Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 145

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1
Chunk 145
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 reconciliation at the beginning and the end of the period of the carrying amount of total equity, equity
attributable to the parent, and equity attributable to the noncontrolling interests that separately discloses:

    1.
    net income or loss;

    2.
    transactions with owners acting in their capacity as owners, showing
    separately contributions from and distributions to owners; and

    3.
    each component of other income or loss.

The noncontrolling interests in the consolidated
balance sheets as of December 31, 2024 and 2023, relate to consolidated subsidiaries for which the Company does not own 100% of the equity
interests, and that no longer have active operations, assets and related financial activity.

Revenue Recognition and Deferred Revenue

The Company recognizes revenue at the time of transfer
of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in
exchange for those goods or services (see Note 3).

Cost of Sales

Cost of sales includes direct and indirect costs
to manufacture formulations and other products sold, including active pharmaceutical ingredients, personnel costs, packaging, storage,
royalties, shipping and handling costs, depreciation and amortization of certain intangible assets and the write-off of obsolete inventory.

Research and Development

Research and development (“R&D”)
expenses consist of expenses incurred in performing research and development activities, including salaries and benefits, other overhead
expenses, and costs related to clinical trials, contract services and outsourced contracts. The Company expenses all costs related to
R&D as they are incurred.

Upfront and milestone payments related to the acquisition
and licensing of technology for drug and product candidates that are not yet approved by the FDA are considered acquisition of in process
R&D and expensed as R&D in the period in which the expense occurs.

Debt Issuance Costs and Debt Discount

Debt issuance costs and the debt discount are recorded
net of notes payable in the consolidated balance sheets. Amortization of debt issuance costs and the debt discount is calculated using
the effective interest method over the term of the related debt and is recorded in interest expense in the accompanying consolidated
statements of operations.

Intellectual Property

The costs of acquiring intellectual property rights
to be used in the research and development process, including licensing fees and milestone payments, are charged to research and development
expense as incurred in situations where the Company has not identified an alternative future use for the acquired rights, and are capitalized
in situations where the Company