Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 523

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 2
Chunk 523
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 a customer: A contract is deemed
    to exist when the customer places an order through receipt of a prescription, via an online order or via receipt of a purchase order
    from a customer. For branded products, orders are received through our 3PL partner, and the customer takes title of the products via
    formal purchase orders placed and fulfilled.

    2.
    Identify the performance obligations in the contract: Obligations
    for fulfillment of our contracts consist of delivering the product to customers at their specified destination. For shipping and
    handling activities under ASC 606, if the customer takes control of the goods after shipment, shipping and handling activities would
    always be considered a fulfillment activity and not treated as a separate performance obligation. 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. We have elected to treat its shipping and handling activities as a fulfillment
    cost.

    3.
    Determine the transaction price: The transaction price is based
    on an amount that reflects the consideration to which we expect 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. We utilize the services of a third-party professional services firm to estimate rebates and chargebacks
    associated with sales of our 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 and other rebates, and
cash discounts. Estimates for these elements of variable consideration require significant judgment.

Chargebacks

Chargebacks, primarily from distributors
and wholesalers, result from arrangements with indirect