What changed in this filing

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Item 9A. Controls and Procedures

2026-03-20 compared with 2025-03-13 · 23 added, 82 removed, 83 unchanged (56% of the section changed)

2 unchanged sentences

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are controls and other procedures designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

As of December 31, 2024, an evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).

Management concluded that our disclosure controls and procedures were not effective as of December 31, 2024, due to the material weakness in our internal control over financial reporting described below.

As of December 31, 2025, the Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act).

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2025, in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Management’s Report on Internal Control Over Financial Reporting

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting using the criteria in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO Framework").

As a result of this evaluation, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2024, based on the criteria established in COSO framework, due to the material weakness in our internal control over financial reporting described below.

This material weakness did not result in any material misstatements to the consolidated financial statements and there were no changes to previously released financial statements.

Notwithstanding our material weakness, we have concluded that the financial statements and other financial information included in this Annual Report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

The Company’s independent registered public accounting firm, Grant Thornton LLP, which audited the 2024 Consolidated Financial Statements and management’s assessment of the effectiveness of internal control over financial reporting included in this Form 10-K, has expressed an adverse opinion on the Company's internal control over financial reporting as of December 31, 2024.

Material Weakness in Internal Control over Financial Reporting - Storage Solutions Segment

Due to segregation of duties conflicts and the lack of precise manual monitoring controls over the system data, we did not maintain effective internal control over financial reporting within a separate enterprise resource planning (“ERP”) system, Navision, used exclusively for our storage solutions segment, branded as “MMI.” As such, information derived from the system could not be relied upon, resulting in management’s inability to assess control activities at a precision level to reasonably prevent or detect errors.

Plan to Remediate Material Weakness in Internal Control over Financial Reporting - MMI

The Company, with oversight by the Audit Committee of the Board, is actively developing and implementing a comprehensive remediation plan that will include the following initiatives:

• Transition MMI off the Navision system and onto NetSuite, our integrated ERP and general ledger system used by all our other business channels.

• Remove administrative capabilities within the ERP system from operational roles.

• Perform segregation of duties analysis over new integrated users and roles within NetSuite.

• Consolidate our enterprise-wide shared service processes with the migration of the MMI business’s accounts payable and accounts receivable functions onto the NetSuite system.

• Develop and/or enhance information technology general and application controls and business process controls specific to MMI.

Remediation of Prior Material Weaknesses in Internal Control over Financial Reporting

Management’s prior evaluations of the effectiveness of the Company’s internal control over financial reporting using the COSO Framework were that internal control over financial reporting were not effective as of December 31, 2023 and December 31, 2022 due to material weaknesses related to its control environment and various COSO Framework components.

Management initiated various remediation efforts in fiscal year 2022, and these efforts continued throughout fiscal years 2023 and 2024.

The following sections discuss these previously identified material weaknesses and their related remediation as of December 31, 2024.

Remediation of Material Weakness in Internal Control over Financial Reporting- Control Environment

Management had previously identified a material weakness due to the Company not maintaining an effective control environment based on the criteria established in the COSO framework.

Contributing to the material weakness in the control environment were:

• Insufficient resources within the accounting and financial reporting department to review the accounting of complex financial reporting transactions including areas such as business combinations, share based compensation and the related income tax reporting.

• Ineffective controls over updating and distributing accounting policies and procedures across the organization.

The Company remediated the above material weakness related to the control environment as follows:

• Engaged a third-party CPA firm to consult with management in redesigning and documenting our internal control over financial reporting, including our entity-level controls, to be compliant with Sarbanes Oxley Act of 2002 (“SOX”).

• Hired a dedicated SOX compliance senior manager and analyst charged with monitoring and facilitating compliance with the Company’s SOX responsibilities and supervising the third-party specialists.

• Enhanced corporate oversight over entity and process level controls to ensure appropriate assignment of authority, responsibility, and accountability.

• Implemented global risk and compliance software to assist in monitoring and documenting compliance with SOX.

• Added personnel and leadership to the accounting and financial reporting department with technical accounting experience to act as internal resources for reviewing complex financial reporting transactions, including areas such as business combinations, share based compensation, and income tax reporting.

• Implemented controls to evaluate, monitor, and review the work of third-party consultants with specialized expertise engaged for complex transactions, including financial advisory support, valuation specialists for impairment analyses, and tax professionals for sales/use and income taxes.

• Completed SOX compliance training to enhance the technical ability and competence of control owners across the organization.

• Updated and formalized policies over significant accounting, finance, information technology, and compliance areas.

Remediation of Material Weakness in Internal Control over Financial Reporting - Risk Assessment

Management previously identified a material weakness related to the failure to design and implement an effective risk assessment based on the criteria established in the COSO framework and related deficiencies in the principles associated with the risk assessment component of the COSO framework.

The Company remediated the above material weakness as follows:

• Performed a comprehensive risk analysis, incorporating quantitative and qualitative factors across the entire organization inclusive of all business segments, applicable systems, and third-party service providers.

• Established materiality thresholds to apply consistent and reliable review precision within applicable control activities.

• Established formal monitoring, review, and communication procedures for newly released accounting pronouncements to ensure appropriate and timely implementation.

• Assessed all critical systems, applications, databases, and interfaces for financial statement impact to ensure the proper design and implementation of related information technology general controls.

Remediation of Material Weakness in Internal Control over Financial Reporting- Information & Communication

Management previously identified a material weakness related to ineffective information and communication processes that could properly identify and assess the source of and controls necessary to ensure the reliability of information used in financial reporting and that communicate relevant information about roles and responsibilities for internal control over financial reporting.

The Company remediated the above material weakness as follows:

• Developed new and revised existing critical system and business process narratives and flowcharts.

• Enhanced the evaluation and review process related to third-parties providing services critical to financial reporting.

• Continued to hold regular Board of Directors meetings throughout the year, including periodic compliance reports to the Audit Committee of the Board of Directors.

• Developed effective communication plans to all parties responsible for remediation relating to, among other things, identification of deficiencies and recommendations for corrective actions.

• Identified and maintained a listing of key reports used in financial reporting.

• Continued to monitor segregation of duties for all key controls and systems related to internal control over financial reporting.

• Formalized financial statement close procedures to document the preparation and review of key processes.

• Enhanced contract management controls to ensure completeness of and proper approval of material contracts.

Remediation of Material Weakness in Internal Control over Financial Reporting- Monitoring Activities

Management previously identified a material weakness related to ineffective monitoring activities to assess the operation of internal control over financial reporting, including the continued appropriateness of control design and the level of documentation maintained to support control effectiveness.

The Company remediated the above material weakness as follows:

• Enhanced review precision definitions for reconciliation controls to ensure proper identification and resolution of variances.

• Incorporated quarterly business reviews into our internal control over financial reporting.

• Established a formal deficiency tracking process, ensuring proper remediation of recommended corrective action.

Remediation of Material Weakness in Internal Control over Financial Reporting- Control Activities

Management previously identified a material weakness related to the design and operation of process-level controls and information technology general controls, which were determined to be pervasive throughout the Company’s financial reporting processes.

Contributing to the material weakness over control activities were:

• Inadequate information and technology general controls, including segregation of duties, change management, and user access, which were inadequate to support financial reporting applications and support automated controls and functionality.

• Inadequate controls over physical inventory counts.

• Inadequate controls over valuations, inclusive of appropriate valuation model inputs and appropriate forecasting for prospective financial information.

• Inadequate segregation of duties within human resources, manual journal entry posting processes, and various bank accounts of the Company to prevent and detect unauthorized transactions in a timely manner.

The Company remediated the above material weakness as follows:

• Implemented new business systems, including an enterprise resource planning software system, to support information technology general controls, appropriate segregation of duties, appropriate journal entry posting processes, change management, and user access.

• Bolstered information technology general controls across change-management, computer operations, user access, system integrations, error monitoring, and password configuration.

• Implemented quarterly access reviews for in-scope systems.

• Updated and/or drafted significant information technology policies to ensure responsibilities and expectations are defined, communicated, and enforced.

• Significantly enhanced physical inventory count procedures through staggering count dates, adding resources, incorporating roll-forward procedures, and increasing corporate oversight.

• Designed controls specific to business combinations and significant events.

• Continued to engage third-party specialists to assist management with complex financial transactions and valuations, including valuation model techniques and inputs such as forecasted, prospective information.

• Restructured or consolidated certain business functions to align more closely with effective business operation as well as to enable appropriate segregation of duties.

• Performed comprehensive segregation of duties analyses for all key controls and systems related to internal control over financial reporting.

• Enhanced segment review controls to properly identify the Company’s reportable segments, operating segments, and reporting units.

• Strengthened and enhanced our procedures around the search for unrecorded liabilities and cash application controls.

As a result of this evaluation, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2025, based on the criteria established in the COSO Framework.

Remediation of Prior Material Weakness in Internal Control over Financial Reporting - Storage Solutions Segment

Management previously concluded that internal control over financial reporting was not effective as of December 31, 2024 due to a material weakness related to (i) segregation of duties conflicts, (ii) inadequate monitoring controls, and (iii) insufficient information technology general controls within the Storage Solutions segment (MMI), which operated on a stand-alone Navision ERP system.

These conditions created a reasonable possibility that material misstatements would not be prevented or detected on a timely basis.

During fiscal year 2025, management executed a comprehensive remediation plan to address the underlying causes of the material weakness.

Key remediation actions included:

• Migrating MMI from Navision to NetSuite, the Company’s integrated ERP and general ledger platform, on August 4, 2025, using established system development life cycle protocols.

• Eliminating administrative access previously assigned to operational personnel and implementing appropriate user-role restrictions.

• Performing a segregation-of-duties review and aligning all MMI access rights with corporate segregation-of-duties standards.

• Centralizing MMI accounts payable, accounts receivable, and accounting functions within the Company’s shared services structure.

• Designing and implementing information technology general controls, application controls, and business-process controls applicable to MMI operations within the NetSuite environment.

Management evaluated the design and operating effectiveness of these controls and concluded that the previously reported material weakness was remediated as of December 31, 2025.

Changes in Internal Control Over Financial Reporting

Except for the remediation of the material weaknesses disclosed above, there were no changes in our internal control over financial reporting during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting, except for the remediation of the material weakness discussed above, during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

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(Incorporated by reference to Exhibit 3(ii) to Form 8-K filed on March 11, 2020)

D escription of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amende d ( Filed herewith)

10.1 GrowGeneration Corp.

6 unchanged sentences

and Michael Salaman (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K as filed on September 30, 2024)

10.5 Employment Agreement, dated August 12, 2022, between GrowGeneration Corp.

and Gregory Sanders (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K as filed on August 12, 2022)

10.5 Employment Agreement, dated December 29, 2025, between GrowGeneration Corp.

and Gregory Sanders (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K as filed on December 30, 2025)

10.6 Form of Long-Term Incentive Agreement dated April 22, 2024 between GrowGeneration Corp and Darren Lampert (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q as filed on August 8, 2024)

1 unchanged sentence

10.8 Form of Long-Term Incentive Agreement dated April 22, 2024 between GrowGeneration Corp and Gregory Sanders (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q as filed on August 8, 2024)

19.1 Insider Trading Polic y (Filed herewith.)

16.1 Letter of Grant Thornton LLP, regarding the change in the Registrant’s certifying accountant, dated July 11, 2025 (Incorporated by reference to Exhibit 16.1 to the Current Report on Form 8-K as filed on July 14, 2025)

19.1 Insider Trading Policy ( Incorporated by reference to Exhibit 19.1 to the Annual Report on Form 10-K as filed on March 13, 2 0 25 )

21.1 List of Subsidiaries of GrowGeneration Corp.

( Incorporated by reference to Exhibit 21.1 to t he Annual R eport on Fo rm 1 0 -K as filed on March 13, 2025 )

23.1 Consent of BDO USA, P.C.

(Filed herewith)

4 unchanged sentences

32.2 Section 1350 Certification of Principal Financial and Accounting Officer (Filed herewith.)

97 Incentive Compensation Recovery Polic y (Filed herewith .

97 Incentive Compensation Recovery Policy ( Incorporated by reference to Exhibit 97 to the Annual Rep ort on Form 10-K as filed on March 13, 2025 )

101.INS XBRL Instance Document (Filed herewith.)

34 unchanged sentences

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-K

Item 9A. Controls and Procedures