Company: HROW
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001641172-25-022980
Chunk: 45

Company: HARROW, INC.
Filing Date: 2025-08-11
Form: 10-Q
Item: Item 1
Chunk 45
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 licensed from Formosa the exclusive rights and marketing authorization of BYQLOVITM (clobetasol propionate ophthalmic
suspension) 0.05% in the U.S. market: In consideration for such rights, the Company will make a one-time payment to Formosa equal to
$500,000 at the time the Company makes its first commercial sale of BYQLOVI to a third party and Formosa will be eligible to receive
other one-time payments based on achievement of commercial gross profit milestones along with royalties on gross profits of BYQLOVI.

During
the three and six months ended June 30, 2025, $2,201,000 and $4,374,000 were incurred under these agreements as royalty expenses, respectively,
and $1,036,000 and $1,310,000, respectively, during the same period in 2024. The Company incurred $0 and $0 related to upfront and milestone
payments under these agreements during the three and six months ended June 30, 2025, respectively, and $0 and $0, respectively, during
the same periods in 2024. As of June 30, 2025, the remaining contingent consideration payable pursuant to these agreements were not considered
probable and reasonably estimable and therefore, no amount was accrued related to these contingent obligations during the six months
ended June 30, 2025. At the time contingent consideration payable becomes probable and reasonably estimable, the additional consideration,
if any, paid will be allocated to the assets based on their initial estimated fair values as a percent of total purchase price.

Formulation
Acquisitions

The
Company has acquired and sourced intellectual property rights related to certain proprietary innovations from certain inventors, innovator
companies and related parties (the “Inventors”) through multiple asset purchase agreements and license agreements. In general,
these agreements provide that the Inventors will cooperate with the Company in obtaining patent protection for the acquired intellectual
property and that the Company will use commercially reasonable efforts to research, develop and commercialize a product based on the
acquired intellectual property. In addition, the Company has acquired a right of first refusal on additional intellectual property and
drug development opportunities presented by these Inventors.

In
consideration for the acquisition of these 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 to