Company: HROW
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001641172-25-022980
Chunk: 12

Company: HARROW, INC.
Filing Date: 2025-08-11
Form: 10-Q
Item: Item 1
Chunk 12
---
 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’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.

The
following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts
receivable to present the net amount expected to be collected at June 30, 2025:

  SCHEDULE
OF ACCOUNTS RECEIVABLE ALLOWANCE OF CREDIT LOSS 

    Balance at January 1, 2025 
    $416,000 
  
    Change in expected credit losses 
     340,000 
  
    Write-offs, net of recoveries 
     (68,000)
  
    Balance at June 30, 2025 
    $688,000 

    8

Fair
Value Measurements

Fair
value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. GAAP
establishes a hierarchy for inputs used in measuring fair value that maximizes the use of