Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 1152

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 7
Chunk 1152
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 net of allowances for credit losses of $371,000 and $14,875,000 for
contractual adjustments (in aggregate $15,246,000).

    F-13

Inventories

Inventories are stated at the lower of cost or net
realizable value. Cost is determined on a first-in, first-out basis. The Company evaluates the carrying value of inventories on a regular
basis, based on the price expected to be obtained for products in their respective markets compared with historical cost. Write-downs
of inventories are considered to be permanent reductions in the cost basis of inventories.

The Company also regularly evaluates its inventories
for excess quantities and obsolescence (expiration), taking into account such factors as historical and anticipated future sales or use
in production compared to quantities on hand and the remaining shelf life of products and active pharmaceutical ingredients on hand.
The Company establishes reserves for excess and obsolete inventories as required based on its analyses.

Investment in Melt Pharmaceuticals, Inc. –
Related Party

The Company owns 3,500,000 shares of common stock
and 2,334,256 shares of preferred stock of Melt (representing in aggregate approximately 45% of the equity interests as of December 31,
2024). The Company analyzes its investment in Melt and related agreements on a regular basis to evaluate its position of variable interests
in Melt. The Company has determined that it does not have the ability to control Melt, however it has the ability to exercise significant
influence over the operating and financial decisions of Melt and uses the equity method of accounting for this investment. Under this
method, the Company recognizes earnings and losses in Melt in its consolidated financial statements and adjusts the carrying amount of
its investment in Melt accordingly. Any intra-entity profits and losses are eliminated. During the year ended December 31, 2021, the
Company reduced the carrying value of its investment in Melt to $0 as a result of the Company recording its share of equity losses in
Melt since its deconsolidation in 2019. As of December 31, 2022, and at the time of entering into the Melt Loan Agreement (see Note 5),
the Company owned 100% of Melt’s indebtedness. Following the reduction of the carrying value of the Company’s common stock
investment in Melt to $0, the Company began recording 100% of the equity method losses of Melt,