Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
GROWGENERATION CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except shares)
June 30,
2025 December 31,
2024
ASSETS
Current assets:
Cash and cash equivalents $ 23,309 $ 27,471
Marketable securities 25,399 28,984
Accounts receivable, net of allowance for credit losses of $ 2,080 and $ 2,177 at June 30, 2025 and December 31, 2024, respectively
10,425 7,361
Notes receivable, current, net of allowance for credit losses of $ 145 and $ — at June 30, 2025 and December 31, 2024, respectively
909 1,056
Inventory 41,737 40,295
Prepaid income taxes 308 145
Prepaid and other current assets 6,901 7,896
Total current assets 108,988 113,208
Property and equipment, net 11,948 15,493
Operating leases right-of-use assets, net 30,667 34,453
Intangible assets, net 6,632 8,779
Goodwill 1,605 1,605
Other assets 770 814
TOTAL ASSETS $ 160,610 $ 174,352
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,608 $ 8,146
Accrued liabilities 2,985 2,358
Payroll and payroll tax liabilities 2,128 2,655
Customer deposits 2,448 2,404
Sales tax payable 1,095 1,313
Current maturities of operating lease liabilities 7,002 7,398
Total current liabilities 27,266 24,274
Operating lease liabilities, net of current maturities 26,188 29,633
Other long-term liabilities 435 352
Total liabilities 53,889 54,259
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock; $ 0.001 par value; 100,000,000 shares authorized, 59,771,716 and 59,402,628 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively
60 59
Additional paid-in capital 376,492 375,677
Accumulated deficit ( 269,831 ) ( 255,643 )
Total stockholders' equity 106,721 120,093
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 160,610 $ 174,352
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
1
GROWGENERATION CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Net sales $ 40,963 $ 53,536 $ 76,666 $ 101,424
Cost of sales (exclusive of depreciation and amortization shown below) 29,369 39,115 55,365 74,639
Gross profit 11,594 14,421 21,301 26,785
Operating expenses:
Store operations and other operational expenses 7,867 10,210 16,659 20,844
Selling, general, and administrative 6,151 7,104 13,263 15,012
Estimated credit losses (recoveries) 163 6 255 ( 482 )
Depreciation and amortization 2,687 3,615 6,272 7,357
Total operating expenses 16,868 20,935 36,449 42,731
Loss from operations ( 5,274 ) ( 6,514 ) ( 15,148 ) ( 15,946 )
Other income (expense):
Other (expense) income — ( 10 ) — 37
Interest income 463 737 960 1,339
Interest expense — ( 14 ) — ( 70 )
Total other income 463 713 960 1,306
Net loss before income taxes ( 4,811 ) ( 5,801 ) ( 14,188 ) ( 14,640 )
Provision for income taxes — ( 95 ) — ( 93 )
Net loss $ ( 4,811 ) $ ( 5,896 ) $ ( 14,188 ) $ ( 14,733 )
Net loss per share, basic $ ( 0.08 ) $ ( 0.10 ) $ ( 0.24 ) $ ( 0.24 )
Net loss per share, diluted $ ( 0.08 ) $ ( 0.10 ) $ ( 0.24 ) $ ( 0.24 )
Weighted average shares outstanding, basic 59,552 60,681 59,497 61,090
Weighted average shares outstanding, diluted 59,552 60,681 59,497 61,090
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
2
GROWGENERATION CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands)
Common Stock Treasury Stock Additional
Paid-In Capital Accumulated Deficit Total
Stockholders' Equity
Shares Amount 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 — — — — — —
Common stock withheld for employee payroll taxes — — — — ( 60 ) — ( 60 )
Share-based compensation — — — — 503 — 503
Net loss — — — — — ( 9,377 ) ( 9,377 )
Balance as of March 31, 2025 59,487 $ 59 — $ — $ 376,120 $ ( 265,020 ) $ 111,159
Common stock issued for share-based compensation 192 1 — — — — 1
Common stock withheld for employee payroll taxes — — — ( 52 ) — ( 52 )
Share-based compensation — — — 315 — 315
Common stock issued in connection with acquisitions
93 — — — 109 — 109
Net loss — — ( 4,811 ) ( 4,811 )
Balance as of June 30, 2025 59,772 $ 60 — $ — $ 376,492 $ ( 269,831 ) $ 106,721
Common Stock Treasury Stock Additional
Paid-In Capital Accumulated Deficit Total
Stockholders' Equity
Shares Amount 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
Common stock withheld for employee payroll taxes — — — — ( 29 ) — ( 29 )
Share-based compensation — — — — 778 — 778
Net loss — — — — — ( 8,837 ) ( 8,837 )
Balance as of 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 )
Balance as of June 30, 2024 60,888 $ 61 ( 939 ) $ ( 2,316 ) $ 374,737 $ ( 216,705 ) $ 155,777
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
3
GROWGENERATION CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended June 30,
2025 2024
Cash flows from operating activities:
Net loss $ ( 14,188 ) $ ( 14,733 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 6,272 7,357
Share-based compensation 818 1,432
Estimated credit losses (recoveries) 255 ( 482 )
Loss on asset disposition 665 37
Change in value of marketable securities ( 398 ) ( 727 )
Impairment loss on operating lease right-of-use assets — 78
Changes in operating assets and liabilities, net of acquisitions:
Accounts and notes receivable ( 3,172 ) ( 903 )
Inventory ( 1,167 ) 4,266
Prepaid expenses and other assets 887 1,027
Accounts payable and accrued liabilities 4,050 886
Operating leases ( 55 ) ( 21 )
Payroll and payroll tax liabilities ( 527 ) 55
Customer deposits 28 ( 2,352 )
Sales tax payable ( 218 ) 36
Net cash and cash equivalents used in operating activities ( 6,750 ) ( 4,044 )
Cash flows from investing activities:
Acquisitions, net of cash acquired ( 1,013 ) —
Purchase of marketable securities ( 18,985 ) ( 28,034 )
Maturities of marketable securities 22,968 35,566
Purchase of property and equipment ( 286 ) ( 1,416 )
Proceeds from disposals of assets 15 66
Net cash and cash equivalents provided by investing activities 2,699 6,182
Cash flows from financing activities:
Common stock withheld for employee payroll taxes ( 111 ) ( 127 )
Common stock repurchased — ( 4,190 )
Net cash and cash equivalents used in financing activities ( 111 ) ( 4,317 )
Net decrease in cash and cash equivalents ( 4,162 ) ( 2,179 )
Cash and cash equivalents at the beginning of period 27,471 29,757
Cash and cash equivalents at the end of period $ 23,309 $ 27,578
Supplemental cash flow disclosures and non-cash investing and financing transactions:
Cash paid for income taxes $ 199 $ 58
Right-of use assets obtained in exchange for new or modified operating lease liabilities $ 297 $ 3,506
Fair value of common stock issued in business combination $ 109 $ —
Fair value of contingent consideration $ 83 $ —
Cash paid for interest $ — $ 70
Cancellation of common stock $ — $ 1,873
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
1. GENERAL
GrowGeneration Corp. (together with its direct and indirect wholly-owned subsidiaries, collectively "GrowGeneration" or the "Company") was incorporated in Colorado in 2014. Since then, GrowGeneration has grown from a small chain of specialty retail hydroponic and organic garden centers to a multifaceted business with diverse assets. Today, GrowGeneration operates two major lines of business: its Cultivation and Gardening segment, composed of the Company's hydroponic and organic gardening business; and its Storage Solutions segment, composed of the Company's benching, racking, and storage solutions business.
As of June 30, 2025, GrowGeneration has 29 retail locations across 11 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
The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 ("2024 Form 10-K"). There were no significant changes to the Company's significant accounting policies as disclosed in the 2024 Form 10-K. 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 notes to the Condensed Consolidated Financial Statements, except per share data, are in thousands (000).
Use of Estimates
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.
2. RECENT ACCOUNTING PRONOUNCEMENTS
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 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 Condensed Consolidated Financial Statements or disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
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. 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 and will adopt this guidance in the fourth quarter of 2025 to provide additional disclosures as required.
5
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"), which provides a practical expedient to measure credit losses on accounts receivable and contract assets. ASU 2025-05 is effective for annual periods beginning after December 15, 2025. Early adoption of ASU 2025-05 is permitted and should be applied prospectively. The Company is currently evaluating the impact of this standard.
3. FAIR VALUE MEASUREMENTS
Fair Value Measurements
Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
• Level 1—Quoted prices in active markets for identical assets or liabilities.
• Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies, and similar techniques.
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Accordingly, the degree of judgement exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and all other current liabilities approximate fair values due to their short-term nature. The fair value of notes receivable approximates the outstanding balance net of reserves for expected credit loss. 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 $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2025, respectively, and $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2024, respectively. Changes in fair value of marketable securities are included in Interest income on the Condensed Consolidated Statements of Operations.
Level June 30,
2025 December 31,
2024
Cash equivalents 1 $ 12,961 $ 16,945
Marketable securities 2 $ 25,399 $ 28,984
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GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
4. REVENUE RECOGNITION
Disaggregation of Revenues
Net sales are disaggregated by the Company's segments, which represent its principal lines of business, as well as by major product line, including proprietary brands, non-proprietary brands, and commercial fixtures, and by product type, including consumable and durable products. Refer to Note 14, Segments, for disaggregated revenue disclosures.
Accounts Receivable and Contract Liabilities
Depending on the timing of when title of product transfers to a customer and when a customer makes payments for such product, the Company recognizes an accounts receivable or a customer deposit. The opening and closing balances of the Company's accounts receivables and customer deposits were as follows:
Accounts Receivable, Net Customer Deposits
Balance as of January 1, 2025
$ 7,361 $ 2,404
Balance as of June 30, 2025
10,425 2,448
Increase $ 3,064 $ 44
Balance as of January 1, 2024
$ 8,895 $ 5,359
Balance as of June 30, 2024
9,663 3,007
Increase (decrease) $ 768 $ ( 2,352 )
Of the total amount of customer deposits as of January 1, 2025, $ 0.5 million and $ 1.6 million was reported as revenue during the three and six months ended June 30, 2025, respectively. Of the total amount of customer deposits as of January 1, 2024, $ 1.1 million and $ 4.0 million was reported as revenue during the three and six months ended June 30, 2024, respectively.
Notes receivable at June 30, 2025 and December 31, 2024 were as follows:
June 30,
2025 December 31,
2024
Notes receivable $ 1,054 $ 1,056
Allowance for credit losses ( 145 ) —
Notes receivable, net $ 909 $ 1,056
During the six months ended June 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, Commitments and Contingencies, for additional information regarding the settlement.
7
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
5. PROPERTY AND EQUIPMENT
Property and equipment at June 30, 2025 and December 31, 2024 consisted of the following:
June 30,
2025 December 31,
2024
Vehicles $ 2,485 $ 2,553
Building and land 2,121 2,121
Leasehold improvements 10,404 12,086
Furniture, fixtures and equipment 13,076 13,051
Capitalized software 9,096 16,446
Construction-in-progress 2 49
Total property and equipment, gross 37,184 46,306
Accumulated depreciation and amortization ( 25,236 ) ( 30,813 )
Property and equipment, net $ 11,948 $ 15,493
Depreciation and amortization expense related to property and equipment was $ 1.2 million and $ 3.2 million for the three and six months ended June 30, 2025, respectively, and $ 1.9 million and $ 4.0 million for the three and six months ended June 30, 2024, respectively. In conjunction with the Company's restructuring activities as discussed in Note 15, Restructuring, the Company retired certain capitalized software assets during the six months ended June 30, 2025. Refer to Note 15, Restructuring, for additional information on the restructuring activities.
6. GOODWILL AND INTANGIBLE ASSETS
The carrying value of goodwill by segment was as follows:
Cultivation and Gardening Storage Solutions Total
Balance as of December 31, 2024 $ — $ 1,605 $ 1,605
Balance as of June 30, 2025 $ — $ 1,605 $ 1,605
Accumulated impairment for goodwill related entirely to the Cultivation and Gardening segment and totaled $ 131.9 million as of June 30, 2025 and December 31, 2024.
The changes in intangible assets by segment for the six months ended June 30, 2025 were as follows:
Cultivation and Gardening Storage Solutions Total
Balance as of December 31, 2024 $ 6,881 $ 1,898 $ 8,779
Amortization ( 2,714 ) ( 351 ) ( 3,065 )
Acquisitions 918 — 918
Balance as of June 30, 2025 $ 5,085 $ 1,547 $ 6,632
8
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
On June 6, 2025, the Company purchased substantially all of the assets of Hydro Generation Inc. (referred to as "Viagrow"), a domestic supplier of gardening and hydroponic equipment. The acquisition related intangible assets in the preceding table represent the preliminary estimates of the fair values of identified intangible assets. As of June 30, 2025, the Company has not finalized its preliminary purchase price allocation. Refer to Note 12, Acquisitions, for additional information regarding the Viagrow acquisition.
Intangible assets on the Condensed Consolidated Balance Sheets consisted of the following:
June 30, 2025 December 31, 2024
Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Trade names $ 27,990 $ ( 24,454 ) $ 3,536 $ 27,790 $ ( 21,908 ) $ 5,882
Customer relationships 13,587 ( 10,492 ) 3,095 12,869 ( 9,974 ) 2,895
Non-competes 860 ( 859 ) 1 860 ( 858 ) 2
Intellectual property 1,136 ( 1,136 ) — 1,136 ( 1,136 ) —
Patents, trademarks 69 ( 69 ) — 69 ( 69 ) —
Total $ 43,642 $ ( 37,010 ) $ 6,632 $ 42,724 $ ( 33,945 ) $ 8,779
Amortization expense was $ 1.6 million and $ 3.1 million for the three and six months ended June 30, 2025, respectively, and $ 1.7 million and $ 3.4 million for the three and six months ended June 30, 2024, respectively.
Future amortization expense as of June 30, 2025 was as follows:
2025 (remainder of the year) $ 2,922
2026 2,174
2027 924
2028 242
2029 184
Thereafter 186
Total $ 6,632
7. INCOME TAXES
For the six months ended June 30, 2025 and 2024, the effective tax rate was 0.0 % and 0.6 %, respectively. The effective tax rate for each of the six months ended June 30, 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 June 30, 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.
On July 4, 2025, the “One Big Beautiful Bill Act”, or “OBBBA”, was signed into law, making several provisions of the Tax Cuts and Jobs Act permanent. Under Accounting Standards Codification Topic 740, Income Taxes , the effects of changes in tax laws must be recognized in the period of enactment. The Company is currently evaluating the potential impact of OBBBA, but based on a preliminary assessment, the provisions of the new law are not expected to have a material impact on the Company’s consolidated financial statements. No adjustments have been made to the financial statements as of June 30, 2025 as a result of the OBBBA.
9
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
8. LEASES
The right-of-use assets and corresponding liabilities related to the Company's operating leases were as follows:
June 30,
2025 December 31,
2024
Operating leases right-of-use assets, net
$ 30,667 $ 34,453
Current maturities of operating lease liability $ 7,002 $ 7,398
Operating lease liability, net of current maturities 26,188 29,633
Total lease liability $ 33,190 $ 37,031
The weighted-average remaining lease terms and weighted-average discount rates for operating leases were as follows:
June 30,
2025 2024
Weighted average remaining lease term 5.2 years 5.8 years
Weighted average discount rate 6.2 % 6.2 %
The components of lease costs were as follows:
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Operating lease costs $ 2,305 $ 2,531 $ 4,597 $ 5,094
Variable lease costs 1,011 351 1,164 1,015
Short-term lease costs 98 108 186 193
Sublease income ( 401 ) ( 278 ) ( 781 ) ( 550 )
Total operating lease costs $ 3,013 $ 2,712 $ 5,166 $ 5,752
Future maturities of the Company's operating lease liabilities and receipts from subleases as of June 30, 2025 were as follows:
Lease Payments Sublease Receipts
2025 (remainder of the year) $ 4,502 $ ( 619 )
2026 8,158 ( 1,351 )
2027 6,519 ( 1,391 )
2028 6,022 ( 1,432 )
2029 5,425 ( 1,474 )
Thereafter 8,170 ( 1,882 )
Total lease payments (receipts) $ 38,796 $ ( 8,149 )
Less: imputed interest ( 5,606 )
Operating lease liability as of June 30, 2025
$ 33,190
Supplemental and other information related to leases was as follows:
Six Months Ended June 30,
2025 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases $ 4,698 $ 5,097
10
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
9. EARNINGS PER SHARE
The following table sets forth the composition of the weighted average shares (denominator) used in the basic and diluted loss per share computation for the three months ended June 30, 2025 and 2024:
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Net loss $ ( 4,811 ) $ ( 5,896 ) $ ( 14,188 ) $ ( 14,733 )
Weighted average shares outstanding, basic 59,552 60,681 59,497 61,090
Effect of dilutive outstanding restricted stock units and stock options
— — — —
Adjusted weighted average shares outstanding, diluted
59,552 60,681 59,497 61,090
Basic loss per share $ ( 0.08 ) $ ( 0.10 ) $ ( 0.24 ) $ ( 0.24 )
Diluted loss per share
$ ( 0.08 ) $ ( 0.10 ) $ ( 0.24 ) $ ( 0.24 )
Diluted loss per share calculations for each of the three and six months ended June 30, 2025 excluded 1.4 million non-vested restricted stock units. In addition, for the three and six months ended June 30, 2025, 7 thousand and 12 thousand shares of common stock issuable upon exercise of stock options were excluded that would have been anti-dilutive, respectively. Diluted loss per share calculations for each of the three and six months ended June 30, 2024 excluded 0.9 million non-vested restricted stock units, and 0.5 million shares of common stock issuable upon exercise of stock options that would have been anti-dilutive.
10. SHARE-BASED PAYMENTS
The Company maintains a long-term incentive plan, the Second Amended and Restated 2018 Equity Incentive Plan (the "2018 Equity Incentive Plan", for employees, non-employee members of its Board of Directors (the "Board"), and consultants. The 2018 Equity Incentive 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 $ 0.3 million and $ 0.8 million in the three and six months ended June 30, 2025, respectively, and $ 0.7 million and $ 1.4 million in the three and six months ended June 30, 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 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.
Restricted stock unit activity for the six months ended June 30, 2025 is presented in the following table:
Units Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2024
1,403 $ 2.57
Granted 375 $ 1.27
Vested ( 368 ) $ 2.72
Forfeited ( 101 ) $ 2.34
Nonvested as of June 30, 2025
1,309 $ 2.17
11
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
As of June 30, 2025, the Company had approximately $ 2.4 million of unrecognized share-based compensation related to restricted stock units, which is expected to be recognized over a weighted average period of approximately 2.4 years. During the six months ended June 30, 2024, 165 thousand restricted stock units were granted at a weighted average grant date fair value of $ 2.79 .
Performance Stock Units
During the six months ended June 30, 2025, the Board granted 90 thousand short-term, performance stock units with a weighted average grant date fair value of $ 0.91 to its named executive officers under the 2018 Equity Incentive Plan. The number of shares issuable as a result of the performance stock units vesting ranges from 0 % and 125 % and is determined based on Company-specific net sales targets to be achieved for fiscal year 2025 as well as service conditions.
Although no awards vest until the Company attains the performance conditions described above, compensation will be recorded based on an assessment of the probability of meeting the performance conditions. During the six months ended June 30, 2025, the Company concluded that the probability of attaining the performance conditions under the awards to be remote. Therefore, no expense was recognized related to the performance stock units. If the performance conditions are probable of being achieved, the Company will begin recognizing the associated non-cash, share-based compensation expense.
Stock Options
Stock option activity for the six months ended June 30, 2025 is presented in the following table:
Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2024
16 $ 4.63 0.36 $ 2.56
Granted — — — —
Exercised — — — —
Forfeited or expired ( 16 ) 4.63 — 2.56
Outstanding as of June 30, 2025
— $ — — $ —
Vested and exercisable as of June 30, 2025
— $ — — $ —
11. STOCKHOLDERS' EQUITY
On March 20, 2024, the Board authorized a share repurchase program, whereby the Company could repurchase up to $ 6.0 million worth of its common stock in open market transactions pursuant to Rule 10b-18 of the Exchange Act and a 10b5-1 trading plan. The program began on April 1, 2024 and as of December 31, 2024, the Company completed all purchases available under the stock repurchase program. This share repurchase program was intended to enhance long-term shareholder value. The program did not obligate the Company to acquire any specific number of shares or to acquire any shares over any specific period of time. The timing and amount of any repurchases was dependent upon factors such as the stock price, trading volumes, market conditions, and regulatory requirements. The stock repurchase program could be amended, suspended, or discontinued at any time by the Company.
During the three and six months ended June 30, 2024, the Company repurchased 1.7 million shares of common stock at an average price of $ 2.39 per share, exclusive of incremental direct costs. 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 0.8 million shares of treasury stock under the repurchase program in the three and six months ended June 30, 2024. The retirement of treasury stock was recognized as a deduction from common stock for the shares' par value and any excess cost over par value was recognized as a deduction from retained earnings. Treasury stock is retired on a first in, first out basis. 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.
12
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
12. ACQUISITIONS
On June 6, 2025, the Company purchased substantially all of the assets of Viagrow, a domestic supplier of gardening and hydroponic equipment. The acquisition further diversifies the Company's home gardening and hydroponic gardening proprietary brand product offerings as well as expands the Company's outreach to significant new customers through relationships with major home improvement mass-market retailers and e-commerce platforms.
The total consideration for the purchase of Viagrow was $ 1.2 million including cash paid and common stock issued on the date of acquisition, with certain additional amounts to be paid in future periods. The preliminary estimated purchase price includes deferred equity consideration to be issued upon settling any discrepancies of net assets acquired, and contingent consideration to be paid in cash over three years, dependent on the achievement of certain performance goals.
As of June 30, 2025, the Company has not finalized its preliminary purchase price allocation. The preliminary purchase price allocation may be adjusted as a result of the finalization of the purchase price allocation procedures related to the assets acquired and liabilities assumed. Measurement period adjustments are recognized in the reporting period in which adjustments are determined and calculated as if the accounting had been completed at the acquisition date. The final fair value determination of the assets acquired and liabilities assumed will be completed prior to one year from the transaction completion.
The table below details the consideration paid, and the preliminary estimated allocation of the purchase price to the acquired net assets during the six months ended June 30, 2025.
Viagrow
Consideration
Cash $ 1,013
Common stock 109
Contingent consideration 83
Deferred equity consideration 23
Total consideration 1,228
Assets and liabilities acquired
Inventory 275
Prepaids and other current assets 10
Property and equipment 41
Intangible assets 918
Customer deposits ( 16 )
Total $ 1,228
The following table represents the preliminary estimates of the fair values of identified intangible assets and their related estimated remaining useful lives.
Estimated Fair Value Estimated Useful Life
Customer relationships $ 718 6.0 years
Trade Names 200 5.0 years
Total $ 918
13
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
The following table represents the revenue and earnings included in the Condensed Consolidated Statement of Operations from the date of acquisition for the three and six months ended June 30, 2025.
Viagrow
Acquisition date June 6, 2025
Revenue $ 122
Net income $ 25
The following table represents the pro forma Condensed Consolidated Statement of Operations as if the acquisition was completed on January 1, 2024.
Three Months Ended June 30, Six Months Ended June 30,
(Unaudited)
2025 2024 2025 2024
Revenue $ 41,586 $ 54,398 $ 77,940 $ 103,160
Net loss $ ( 4,704 ) $ ( 5,916 ) $ ( 13,925 ) $ ( 14,728 )
The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the Viagrow acquisition had been consummated as of the beginning of the periods presented or of results that may occur in the future.
13. COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, the Company has been, and may again become involved in legal proceedings arising in the ordinary course of its business, including the initiation and defense of proceedings related to contract and employment disputes. 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.
In December 2021, the Company was sued in the U.S. District Court for the Southern District of Texas related to a Promissory Note & Asset Acquisition Rights Option ("Note & Option") with TGC Systems, LLC ("Total Grow"). The case was dismissed and the parties submitted the matter to arbitration pursuant to the arbitration clause of the Note & Option. Among other claims, Total Grow alleged that the Company was liable to Total Grow for failing to consummate the acquisition of Total Grow by the Company. The Company asserted counterclaims for repayment of $ 1.5 million in principal loaned by the Company to Total Grow pursuant to the Note & Option, plus interest and certain costs. In July 2023, the arbitrator rendered an arbitration award denying all of Total Grow's claims and defenses and awarding the Company more than $ 2.0 million in total, consisting of principal, interest, and certain costs. Total Grow voluntarily filed for bankruptcy in October 2023. 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 six months ended June 30, 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. The Company believes that its assessment of contingencies is reasonable and that the related accruals, in the aggregate, are adequate; however, there can be no assurance that the final resolution of these matters will not have a material effect on the Company's financial condition, results of operations or cash flows.
Indemnifications
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 June 30, 2025, the Company did not have any liabilities associated with indemnities.
14
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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. The duration of these indemnifications varies. The Company has a director and officer insurance policy that may enable it to recover a portion of any future amounts paid. The Company accrues for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable. No such losses have been recorded to date.
14. SEGMENTS
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.
Disaggregated revenue by segment is presented in the following tables:
Three Months Ended June 30, Six Months Ended June 30,
Net sales 2025 2024 2025 2024
Cultivation and Gardening
Proprietary brand sales $ 10,503 $ 9,931 $ 20,386 $ 19,657
Non-proprietary brand sales 22,358 36,179 43,386 69,561
Total Cultivation and Gardening 32,861 46,110 63,772 89,218
Storage Solutions
Commercial fixture sales 8,102 7,426 12,894 12,206
Total Storage Solutions 8,102 7,426 12,894 12,206
Total $ 40,963 $ 53,536 $ 76,666 $ 101,424
Three Months Ended June 30, Six Months Ended June 30,
Net sales 2025 2024 2025 2024
Cultivation and Gardening
Consumables $ 25,627 $ 33,677 $ 48,682 $ 63,858
Durables 7,234 12,433 15,090 $ 25,360
Total Cultivation and Gardening 32,861 46,110 63,772 $ 89,218
Storage Solutions
Durables 8,102 7,426 12,894 $ 12,206
Total Storage Solutions 8,102 7,426 12,894 $ 12,206
Total $ 40,963 $ 53,536 $ 76,666 $ 101,424
Selected information by segment is presented in the following tables for the three and six months ended:
15
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Three Months Ended June 30, 2025
Cultivation & Gardening Storage Solutions Corporate Total
Net sales $ 32,861 $ 8,102 $ — $ 40,963
Cost of sales 24,696 4,673 — 29,369
Gross profit 8,165 3,429 — 11,594
Operating expenses
Store operations and other operational expenses:
Employee costs 2,480 692 — 3,172
Facilities 2,645 402 — 3,047
External service providers 247 2 — 249
Other segment items (1)
1,220 179 — 1,399
Total store operations and other operational expenses 6,592 1,275 — 7,867
Other operating expenses
Selling, general, and administrative — — 6,151 6,151
Estimated credit losses — — 163 163
Depreciation and amortization — — 2,687 2,687
Total operating expenses 6,592 1,275 9,001 16,868
Income (loss) from operations 1,573 2,154 ( 9,001 ) ( 5,274 )
Other income — — 463 463
Net income (loss) before income taxes
$ 1,573 $ 2,154 $ ( 8,538 ) $ ( 4,811 )
(1) Other segment items for each reportable segment include travel expenses, transaction fees, and other miscellaneous expenses.
Six Months Ended June 30, 2025
Cultivation & Gardening Storage Solutions Corporate Total
Net sales $ 63,772 $ 12,894 $ — $ 76,666
Cost of sales 47,703 7,662 — 55,365
Gross profit 16,069 5,232 — 21,301
Operating expenses
Store operations and other operational expenses:
Employee costs 5,141 1,439 — 6,580
Facilities 5,401 796 — 6,197
External service providers 342 16 — 358
Other segment items (1)
3,077 447 — 3,524
Total store operations and other operational expenses 13,961 2,698 — 16,659
Other operating expenses
Selling, general, and administrative — — 13,263 13,263
Estimated credit losses — — 255 255
Depreciation and amortization — — 6,272 6,272
Total operating expenses 13,961 2,698 19,790 36,449
Income (loss) from operations 2,108 2,534 ( 19,790 ) ( 15,148 )
Other income — — 960 960
Net income (loss) before income taxes
$ 2,108 $ 2,534 $ ( 18,830 ) $ ( 14,188 )
(1) Other segment items for each reportable segment include travel expenses, transaction fees, and other miscellaneous expenses.
16
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Three Months Ended June 30, 2024
Cultivation & Gardening Storage Solutions Corporate Total
Net sales $ 46,110 $ 7,426 $ — $ 53,536
Cost of sales 35,174 3,941 — 39,115
Gross profit 10,936 3,485 — 14,421
Operating expenses
Store operations and other operational expenses:
Employee costs 3,598 755 — 4,353
Facilities 3,358 284 — 3,642
External service providers 301 16 — 317
Other segment items (1)
1,670 228 — 1,898
Total store operations and other operational expenses 8,927 1,283 — 10,210
Other operating expenses
Selling, general, and administrative — — 7,104 7,104
Estimated credit losses — — 6 6
Depreciation and amortization — — 3,615 3,615
Total operating expenses 8,927 1,283 10,725 20,935
Income (loss) from operations 2,009 2,202 ( 10,725 ) ( 6,514 )
Other income — — 713 713
Net income (loss) before income taxes
$ 2,009 $ 2,202 $ ( 10,012 ) $ ( 5,801 )
(1) Other segment items for each reportable segment include travel expenses, transaction fees, and other miscellaneous expenses.
Six Months Ended June 30, 2024
Cultivation & Gardening Storage Solutions Corporate Total
Net sales $ 89,218 $ 12,206 $ — $ 101,424
Cost of sales 67,957 6,682 — 74,639
Gross profit 21,261 5,524 — 26,785
Operating expenses
Store operations and other operational expenses:
Employee costs 7,252 1,526 — 8,778
Facilities 6,838 642 — 7,480
External service providers 830 27 — 857
Other segment items (1)
3,268 461 — 3,729
Total store operations and other operational expenses 18,188 2,656 — 20,844
Other operating expenses
Selling, general, and administrative — — 15,012 15,012
Estimated credit recoveries — — ( 482 ) ( 482 )
Depreciation and amortization — — 7,357 7,357
Total operating expenses 18,188 2,656 21,887 42,731
Income (loss) from operations 3,073 2,868 ( 21,887 ) ( 15,946 )
Other income — — 1,306 1,306
Net income (loss) before income taxes
$ 3,073 $ 2,868 $ ( 20,581 ) $ ( 14,640 )
(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.
17
GROWGENERATION CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
15. 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.
The Company substantially completed its restructuring activities as of March 31, 2025. Overall, the Company incurred aggregate restructuring and restructuring-related costs of $ 3.5 million, of which $ 1.1 million were incurred during the six months ended June 30, 2025 and are presented on the Condensed Consolidated Statements of Operations in the following table. The Company does not expect to incur significant additional restructuring and restructuring-related costs in future periods.
Restructuring
Cultivation and Gardening segment:
Store operations and other operational expenses (1)
765
Segment operating loss ( 765 )
Corporate expenses:
Selling, general, and administrative (2)
376
Total restructuring and restructuring-related charges $ ( 1,141 )
(1) Costs consist primarily of property and equipment 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. These capitalized software assets became fully amortized and were retired during the six months ended June 30, 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 were 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 were as follows:
Retail Location Closures Termination Benefits Total
Balance as of January 1, 2025 $ 115 $ 9 $ 124
Additions 765 — 765
Payments and other adjustments ( 880 ) ( 9 ) ( 889 )
Balance as of June 30, 2025 $ — $ — $ —
18
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.