
<td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt">$</font></td><td style="padding-bottom: 2.5pt; text-align: right; font-size: 9pt"><font style="font-size: 9pt">4.69</font></td><td style="padding-bottom: 2.5pt; text-align: left; font-size: 9pt"><font style="font-size: 9pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, there was approximately $4,128 of total unrecognized compensation expense related to unvested stock options
granted under the Plans. That expense is expected to be recognized over the weighted-average remaining vesting period of 3.94
years. The stock-based compensation expense for all stock options was $262 and $540 during the three and six months ended
June 30, 2019, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i></i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Restricted
Stock Units </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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. Unvested portions of RSUs issued to consultants
are remeasured on an interim basis until vesting criteria is met.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the six months ended June 30, 2019, 185,000 RSUs with a fair market value of $1,139 were issued to certain employees; the RSUs
vest in full on the third year anniversary of the grant date.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the three and six months ended June 30, 2019, the Company’s board of directors were granted 38,860 RSUs with a fair market
value $300 which vests on a quarterly basis, over one year in equal installments.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
summary of the Company’s RSU activity and related information for the six months ended June 30, 2019 is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of RSUs</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Average Grant Date Fair Value</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 50%">RSUs unvested - January 1, 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 21%; text-align: right">1,275,680</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 21%; text-align: right">2.16</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">RSUs granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">223,860</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">6.43</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">RSUs vested</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(68,180</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">2.20</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">RSUs cancelled/forfeited</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt">RSUs unvested at June 30, 2019</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,431,360</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left">$</td><td style="padding-bottom: 2.5pt; text-align: right">2.83</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, the total unrecognized compensation expense related to unvested RSUs was approximately $1,076, which is expected
to be recognized over a weighted-average period of 0.37 years, based on estimated and actual vesting schedules of the applicable
RSUs. The stock-based compensation for RSUs during the three and six months ended June 30, 2019 was $110 and $540, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Warrants</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">From
time to time, the Company issues warrants to purchase shares of the Company’s common stock to investors, lenders, underwriters
and other non-employees for services rendered or to be rendered in the future, or pursuant to settlement agreements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
summary of warrant activity for the six months ended June 30, 2019 is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of Shares Subject to Warrants Outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Avg. Exercise Price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%">Warrants outstanding - January 1, 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">2,206,973</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">1.91</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,032,055</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1.79</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Expired</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt">Warrants outstanding and exercisable - June 30, 2019</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,174,918</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left">$</td><td style="padding-bottom: 2.5pt; text-align: right">2.01</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Weighted average remaining contractual life of the outstanding warrants in years - June 30, 2019</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">3.51</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
list of the warrants outstanding as of June 30, 2019 is included in the following table:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Warrants</td><td style="font-weight: bold; text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Exercise</b></font></td><td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center">Expiration</td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left; border-bottom: Black 1.5pt solid">Warrant Series</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Issue Date</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Outstanding</td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif"><b>Price</b></font></td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; text-align: center; padding-bottom: 1.5pt"> </td>
<td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Date</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 21%; text-align: left">Lender warrants</td><td style="width: 2%"> </td>
<td style="width: 19%; text-align: center">5/11/2015</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">125,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 15%; text-align: right">1.79</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 17%; text-align: center">5/11/2025</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Settlement warrants</td><td> </td>
<td style="text-align: center">8/16/2016</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">40,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">3.75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">8/16/2021</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">PIPE investor and placement agent warrants</td><td> </td>
<td style="text-align: center">12/27/2016</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">394,532</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1.79</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">12/27/2019</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Lender warrants</td><td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center">7/19/2017</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">615,386</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt">$</td><td style="text-align: right; padding-bottom: 1.5pt">2.08</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center">7/19/2024</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: center"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">1,174,918</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"></td><td style="text-align: right; padding-bottom: 2.5pt"></td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: center"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Subsidiary
Stock-Based Transactions</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Mayfield
Pharmaceuticals, Inc. </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company issued 1,000,000 shares of Mayfield’s common stock to Elle in connection with acquisition of certain drug candidate
intellectual property and rights in February 2019. Following the issuance of Mayfield common stock to Elle, and as of June 30,
2019, the Company owned 72% of the equity interests in Mayfield. Mayfield is a consolidated subsidiary; the Company reports the
operating results of Mayfield and allocates the noncontrolling interests to the non-majority partners.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Stock-Based
Compensation Summary</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company recorded stock-based compensation related to equity instruments granted to employees, directors and consultants as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid">For the Six Months Ended</td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left">Employees - selling, general and administrative</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">268</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">573</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">906</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">1,166</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Directors - selling, general and administrative</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">35</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">150</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">85</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Consultants - selling, general and administrative</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">24</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">99</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">108</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">367</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">608</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,155</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,359</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Diluted common equivalent shares for the six months ended June 30, 2019 and the three months
ended June 30, 2018, consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">For the</td><td> </td><td> </td>
<td colspan="2" style="text-align: center">For the</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">Three Months<br />
Ended</td><td> </td><td> </td>
<td colspan="2" style="text-align: center"><p style="margin-top: 0; margin-bottom: 0">Six Months</p>
<p style="margin-top: 0; margin-bottom: 0">Ended</p></td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Diluted shares related to:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 56%; padding-left: 10pt">Warrants</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 18%; text-align: right">1,093,006</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 18%; text-align: right">1,028,780</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Stock options and RSUs</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">891,631</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">637,891</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dilutive common equivalent shares</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,984,637</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">1,666,671</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table shows the computation of diluted net income (loss) per share of common stock for the three and six months ended
June 30, 2019 and 2018:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For
the Three Months Ended<br /> June 30,</p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="margin-top: 0; margin-bottom: 0">For the Six Months Ended</p>
<p style="margin-top: 0; margin-bottom: 0">June 30,</p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td><td> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2018</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left; padding-bottom: 2.5pt">Numerator – net income (loss) attributable to Harrow Health, Inc.</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(2,378</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">2,522</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">8,980</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt"> </td><td style="width: 2%; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 11%; border-bottom: Black 2.5pt double; text-align: right">(991</td><td style="width: 1%; text-align: left; padding-bottom: 2.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Denominator – weighted average number of shares outstanding, basic</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,190,794</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,030,012</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dilutive common equivalents</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,984,637</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,666,671</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Number of shares used for diluted earnings per share computation</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">25,216,565</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">23,175,431</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">26,696,683</td><td style="text-align: left"> </td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,070,644</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) per share, diluted</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.09</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.11</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">0.34</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.05</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Segment
net revenues, segment operating expenses and segment contribution information consisted of the following for the three and six
months ended June 30, 2019:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27.8pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended June 30, 2019</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">Pharmaceutical</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">Pharmaceutical</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Compounding</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Drug Development</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Total</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left">Net revenues</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">13,516</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">13,516</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Cost of sales</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(5,225</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">                   -</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(5,225</td><td style="text-align: left; padding-bottom: 1.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Gross profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,291</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,291</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Operating expenses:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Selling, general and administrative</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,804</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">43</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,847</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Research and development</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">533</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">127</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">660</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Segment contribution</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">1,954</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">(170</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">1,784</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Corporate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,342</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Research and development</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">150</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">59</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Operating loss</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">(767</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="text-align: center; border-bottom: Black 1.5pt solid">For the Six Months Ended June 30, 2019</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">Pharmaceutical</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">Pharmaceutical</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Compounding</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Drug Development</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Total</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: left">Net revenues</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">25,806</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">25,806</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Cost of sales</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(9,123</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(9,123</td><td style="text-align: left; padding-bottom: 1.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 10pt">Gross profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16,683</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">16,683</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Operating expenses:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Selling, general and administrative</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,519</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">86</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,605</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Research and development</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">658</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">263</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">921</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Segment contribution</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">4,506</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">(349</td><td style="text-align: left; padding-bottom: 2.5pt">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="text-align: right; border-bottom: Black 2.5pt double">4,157</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Corporate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,061</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Research and development</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">294</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">125</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Operating loss</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt">                  </td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">(1,323</td><td style="text-align: left; padding-bottom: 2.5pt">)</td></tr></table>
-76000
-393000
105000
5000
224000
119000
10200
4500
25000
1400000
0.10
0.14
2
0.10
0.10
0.65
0.52
0.67
0.54
7.90
5.00
5.00
3.30
3.30
4157000
4506000
-349000
1784000
1954000
-170000
125000
59000
630000
-255000
-255000
100271000
98938000
75000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
4. INVESTMENT IN MELT PHARMACEUTICALS, INC. AND AGREEMENTS - RELATED PARTY TRANSACTIONS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
December 2018, the Company entered into an asset purchase agreement with Melt (the “Melt Asset Purchase Agreement”).
Pursuant to the terms of the Melt Asset Purchase Agreement, Melt was assigned certain intellectual property and related rights
from the Company to develop, formulate, make, sell, and sub-license certain Company conscious sedation and analgesia related formulations
(collectively, the “Melt Products”). Under the terms of the Melt Asset Purchase Agreement, Melt is required to make
royalty payments to the Company up to eight percent (8%) of net sales of the Melt Products while any patent rights remain outstanding,
as well as other conditions. In January and March 2019, the Company entered into the Melt Series A Preferred Stock Agreement.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2019, the Company and Melt entered into a Management Services Agreement (the “Melt MSA”), whereby the Company
provides to Melt certain administrative services and support, including bookkeeping, web services and human resources related
activities, and Melt pays the Company a monthly amount of $10.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, the Company was due $714 from Melt for reimbursable expenses and amounts due under the Melt MSA and included
in prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s Chief Executive Officer, Mark L. Baum, and Chief Medical Officer, Larry Dillaha, are members of the Melt board
of directors, and several employees of the Company (including Mr. Baum and the Company’s Chief Financial Officer, Andrew
Boll) entered into consulting agreements and provide consulting services to Melt.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
unaudited condensed results of operations information of Melt is summarized below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">For the</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">Six months ended</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">June 30, 2019</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Revenues, net</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 71%; text-align: left">Loss from operations</td><td style="width: 2%"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="width: 25%; border-bottom: Black 1.5pt solid; text-align: right">1,382</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net loss</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,382</td><td style="text-align: left">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
unaudited condensed balance sheet information of Melt is summarized below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">June 30,</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2019</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Current assets</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">9,521</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Non current assets</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total assets</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,524</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total liabilities</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">940</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total preferred stock and stockholders’ equity</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">8,584</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total liabilities and stockholders’ equity</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,524</td><td style="text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investment
in Eton Pharmaceuticals, Inc. – Related Party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company owns 3,500,000 shares of Eton common stock, which represents approximately 19.7% of the equity and voting interests of
Eton as of June 30, 2019. At June 30, 2019, the fair market value of Eton’s common stock was $7.90 per share, the closing
share price of Eton common stock on June 28, 2019, the last trading day of the period ended June 30, 2019. In accordance with
the Accounting Standards Update (“ASU”) 2016-01, <i>Financial Instruments-Overall (Subtopic 825-10): Recognition
and Measurement of Financial Assets and Financial Liabilities</i>, for the three months ended June 30, 2019, the Company recorded
an investment loss from its Eton common stock position of $350, related to the change in fair market value of the Company’s
investment in Eton during the measurement period. For the six months ended June 30, 2019, the Company recorded an investment gain
from its Eton common stock position of $6,230, related to the change in fair market value of the Company’s investment in
Eton during the measurement period. As of June 30, 2019, the fair market value of the Company’s investment in Eton was $27,650.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
November 2018, the Company entered into a lock-up agreement that prohibits the sale of any of its Eton common stock until November
2019 without the approval of National Securities Corporation, the underwriter of Eton’s initial public offering of its
common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Mark
Baum, the Company’s Chief Executive Officer, is a member of the board of directors of Eton.</font></p>
200000
200000
968000
800000
491000
4.69
P5Y7M10D
25165965
-504000
6230000
5218000
-2215000
5199000
5976000
29000
-67000
34998000
24751000
21000
24000
91430000
98938000
-88836000
-74211000
2615000
21000
25000
93538000
100271000
-89827000
-65231000
3732000
2615000
24751000
3732000
35065000
-67000
25000
21000
99887000
92411000
-62853000
-92349000
37059000
83000
-25000
37034000
83000
-504000
6230000
5218000
-2215000
5199000
-326000
-261000
5218000
-350000
-1146000
67000
42000
8913000
-991000
-991000
8980000
-991000
8980000
-67000
-2420000
2522000
-2378000
2522000
-2378000
2522000
-42000
179000
1000
178000
179000
17000
17000
17000
763393
399354
1080000
1359000
1359000
1080000
1359000
1080000
367000
608000
367000
608000
367000
608000
60000
305619
236243
4193000
4170000
256000
108000
4000
220000
154000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Company
and Background</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Harrow
Health, Inc. (together with its subsidiaries, unless the context indicates or otherwise requires, the “Company” or
“Harrow”) specializes in the development, production and sale of innovative medications that offer unique competitive
advantages and serve unmet needs in the marketplace through its subsidiaries and deconsolidated companies. The Company owns one
of the nation’s leading ophthalmology pharmaceutical businesses, ImprimisRx. In addition to wholly owning ImprimisRx, the
Company also has equity positions in Eton Pharmaceuticals, Inc. (“Eton”), Surface Pharmaceuticals, Inc. (“Surface”),
and Melt Pharmaceuticals, Inc. (“Melt”). More recently, the Company founded its subsidiaries Mayfield Pharmaceuticals,
Inc. (“Mayfield”), Radley Pharmaceuticals, Inc. (“Radley”), and Stowe Pharmaceuticals, Inc. (“Stowe”).
The Company owns royalty rights in certain 505(b)(2) drug candidates being developed by Surface, Melt, Radley and Mayfield. Harrow
intends to continue to create new subsidiaries, and found, and hold equity and royalty rights in, new businesses that commercialize
drug candidates that are internally developed or otherwise acquired or licensed from third parties</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2019, the Company entered into an agreement with Elle Pharmaceutical, Inc. (“Elle”) in which Mayfield issued
1,000,000 shares of its common stock to Elle (see Note 14).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
July 2019, the Company entered into an agreement with Noice Rx, LLC (“Noice”) to sell substantially all the assets
associated with its non-ophthalmology pharmaceutical compounding business conducted by the Company’s subsidiary Park Compounding,
Inc. (“Park”) for a purchase price of $8,000. The closing of the Park sale is contingent upon Noice being issued a
temporary pharmacy and sterile license from the California State Board of Pharmacy and other customary conditions and terms (see
Note 16). In connection with the sale of Park, the Company will issue Noice a seller’s note for $8,000.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Basis
of Presentation</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 with the instructions
to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by
GAAP for audited financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30,
2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 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, 2018.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
consolidated financial statements include the accounts of Harrow and its wholly owned subsidiaries, as well as Mayfield, a 72%
majority owned subsidiary of Harrow, as of June 30, 2019. The remaining 28% of Mayfield is owned by Elle. Mayfield was organized
to develop women’s health focused drug candidates. All inter-company accounts and transactions have been eliminated in consolidation.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Harrow
consolidates entities in which we have a controlling financial interest. We consolidate subsidiaries in which we hold, directly
or indirectly, more than 50% of the voting rights.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
condensed consolidated balance sheets at June 30, 2019 and December 31, 2018 and the condensed consolidated statements of operations,
stockholders’ equity and cash flows for the periods ended June 30, 2019 include our accounts and those of our wholly
owned subsidiaries as well as Mayfield. The condensed consolidated statements of operations, stockholders’ equity
and cash flows for the periods ended June 30, 2018 include our accounts and those of our wholly owned subsidiaries.</font></p>
641000
641000
641000
519000
519000
519000
13498000
11999000
13498000
30159000
24700000
532000
940000
0.30
0.72
0.28
0.197
0.44
0.72
0.199
4193000
5331883
10245280
304873
168513
27650000
21000000
21000000
11400000
11400000
5320000
5810000
6472000
6712000
-632000
400000
1666671
1028780
637891
1984637
1984637
1093006
891631
26696683
21070644
25216565
23175431
0.08
0.03
0.04
0.06
714000
50000
48000
3000
10000
10000
1758000
1119000
264000
6000
630000
709000
65000
328000
434000
334000
50000
50000
714000
138000
125000
1743000
1662000
420000
397000
3416000
3184000
5612000
5496000
11191000
10739000
5245000
4364000
P20Y
P5Y
P25Y
P17Y
P19Y
P3Y
P15Y
P3Y
P4Y
Indefinite
4697000
962000
50000
332000
2998000
16000
294000
45000
1479000
64000
5000
1115000
15000
274000
6000
-64000
-15000
-1000
-20000
-28000
3154000
898000
45000
332000
1868000
11000
128000
252000
252000
252000
252000
2018000
5957000
4966000
388000
253000
256000
7743000
7050000
1216000
3696000
4121000
3828000
20191000
4941000
15250000
13745000
P5Y
0.0636
0.0971
P12Y1M9D
P8M12D
448000
230000
464000
232000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Future
lease payments under non-cancelable finance leases as of June 30, 2019 were as follows<b>: </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Finance Leases</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Remainder of 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">368</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">2023</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">10</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total minimum lease payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">405</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: amount representing interest payments</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Present value of future minimum lease payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">399</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">399</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion, net of unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(370</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Finance lease obligation, net of current portion</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">29</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
75000
932000
100055
179000
1000000
375000
337000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Segments</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s chief operating decision-maker is its Chief Executive Officer who makes resource allocation decisions and assesses
performance based on financial information presented on as operating segments. The Company has identified two operating segments
as reportable segments. See Note 15 for more information regarding the Company’s reportable segments.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Noncontrolling
Interests</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 income (loss) attributable to noncontrolling interests in consolidated net income (loss) on the face of the
condensed consolidated statements of operations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(1)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">net
</font><font style="font: 10pt Times New Roman, Times, Serif">income or loss;</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(2)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">transactions
with owners acting in their capacity as owners, showing separately contributions from and distributions to owners; and</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(3)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">each
component of other income or loss.</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Future
lease payments under operating leases as of June 30, 2019 were as follows<b>: </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Operating Leases</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">Remainder of 2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">457</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">930</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">809</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">824</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">843</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt; text-align: left">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,304</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total minimum lease payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,167</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Less: amount representing interest payments</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,695</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total operating lease liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,472</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion, operating lease liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(496</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt">Operating lease liabilities, net of current portion</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,976</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investment
in Melt Pharmaceuticals, Inc. – Related Party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2018, the Company formed Melt as a wholly owned subsidiary. In January and March of 2019, Melt entered into definitive stock
purchase agreements (collectively, the “Melt Series A Preferred Stock Agreement”) with certain investors and closed
on the purchase and sale of Melt’s Series A Preferred Stock (the “Melt Series A Stock”), totaling approximately
$11,400 of proceeds (collectively the “Melt Series A Round”) at a purchase price of $5.00 per share. As a result,
the Company lost voting and ownership control of Melt and ceased consolidating Melt’s financial statements. In connection
with the Melt Series A Preferred Stock Agreement, Melt also entered into a Registration Rights Agreement and agreed to use commercially
reasonable efforts to file, or confidentially submit, a registration statement on Form S-1 with the United States Securities and
Exchange Commission by September 30, 2020 relating to an initial public offering of its common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
the time of deconsolidation, the Company recorded a gain of $5,810 and adjusted the carrying value in Melt to reflect the increased
valuation of Melt and the Company’s new ownership interest in accordance with Accounting Standard Codification (“ASC”)
810-10-40-4(c), <i>Consolidation</i>.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company owns 3,500,000 common shares (which is approximately 44% of the equity interest as of June 30, 2019) of Melt and uses
the equity method of accounting for this investment, as management has determined that the Company has the ability to exercise
significant influence over the operating and financial decisions of Melt. Under this method, the Company recognizes earnings and
losses of Melt in its consolidated financial statements and adjusts the carrying amount of its investment in Melt accordingly.
The Company’s share of earnings and losses are based on the Company’s ownership interest of Melt. Any intra-entity
profits and losses are eliminated. During the three and six months ended June 30, 2019, the Company recorded equity in net loss
of Melt of $326 and $611, respectively. As of June 30, 2019, the carrying value of the Company’s investment in Melt was
$5,199.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">See
Note 4 for more information and related party disclosure regarding Melt.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investment
in Surface Pharmaceuticals, Inc. – Related Party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2017, the Company formed Surface as a wholly owned subsidiary. In May and July 2018, Surface entered into a definitive stock
purchase agreement with an institutional investor for the purchase of Surface’s Series A Preferred Stock (the “Surface
Series A Stock”) and closed on the sale, resulting in total proceeds to Surface of approximately $21,000. At the time of
the first closing in May 2018, the Company lost voting and ownership control of Surface and it ceased consolidating Surface’s
financial statements. The Surface Series A Stock (i) was issued at a purchase price of $3.30 per share; (ii) will vote together
with the common stock and all other shares of stock of Surface having general voting power; (iii) will be entitled to the number
of votes equal to the number of shares of preferred stock held; (iv) will hold liquidation preference over all other equity interests
in Surface; and (v) will have mandatory conversion requirements into Surface common stock upon events including an underwritten
initial public offering (“IPO”) of Surface common stock or similar transaction.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
the time of deconsolidation, the Company recorded a gain of $5,320 and adjusted the carrying value in Surface to reflect the increased
valuation of Surface and the Company’s new ownership interest in accordance with ASC 810-10-40-4(c), <i>Consolidation</i>.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company owns 3,500,000 common shares (which is approximately 30% of the equity interest as of June 30, 2019) of Surface and uses
the equity method of accounting for this investment, as management has determined that the Company has the ability to exercise
significant influence over the operating and financial decisions of Surface. Under this method, the Company recognizes earnings
and losses of Surface in its consolidated financial statements and adjusts the carrying amount of its investment in Surface accordingly.
The Company’s share of earnings and losses are based on the Company’s ownership interest of Surface. Any intra-entity
profits and losses are eliminated. The Company recorded equity in net loss of Surface of $261 and $504 during the three and six
months ended June 30, 2019. The Company recorded equity in net loss of Surface of $102 during the three and six months ended
June 30, 2018. As of June 30, 2019, the carrying value of the Company’s investment in Surface was $4,443.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">See
Note 5 for more information and related party disclosure regarding Surface.</font></p>
More than 50% of the voting rights
Generally, any interest that holds less than 50% of the outstanding voting shares is deemed to be a noncontrolling interest
504000
611000
326000
261000
102000
102000
2021-12-31
2020-12-31
2024-07-31
The Company has elected to not recognize right-of-use assets and lease liabilities arising from short-term leases, which are leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
Term for up to two five-year periods
Term for two additional five-year periods.
368000
751000
9000
9000
9000
10000
405000
751000
399000
399000
100000
50000
750000
6000
370000
720000
733000
640000
146000
73000
15000
4000
930000
857000
809000
742000
824000
320000
843000
330000
5304000
196000
9167000
3242000
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 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.
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Future
minimum lease payments under operating leases and future minimum finance lease payments as of December 31, 2018 were as follows
(in thousands):</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">Finance Leases</td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">Operating Leases</td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left">2019</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">751</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">797</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2020</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">857</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">742</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">320</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">330</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">-</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">196</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">751</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">3,242</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Less: Amounts representing interest</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Amounts representing unamortized discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(16</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Total obligation under capital leases</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">720</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Current portion of capital leases</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">(720</td><td style="text-align: left; padding-bottom: 1.5pt">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="text-align: right; padding-bottom: 1.5pt"> </td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Long term capital lease obligation</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; border-bottom: Black 2.5pt double">-</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="text-align: right; padding-bottom: 2.5pt"> </td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr></table>
Yes
Yes
false
60700
15000
75000
108000
108000
75000
108000
75000
20955
20955
40000
282000
4193000
6838000
4219000
4170000
8000000
6230000
350000
7330000
0.0200
0.1000
0.095
The interest rate calculation that the loan bears is now equal to the three-month London Inter-Bank Offered Rate (subject to a minimum of 2.00%), plus an applicable margin of 10.00% (the "Margin Rate"); provided that, if, two days prior to a payment date, the Company provides the Lender evidence that the Company has achieved a leverage ratio as of such date of less than 4.00:1:00, the Margin Rate shall equal 9.00%; and if the Company has achieved a leverage ratio as of such date of less than 3.00:1:00, the Margin Rate shall equal 7.00%
5000000
282000
457000
Vesting terms for options granted to employees and consultants during the six months ended June 30, 2019 typically 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; 100% of the shares subject to the option vest on a quarterly basis in equal installments over three years; and 90% of the shares subject to the option vest and become exercisable on the second month after the grant date and the remaining 10% of the shares subject to the option vest and become exercisable quarterly in equal installments thereafter over the next 11 months. Certain option awards provide for accelerated vesting if there is a change in control (as defined in the Plan) and in the event of certain modifications to the option award agreement.
Which vests on a quarterly basis, over one year in equal installments.
Which vests on a quarterly basis, over one year in equal installments.
8.70
2025-05-11
2021-08-16
2019-12-27
2024-07-19
P3Y6M3D
1.91
2.01
1.79
0.014
48000
1182000
640000
8000000
8000000
63000
2000000
2021-09-15
119000
P5Y
The Sellers Note will bear interest at 9.5% per annum and will be secured by all the assets of Noice. Noice will make ninety-six (96) monthly cash payments to the Company over the eight years following the closing. The first twenty-four months of the Sellers Note will require interest only payments of $63, with a principal payment of $2,000 due on September 15, 2021.
0.50
797000
-15000
-16000
720000
57933
2695000
720000
11000
274000
114000
32532
1872
1872
5000