Company: HROW
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001493152-25-021562
Chunk: 18

Company: HARROW, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 1
Chunk 18
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 If the customer takes control of the goods before shipment, entities must make an accounting
    policy election to treat shipping and handling activities as either a fulfillment cost or as a separate performance obligation. The
    Company has elected to treat its shipping and handling activities as a fulfillment cost.

    11

    3.
    Determine
    the transaction price: The transaction price is based on an amount that reflects the consideration to which the Company expects
    to be entitled, net of accruals for estimated rebates, wholesaler chargebacks, discounts, copay assistance and other deductions (collectively,
    sales deductions) and an estimate for returns and replacements established at the time of sale. The Company utilizes the services
    of a third-party professional services firm to estimate rebates and chargebacks associated with sales of its branded products. The
    transfer of promised goods is satisfied within a year, and therefore there are no significant financing components. There is no non-cash
    consideration related to product sales.

    4.
    Allocate
    the transaction price to the performance obligations in the contract: Because there is only one performance obligation for product
    sales, no allocation is necessary.

    5.
    Recognize
    revenue when (or as) the entity satisfies a performance obligation: Revenue from products is recognized upon transfer of control
    of a product to a customer. This generally occurs upon shipment unless contractual terms with a customer state that transfer of control
    occurs at delivery.

Variable
Consideration

Sales
of branded pharmaceutical products are subject to variable consideration due to chargebacks, government rebates, returns, administrative
fees, co-pay assistance and other rebates, and prompt pay discounts. Estimates for these elements of variable consideration require significant
judgment.

Chargebacks

Chargebacks,
primarily from distributors and wholesalers, result from arrangements with indirect customers establishing prices for products which
the indirect customer purchases through a wholesaler. Alternatively, the Company may pre-authorize wholesalers to offer specified contract
pricing to other indirect customers. Under either arrangement, the Company provides a chargeback credit to the wholesaler for any difference
between the contracted price with the indirect customer and the wholesaler’s invoice price, typically Wholesale Acquisition Cost
(“WAC”).

Prior
period chargebacks claimed by wholesalers are analyzed to determine the actual net price per package (“NPP”) for each product.
This calculation is performed by product, by wholesaler. NPPs can be affected by several factors such as: