Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 644

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 3
Chunk 644
---
 separate and independent of our performance under the other elements of the arrangement. In addition, if our continued involvement
is required, through research and development services that are related to its proprietary know-how and expertise of the delivered technology
or can only be performed by us, then such non-refundable fees are deferred and recognized over the period of continuing involvement.
Guaranteed minimum annual royalties are recognized on a straight-line basis over the applicable term.

 65 

Income Taxes

As part of the process of preparing
our consolidated financial statements, we must estimate the actual current tax assets and liabilities and assess permanent and temporary
differences that result from differing treatment of items for tax and accounting purposes. The temporary differences result in deferred
tax assets and liabilities, which are included within the consolidated balance sheets. We must assess the likelihood that the deferred
tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not more likely than not, a valuation
allowance must be established which reduces the amount of deferred tax assets recorded on the consolidated balance sheets. To the extent
we establish a valuation allowance or increase or decrease this allowance in a period, the impact will be included in income tax expense
in the consolidated statements of operations.

We account for income taxes under
the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740,
Income Taxes. As of December 31, 2024 and 2023, there was $2,858,000 and $2,822,000, respectively, of unrecognized tax benefits
included in the consolidated balance sheets that would, if recognized, affect the effective tax rate. Our practice is to recognize interest
and/or penalties related to income tax matters in income tax expense. We had an accrual for interest or penalties of $69,000 and $40,000
in the consolidated balance sheets at December 31, 2024 and 2023, respectively, and have recognized interest and/or penalties in the
consolidated statements of operations for the years ended December 31, 2024 and 2023 of $69,000 and $40,000, respectively. We are subject
to taxation in the U.S., California, New Jersey, Tennessee, and various other states. Our tax years since 2000 may be subject to examination
by the federal and state tax authorities due to the carryforward of unutilized net operating losses.

Goodwill and Intangible Assets

Patents and trademarks