Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 384

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1A
Chunk 384
---
 product based
on the acquired intellectual property, the Inventors may terminate the applicable asset purchase agreement and request that the
Company re-assign the acquired technology to the Inventors. During the years ended December 31, 2024 and 2023, $1,234,000 and
$1,130,000,
respectively, were incurred under these agreements as royalty expenses.

 Contract Manufacturing

The Company has entered into manufacturing agreements
with respect to third-party contract manufacturers for its FDA approved pharmaceutical products. Some of these contract manufacturing
agreements require minimum annual order amounts. The Company had committed to pay approximately $2,728,000 related to contract manufacturing
agreements for the year ended December 31, 2024.

Cybersecurity Incident

In November 2024, the Company became aware of a cybersecurity
incident that involved unauthorized access of an employee’s email account. Through this unauthorized access the threat actor was
able to fraudulently divert Company funds to its bank account. The Company, along with its external cybersecurity experts, fully investigated
and assessed the impact of the incident and notified, and is cooperated with, federal law enforcement. The Company detected the incident
in a time that management believes minimized any financial, operational or reputational risk to the Company. During the year ended December
31, 2024, the Company recorded a loss of $271,000 associated with this event and management does not believe any additional loss will
be recorded. At no point was the Company’s ability to generate revenues disrupted.

NOTE 19. SEGMENTS
AND CONCENTRATIONS

In 2023, the Company operated its business on the
basis of a single reportable segment due to the lack of discrete, precise financial information available to the chief operating decision
maker (“CODM”). The CODM is the Chief Executive Officer. The CODM does not review segment assets when assessing segment performance
and deciding how to allocate resources. During 2024, refinements were made to the financial reporting information and the Company began
reporting on two reportable segments which were generally determined based on the decision-making structure of the Company and the grouping
of similar products and services: Branded and ImprimisRx.

    ●
    The Branded segment includes activities of the Company’s
    FDA approved ophthalmology pharmaceutical products, including the out-licensing of rights to certain of our branded products.

    ●
    The ImprimisRx segment represents activities in the Company’s