Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 464

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1B
Chunk 464
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purchased the exclusive commercial rights to assets associated with certain ophthalmic products from other pharmaceutical companies (the
“Sellers”). During a temporary, transition period, the Sellers continue to manufacture and market these products and transfer
the net profit from the sale of the products to the Company. The revenue recognized by the Company from the transfer of net profit was
recognized at the time profit from the product sales were calculated by the Sellers and confirmed by the Company, typically on a monthly
basis, at which point there is no future performance obligation required by the Company and no consequential continuing involvement on
the Company’s part to recognize the associated revenue. On a quarterly basis, the Sellers invoice the Company for all credits and
reimbursements (“Chargebacks”) made to customers related to the products. The Company uses historical actual experience to
estimate Chargebacks associated with the net sales and profit transferred. The estimated Chargebacks are recorded as a reduction in revenues
from transfer of acquired product sales and profits in the Company’s consolidated statements of operations, and recorded as a reduction
to accounts receivable in the consolidated balance sheets, at the time the revenue is recognized.

Intellectual Property License Revenues

The Company currently holds five intellectual property
licenses and related agreements pursuant to which the Company has agreed to license or sell to a customer with the right to access the
Company’s intellectual property. License arrangements may consist of non-refundable upfront license fees, data transfer fees, research
reimbursement payments, exclusive license rights to patented or patent pending compounds, technology access fees, and various performance
or sales milestones. These arrangements can be multiple-element arrangements, the revenue of which is recognized at the point in time
that the performance obligation is met.

Non-refundable fees that are not contingent on any
future performance by the Company and require no consequential continuing involvement on the part of the Company are recognized as revenue
when the license term commences and the licensed data, technology, compounded drug preparation and/or other deliverables are delivered.
Such deliverables may include physical quantities of compounded drug preparations, design of the compounded drug preparations and structure-activity
relationships, the conceptual framework and mechanism of action, and rights to the patents or patent applications for such compounded
drug preparations. The Company defers recognition of non-refundable fees if it has continuing performance obligations without which the
technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee and that are
separate and independent of the