What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-12 · 180 added, 276 removed, 344 unchanged (57% of the section changed)

4 unchanged sentences

(Unaudited, in thousands, except shares)

September 30,

2025 December 31,

2 unchanged sentences

Marketable securities 19,836 28,984

Accounts receivable, net of allowance for credit losses of $ 1,800 and $ 1,363 at September 30, 2024 and December 31, 2023, respectively

Notes receivable, current, net of allowance for credit losses of $ — and $ 1,732 at September 30, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for credit losses of $ 2,146 and $ 2,177 at March 31, 2025 and December 31, 2024, respectively

Notes receivable, current, net of allowance for credit losses of $ — and $ — at March 31, 2025 and December 31, 2024, respectively

Inventory 42,129 40,295

4 unchanged sentences

Operating leases right-of-use assets, net 32,431 34,453

Notes receivable, long-term — 106

Intangible assets, net 7,241 8,779

18 unchanged sentences

$ 0.001 par value;

100,000,000 shares authorized, 59,242,200 and 61,483,762 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

100,000,000 shares authorized, 59,487,477 and 59,402,628 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 376,120 375,677

7 unchanged sentences

(Unaudited, in thousands, except per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net sales $ 35,703 $ 47,888

6 unchanged sentences

Depreciation and amortization 3,585 3,742

Impairment loss 220 — 220 —

Total operating expenses 19,581 21,796

1 unchanged sentence

Other income (expense):

Other (expense) income ( 50 ) ( 23 ) ( 13 ) 786

Other income — 47

Interest income 497 602

2 unchanged sentences

Net loss before taxes ( 9,377 ) ( 8,839 )

Benefit (provision) for income taxes 43 — ( 50 ) ( 93 )

(Provision) benefit for income taxes — 2

Net loss $ ( 9,377 ) $ ( 8,837 )

8 unchanged sentences

(Unaudited, in thousands)

Common Stock Treasury Stock Additional

Common Stock Additional

Paid-In Capital Accumulated Deficit Total

Stockholders' Equity

Shares Amount Shares Amount

Balances, December 31, 2023 61,484 $ 61 — $ — $ 373,433 $ ( 200,099 ) $ 173,395

Common stock issued for share-based compensation 23 1 — — — — 1

Common stock withheld for employee payroll taxes — — — — ( 29 ) — ( 29 )

Share-based compensation — — — — 778 — 778

Net loss — — — — — ( 8,837 ) ( 8,837 )

Balances, March 31, 2024 61,507 $ 62 — $ — $ 374,182 $ ( 208,936 ) $ 165,308

Common stock issued for share-based compensation 181 — — — — — —

Common stock withheld for employee payroll taxes — — — — ( 99 ) — ( 99 )

Share-based compensation — — — — 654 — 654

Repurchase of common stock — — ( 1,739 ) ( 4,190 ) — — ( 4,190 )

Cancellation of common stock ( 800 ) ( 1 ) 800 1,874 — ( 1,873 ) —

Net loss — — — — — ( 5,896 ) ( 5,896 )

Balances, June 30, 2024 60,888 $ 61 ( 939 ) $ ( 2,316 ) $ 374,737 $ ( 216,705 ) $ 155,777

Shares Amount

Balance as of December 31, 2024 59,403 $ 59 $ 375,677 $ ( 255,643 ) $ 120,093

Common stock issued for share-based compensation 84 — — — —

1 unchanged sentence

Share-based compensation — — 503 — 503

Repurchase of common stock — — ( 778 ) ( 1,847 ) — — ( 1,847 )

Cancellation of common stock ( 1,717 ) ( 2 ) 1,717 4,163 — ( 4,161 ) —

Net loss — — — ( 9,377 ) ( 9,377 )

Balances, September 30, 2024 59,242 $ 59 — $ — $ 375,407 $ ( 232,301 ) $ 143,165

Common Stock Treasury Stock Additional

Balance as of March 31, 2025 59,487 $ 59 $ 376,120 $ ( 265,020 ) $ 111,159

Common Stock Additional

Paid-In Capital Accumulated Deficit Total

Stockholders' Equity

Shares Amount Shares Amount

Balances, December 31, 2022 61,010 $ 61 — $ — $ 369,938 $ ( 153,603 ) $ 216,396

Common stock issued for share-based compensation 25 — — — — — —

Common stock withheld for employee payroll taxes — — — — ( 70 ) — ( 70 )

Share-based compensation — — — — 511 — 511

Net loss — — — — — ( 6,134 ) ( 6,134 )

Balances, March 31, 2023 61,035 $ 61 — $ — $ 370,379 $ ( 159,737 ) $ 210,703

Common stock issued for share-based compensation 159 — — — — — —

Common stock withheld for employee payroll taxes — — — — ( 105 ) — ( 105 )

Share-based compensation — — — — 816 — 816

Non-cash repurchase of liability awards — — — — 653 — 653

Liability redemption associated with business acquisition 35 — — — 120 — 120

Net loss — — — — — ( 5,699 ) ( 5,699 )

Balances, June 30, 2023 61,229 $ 61 — $ — $ 371,863 $ ( 165,436 ) $ 206,488

Shares Amount

Balance as of December 31, 2023 61,484 $ 61 $ 373,433 $ ( 200,099 ) $ 173,395

Common stock issued for share-based compensation 23 1 — — 1

2 unchanged sentences

Net loss — — — ( 8,837 ) ( 8,837 )

Balances, September 30, 2023 61,309 $ 61 — $ — $ 372,789 $ ( 172,785 ) $ 200,065

Balance as of March 31, 2024 61,507 $ 62 $ 374,182 $ ( 208,936 ) $ 165,308

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

3 unchanged sentences

(Unaudited, in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net loss $ ( 9,377 ) $ ( 8,837 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 3,585 3,742

Share-based compensation 503 778

Estimated credit (recoveries) losses ( 210 ) 681

Estimated credit losses (recoveries) 92 ( 488 )

Loss on asset disposition 658 33

Change in value of marketable securities ( 234 ) ( 390 )

Impairment loss on operating lease right-of-use assets 220 —

Changes in operating assets and liabilities:

7 unchanged sentences

Sales tax payable 96 64

Net cash and cash equivalents (used in) provided by operating activities ( 2,873 ) 2,777

Net cash and cash equivalents used in operating activities ( 3,829 ) ( 3,646 )

Cash flows from investing activities:

Acquisitions, net of cash acquired — ( 3,050 )

Purchase of marketable securities ( 7,186 ) ( 21,143 )

2 unchanged sentences

Proceeds from disposals of assets 15 —

Net cash and cash equivalents provided by (used in) investing activities 6,717 ( 11,180 )

Net cash and cash equivalents provided by investing activities 9,160 4,967

Cash flows from financing activities:

Principal payments on long term debt — ( 50 )

Common stock withheld for employee payroll taxes ( 60 ) ( 28 )

Common stock repurchased ( 6,036 ) —

Net cash and cash equivalents used in financing activities ( 60 ) ( 28 )

Net decrease in cash and cash equivalents ( 2,321 ) ( 8,640 )

Net increase in cash and cash equivalents 5,271 1,293

Cash and cash equivalents at the beginning of period 27,471 29,757

4 unchanged sentences

Right-of use assets obtained in exchange for new or modified operating lease liabilities $ — $ 2,869

Cancellation of common stock $ 6,036 $ —

Purchase of property and equipment accrued in accounts payable $ 11 $ 355

Non-cash repurchase of liability awards $ — $ 653

Liability redemption associated with business acquisition $ — $ 120

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

GrowGeneration Corp.

4 unchanged sentences

and its Storage Solutions segment, composed of the Company's benching, racking, and storage solutions business.

As of September 30, 2024, GrowGeneration has 31 retail locations across 12 states in the U.S.

The Company also operates an online superstore for cultivators at growgeneration.com, as well as a wholesale business for resellers, HRG Distribution, and a benching, racking, and storage solutions business, Mobile Media or MMI.

As of March 31, 2025, GrowGeneration has 31 retail locations across 12 states in the U.S.

The Company also operates an online superstore at growgeneration.com, as well as a wholesale distribution business for resellers, and a benching, racking, and storage solutions business, Mobile Media or MMI.

Basis of Presentation

7 unchanged sentences

The results reported in these unaudited Condensed Consolidated Financial Statements are not necessarily indicative of results for the full fiscal year.

All amounts included in the accompanying footnotes to the Condensed Consolidated Financial Statements, except per share data, are in thousands (000).

All amounts included in the accompanying notes to the Condensed Consolidated Financial Statements, except per share data, are in thousands (000).

Reclassifications

2 unchanged sentences

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported revenues and expenses during the reporting period.

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported revenues and expenses during the reporting period.

Actual results could vary from the estimates that were used.

1 unchanged sentence

From time to time, the Financial Accounting Standard Board ("FASB") or other standard setting bodies issue new accounting pronouncements.

Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update ("ASU").

Updates to the FASB Accounting Standards Codification are communicated through the issuance of an Accounting Standards Update ("ASU").

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements.

In addition to the accounting pronouncements discussed below, no other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material effect on the Company's consolidated financial statements or disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which requires an enhanced disclosure of segments on an annual and interim basis, including the title of the chief operating decision maker, significant segment expenses, and the composition of other segment items for each segment's reported profit.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) - Improvements to income tax disclosures ("ASU 2023-09"), expanding the disclosures requirement for income taxes primarily by requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation.

ASU 2023-09 is effective for annual periods beginning after

GROWGENERATION CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and adoption of ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this standard and will adopt this guidance in the fourth quarter of 2024 to provide additional disclosures as required.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures ("ASU 2023-09"), expanding the disclosures requirement for income taxes primarily by requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

March 31, 2025

December 15, 2024.

Early adoption is permitted, and adoption of ASU 2023-09 can be applied prospectively or retrospectively.

The Company is currently evaluating the impact of this standard.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"), which requires disclosure on an annual and interim basis of disaggregated information about certain income statement expense line items in the notes to the financial statements.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

Early adoption is permitted, and adoption of ASU 2024-03 can be applied prospectively or retrospectively.

The Company is currently evaluating the impact of this standard.

FAIR VALUE MEASUREMENTS

12 unchanged sentences

The marketable securities are classified as available-for-sale and are carried at fair value based on quoted market prices.

Changes in fair value of marketable securities, principally derived from accretion of discounts, were $ 0.3 million and $ 1.0 million for the three and nine months ended September 30, 2024, respectively, and were $ 0.5 million and $ 1.0 million for the three and nine months ended September 30, 2023.

Changes in fair value of marketable securities, principally derived from accretion of discounts, were $ 0.2 million and $ 0.4 million for the three months ended March 31, 2025 and 2024, respectively.

Changes in fair value of marketable securities are included in Interest income on the Condensed Consolidated Statements of Operations.

Level September 30,

Level March 31,

2025 December 31,

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Contract Assets and Liabilities

2 unchanged sentences

Accounts Receivable, Net Customer Deposits

Opening balance, January 1, 2024 $ 8,895 $ 5,359

Closing balance, September 30, 2024

Increase (decrease) $ 1,429 $ ( 2,728 )

Opening balance, January 1, 2023 $ 8,336 $ 4,338

Closing balance, September 30, 2023

Increase $ 15 $ 588

Of the total amount of customer deposit liability as of January 1, 2024, $ 4.4 million was reported as revenue during the nine months ended September 30, 2024.

Of the total amount of customer deposit liability as of January 1, 2023, $ 2.9 million was reported as revenue during the nine months ended September 30, 2023.

Notes receivable at September 30, 2024 and December 31, 2023 were as follows:

September 30,

2024 December 31,

Notes receivable $ 1,106 $ 2,031

Allowance for credit losses — ( 1,732 )

Notes receivable, net $ 1,106 $ 299

The following table summarizes changes in notes receivable balances that have been deemed impaired.

September 30,

Balance as of January 1, 2025

$ 7,361 $ 2,404

Balance as of March 31, 2025

Decrease $ ( 425 ) $ ( 54 )

Balance as of January 1, 2024

$ 8,895 $ 5,359

Balance as of March 31, 2024

Decrease $ ( 1,063 ) $ ( 1,479 )

Of the total amount of customer deposits as of January 1, 2025, $ 1.1 million was reported as revenue during the three months ended March 31, 2025.

Of the total amount of customer deposits as of January 1, 2024, $ 2.9 million was reported as revenue during the three months ended March 31, 2024.

Notes receivable at March 31, 2025 and December 31, 2024 were as follows:

2025 December 31,

2 unchanged sentences

Notes receivable, net $ 1,056 $ 1,056

During the nine months ended September 30, 2024, the Company received a $ 0.3 million settlement related to a $ 1.5 million note receivable, which had been fully reserved as of December 31, 2023.

Refer to Note 13, Commitment and Contingencies, for additional information regarding the settlement.

GROWGENERATION CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

During the three months ended March 31, 2024, the Company received a $ 0.3 million settlement related to a $ 1.5 million note receivable, which had been fully reserved as of December 31, 2023.

Refer to Note 12, Commitments and Contingencies, for additional information regarding the settlement.

PROPERTY AND EQUIPMENT

Property and equipment at September 30, 2024 and December 31, 2023 consisted of the following:

September 30,

Property and equipment at March 31, 2025 and December 31, 2024 consisted of the following:

2025 December 31,

8 unchanged sentences

Property and equipment, net $ 13,014 $ 15,493

Depreciation and amortization expense related to property and equipment was $ 3.3 million and $ 7.3 million for the three and nine months ended September 30, 2024, respectively.

Depreciation and amortization expense related to property and equipment was $ 2.5 million and $ 5.8 million for the three and nine months ended September 30, 2023, respectively.

In conjunction with the Company's restructuring activities as discussed in Note 16, Restructuring , the Company reassessed and shortened the estimated useful life of certain capitalized software assets, which resulted in a $ 1.5 million increase to depreciation and amortization expense related to property and equipment in the three and nine months ended September 30, 2024.

Depreciation and amortization expense related to property and equipment was $ 2.0 million and $ 2.1 million for the three months ended March 31, 2025 and 2024, respectively.

In conjunction with the Company's restructuring activities as discussed in Note 14, Restructuring, the Company reassessed and shortened the estimated useful life of certain capitalized software assets, which resulted in a $ 0.6 million increase to depreciation and amortization expense related to property and equipment in the

GROWGENERATION CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

three months ended March 31, 2025.

These capitalized software assets became fully amortized and were retired during the three months ended March 31, 2025.

Refer to Note 14, Restructuring, for additional information on the restructuring activities.

3 unchanged sentences

Balance as of December 31, 2024 $ — $ 1,605 $ 1,605

Balance as of September 30, 2024 $ 5,920 $ 1,605 $ 7,525

Accumulated impairment for goodwill was $ 125.9 million as of September 30, 2024 and December 31, 2023.

The changes in intangible assets by segment for the nine months ended September 30, 2024 were as follows:

Balance as of March 31, 2025 $ — $ 1,605 $ 1,605

Accumulated impairment for goodwill related entirely to the Cultivation and Gardening segment and totaled $ 131.9 million as of March 31, 2025 and December 31, 2024.

The changes in intangible assets by segment for the three months ended March 31, 2025 were as follows:

Cultivation and Gardening Storage Solutions Total

1 unchanged sentence

Amortization ( 1,363 ) ( 175 ) ( 1,538 )

Balance as of September 30, 2024 $ 9,059 $ 2,093 $ 11,152

GROWGENERATION CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Balance as of March 31, 2025 $ 5,518 $ 1,723 $ 7,241

Intangible assets on the Condensed Consolidated Balance Sheets consisted of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Amount Accumulated

8 unchanged sentences

Total $ 42,724 $ ( 35,483 ) $ 7,241 $ 42,724 $ ( 33,945 ) $ 8,779

Amortization expense was $ 1.7 million and $ 5.0 million for the three and nine months ended September 30, 2024, respectively.

Amortization expense was $ 2.2 million and $ 6.9 million for the three and nine months ended September 30, 2023, respectively.

Future amortization expense as of September 30, 2024 was as follows:

Amortization expense was $ 1.5 million and $ 1.7 million for the three months ended March 31, 2025 and 2024, respectively.

Future amortization expense as of March 31, 2025 was as follows:

2025 (remainder of the year) $ 4,354

Thereafter 24

Total $ 7,241

For the nine months ended September 30, 2024, the effective tax rate was 0.2 %, compared to 0.4 % for the nine months ended September 30, 2023.

The effective tax rate for each of the nine months ended September 30, 2024 and 2023 was lower than the U.S.

GROWGENERATION CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

For the three months ended March 31, 2025 and 2024, the effective tax rate was 0.0 %.

The effective tax rate for each of the three months ended March 31, 2025 and 2024 was lower than the U.S.

federal statutory rate of 21.0% primarily due to the Company's valuation allowance against deferred tax assets.

As of September 30, 2024, the Company concluded that its deferred tax assets are not expected to be realizable, based on positive and negative evidence, therefore it has assigned a full valuation allowance against them.

As of March 31, 2025, the Company concluded that its deferred tax assets are not expected to be realizable, based on positive and negative evidence, therefore it has assigned a full valuation allowance against them.

The right-of-use assets and corresponding liabilities related to the Company's operating leases were as follows:

September 30,

2025 December 31,

Operating leases right-of-use assets $ 36,453 $ 39,933

Operating leases right-of-use assets, net

$ 32,431 $ 34,453

Current maturities of operating lease liability $ 7,024 $ 7,398

1 unchanged sentence

Total lease liability $ 34,833 $ 37,031

GROWGENERATION CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The weighted-average remaining lease terms and weighted-average discount rates for operating leases were as follows:

September 30,

Weighted average remaining lease term 5.4 years 6.0 years

Weighted average discount rate 6.2 % 6.2 %

Lease expense is recorded within the Company's Condensed Consolidated Statements of Operations based upon the nature of the operating lease right-of-use assets.

Where assets are used to directly serve our customers, such as retail locations and distribution centers, lease costs are recorded in Store operations and other operational expenses.

Facilities and assets which serve management and support functions are expensed through Selling, general, and administrative.

The Company's subleases generally do not relieve it of its primary obligations under the corresponding head lease.

As a result, the Company accounts for the head lease based on the original assessment at inception.

Additionally, the Company determines if the sublease arrangement is either a sales-type, direct financing, or operating lease at inception.

The Company's subleases are all operating leases related to the sublease of a closed retail location.

The Company recognizes sublease income within Store operations and other operational expenses.

If the total remaining lease cost on the head lease for the term of the sublease is greater than the anticipated sublease income, the right-of-use asset is assessed for impairment.

If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value.

In conjunction with the Company's restructuring activities as discussed in Note 16, Restructuring , the Company assessed and impaired the right-of-use assets of certain closed retail locations, which resulted in an impairment loss of $ 0.2 million in the three and nine months ended September 30, 2024.

Refer to Note 16, Restructuring , for additional information on the restructuring activities.

The components of lease costs were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Operating lease costs $ 2,292 $ 2,563

3 unchanged sentences

Total operating lease costs $ 2,153 $ 3,040

Future maturities of the Company's operating lease liabilities and receipts from subleases as of September 30, 2024 were as follows:

Future maturities of the Company's operating lease liabilities and receipts from subleases as of March 31, 2025 were as follows:

Lease Payments Sublease Receipts

7 unchanged sentences

imputed interest ( 6,110 )

Operating lease liability as of September 30, 2024

Operating lease liability as of March 31, 2025

GROWGENERATION CORP.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Supplemental and other information related to leases was as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

EARNINGS PER SHARE

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive loss per share computation for the three months ended September 30, 2024 and 2023:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive loss per share computation for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Net loss $ ( 9,377 ) $ ( 8,837 )

Weighted average shares outstanding, basic 59,441 61,499

Effect of dilutive outstanding restricted stock units, stock options, and warrants — — — —

Effect of dilutive outstanding restricted stock units and stock options

Adjusted weighted average shares outstanding, dilutive 59,441 61,499

1 unchanged sentence

Dilutive loss per share $ ( 0.16 ) $ ( 0.14 )

Diluted loss per share calculations for the three and nine months ended September 30, 2024 excluded 0.7 million and 0.8 million of non-vested restricted stock units, respectively.

In addition, for each of the three and nine months ended September 30, 2024, 0.5 million shares of common stock issuable upon exercise of stock options were excluded that would have been anti-dilutive.

Diluted loss per share calculations for the three and nine months ended September 30, 2023 excluded 1.1 million and 1.0 million shares of non-vested restricted stock units, respectively.

In addition, for each of the three and nine months ended September 30, 2023, 0.6 million shares of common stock issuable upon exercise of stock options, and 33 thousand shares of common stock issuable upon exercise of the stock purchase warrants were excluded that would have been anti-dilutive.

Diluted loss per share calculations for the three months ended March 31, 2025 excluded 1.4 million non-vested restricted stock units and 17 thousand shares of common stock issuable upon exercise of stock options that would have been anti-dilutive.

Diluted loss per share calculations for the three months ended March 31, 2024 excluded 0.9 million non-vested restricted stock units and 0.6 million shares of common stock issuable upon exercise of stock options that would have been anti-dilutive.

SHARE-BASED PAYMENTS

The Company maintains long-term incentive plans for employees, non-employee members of its Board of Directors (the "Board"), and consultants.

The plans allow the Company to grant equity-based compensation awards, including stock options, stock appreciation rights, performance share units, restricted stock units, restricted stock awards, common stock warrants, or a combination of awards (collectively, "share-based awards").

The Company maintains a long-term incentive plan, the Second Amended and Restated 2018 Equity Incentive Plan, for employees, non-employee members of its Board of Directors (the "Board"), and consultants.

The plan allows the Company to grant equity-based compensation awards, including stock options, stock appreciation rights, performance share units, restricted stock units, restricted stock awards, common stock warrants, or a combination of awards (collectively, "share-based awards").

The Company accounts for share-based payments through the measurement and recognition of compensation expense for share-based awards made to employees, non-employee members of the Board, and consultants of the Company, including stock options and restricted stock units.

The Company recorded share-based compensation expense of $ 0.7 million and $ 2.1 million in the three and nine months ended September 30, 2024, respectively, and $ 0.9 million and $ 2.5 million for the three and nine months ended September 30, 2023, respectively.

The Company recorded share-based compensation expense of $ 0.5 million and $ 0.8 million in the three months ended March 31, 2025 and 2024, respectively.

Restricted Stock Units

The Company issues restricted stock units to eligible employees, which are subject to forfeiture until the end of an applicable vesting period.

The awards generally vest annually or biannually over three to four years following the date of grant, subject to the employee's continuing employment as of that date.

The awards generally vest annually or biannually over three to five years following the date of grant, subject to the employee's continuing employment as of that date.

Restricted stock units are valued using the market value on the grant date.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Restricted stock unit activity for the nine months ended September 30, 2024 is presented in the following table:

March 31, 2025

Restricted stock unit activity for the three months ended March 31, 2025 is presented in the following table:

Units Weighted Average Grant Date Fair Value

Nonvested as of December 31, 2024

904,834 $ 5.23

Granted 244 $ 1.26

1 unchanged sentence

Forfeited ( 13 ) $ 2.65

Nonvested as of September 30, 2024

1,139,542 $ 3.53

As of September 30, 2024, the Company had approximately $ 2.7 million of unrecognized share-based compensation related to restricted stock units, which are expected to be recognized over a weighted average period of approximately 1.9 years.

Nonvested as of March 31, 2025

As of March 31, 2025, the Company had approximately $ 2.7 million of unrecognized share-based compensation related to restricted stock units, which is expected to be recognized over a weighted average period of approximately 2.5 years.

During the three months ended March 31, 2024, no restricted stock units were granted.

Stock Options

Stock option activity for the nine months ended September 30, 2024 is presented in the following table:

Stock option activity for the three months ended March 31, 2025 is presented in the following table:

Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Weighted Average Grant Date Fair Value

4 unchanged sentences

Forfeited or expired — — — —

Outstanding as of September 30, 2024

Outstanding as of March 31, 2025

16 $ 4.63 0.11 $ 2.56

Vested and exercisable as of September 30, 2024

Vested and exercisable as of March 31, 2025

16 $ 4.63 0.11 $ 2.56

Liability Awards

In August 2022, the Company issued certain stock awards classified as liabilities based on the guidance set forth at ASC 480, Distinguishing Liabilities from Equity , and ASC 718, Compensation-Stock Compensation .

These awards entitled the employees to receive an equity award with a specified dollar value of common stock on future dates ranging from June 15, 2023, through June 15, 2025.

The awards generally vested over three years subject to the employee's continued employment.

On June 15, 2023, the three employees subject to these awards entered into new employment agreements which superseded the prior agreements and removed the liability awards from their compensation package.

In accordance with ASC 718-20-35-2A through 718-20-35-9, these awards were evaluated and accounted for as modified awards.

In the nine months ended September 30, 2023, the liability of $ 0.7 million was relieved to additional paid-in capital and no awards were outstanding as of September 30, 2024 and December 31, 2023.

STOCKHOLDERS' EQUITY

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The stock repurchase program could be amended, suspended, or discontinued at any time by the Company.

GROWGENERATION CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

During the three and nine months ended September 30, 2024, respectively, the Company repurchased 0.8 million and 2.5 million shares of common stock at an average price of $ 2.36 and $ 2.38 per share exclusive of incremental direct costs.

As of September 30, 2024, the Company completed all purchases available under the stock repurchase program.

The Company recognized the common stock repurchased as treasury stock at the amount paid to repurchase its shares, including the incremental direct costs to repurchase the common stock, as a reduction to stockholders' equity on the Condensed Consolidated Balance Sheets.

The Company retired 1.7 million and 2.5 million shares of treasury stock under the share repurchase program in the three and nine months ended September 30, 2024, respectively.

As of December 31, 2024, the Company completed all purchases available under the stock repurchase program.

The Company retired all shares of treasury stock acquired under the share repurchase program during the year ended December 31, 2024.

The shares were returned to the status of authorized but unissued shares.

The retirement of treasury stock is recognized as a deduction from common stock for the shares' par value and any excess cost over par value is recognized as a deduction from retained earnings.

Treasury stock is retired on a first in, first out basis.

The Company's acquisition strategy has been primarily to acquire (i) well-established, profitable hydroponic garden centers in markets where the Company does not have a market presence or in markets where it is increasing its market presence;

and (ii) proprietary brands.

Acquisitions during the nine months ended September 30, 2024

The Company had no acquisitions during the nine months ended September 30, 2024.

Acquisitions during the nine months ended September 30, 2023

On May 23, 2023, the Company purchased substantially all of the assets of Southside Garden Supply ("SGS"), a two -store chain of indoor/outdoor garden centers in Alaska.

The total consideration for the purchase of the SGS assets was approximately $ 2.0 million, including $ 1.9 million in cash and an indemnity holdback of $ 0.1 million.

The SGS asset acquisition also included acquired goodwill of approximately $ 0.6 million, which represented the value expected to rise from organic growth and an opportunity for the Company to expand into a new market.

SGS was included in the Company's Cultivation and Gardening segment.

Additionally, the Company made other, individually immaterial acquisitions during the nine months ended September 30, 2023.

Total consideration for these purchases was approximately $ 1.2 million, including $ 1.1 million paid in cash and indemnity holdbacks of less than $ 0.1 million.

These individually immaterial acquisitions also included aggregate acquired goodwill of approximately $ 0.3 million, which represented the value expected to rise from organic growth and an opportunity for the Company to expand into a new market.

These acquisitions were included in the Company's Cultivation and Gardening segment.

The table below represents the allocation of the purchase price to the acquired net assets during the nine months ended September 30, 2023.

SGS Other Total

Inventory $ 720 $ 867 $ 1,587

Prepaids and other current assets 292 1 293

Furniture and equipment — 47 47

Operating lease right-of-use asset 612 620 1,232

Operating lease liability ( 612 ) ( 620 ) ( 1,232 )

Customer relationships 440 — 440

Goodwill 577 253 830

Total $ 2,029 $ 1,168 $ 3,197

The table below represents the consideration paid for the net assets acquired in business combinations during 2023.

SGS Other Total

Cash $ 1,922 $ 1,128 $ 3,050

Indemnity holdback 107 40 147

Total $ 2,029 $ 1,168 $ 3,197

GROWGENERATION CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

COMMITMENTS AND CONTINGENCIES

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It is the Company's opinion that these claims individually and in the aggregate are not expected to have a material adverse effect on its financial condition, results of operations or cash flows.

GROWGENERATION CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

In December 2021, the Company was sued in the U.S.

6 unchanged sentences

In February 2024, the Company received $ 0.3 million from the bankruptcy proceedings, which it recorded as a recovery on the $ 1.5 million Note & Option.

The remainder of the Note & Option, which were fully reserved, were written off during the nine months ended September 30, 2024.

The remainder of the Note & Option, which were fully reserved, were written off during the three months ended March 31, 2024.

There can be no assurance that future developments related to pending claims or claims filed in the future, whether as a result of adverse outcomes or as a result of significant defense costs, will not have a material effect on the Company's financial condition, results of operations or cash flows.

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In the ordinary course of its business, the Company makes certain indemnities under which it may be required to make payments in relation to certain transactions.

As of September 30, 2024, the Company did not have any liabilities associated with indemnities.

As of March 31, 2025, the Company did not have any liabilities associated with indemnities.

In addition, the Company, as permitted under Colorado law and in accordance with its amended and restated certificate of incorporation and amended and restated bylaws, in each case, as amended to date, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company's request in such capacity.

3 unchanged sentences

No such losses have been recorded to date.

RELATED PARTIES

The Company has engaged with a firm that employs an immediate family member of an officer of the Company as partner.

The firm provides certain legal services.

Amounts paid to that firm in total were $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2024, respectively, and were immaterial for the three and nine months ended September 30, 2023.

As of September 30, 2024 and December 31, 2023, there was an immaterial amount outstanding due to the firm.

The Company has two operating segments, each its own reportable segment, based on its major lines of business:

the Cultivation and Gardening segment, composed of the Company's hydroponic and organic gardening business;

and the Storage Solutions segment, composed of the Company's benching, racking, and storage solutions business.

In addition to sales by operating segment, which represent the Company's principal lines of business, the chief operating decision maker ("CODM") evaluates the Company's operations by regularly reviewing sales by major product line, including proprietary brands, non-proprietary brands, and commercial fixtures, and by product type, including consumable and durable products.

Profit measures are evaluated for each reportable segment based on income from operations with identifiable expenses allocated to each reporting unit from which the expense line item was derived.

The CODM compares actual results to prior year and current year budgeted income statements to identify areas for improvement and make capital allocation decisions.

The CODM uses gross profit measures to evaluate pricing decisions and product mix, also reviewing proprietary brand versus non-proprietary brand sales to assess the Company’s progress with key performance initiatives.

The Company's CODM is the chief executive officer.

GROWGENERATION CORP.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

During the fourth quarter of 2023, the Company realigned its operating and reportable segments to correspond with changes to its operating model, management structure, and internal reporting and to better align with how the chief operating decision maker ("CODM") makes operating decisions, allocates resources, and assesses performance.

Accordingly, the Company identified two operating segments, each its own reportable segment, based on its major lines of business:

the Cultivation and Gardening segment, composed of the Company's hydroponic and organic gardening business;

and the Storage Solutions segment, composed of the Company's benching, racking, and storage solutions business.

Comparative prior period disclosures have been recast to conform to the current segment presentation.

In addition to sales by operating segment, which represent the Company's principal lines of business, the CODM evaluates the Company's operations by regularly reviewing sales by major product line, including proprietary brands, non-proprietary brands, and commercial fixtures, and by product type, including consumable and durable products.

During the first quarter of 2024, the Company reviewed and reclassified certain item level designations as consumable or durable products.

Comparative prior period disclosures have been recast to conform to the current presentation.

March 31, 2025

Disaggregated revenue by segment is presented in the following tables:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Net sales 2025 2024

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Total $ 35,703 $ 47,888

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Net sales 2025 2024

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Selected information by segment is presented in the following tables:

Three Months Ended September 30, Nine Months Ended September 30,

March 31, 2025

Selected information by segment is presented in the following tables for the three months ended:

March 31, 2025

Cultivation & Gardening Storage Solutions Corporate Total

Net sales $ 30,911 $ 4,792 $ — $ 35,703

Cost of sales 23,007 2,989 — 25,996

Gross profit 7,904 1,803 — 9,707

Operating expenses

Store operations and other operational expenses:

Employee costs 2,661 747 — 3,408

Facilities 2,756 394 — 3,150

External service providers 95 14 — 109

Other segment items (1)

1,857 268 — 2,125

Cultivation and Gardening $ 41,377 $ 48,035 $ 130,595 $ 152,713

Storage Solutions 8,629 7,643 20,835 23,717

Total net sales 50,006 55,678 151,430 176,430

Cultivation and Gardening 7,170 12,644 28,431 39,210

Storage Solutions 3,640 3,544 9,164 10,404

Total gross profit 10,810 16,188 37,595 49,614

Segment operating (loss) profit

Cultivation and Gardening ( 1,548 ) 2,306 1,525 6,574

Storage Solutions 2,326 2,224 5,194 6,752

Total segment operating profit 778 4,530 6,719 13,326

Corporate expenses

Total store operations and other operational expenses 7,369 1,423 — 8,792

Other operating expenses

Selling, general, and administrative — — 7,112 7,112

Estimated credit losses (recoveries) 272 257 ( 210 ) 681

Estimated credit losses — — 92 92

Depreciation and amortization — — 3,585 3,585

Impairment loss 220 — 220 —

Loss from operations $ ( 12,091 ) $ ( 8,030 ) $ ( 28,037 ) $ ( 21,755 )

The Company does not evaluate segments by assets as it is not practical and does not inform any of its decision making processes.

Total operating expenses 7,369 1,423 10,789 19,581

Income (loss) from operations 535 380 ( 10,789 ) ( 9,874 )

Other income — — 497 497

Net income (loss) before taxes $ 535 $ 380 $ ( 10,292 ) $ ( 9,377 )

(1) Other segment items for each reportable segment include travel expenses, transaction fees, and other miscellaneous expenses.

March 31, 2024

Cultivation & Gardening Storage Solutions Corporate Total

Net sales $ 43,108 $ 4,780 $ — $ 47,888

Cost of sales 32,783 2,741 — 35,524

Gross profit 10,325 2,039 — 12,364

Operating expenses

Store operations and other operational expenses:

Employee costs 3,654 771 — 4,425

Facilities 3,480 358 — 3,838

External service providers 529 11 — 540

Other segment items (1)

1,598 233 — 1,831

Total store operations and other operational expenses 9,261 1,373 — 10,634

Other operating expenses

Selling, general, and administrative — — 7,908 7,908

Estimated credit recoveries — — ( 488 ) ( 488 )

Depreciation and amortization — — 3,742 3,742

Total operating expenses 9,261 1,373 11,162 21,796

Income (loss) from operations 1,064 666 ( 11,162 ) ( 9,432 )

Other income — — 593 593

Net income (loss) before taxes $ 1,064 $ 666 $ ( 10,569 ) $ ( 8,839 )

(1) Other segment items for each reportable segment include travel expenses, transaction fees, and other miscellaneous expenses.

The Company does not evaluate segments by assets or capital expenditures as it is not practical and does not inform any of its decision making processes.

The CODM neither reviews nor requests this information.

RESTRUCTURING

On July 22, 2024, the Company announced a strategic restructuring plan focused on long-term profitability and advancing growth initiatives in key areas of its Gardening and Cultivation segment such as its proprietary brands, commercial sales, and e-commerce business.

The restructuring plan primarily includes reductions in cost structure by closing and consolidating twelve redundant or underperforming retail locations, workforce reductions, and other operational improvements in inventory management, sales and marketing, and administrative activities.

The Company's restructuring and restructuring related charges consists of inventory disposal costs, retail location closure costs including related contract termination costs and fixed asset disposals, employee termination benefits, asset impairments including the impairment of operating lease right-of-use assets, and other associated costs.

GROWGENERATION CORP.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Since the restructuring activities were announced in July 2024, the Company incurred aggregate restructuring and restructuring-related costs of $ 2.1 million, presented on the Condensed Consolidated Statements of Operations in the three and nine months ended September 30, 2024 as follows:

March 31, 2025

RESTRUCTURING

On July 22, 2024, the Company announced a strategic restructuring plan focused on long-term profitability and advancing growth initiatives in key areas of its Cultivation and Gardening segment such as its proprietary brands, commercial sales, and e-commerce business.

The restructuring plan primarily included reductions in cost structure by closing and consolidating 12 redundant or underperforming retail locations, workforce reductions, and other operational improvements in inventory management, sales and marketing, and administrative activities.

The Company's restructuring and restructuring-related charges consisted of inventory disposal costs, retail location closure costs including related contract termination costs and fixed asset disposals, employee termination benefits, asset impairments including the impairment of operating lease right-of-use assets, and other associated costs.

Since the restructuring activities were announced in July 2024, the Company incurred aggregate restructuring and restructuring-related costs of $ 3.5 million, of which $ 1.1 million were incurred during the three months ended March 31, 2025 and are presented on the Condensed Consolidated Statements of Operations as follows:

Restructuring

Cultivation and Gardening segment:

Cost of sales (1)

Gross profit ( 1,039 )

Store operations and other operational expenses (1)

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Selling, general, and administrative (2)

Impairment loss (4)

Other expense (5)

Total restructuring and restructuring-related charges $ ( 1,141 )

(1) Includes inventory disposal costs

(2) Costs consist of retail location closure costs and employee termination benefits

(3) Includes employee termination benefits and other associated costs

(4) Consists of asset impairments for operating lease right-of-use assets

(5) Includes non-operating losses related to retail location closures

In conjunction with the Company's restructuring activities related to operational and administrative improvements, the Company reassessed and shortened the estimated useful life of certain capitalized software assets, which resulted in an $ 1.5 million increase to depreciation and amortization expense related to property and equipment in the three and nine months ended September 30, 2024.

Additionally, certain facilities costs related to closed retail locations for which the Company is pursuing sublease arrangements will be paid over the remaining terms which extend through 2032.

(1) Costs consist primarily of fixed asset disposals and lease contract termination costs for previously closed retail locations

(2) Costs consist of corporate operational and administrative contract terminations

In conjunction with the Company's restructuring activities related to operational and administrative improvements, the Company reassessed and shortened the estimated useful life of certain capitalized software assets, which resulted in an $ 0.6 million increase to depreciation and amortization expense related to property and equipment in the three months ended March 31, 2025.

These capitalized software assets became fully amortized and were retired during the three months ended March 31, 2025.

Additionally, certain facilities costs or contract termination costs related to closed retail locations for which the Company is pursuing sublease arrangements or lease terminations may be paid over the remaining terms which extend through 2032.

The liabilities associated with restructuring costs are included in Accrued liabilities and Payroll and payroll tax liabilities on the Condensed Consolidated Balance Sheets.

Activities related to liabilities incurred under the restructuring plan are as follows:

Retail Location Closures Termination Benefits Other Associated Costs Total

Activities related to liabilities incurred under the restructuring plan were as follows:

Retail Location Closures Termination Benefits Total

Balance as of January 1, 2025 $ 115 $ 9 $ 124

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Payments and other adjustments ( 880 ) ( 9 ) ( 889 )

Balance as of September 30, 2024 $ 152 $ 138 $ — $ 290

Overall, the Company expects to incur a total of approximately $ 2.4 million in restructuring and restructuring-related costs, including the $ 2.1 million previously incurred.

The remainder of the expected charges primarily relate to corporate operational and administrative contract terminations and other associated costs.

The Company expects that these restructuring activities will be substantially completed by the end of the first quarter of 2025.

Balance as of March 31, 2025 $ — $ — $ —

Overall, the Company has incurred a total of approximately $ 3.5 million in restructuring and restructuring-related costs, including the $ 1.1 million incurred in the three months ended March 31, 2025.

The Company has substantially completed its restructuring activities as of March 31, 2025 and does not expect to incur significant additional restructuring and restructuring-related costs in future periods.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements