Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 1109

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 7
Chunk 1109
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 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 customers establishing prices for products which the indirect customer purchases
through a wholesaler. Alternatively, we may pre-authorize wholesalers to offer specified contract pricing to other indirect customers.
Under either arrangement, we provide 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