Company: HROW
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001493152-25-021562
Chunk: 11

Company: HARROW, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 1
Chunk 11
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) entities
in which it holds and/or controls, directly or indirectly, more than 50% of the voting rights, and (ii) VIEs for which the Company is
deemed to be the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.

NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The
following represents an update for the nine months ended September 30, 2025 to the significant accounting policies described in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2024.

    7

Risks,
Uncertainties and Liquidity

The
Company is subject to certain regulatory standards, approvals, guidelines and inspections which could impact the Company’s ability
to make, dispense, and sell certain products. If the Company was required to cease compounding and selling certain products as a result
of regulatory guidelines or inspections, this may have a material impact on the Company’s financial condition, liquidity and results
of operations.

Credit
Losses

The
Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables.
Management considers historical collection rates, the current financial status of the Company’s customers, macroeconomic factors,
and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered
in the evaluation of current expected credit losses. However, because of the short time to the expected receipt of accounts receivable,
management believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical
and current analysis of such financial instruments, including its trade receivables.

To
determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by class of
customer at the business component level, as management determined that the risk profile of the Company’s customers is consistent
based on the type and industry in which they operate, mainly in the pharmaceuticals industry. Each business component is analyzed for
estimated credit losses individually. In doing so, the Company establishes a historical loss matrix, based on the previous collections
of accounts receivable by the age of such receivables, and evaluates the current and forecasted financial position of its customers,
as available. Further, the Company considers macroeconomic factors and the status of the pharmaceuticals industry to estimate if there
are current expected credit losses within its trade receivables based on the trends of the Company