Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 1174

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 7
Chunk 1174
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 Company for reimbursable expenses and amounts due under the Melt
MSA prior to the effective date of the note receivable.

In connection with the Melt Loan Agreement, the Company
and Melt entered into a Right of First Refusal Agreement providing the Company with the right, but not the obligation, to match any offer
received by Melt associated with the commercial rights to any of Melt’s drug candidates for a period of five years following the
effective date of the Melt Loan Agreement.

On December 28, 2023, the Company terminated the
Melt Loan Agreement. As of the date of termination, approximately $18,395,000 remained outstanding under the Melt Loan Agreement. Pursuant
to the terms of a Settlement and Payoff Agreement, dated as of December 28, 2023, by and between the Company and Melt (the “Settlement
Agreement”), the Company received 2,260,000 shares of Melt’s Series B-1 Preferred Stock and 74,256 shares of Melt’s
Series B Preferred Stock (which both series have similar rights and preferences) in consideration for the full payment of all amounts
outstanding under the Melt Loan Agreement. The Settlement Agreement contains customary representations, warranties and releases of the
parties and requires the parties to enter into a registration rights agreement providing the Company with rights consistent with other
holders of preferred stock of Melt. The Company concluded the Settlement Agreement is in substance a funding of the Company’s share
of prior unrecorded losses and, therefore, those suspended losses must be recognized first against the value of the new preferred stock
investments. This resulted in reducing the carrying value of the Company’s investment in Melt, including the carrying value of
the Preferred Stock received, to zero (the consideration received in the form of an equivalent fair value of Melt’s Preferred Stock
to settle the full outstanding note receivable balance of $18,400,000 is offset by an equal amount of the funding of prior unrecorded
losses). Accordingly, this settlement transaction had no quantitative effect on either the Company’s consolidated balance sheet
or consolidated statement of operations for the year ended December 31, 2023.

    F-25

In accordance with ASC 323, Investments –
Equity Method and Joint Ventures, the carrying amount of the note receivable and other investments in Melt have been reduced by the
Company’s allocated share of Melt’s losses based on its ownership