Company: HROW
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001641172-25-022980
Chunk: 70

Company: HARROW, INC.
Filing Date: 2025-08-11
Form: 10-Q
Item: Item 1
Chunk 70
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impacts on the commodity market and supply chains) and the Middle East may also increase our operating expenses. Some of our operational
costs, including the cost of energy, cost of goods, other materials, labor, distribution and our other operational costs are subject
to market conditions and have been adversely affected by inflationary pressures. Although we monitor our distributors’, customers’
and suppliers’ financial condition and their liquidity to mitigate our business risks, some of our distributors, customers and
suppliers may become insolvent, which could have a material adverse effect on our product sales, business and results of operations.

Changes
in U.S. trade policy—including the possible imposition of significant tariffs on pharmaceuticals and raw materials—could
materially increase our costs, disrupt our supply chain, and impair our competitive position.

Recent
public statements by U.S. policymakers contemplate phased tariff rates of up to 150% (or more) on imported finished drugs, active pharmaceutical
ingredients (“APIs”), and key excipients. Although we manufacture a significant amount of our finished ophthalmic products
in the United States, we rely on third-party suppliers, many of which source APIs, sterile bottles, dropper tips, and other critical
components from non-U.S. jurisdictions. If one or more rounds of tariffs are enacted, we could experience:

    ●
    Higher
    input costs that we may be unable to pass through to customers under existing supply and reimbursement arrangements, compressing
    gross margins;

    ●
    Customs
    delays or shortages if overseas suppliers elect to redirect shipments to non-U.S. customers to avoid tariff exposure;

    ●
    Retaliatory
    measures by foreign governments that could hinder our ability to procure specialized equipment or to out-license our products abroad;
    and

    ●
    Working-capital
    pressure, as we may need to build additional safety stock or advance-pay duties before goods clear U.S. customs.

While
we are evaluating mitigation strategies—including dual-sourcing, qualifying U.S. or free-trade-area suppliers, and tariff-engineering
options—there can be no assurance that these actions will be successful or fully offset potential cost increases. Material tariff-related
cost inflation or supply disruptions could adversely affect our financial condition, results of operations and cash flows.

Item
2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

38

Item
3. Defaults Upon Senior Securities

Not
applicable.

Item
4. Mine Safety Disclosures

Not
applicable.