Company: HROW
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001641172-25-009263
Chunk: 38

Company: HARROW, INC.
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 1
Chunk 38
---
 of the matters (whether discussed in this footnote
or not) currently pending may have a material adverse effect on the Company’s condensed consolidated results of operations, financial
position or cash flows. Legal costs incurred for loss contingencies are expensed as incurred.

Ocular Science, Inc. et. al

In July 2021, ImprimisRx,
LLC, a subsidiary of the Company, filed a lawsuit against Ocular Science, Inc. and OSRX, Inc. (together, “OSRX”) in the U.S.
District Court for the Southern District of California, asserting claims for copyright infringement, trademark infringement, unfair competition
and false advertising (Lanham Act). Since July 2021, the complaint had been amended and OSRX added counterclaims alleging ImprimisRx,
LLC was violating the Lanham Act with false advertising. The Court granted cross motions for summary judgement on each party’s Lanham
Act claims thus leaving only ImprimisRx, LLC’s copyright infringement, trademark infringement and unfair competition claims for
trial. Following a jury trial in November 2024, a jury found OSRX acted with malice, fraud, or oppression, willfully engaging in trademark
infringement and unfair competition under California and federal law and ImprimisRx, LLC received a $34,900,000 jury verdict award, which
includes $20,400,000 in punitive damages and $14,500,000 in actual damages. Due to uncertainty regarding probability of collection, the
Company has not recognized any gains associated with the verdict award in the accompanying condensed consolidated financial statements.

     22 

Product and Professional Liability

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.

Indemnities

In addition
to the indemnification provisions contained in the Company’s charter documents, the Company generally enters into separate indemnification
agreements with each of the Company’s directors and officers. These agreements require the Company, among other things, to indemnify
the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid
by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as the Company’s
director or officer, other