Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 1146

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 7
Chunk 1146
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is unable to successfully refinance the Oaktree Loan, the Company does not expect to have the ability to repay the Oaktree Loan in
full.

The Company believes that one of the other alternatives
available to it in lieu of refinancing the Oaktree Loan is the sale of one or more of the Company’s assets. There can be no assurance
that any sale could be completed on a timely basis or on terms acceptable to the Company.

The accompanying consolidated financial statements
are prepared on a going concern basis and do not include any adjustments that might result from the outcome of the uncertainty regarding
the Company’s ability to refinance the Oaktree Loan or sell some of its assets to meet its obligations.

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 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 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’s expectation of the future status of such economic and industry-specific factors. Also, specific
allowance amounts are established based on review of outstanding invoices to record the appropriate provision for customers that have
a higher probability of default.

Accounts receivable at December 31, 2024 and 2023
are net of allowances for credit losses