Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 1829

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 10
Chunk 1829
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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:

·Changes
                                            in customer mix

·Changes
                                            in negotiated terms with customers

·Changes
                                            in the volume of off-contract purchases

·Changes
                                            in WAC

As necessary, NPPs are adjusted based on anticipated
changes in the factors above.

The difference between NPP and WAC is recorded as
a reduction in both gross revenues