Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 917

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 5
Chunk 917
---

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 has identified an alternative future use for the acquired rights. Patents and trademarks are recorded
at cost and capitalized at a time when the future economic benefits of such patents and trademarks become more certain (see “Goodwill
and Intangible Assets” below). If costs are not capitalized, they are expensed as incurred.

    F-12

Income Taxes 

As part of the process of preparing the Company’s
consolidated financial statements, the Company 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. The Company must assess the likelihood that the
deferred tax assets will be recovered from future taxable income and, to the extent the Company believes 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 the Company establishes 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.

The Company accounts for income taxes under the
provisions of ASC 740, Income Taxes. As of December 31, 2024 and 2023, there was $2,858,000
and $2,822,000,
respectively, of