HARROW, INC. Goodwill & Intangibles Disclosure

NOTE 11. INTANGIBLE ASSETS AND GOODWILL

 

The Company’s intangible assets at December 31, 2024 consisted of the following:

 SCHEDULE OF INTANGIBLE ASSETS

		Weighted-average														Net
		useful life						Accumulated								Carrying
		(in years)		Cost				amortization				Impairment				value
Patents		19 years		$	611,000			$	(216,000	)		$	(253,000	)		$	142,000
Licenses		20 years			50,000				(36,000	)			-				14,000
Trademarks		Indefinite			230,000				-				-				230,000
Acquired NDAs		14 years			207,398,000				(22,962,000	)			-				184,436,000
Customer relationships		7 years			596,000				(542,000	)			-				54,000
Trade name		5 years			75,000				(7,000	)			-				68,000
Non-competition clause		4 years			50,000				(50,000	)			-				-
State pharmacy licenses		25 years			8,000				(3,000	)			-				5,000
				$	209,018,000			$	(23,816,000	)		$	(253,000	)		$	184,949,000

 

The Company’s intangible assets at December 31, 2023 consisted of the following:

 

		Weighted-average														Net
		useful life						Accumulated								Carrying
		(in years)		Cost				amortization				Impairment				value
Patents		19 years		$	984,000			$	(253,000	)		$	(276,000	)		$	455,000
Licenses		20 years			100,000				(30,000	)			(22,000	)			48,000
Trademarks		Indefinite			281,000				-				(82,000	)			199,000
Acquired NDAs		14 years			170,353,000				(11,300,000	)			-				159,053,000
Customer relationships		7 years			596,000				(516,000	)			-				80,000
Trade name		5 years			75,000				(5,000	)			-				70,000
Non-competition clause		4 years			50,000				(50,000	)			-				-
State pharmacy licenses		25 years			8,000				(7,000	)			-				1,000
				$	172,447,000			$	(12,161,000	)		$	(380,000	)		$	159,906,000

 

During the years ended December 31, 2024 and 2023, the Company recorded a charge of $253,000 and $380,000, respectively, related to the impairment of certain licenses, trademarks, patents and patent applications. The Company determined that the sum of the expected undiscounted cash flows attributable to these intangible assets was less than their carrying value and that an impairment charge was required. Accordingly, the Company calculated the estimated fair value of the intangible assets based on the present value of the expected cash flows over their estimated lives. The impairment amount was calculated by deducting the present value of the expected cash flows from the carrying value. Significant estimates and assumptions used by the Company included sales and expense growth rates, and discounted projected cash flows. The estimates and assumptions used in the Company’s assessment represent a Level 3 measurement because they are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. The assumptions used in the impairment analysis are inherently subject to uncertainty and, therefore, changes in these assumptions could have a significant impact on the concluded fair value.

 

See Note 4 related to other intangible assets acquired during the year ended December 31, 2023.

 

  

Amortization expense for intangible assets for the years ended December 31, 2024 and 2023 were as follows:

 SCHEDULE OF AMORTIZATION EXPENSES FOR INTANGIBLE ASSETS

		2024				2023
		For the Years Ended December 31,
		2024				2023
Patents		$	56,000			$	84,000
Licenses			35,000				7,000
Acquired NDAs			11,669,000				9,937,000
Customer relationships			22,000				54,000
Trade name			1,000				-
Amortization expense of intangible assets		$	11,783,000			$	10,082,000

 

Estimated future amortization expense for the Company’s intangible assets at December 31, 2024 is as follows:

 SCHEDULE OF ESTIMATED FUTURE AMORTIZATION EXPENSE

Years ending December 31,
2025		$	16,903,000
2026			16,903,000
2027			16,612,000
2028			16,205,000
2029			16,095,000
Thereafter			102,001,000
Intangible assets		$	184,719,000

 

In connection with an asset purchase agreement between Novartis and the Company, the Company recognized a $37,000,000 milestone payment during 2024 following the release of the first commercially available batch of TRIESENCE. The milestone payment was recognized as an increase in the amount of intangible assets for Acquired NDAs.

 

There were no changes in the carrying value of the Company’s goodwill during the years ended December 31, 2024 and 2023.