HARROW, INC. Debt Disclosure

NOTE 13. DEBT

 

Fifth Third Revolving Credit Facility - Undrawn

 

In September 2025, the Company entered into a Credit Agreement (the “5/3 Revolver”) with Fifth Third Bank, National Association as administrative agent for itself and the other lenders, providing for a senior secured revolving credit facility in the initial principal amount of $40,000,000, together with an uncommitted incremental revolving line of credit in the principal amount of up to $20,000,000. The 5/3 Revolver will mature on September 26, 2030, or, if earlier, the date that is 91 days prior to the earliest maturity date of the Company’s 2030 Notes (as defined below).

 

 

Borrowings under the 5/3 Revolver bear interest at a floating rate equal to, at the Company’s option, either (i) a base rate plus a margin ranging from 0.25% to 0.75%, or (ii) a Secured Overnight Financing Rate (“SOFR”)-based rate plus a margin ranging from 1.25% to 1.75%. In addition, an unused fee of 0.25% per annum is payable monthly in arrears based on the undrawn portion of the commitments in respect of the 5/3 Revolver. Borrowings under the 5/3 Revolver are secured by a first priority lien in substantially all of the present and future property and assets, real and personal, of the Company, subject to customary exceptions.

 

Under the 5/3 Revolver, the Company is subject to certain customary affirmative and negative covenants. In addition, the 5/3 Revolver contains certain financial covenants requiring the Company to maintain, on a consolidated basis as of the last day of each month, a fixed charge coverage ratio of at least 1.10 to 1.0.

 

Deferred financing costs of $675,000 were recorded and will be amortized to interest expense over the term of agreement. The commitment fee related to the unused line of credit will be expensed as incurred.

 

As of December 31, 2025, there were no borrowings drawn or outstanding under the 5/3 Revolver. The Company was in compliance with all covenants and the entire initial principal amount is available as of December 31, 2025.

 

8.625% Senior Notes Due 2030

 

In September 2025, the Company closed a private offering of $250,000,000, aggregate principal amount of 8.625% senior notes due 2030 (the “2030 Notes”). The 2030 Notes offering resulted in net proceeds to the Company of approximately $242,748,000 after deducting underwriting discounts of $5,625,000 and commissions and other offering expenses of $1,627,000.

 

The 2030 Notes are senior unsecured obligations of the Company. The 2030 Notes are effectively subordinated to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness. The 2030 Notes are guaranteed on a senior unsecured basis by the Company, subject to certain exceptions. The 2030 Notes bear interest at the rate of 8.625% per annum. Interest on the 2030 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing March 15, 2026. The issuance costs were recorded as a debt discount and are being amortized as interest expense over the term of the 2030 Notes using the effective interest rate method. The Indenture governing the 2030 Notes contains customary high-yield restrictive covenants including the payment of dividends, subject to specified exceptions, and requires an offer to repurchase the Notes upon the occurrence of certain change of control triggering events.

 

The Company may redeem all or part of the 2030 Notes prior to September 15, 2027, at a price equal to 100% of the principal amount of the 2030 Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make-whole” premium, as described in the indenture. The Company may redeem all or part of the 2030 Notes on or after September 15, 2027 at the applicable redemption prices described in the indenture. The Company may also redeem up to 40% of the aggregate principal amount of the 2030 Notes at any time prior to September 15, 2027, at a redemption price equal to 108.625% of the principal amount of the 2030 Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with the net cash proceeds from certain equity offerings. If a change in control triggering event occurs, unless the Company has previously exercised or substantially concurrently exercise its optional redemption right, the Company will be required to offer to repurchase the 2030 Notes from holders at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

 

Interest expense related to the 2030 Notes totaled $6,934,000 for the year ended December 31, 2025, and included the amortization of debt issuance costs and discount of $436,000.

 

The terms of our 2030 Notes contain customary affirmative and negative covenants. As of December 31, 2025, the Company was in compliance with all such covenants.

 

 

Oaktree Loan Due 2026 – Paid in Full

 

In March 2023, the Company entered into a Credit Agreement and Guaranty (the “Oaktree Loan”) with Oaktree Fund Administration, LLC, as administrative agent for the lenders (together, “Oaktree”). Including through subsequent amendments to the Oaktree Loan, the Company had drawn down a total principal loan amount of $107,500,000. The Oaktree Loan carried an interest rate equal to SOFR plus 6.5% per annum, and included an exit fee equal to 3.5% of the aggregate principal amount owed, payable at maturity. In addition to the exit fee, the Oaktree Loan required a make-whole premium to be paid on early principal amount payments prior to its maturity in January 2026. The exit fee of $3,763,000 was recorded as a debt discount and recognized as interest expense using the effective interest method over the term of the loan.

 

In September 2025, the Company repaid the $107,500,000 principal balance owed under the Oaktree Loan and all accrued interest as of the date the loan was repaid. In connection with the loan repayment, the Company agreed to pay an exit fee and a make-whole premium to Oaktree. During the year ended December 31, 2025, the Company recorded the unaccrued exit fee of $268,000, make-whole premium of $1,861,000, and write-off of unamortized debt issuance costs of $1,289,000 as a loss on debt extinguishment of $3,418,000 in the aggregate.

 

Interest expense related to the Oaktree Loan totaled $10,826,000, $12,568,000 and $8,804,000 for the years ended December 31, 2025, 2024 and 2023, respectively, and included the amortization of debt issuance costs and discount of $2,567,000, $2,705,000 and $1,680,000 for the years ended December 31, 2025, 2024 and 2023, respectively. Also included in interest expense is the amortization of deferred commitment fees of $601,000 and $543,000 for the years ended December 31, 2024 and 2023, respectively.

 

HROWL – 8.625% Senior Notes Due 2026 – Paid in Full

 

In April 2021, the Company closed an offering of $50,000,000 aggregate principal amount of 8.625% senior notes due 2026. In May 2021, the Company issued an additional $5,000,000 of such notes pursuant to the full exercise of the underwriters’ option to purchase additional notes, and in September 2021, the Company sold an additional $20,000,000 aggregate principal amount of such notes (collectively, the “2026 Notes”).

 

In September 2025, the Company fully repaid the principal balance of $75,000,000, along with all accrued interest owed under the 2026 Notes through US Bank Trust Company National Association as Trustee. The 2026 Notes were considered legally extinguished upon such repayment. In connection with the 2026 Notes repayment, the Company paid a make-whole premium of $907,000, recorded $449,000 of unaccrued interest and wrote off $452,000 of unamortized debt issuance costs. During the twelve months ended December 31, 2025, the make-whole premium, unaccrued interest paid after the redemption notice date, and unamortized debt issuance costs were recorded as a loss on debt extinguishment equal to $1,808,000 in the aggregate. The 2026 Notes listed on The Nasdaq Stock Market under the symbol “HROWL” were delisted on October 10, 2025.

 

Interest expense related to the 2026 Notes totaled $5,074,000, $7,253,000 and $7,251,000 for the years ended December 31, 2025, 2024 and 2023, respectively, and included amortization of debt issuance costs and discount of $546,000, $784,000 and $782,000 for the years ended December 31, 2025, 2024 and 2023, respectively.

 

HROWM - 11.875% Senior Notes Due 2027 – Paid in Full

 

In December 2022 and in January 2023, the Company closed an offering of $35,000,000 and $5,250,000, respectively, aggregate principal amount of 11.875% senior notes due 2027 (the “2027 Notes”). The 2027 Notes could be redeemed for cash in whole or in part prior to December 31, 2025, at a price equal to $25.50 per note, plus accrued and unpaid interest to, but excluding, the date of redemption.

 

In September 2025, the Company fully repaid the principal balance of $40,250,000, along with all accrued interest owed under the 2027 Notes through US Bank Trust Company National Association as Trustee. The 2027 Notes were considered legally extinguished upon such repayment. In connection with the 2027 Notes repayment, the Company paid a prepayment penalty of $805,000, recorded unaccrued interest of $98,000 and wrote off $1,621,000 of unamortized debt issuance costs. During the year ended December 31, 2025, the prepayment penalty, unaccrued additional interest paid after the redemption notice date and the unamortized debt issuance costs were recorded as a loss on debt extinguishment equal to $2,524,000 in the aggregate. The 2027 Notes listed on The Nasdaq Stock Market under the symbol “HROWM” were delisted on October 8, 2025.

 

 

Interest expense related to the 2027 Notes totaled $3,845,000, $5,496,000 and $5,516,000 for the years ended December 31, 2025, 2024 and 2023, respectively, and included the amortization of debt issuance costs and discount of $499,000, $716,000 and $736,000 for the years ended December 31, 2025, 2024 and 2023, respectively.

 

B. Riley Loan and Security Agreement – Paid in Full

 

On December 14, 2022 (the “Effective Date”), the Company entered into a Loan and Security Agreement (the “BR Loan”) with B. Riley Commercial Capital, LLC, as administrative agent for the lenders. The BR Loan provided for a loan facility of up to $100,000,000 to the Company with a maturity date of December 14, 2025 (the “Maturity Date”), at an interest rate of 10.875% per annum.

 

In January 2023, $59,750,000 of principal amount was funded pursuant to the BR Loan simultaneously with the consummation of the NVS 5 Acquisition (see Note 4). In March 2023, the Company repaid all amounts owed under the BR Loan, in connection with the Oaktree Loan, and no exit or prepayment fees were paid as a result of the payoff of the BR Loan pursuant to a side letter agreement among the parties.

 

Interest expense related to the BR Loan totaled $1,565,000 for the year ended December 31, 2023, and included amortization of debt issuance costs and debt discount of $356,000.

 

The Company recognized a loss on extinguishment of debt in 2025 of $7,750,000 related to the Oaktree Loan, the 2026 Notes and 2027 Notes, $0 in 2024 and $5,465,000 related to the BR Loan in 2023.

 

A summary of the Company’s debt at December 31, 2025 and 2024 is described as follows:

 SCHEDULE OF LONG TERM DEBT

		2025				2024
8.625% Senior Notes due April 2026		$	-			$	75,000,000
8.625% Senior Notes due September 2030			250,000,000				-
11.875% Senior Notes due December 2027			-				40,250,000
Oaktree Loan due January 2026			-				111,263,000
Notes payable gross			250,000,000				226,513,000
Less: Unamortized debt issuance costs			(6,816,000	)			(6,974,000	)
Notes payable net		$	243,184,000			$	219,539,000

 

The total effective interest rate of the Company’s debt was 9.2%, 10.74% and 10.58% as of December 31, 2025, 2024 and 2023, respectively.

 

At December 31, 2025, future minimum payments under the Company’s debt were as follows:

SCHEDULE OF FUTURE MINIMUM PAYMENT UNDER NOTES PAYABLES  

		Amount
2026		$	-
2027			-
2028			-
2029			-
2030			250,000,000
Thereafter			-
Total minimum payments			250,000,000
Less: unamortized discount, net of premium			(6,816,000	)
Notes payable, net of unamortized discount		$	243,184,000