Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 150

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1
Chunk 150
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Related Party

The Company owns 3,500,000 common shares of Surface
(representing approximately 20% of Surface’s equity interests following the closing of a round of financing completed by Surface
in July 2021) and uses the equity method of accounting for this investment, as management has determined that the Company has the ability
to exercise significant influence over the operating and financial decisions of Surface. Under this method, the Company recognizes earnings
and losses in Surface in its consolidated financial statements and adjusts the carrying amount of its investment in Surface accordingly.
The Company’s share of earnings and losses are based on the Company’s ownership interest of Surface. Any intra-entity profits
and losses are eliminated. During the year ended December 31, 2021, the Company reduced its common stock investment in Surface to $0
as a result of the Company recording its share of equity losses of Surface. The Company has no other investments in Surface and no other
requirements to advance funds to Surface.

The following table summarizes the Company’s
investment in Surface as of December 31, 2024 and 2023:

SCHEDULE OF INVESTMENT

    Cost Basis  
    Share of Equity Method Losses  
    Net Carrying value 
  
    Common stock 
    $5,320,000  
    $(5,320,000) 
    $- 

See Note 6 for more information and related party
disclosure regarding Surface.

Property, Plant and Equipment

Property, plant and equipment is stated at cost less
accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the estimated
useful life of the asset. Leasehold improvements and finance lease equipment are amortized over the estimated useful life or remaining
lease term, whichever is shorter. Computer hardware and furniture and equipment are depreciated over three to five years.

Capitalized Software Costs

The Company capitalizes certain costs related to
the development of internal-use software. Costs incurred during the application development phase are capitalized only when the Company
believes it is probable the development will result in new or additional functionality. The types of costs capitalized during the application
development phase include consulting fees for third-party developers working on these projects. Costs related to the preliminary project
stage and post-implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over the
estimated useful life of the asset, which ranges from two to five years. When internal-use software that