GrowGeneration Corp. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TABLE OF CONTENTS Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Denver, CO; PCAOB ID # 243 ) F- 2 Report of Independent Registered Public Accounting Firm (Grant Thornton LLP; Denver, CO; PCAOB ID # 248 ) F- 4 Consolidated Balance Sheets as of December 31, 202 5 and 20 24 F- 5 Consolidated Statements of Operations for the Years Ended December 31, 202 5 , 202 4 and 202 3 F- 6 Consolidated Statements of Equity for the Years Ended December 31, 202 5 , 202 4 and 202 3 F- 7 Consolidated Statements of Cash Flows for Years Ended December 31, 202 5 , 202 4 and 202 3 F- 8 Notes to Consolidated Financial Statements F- 9 F-1 Table of Contents Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors GrowGeneration Corp. Greenwood Village, Colorado Opinion on the financial statements We have audited the accompanying consolidated balance sheet of GrowGeneration Corp. (the “Company”) as of December 31, 2025, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Inventory - Valuation As described in Note 2 to the consolidated financial statements, the Company’s inventory consists predominantly of gardening supplies and materials, fixtures, and equipment. Inventory is valued at the lower of cost (moving average cost method) or net realizable value, inclusive of write-downs and write-offs in connection with its assessment of market conditions, slow-moving or obsolete inventory, and overstocked inventory based on trends and experience, including demand-based product rankings. At December 31, 2025, the Company’s inventory balance was $38.8 million and the Company recognized inventory write-downs and write-offs of $2.4 million during the year. We identified the auditing of certain inputs used to determine the inventory write-downs or write-offs, which include inventory quantities on hand and historical sales data, as well as assumptions over demand-based product rankings and the F-2 Table of Contents associated write-down or write-off percentages applied as a critical audit matter. Auditing these inputs and assumptions involved especially challenging auditor judgment due to the nature and extent of audit effort required to address this matter. The primary procedures we performed to address this critical audit matter included: • Testing the completeness and accuracy of underlying data inputs including inventory quantities on hand and historical sales data. • Evaluating the reasonableness of the demand-based product rankings and write-downs and write-offs percentages applied by performing a retrospective comparison of prior estimates over customer demand to actuals. • Testing the mathematical accuracy of the analysis used to determine inventory write-downs or write-offs. /s/ BDO USA, P.C. We have served as the Company’s auditor since 2025. Denver, Colorado March 20, 2026 F-3 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders GrowGeneration Corp. Opinion on the financial statements We have audited the accompanying consolidated balance sheet of GrowGeneration Corp. (a Colorado corporation) and subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2024 and December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the years ended December 31, 2024 and December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ GRANT THORNTON LLP We have served as the Company’s auditor from 2022 to 2025. Denver, Colorado March 13, 2025 F-4 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 30,406 $ 27,471 Marketable securities 15,658 28,984 Accounts receivable, net of allowance for credit losses of $ 2,109 and $ 2,177 at December 31, 2025 and 2024, respectively 10,668 7,361 Notes receivable, current, net of allowance for credit losses of $ 214 and $ — at December 31, 2025 and 2024, respectively 507 1,056 Inventory 38,776 40,295 Prepaid income taxes 60 145 Prepaid and other current assets 7,672 7,896 Total current assets 103,747 113,208 Property and equipment, net 9,795 15,493 Operating lease right-of-use assets, net 27,050 34,453 Intangible assets, net 3,326 8,779 Goodwill 2,080 1,605 Other assets 1,042 814 TOTAL ASSETS $ 147,040 $ 174,352 LIABILITIES & STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 8,775 8,146 Accrued liabilities 3,269 2,358 Payroll and payroll tax liabilities 2,589 2,655 Customer deposits 4,015 2,404 Sales tax payable 872 1,313 Current maturities of operating lease liabilities 6,455 7,398 Total current liabilities 25,975 24,274 Operating lease liabilities, net of current maturities 23,022 29,633 Other long-term liabilities 544 352 Total liabilities 49,541 54,259 Commitments and contingencies (Note 16) Stockholders’ equity: Common stock; $ .001 par value; 100,000,000 shares authorized; 60,090,905 and 59,402,628 shares issued and outstanding as of December 31, 2025 and 2024, respectively 60 59 Additional paid-in capital 377,128 375,677 Accumulated deficit ( 279,689 ) ( 255,643 ) Total stockholders’ equity 97,499 120,093 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 147,040 $ 174,352 The accompanying notes are an integral part of these Consolidated Financial Statements. F-5 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share) For the Years Ended December 31, 2025 2024 2023 Net sales $ 161,741 $ 188,866 $ 225,882 Cost of sales (exclusive of depreciation and amortization shown below) 118,466 145,144 164,624 Gross profit 43,275 43,722 61,258 Operating expenses: Store operations and other operational expenses 30,732 40,198 48,082 Selling, general, and administrative 26,266 29,243 29,799 Estimated credit losses (recoveries) 437 ( 58 ) 955 Depreciation and amortization 11,295 19,436 16,607 Impairment loss 130 6,875 15,659 Total operating expenses 68,860 95,694 111,102 Loss from operations ( 25,585 ) ( 51,972 ) ( 49,844 ) Other income (expense): Other (expense) income — ( 13 ) 781 Interest income 1,730 2,703 2,696 Interest expense — ( 70 ) ( 97 ) Total other income 1,730 2,620 3,380 Net loss before taxes ( 23,855 ) ( 49,352 ) ( 46,464 ) Provision for income taxes ( 191 ) ( 158 ) ( 32 ) Net loss $ ( 24,046 ) $ ( 49,510 ) $ ( 46,496 ) Net loss per share, basic $ ( 0.40 ) $ ( 0.82 ) $ ( 0.76 ) Net loss per share, diluted $ ( 0.40 ) $ ( 0.82 ) $ ( 0.76 ) Weighted average shares outstanding, basic 59,671 60,176 61,181 Weighted average shares outstanding, diluted 59,671 60,176 61,181 The accompanying notes are an integral part of these Consolidated Financial Statements. F-6 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Common Stock Treasury Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity Shares Amount Shares Amount Balance as of December 31, 2022 61,010 $ 61 — $ — $ 369,938 $ ( 153,603 ) $ 216,396 Common stock issued for share-based compensation 439 — — — — — — Common stock withheld for employee payroll taxes — — — — ( 263 ) — ( 263 ) Share-based compensation — — — — 2,985 — 2,985 Non-cash repurchase of liability awards — — — — 653 — 653 Liability redemption associated with business acquisition 35 — — — 120 — 120 Net loss — — — — — ( 46,496 ) ( 46,496 ) Balance as of December 31, 2023 61,484 $ 61 — $ — $ 373,433 $ ( 200,099 ) $ 173,395 Common stock issued for share-based compensation 436 1 — — — — 1 Common stock withheld for employee payroll taxes — — — — ( 177 ) — ( 177 ) Share-based compensation — — — — 2,421 — 2,421 Repurchase of common stock — — ( 2,517 ) ( 6,037 ) — — ( 6,037 ) Cancellation of common stock ( 2,517 ) ( 3 ) 2,517 6,037 — ( 6,034 ) — Net loss — — — — — ( 49,510 ) ( 49,510 ) Balance as of December 31, 2024 59,403 $ 59 — $ — $ 375,677 $ ( 255,643 ) $ 120,093 Common stock issued for share-based compensation 567 1 — — — — 1 Common stock withheld for employee payroll taxes — — — — ( 221 ) — ( 221 ) Share-based compensation — — — — 1,513 — 1,513 Common stock issued in connection with acquisitions 121 — — — 159 — 159 Net loss — — — — — ( 24,046 ) ( 24,046 ) Balance as of December 31, 2025 60,091 $ 60 — $ — $ 377,128 $ ( 279,689 ) $ 97,499 The accompanying notes are an integral part of these Consolidated Financial Statements. F-7 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net loss $ ( 24,046 ) $ ( 49,510 ) $ ( 46,496 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 11,295 19,436 16,607 Estimated credit losses (recoveries) 437 ( 58 ) 955 Share-based compensation 1,513 2,421 3,171 Impairment loss on held for sale property and equipment 130 — — Impairment loss related to goodwill and intangible assets — 6,655 15,526 Impairment loss on operating lease right-of-use assets — 220 133 Loss on asset disposition 773 685 218 Change in value of marketable securities ( 796 ) ( 1,326 ) ( 1,438 ) Changes in operating assets and liabilities (net of the effect of acquisitions): Accounts and notes receivable ( 3,195 ) 835 ( 300 ) Inventory 1,794 24,557 13,773 Prepaid expenses and other assets 91 477 3,898 Accounts payable and accrued liabilities 1,511 ( 3,712 ) ( 3,035 ) Operating leases ( 151 ) ( 173 ) 46 Customer deposits 1,595 ( 2,955 ) 1,021 Payroll and payroll tax liabilities ( 66 ) 486 ( 2,502 ) Sales taxes payable ( 441 ) 128 ( 156 ) Other 109 35 — Net cash and cash equivalents (used in) provided by operating activities ( 9,447 ) ( 1,799 ) 1,421 Cash flows from investing activities: Acquisitions, net of cash acquired ( 1,013 ) — ( 3,050 ) Purchase of property and equipment ( 536 ) ( 1,978 ) ( 6,698 ) Purchase of marketable securities ( 35,665 ) ( 52,639 ) ( 98,680 ) Maturities of marketable securities 49,787 60,193 96,758 Proceeds from disposals of assets 29 150 265 Net cash and cash equivalents provided by (used in) investing activities 12,602 5,726 ( 11,405 ) Cash flows from financing activities: Principal payments on long-term debt — — ( 50 ) Common stock withheld for employee payroll taxes ( 220 ) ( 176 ) ( 263 ) Common stock repurchased — ( 6,037 ) — Net cash and cash equivalents used in financing activities ( 220 ) ( 6,213 ) ( 313 ) Net increase (decrease) in cash and cash equivalents 2,935 ( 2,286 ) ( 10,297 ) Cash and cash equivalents at beginning of year 27,471 29,757 40,054 Cash and cash equivalents at end of year $ 30,406 $ 27,471 $ 29,757 Supplemental Information: Right-of-use assets obtained in exchange for new or modified operating lease liabilities $ 1,049 $ 3,506 $ 4,289 Fair value of common stock issued in business combination $ 159 $ — $ — Fair value of contingent consideration $ 83 $ — $ — Cash paid for interest $ — $ 70 $ 98 Non-cash repurchase of liability awards $ — $ — $ 653 Non-cash issuance of a note receivable $ — $ — $ 299 Liability redemption associated with business acquisition $ — $ — $ 120 The accompanying notes are an integral part of these Consolidated Financial Statements. F-8 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS 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 December 31, 2025, GrowGeneration has 23 retail locations across 10 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 mass-market retailers, and a benching, racking, and storage solutions business, Mobile Media or MMI. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect the financial position, results of operations and cash flows of the Company. The Consolidated Financial Statements include the accounts of GrowGeneration Corp. and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. All amounts included in the accompanying notes to the Consolidated Financial Statements, except per share data, are in thousands (000). Use of Estimates The preparation of consolidated financial statements in conformity with 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. Actual results could vary from the estimates that were used. Revenue Recognition The Company's revenue is primarily generated from sales of its hydroponic and organic gardening proprietary brand products and non-proprietary brand products through its retail locations, e-commerce platforms, wholesale distribution, and commercial sales organization. In addition to its hydroponic and organic gardening product sales, the Company sells and installs commercial fixtures through its benching, racking, and storage solutions business . The Company recognizes revenue when performance obligations under the terms of a contract with its customer are satisfied. Revenue is recognized at the point in time when the Company has satisfied its performance obligation and the customer has obtained control of the products or when services have been completed. In evaluating the timing of the transfer of control of products to customers, the Company considers several control indicators, including significant risks and rewards of products, the Company's right to payment, and the legal title of the products. Based on the assessment of control indicators, product sales are typically recognized when product is delivered to or picked up by the customer. Promises related to product installation are considered a separate and distinct performance obligation from the product sale because the products can be used without customization or modification and the installation is not complex and can be performed by other vendors. Installation revenue is recognized upon completion of the installation services. Revenues are measured as the amount of consideration that the Company expects to receive, which is derived from a list price, reduced by variable consideration including applicable sales discounts and estimated expected sales returns. The majority of the Company's returns come from retail sales. Estimating future returns requires judgment based on current and historical trends, and actual returns may vary from management's estimates. Sales and other taxes collected concurrent with revenue producing activities are also excluded from revenue. F-9 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company provides standard assurance type warranties that its products and installation services will comply with all agreed-upon specifications. No services beyond an assurance type warranty are provided to customers. Payment for goods and services sold by the Company is typically due upon satisfaction of the performance obligations. Under certain circumstances, the Company does provide goods and services to customers on a credit basis which are due under customary payment terms (see Accounts Receivable, Notes Receivable and Concentration of Credit Risk below). When the Company receives payment from customers before the customer obtains control of the merchandise or the service has been performed, the amount received is recorded as a customer deposit in the accompanying Consolidated Balance Sheets until the sale or service is complete. In accordance with ASC 606, Revenue from Contracts with Customers , the Company has elected the practical expedient to exclude the value of remaining performance obligations for contracts with an original term of one year or less and the practical expedient for shipping and handling costs. Shipping and handling costs incurred to deliver products to customers are accounted for as fulfillment activities, rather than a promised service, and as such are included in Cost of sales in the Consolidated Statements of Operations. Cost of Sales Cost of sales includes cost of goods and shipping costs. Cost of goods consists of cost of merchandise, inbound freight, and other inventory-related costs, such as shrinkage costs and lower of cost or net realizable value adjustments. Occupancy expenses of the Company's retail locations and distribution centers, which consist of payroll, rent, and other lease required costs, including common area maintenance and utilities, are included as a component of Store operations and other operational expenses on the Consolidated Statements of Operations. The Company does not consider these occupancy expenses to be part of the costs to bring its products to the finished condition and therefore records such costs as Store operations and other operational expenses rather than Cost of sales. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company's cash equivalents consist primarily of money market funds. Financial instruments that potentially expose the Company to concentrations of risk consist primarily of cash and cash equivalents and accounts receivable, which are generally not collateralized. The Company's policy is to place its cash and cash equivalents with high-quality financial institutions in order to limit the amount of credit exposure. Accounts at each institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $ 250,000 . Additionally, certain cash equivalents maintained with investment institutions are insured by a combination of the Securities Investor Protection Corporation ("SIPC") up to $ 500,000 , which includes a $ 250,000 limit for cash, and additional private insurance, which mitigates the Company's exposure. As of December 31, 2025, the Company had $ 27.4 million in excess of the FDIC, SIPC, and other insurance limits. Marketable Securities Marketable securities investments primarily consist of fixed-income securities with short-term maturities, including debt instruments of the U.S. government and its agencies as well as high quality corporate bonds, which are not actively traded by the Company. 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 $ 0.8 million, $ 1.3 million and $ 1.4 million for the years ended December 31, 2025, 2024 and 2023, respectively, and are included in Interest income on the Consolidated Statements of Operations. Accounts Receivable Accounts receivable consist primarily of trade receivables stated at the amount of consideration that the Company expects to collect from balances outstanding at period-end, net of allowances for credit losses. The Company estimates its allowance for credit losses and the related expected credit loss based upon the Company's historical credit loss experience and the age of the account adjusted for asset-specific risk characteristics, current economic conditions, relationship with the customer, and reasonable forecasts. Accounts receivable are written off or fully reserved when collection of amounts due is deemed improbable. Indicators of improbable collection include client bankruptcy, client litigation, client cash flow F-10 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS difficulties, and ongoing service or billing disputes. Credit is generally extended on a short-term basis, thus current receivables do not bear interest. Interest on past due balances are subject to an interest charge of 1.5 % per month. Notes Receivable From time-to-time, the Company has executed notes receivable to third parties secured by collateral. Notes receivable generally have terms of 12 months to 18 months and bear interest from 12 to 14 % per annum. Generally, the underlying collateral is product or equipment financed by the note receivable. Notes receivable are stated at the amount the Company expects to collect from balances outstanding at period-end, net of allowances for credit losses. The Company estimates its allowance for credit losses and the related expected credit loss based upon the Company's historical credit loss experience and the age of the account adjusted for asset-specific risk characteristics, current economic conditions, relationship with the customer, and reasonable forecasts. A reserve for uncollectible notes receivable is established when collection of amounts due is deemed improbable. Indicators of improbable collection include client bankruptcy, client litigation, client cash flow difficulties, and ongoing service or billing disputes. When management determines, after considering economic and business conditions and collection efforts, that an allowance for credit losses is necessary for a note receivable or collection of interest on the note is improbable, the accrual of interest on the instrument ceases. Any payment received on such non-accrual note receivable is recorded as interest income when the payment is received. Once payments of principal and interest are current, the Company resumes accruing interest on the note receivable. The Company periodically reviews the value of the underlying collateral for the note receivable and evaluates whether the value of the collateral continues to provide adequate security for the note. Should the value of the underlying collateral become less than the outstanding principal and interest, the Company will determine whether an allowance or impairment of the note receivable and related accrued interest is necessary. As of December 31, 2025 and 2024, the Company believes the value of the underlying collateral to be sufficient and in excess of the respective outstanding principal and accrued interest, net of recognized allowance for credit losses. Concentration of Credit Risk The Company is exposed to credit risk in the normal course of business, primarily related to accounts receivable and notes receivable. The Company is affected by general economic conditions in the U.S. To limit credit risk, management periodically reviews and evaluates the financial condition of customers and maintains an allowance for credit losses. As of December 31, 2025 and 2024, the Company does not believe that it has significant credit risk. Inventory Inventory consists predominantly of gardening supplies and materials, fixtures, and equipment, and is recorded at the lower of cost (moving average cost method) or net realizable value. The inventory balance includes raw materials of $ 2.2 million and $ 2.4 million each of the years ended December 31, 2025 and 2024, respectively, with the remainder consisting of finished goods. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions, slow-moving or obsolete inventory, and overstocked inventory based on trends and experience, including demand-based product rankings. Write-downs and write-offs are recorded to cost of sales on the Consolidated Statements of Operations and charges during the years ended December 31, 2025, 2024 and 2023, were $ 2.4 million, $ 6.5 million and $ 4.8 million, respectively. Property and Equipment Property and equipment are recorded at cost, or at fair value for assets acquired in accordance with ASC 805, Business Combinations , and depreciated on a straight-line basis over their estimated useful lives. Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining term of the lease or the useful life of the improvement. Renewals and betterment that materially extend the life of the asset are capitalized. With respect to constructed assets, all materials, direct labor, and contract services, as well as certain indirect costs, are capitalized. Costs for maintenance and repairs are expensed as incurred. F-11 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Computer software development costs and website development costs are expensed as incurred, except for internal-use software or website development costs that qualify for capitalization in accordance with ASC 350, Intangibles—Goodwill and Other , and include certain employee related expenses, including salaries, bonuses, benefits, and share-based compensation expenses; costs of computer hardware and software; and costs incurred in developing features and functionality. The Company expenses costs incurred in the preliminary project and post-implementation stages of software development and capitalizes costs incurred in the application development stage and costs associated with significant enhancements to existing internal use software applications. Costs incurred related to less significant modifications and enhancements as well as maintenance are expensed as incurred. These capitalized software costs are amortized on a straight-line basis over an estimated useful life commencing when the software project is ready for its intended use. The general range of estimated useful lives for property and equipment are as follows: Estimated Lives Vehicles 5 years Buildings 20 - 30 years Furniture, fixtures and equipment 3 - 7 years Capitalized software 3 - 8 years Leasehold improvements 3 - 10 years, not to exceed lease term The Company reviews for impairment indicators and recoverability of long-lived assets, including property and equipment, when circumstances indicate that the carrying value of the asset may not be recoverable. Refer to the Recoverability of long-lived assets significant accounting policy. Intangible Assets Intangible assets primarily include trade names, customer relationships, non-compete agreements, and intellectual property with finite lives identified in connection with acquisitions in accordance to ASC 805, Business Combinations . For each acquisition, the Company allocates the purchase price to the identifiable assets acquired and liabilities assumed, including intangible assets, based on estimated fair values. The Company determines the appropriate useful life of intangible assets by performing an analysis of cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives on a straight-line basis, which approximates the pattern in which the economic benefits associated with the asset are expected to be consumed. The estimated useful lives for trade names, customer relationships, non-compete agreements, and intellectual property are generally five to nine years . Goodwill Goodwill represents the excess purchase price over the fair value of identifiable assets acquired and liabilities assumed in connection with acquisitions in accordance to ASC 805, Business Combinations . Goodwill is not amortized but instead is tested for impairment at the reporting unit level at least annually, or more frequently if indicators of impairment exist. The Company performs its required annual goodwill impairment test as of December 1. Goodwill is assessed using either a qualitative or quantitative approach to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The qualitative assessment evaluates factors including macro-economic conditions, industry-specific and company-specific considerations, legal and regulatory environments, and historical performance. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed. Otherwise, no further assessment is required. Companies also have the unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test for a reporting unit. The quantitative approach compares the estimated fair value of the reporting unit, including goodwill, to its carrying amount. Impairment is indicated if the estimated fair value of the reporting unit is less than the carrying amount, and an impairment loss is recognized for the differential. The Company performs a quantitative impairment assessment for a reporting unit using a fair value method based on management's judgments and assumptions or third-party valuations. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. The Company determines fair value using the income approach, where estimated future cash flows are discounted to present value at an appropriate rate of return. Multiples of earnings F-12 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS based on the average of historical, published multiples of earnings of comparable entities with similar operations and economic characteristics are also used in developing estimated fair values. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, Fair Value Measurement . Impairment losses related to goodwill are included in Impairment loss on the Consolidated Statements of Operations. Refer to Note 6, Goodwill and Intangible Assets, for additional information regarding the Company's impairment assessments. Recoverability of Long-Lived Assets The Company reviews the recoverability of long-lived assets, including property and equipment, operating leases right-of-use assets, and intangible assets, when events or changes in circumstances occur that indicate the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the asset from the expected future pretax cash flows (undiscounted and without interest charges) of the related operations. 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. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations. The estimated fair values of the assets are measured using an income approach, which utilizes forecasted discounted cash flows. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, Fair Value Measurement , and primarily consist of expected future operating margins and cash flows, weighted average cost of capital rates, estimated salable values and third-party appraisal techniques such as market comparables. Impairment losses related to long-lived assets are included in Impairment loss on the Consolidated Statements of Operations. Refer to Note 6, Goodwill and Intangible Assets, and Note 8, Leases, for additional information regarding the Company's long-lived asset impairment assessments. Leases Leases are accounted for in accordance with ASC 842, Leases . Contracts are evaluated to determine whether the arrangement contains a lease at inception. Leases are classified as either finance leases or operating leases based on criteria in ASC 842, Leases . The Company's operating leases primarily consist of real estate leases for its retail stores, distribution centers, warehouses, and offices. The Company does not have finance leases. Additionally, the Company subleases certain of its operating leases related to closed retail locations. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term. The lease liabilities represent the present value of remaining lease payments over the lease term. The right-of-use assets represent the Company's right to use an underlying asset and are based upon the lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of right-of-use assets. The majority of the Company's leases do not provide an implicit rate; therefore, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments for those leases. The Company's incremental borrowing rate for a lease is the rate of interest it would pay to borrow on a collateralized basis over a similar term to the lease in a similar economic environment. The lease term includes the non-cancelable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The exercise of lease renewal options is at the Company's sole discretion. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term operating leases that have a lease term of one year or less and that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Short-term lease costs include expenses related to leases with terms greater than one month but less than 12 months, and the expense is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient to account for lease and non-lease components as a single component for all leases. F-13 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company monitors for triggering events or conditions that require a reassessment of its leases. When the reassessment requires a re-measurement of the lease liability, a corresponding adjustment is made to the carrying amount of the right-of-use asset. Additionally, the Company reviews for impairment indicators of its right-of-use assets and other long-lived assets as described in the Recoverability of long-lived assets significant accounting policy. Lease expense is recorded within the Company's Consolidated Statements of Operations based upon the nature of the operating lease right-of-use assets. Where assets are used to directly serve 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. Variable lease payments are expensed as incurred and include certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease, as applicable. 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 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. 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 judgment. Accordingly, the degree of judgment 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 losses. The marketable securities are classified as available-for-sale and are carried at fair value based on quoted market prices. Level December 31, 2025 December 31, 2024 Cash equivalents 1 $ 20,431 $ 16,945 Marketable securities 2 $ 15,658 $ 28,984 Business Combinations The Company accounts for acquisitions in accordance with ASC 805, Business Combinations . Assets acquired and liabilities assumed are recognized at their estimated fair values in accordance with ASC 820, Fair Value Measurements , as F-14 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS of the acquisition date. For all acquisitions, the preliminary allocation of the purchase price was based upon a preliminary valuation, and the Company's estimates and assumptions are subject to change as valuations are finalized within the measurement period, which cannot extend beyond one year from the acquisition date. Measurement period adjustments are recognized in the reporting period in which the adjustments were determined and calculated as if the accounting had been completed at the acquisition date. The process for estimating fair values requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of future cash flows and developing appropriate discount rates. Any changes to these estimates may have a material impact on the Company's operating results or financial position. All transaction costs are expensed as incurred and recorded in Selling, general and administrative expense in the Consolidated Statements of Operations. Refer to Note 13, Acquisitions, for additional information regarding the Company's business combinations. Income Taxes The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets to the amount that will more likely than not be realized. To the extent that a determination was made to establish or adjust a valuation allowance, the expense or benefit is recorded in the period in which the determination is made. From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. The Company prepares and files tax returns based on its interpretation of tax laws and regulations. In the normal course of business, the tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax, interest and penalty assessments by these taxing authorities. In determining the Company's income tax provision for financial reporting purposes, the Company establishes a reserve for uncertain income tax positions unless such positions are determined to be more likely than not of being sustained upon examination, based on their technical merits. The Company only recognizes tax benefits taken on the tax return that the Company believes are more likely than not of being sustained upon examination. There is considerable judgment involved in determining whether a position taken on the tax return is more likely than not of being sustained. The Company adjusts its tax reserve estimates periodically because of ongoing examinations by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations. The consolidated income tax provision of any given year includes adjustments to prior year income tax accruals that are considered appropriate and any related estimated interest and penalties. The Company's policy is to recognize, when applicable, interest and penalties on uncertain income tax positions as part of its income tax provision. Advertising The Company expenses advertising and promotional costs when incurred. Advertising and promotional expenses for the years ended December 31, 2025, 2024, and 2023 amounted to $ 1.6 million, $ 2.0 million, and $ 1.8 million, respectively. Earnings Per Share The Company computes net earnings per share under ASC 260-10, Earnings Per Share . Basic earnings or loss per share ("EPS") is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income or loss by the weighted average of all potentially dilutive shares of common stock that were outstanding during the periods presented. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options, restricted stock units, and common stock warrants, which assumes that any proceeds received from the exercise of in-the-money stock options, restricted stock units, and common stock warrants, would be used to purchase common shares at the average market price for the period. F-15 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Share-Based Compensation The Company uses share-based compensation, primarily restricted stock units, to provide long-term performance incentives for its employees, non-employee members of its Board of Directors, and consultants. The Company records share-based compensation in accordance with ASC 718, Compensation-Stock Compensation . Restricted stock units are valued using the market value on the grant date. The fair value of all share-based payment awards is recognized as an expense over the requisite service period using the straight-line single-option method and is included in Selling, general, and administrative expense in the Consolidated Statements of Operations. Forfeitures are recognized as they occur. Periodically, the Company has issued stock options and common stock warrants for which the fair value is estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which affect the calculated values. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate used in the option pricing model is based on the U.S. Treasury rate that corresponds to the expected life of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company's stock price. These factors could change in the future, affecting the determination of share-based compensation expense in future periods. The Company has also periodically 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 generally entitle the employees to receive a specified dollar value of common stock on future dates and vest over time subject to the employee's continued employment. The Company recognizes compensation expense for these awards over the requisite service period. Refer to Note 9, Share-Based Payments, for additional information regarding the Company's share-based compensation and share-based payment awards. Treasury Stock The Company recognizes common stock repurchased as treasury stock at the amount paid to repurchase its shares, including incremental direct costs to repurchase the common stock, as a reduction to stockholders' equity on the Consolidated Balance Sheets. In accordance with ASC 505, Equity , 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. Segment Reporting The Company continually monitors and reviews its segment reporting structure in accordance with authoritative guidance for changes in management's approach or changes in other facts and circumstances that might result in different segment reporting. Consistent with the prior year, 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. Refer to Note 15, Segments, for additional information regarding the Company's reportable segments. Restructuring 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. Certain of the Company's restructuring activities include the recognition of exit or disposal costs, which are recognized in accordance with ASC 420, Exit or Disposal Cost Obligations . Exit or disposal costs include, but are not limited to, the costs of termination benefits, such as one-time involuntary severance or retention bonuses, one-time contract termination costs (excluding leases), and other costs associated with non-termination type costs related to restructuring initiatives. Liabilities F-16 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS from exit and disposal costs are recorded for estimated costs to be incurred. Refer to Note 17, Restructuring, for additional information related to restructuring activities. 3. RECENT ACCOUNTING PRONOUNCEMENTS From time to time, the 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 Consolidated Financial Statements or disclosures. Recently Adopted Accounting Pronouncements 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. The Company adopted ASU 2023-09 on a prospective basis for the annual reporting period beginning January 1, 2025. Refer to Note 7, Income Taxes for changes in disclosures resulting from adoption of ASU 2023-09. Recently Issued Accounting Pronouncements Not Yet Adopted 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 will adopt the standard for the annual reporting period beginning January 1, 2026 and does not expect the standard to have a material impact on the consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)—Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"), which amends current guidance for capitalizing internal use software costs by removing all references to prescriptive and sequential software development stages to better align with current iterative development methods. ASU 2025-06 is effective for interim and annual periods beginning after December 15, 2027. Early adoption is permitted as of the beginning of an annual reporting period, and ASU 2025-06 can be applied prospectively, retrospectively, or on a modified transition approach. The Company will adopt the standard prospectively as of January 1, 2026 and does not expect the standard to have a material impact on the consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270)—Narrow-Scope Improvements (“ASU 2025-11”), which is intended to clarify interim disclosure requirements and the applicability of Topic 270. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and adoption of ASU 2025-11 can be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this standard. F-17 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 15, 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 December 31, 2025 10,668 4,015 Increase $ 3,307 $ 1,611 Balance as of January 1, 2024 $ 8,895 $ 5,359 Balance as of December 31, 2024 7,361 2,404 Decrease $ ( 1,534 ) $ ( 2,955 ) Of the total amount of customer deposits as of January 1, 2025, $ 1.9 million was reported as revenue during the year ended December 31, 2025. Of the total amount of customer deposits as of January 1, 2024, $ 4.8 million was reported as revenue during the year ended December 31, 2024. Of the total amount of customer deposits as of January 1, 2023, $ 3.4 million was reported as revenue during the year ended December 31, 2023. The Company also has notes receivable under longer term financing arrangements at interest rates typically ranging from 12 % to 14 % with repayment terms typically ranging for 12 to 18 months. Notes receivable at December 31, 2025 and 2024 were as follows: December 31, 2025 2024 Notes receivable $ 721 $ 1,056 Allowance for credit losses ( 214 ) — Notes receivable, net $ 507 $ 1,056 During the year ended December 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 16, Commitment and Contingencies, for additional information regarding the settlement. F-18 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. PROPERTY AND EQUIPMENT Property and equipment at December 31, 2025 and 2024 consisted of the following: December 31, 2025 2024 Vehicles $ 2,504 $ 2,553 Buildings and land 1,991 2,121 Leasehold improvements 10,312 12,086 Furniture, fixtures and equipment 11,704 13,051 Capitalized software 9,155 16,446 Construction-in-progress 58 49 Property and equipment, gross 35,724 46,306 Accumulated depreciation and amortization ( 25,929 ) ( 30,813 ) Property and equipment, net $ 9,795 $ 15,493 Depreciation and amortization expense related to property and equipment was $ 5.4 million, $ 12.8 million and $ 7.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. In conjunction with the Company's restructuring activities as discussed in Note 17, Restructuring, the Company reassessed and shortened the estimated useful life of certain capitalized software assets, which resulted in a $ 5.3 million increase to depreciation and amortization expense related to property and equipment for the year ended December 31, 2024. These capitalized software assets became fully amortized and were retired during the year ended December 31, 2025. Refer to Note 17, Restructuring, for additional information on the restructuring activities. During the year ended December 31, 2025, the Company concluded that a closed retail location, wholly-owned by the Company, met the criteria for classification as held for sale. The Company determined that the carrying value of the building and related improvements was greater than the fair value less costs to sell and recognized a $ 0.1 million impairment loss in the year ended December 31, 2025. Property and equipment in the above table includes building and land amounts classified as held for sale with a carrying value of $ 0.3 million. As of December 31, 2025, the Company continues to actively market the asset and expects to sell the asset within one year. 6. GOODWILL AND INTANGIBLE ASSETS The Company performs goodwill impairment testing annually on December 1, or more frequently if events or circumstances were to occur that would more likely than not reduce the fair value of reporting units below the carrying amount. The Company would recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill. The adjusted carrying amount of goodwill shall be its new accounting basis. For the goodwill impairment test performed on December 1, 2025, only two of the Company's four reporting units had remaining goodwill balances. The Company elected to qualitatively review both reporting units for events and circumstances which would indicate whether it was more than likely than not reporting unit fair values were below carrying values. The qualitative assessment did not identify any indicators of impairment, and accordingly, no further impairment assessments were necessary. For the goodwill impairment test performed on December 1, 2024, the Company elected different approaches based on the circumstances surrounding each reporting unit. Of the Company's four reporting units, only three had remaining goodwill balances. The Company elected to qualitatively review one reporting unit for events and circumstances which would indicate whether it was more than likely than not reporting unit fair values were below carrying values. The qualitative assessment did not identify any indicators of impairment, and accordingly, no further impairment assessments were necessary. For the remaining two reporting units, the Company elected to bypass the qualitative assessment and proceed directly to a quantitative assessment. The fair value of each reporting unit was primarily determined using the income approach, which discounts estimated future cash flows to present value using an appropriate rate of return. Multiples of earnings based on the average of historical, published multiples of earnings of comparable entities with similar operations and economic characteristics are also used in developing estimated fair values. The estimated fair value of each reporting F-19 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS unit was compared to each respective carrying amount, and, as a result of changes to the business and future projections, the Company recorded a goodwill impairment loss of $ 5.9 million for the year ended December 31, 2024. In conjunction with the quantitative impairment assessment on December 1, 2024, the Company performed a recoverability test on the following finite-lived intangible assets: customer relationships and trade names. The Company determined the fair value of these finite-lived intangible assets using the income approach. The estimated fair values of the finite-lived intangible assets were compared to the respective carrying values, and as a result, the Company identified a $ 0.7 million impairment loss, for the year ended December 31, 2024. For the goodwill impairment test performed on December 1, 2023, the Company completed a quantitative goodwill impairment assessment for each of its four reporting units. The fair value of each reporting unit was determined using the income approach, which discounts estimated future cash flows to present value using an appropriate rate of return. The estimated fair value of each reporting unit was compared to its carrying amount, and, as a result of changes to the business and future projections, the Company identified a $ 9.3 million impairment loss related to its goodwill for the year ended December 31, 2023. In conjunction with its annual goodwill impairment assessment on December 1, 2023, the Company quantitatively evaluated the recoverability of its long-lived assets, including its finite-lived intangible assets, for impairment. The recoverability assessment compared the carrying value of long-lived asset groups to their expected future pretax cash flows (undiscounted and without interest charges). If the undiscounted cash flows were less than the carrying values, an impairment loss was recognized for the difference between the estimated fair values using an income approach and the related carrying values. As a result, the Company identified a $ 6.2 million impairment loss for the year ended December 31, 2023 related to its finite-lived intangible assets, including trade names, patents, customer relationships, non-competes, and intellectual property. The changes in goodwill, including the impairments discussed above, by segment for the years ended December 31, 2025 and 2024 were as follows: Cultivation and Gardening Storage Solutions Total Balance as of December 31, 2023 $ 5,920 $ 1,605 $ 7,525 Impairment ( 5,920 ) — ( 5,920 ) Balance as of December 31, 2024 — 1,605 1,605 Acquisitions and measurement period adjustments 475 — 475 Balance as of December 31, 2025 $ 475 $ 1,605 $ 2,080 Accumulated impairment for goodwill related entirely to the Cultivation and Gardening segment and totaled $ 131.9 million, $ 131.9 million and $ 125.9 million as of December 31, 2025, 2024, and 2023, respectively. The changes in intangible assets, including the impairments discussed above, by segment for the years ended December 31, 2025 and 2024 were as follows: Cultivation and Gardening Storage Solutions Total Balance as of December 31, 2023 $ 13,501 $ 2,679 $ 16,180 Amortization ( 5,885 ) ( 781 ) ( 6,666 ) Impairment ( 735 ) — ( 735 ) Balance as of December 31, 2024 6,881 1,898 8,779 Amortization ( 5,221 ) ( 702 ) ( 5,923 ) Acquisitions 470 — 470 Balance as of December 31, 2025 $ 2,130 $ 1,196 $ 3,326 F-20 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 assets in the preceding tables represent the estimated fair values of goodwill and identified intangible assets. As of December 31, 2025, the Company has finalized its purchase price allocation. Refer to Note 13, Acquisitions, for additional information regarding the Viagrow acquisition. Intangible assets on the Company's Consolidated Balance Sheets consisted of the following: December 31, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade names $ 27,790 $ ( 26,764 ) $ 1,026 $ 27,790 $ ( 21,908 ) $ 5,882 Customer relationships 13,339 ( 11,040 ) 2,299 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 $ 43,194 $ ( 39,868 ) $ 3,326 $ 42,724 $ ( 33,945 ) $ 8,779 Amortization expense for the years ended December 31, 2025, 2024, and 2023 was $ 5.9 million, $ 6.7 million and $ 8.7 million, respectively. Future amortization expense as of December 31, 2025 was as follows: 2026 $ 2,067 2027 817 2028 135 2029 77 2030 52 Thereafter 178 Total $ 3,326 7. INCOME TAXES On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law, introducing significant changes to U.S. federal income tax law. The OBBBA made permanent or modified several provisions originally enacted under the Tax Cuts and Jobs Act of 2017, and introduced new rules affecting both domestic and international tax regimes. Under ASC 740, the effects of new tax legislation are recognized in the period that includes the enactment date. The Company has evaluated the provisions of the OBBBA and their impact on its financial statements as of the enactment date, in accordance with ASC 740. The legislation did not have a material impact on the Company's income tax expense or effective income tax rate for the year ended December 31, 2025. The ultimate impact of the OBBBA on the Company’s tax position and financial statements will depend on future guidance, the Company’s actual results, and potential changes in state tax conformity. F-21 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company's income is derived solely from operations in the in the United States. The provision for income taxes for the years ended December 31, 2025, 2024, and 2023 consisted of the following: Year Ended December 31, 2025 2024 2023 Current tax expense (benefit): Federal $ — $ — $ ( 115 ) State 191 158 147 Deferred tax (benefit): Federal — — — State — — — Provision for income taxes $ 191 $ 158 $ 32 The tax effects of temporary differences that gave rise to the Company's deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows: December 31, 2025 2024 Deferred tax assets: Net operating losses and attributes carryovers $ 31,800 $ 24,897 Deferred right-of-use lease liabilities 7,420 9,750 Share-based compensation 88 586 Accumulated depreciation and amortization 29,929 31,804 Capitalized research costs 280 397 Accruals and other 2,638 2,039 Total deferred tax assets 72,155 69,473 Deferred tax liabilities: Deferred right-of-use lease assets ( 6,809 ) ( 9,071 ) Total deferred tax liabilities ( 6,809 ) ( 9,071 ) Net deferred tax asset 65,346 60,402 Valuation allowance ( 65,346 ) ( 60,402 ) Net deferred tax asset after valuation allowance $ — $ — The Company regularly assesses the ability to realize deferred tax assets recorded based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income on a jurisdiction by jurisdiction basis. In the event that the Company changes its determination as to the amount of realizable deferred tax assets, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. The Company’s management believes that, based on a number of factors, it is more likely than not, that all or some portion of the deferred tax assets will not be realized; and accordingly, for the year ended December 31, 2025, the Company has provided a valuation allowance against the Company’s U.S. net deferred tax assets. The net change in the valuation allowance for the year ended December 31, 2025 was an increase of $ 4.9 million. As of December 31, 2025, the Company had cumulative federal net operating losses of $ 126.8 million, which have an indefinite carryforward period. As of December 31, 2025 and 2024, the Company had cumulative state net operating loss carryforwards of $ 100.7 million and $ 81.6 million, respectively. State net operating loss carryforwards will begin to expire in calendar year 2035. In certain circumstances, due to ownership changes, the Company’s net operating loss carryforwards may be subject to limitations under Section 382 of the Internal Revenue Code ("IRC"). The Company has not completed a study to assess whether an ownership change has occurred, as defined by IRC Section 382, or whether there have been ownership changes since the Company's formation due to the complexity of cost associated with such a study. The Company estimates that if F-22 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS such a change did occur, the federal and state net operating loss carryforwards that can be utilized in the future could be significantly limited. There can be no assurance that the Company will ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership change limitations. The Company has assessed potential limitations on its tax attributes and has assigned a full valuation allowance against them as of December 31, 2025. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate after the adoption of ASU 2023-09 for the year ended December 31, 2025 is as follows: Year ended December 31, 2025 (in thousands) Percent Tax at U.S. Statutory Rate $ ( 4,976 ) 21 % State and Local Income Taxes, Net of Federal Benefit (1) 1,533 ( 6 ) % Changes in Valuation Allowances 3,121 ( 13 ) % Nondeductible items 164 ( 1 ) % Other items adjustments 349 ( 1 ) % Effective Tax Rate $ 191 — % (1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California and Michigan. A reconciliation of the U.S. federal statutory income tax rate to the Company's effective income tax rate prior to the adoption of ASU 2023-09 for the years ended December 31, 2024 and 2023 was as follows: Year Ended December 31, 2024 2023 Federal statutory income tax rate 21 % 21 % State and local income taxes (net of federal tax benefit) 3 % 4 % Share-based compensation — % ( 1 ) % Valuation allowance ( 22 ) % ( 24 ) % Other ( 2 ) % — % Effective income tax rate — % — % The amounts of cash income taxes paid by the Company during the year ended December 31, 2025 were as follows: Year ended December 31, 2025 State and local $ 141 Income taxes, net of amounts refunded $ 141 The Company paid $ 0.1 million of cash for income taxes during each of the years ended December 31, 2024 and 2023. Uncertain Tax Benefits The Company has not identified any uncertain tax positions as of December 31, 2025. The Company recognizes interest and penalties accrued related to uncertain tax benefits in the income tax provision. There were no interest and penalties included in other long-term liabilities on the accompanying Consolidated Balance Sheets for years ended December 31, 2025 and 2024. The Company does not expect any significant changes in its unrecognized tax benefits within 12 months of the reporting date. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. No tax years for the Company are currently under examination by the IRS or state and local tax authorities for income tax purposes. Generally, the Company's 2022 through 2024 fiscal years remain open for examination and assessment. For F-23 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS various states, the examination and assessment remain open for 2020 through 2024. Years prior to 2020 remain open solely for purpose of examination of the Company's loss and credit carryforwards. 8. LEASES The right-of-use assets and corresponding liabilities related to the Company's operating leases were as follows: December 31, 2025 2024 Operating lease right-of-use assets, net $ 27,050 $ 34,453 Current maturities of operating lease liabilities 6,455 7,398 Operating lease liabilities, net of current maturities 23,022 29,633 Total lease liabilities $ 29,477 $ 37,031 The weighted-average remaining lease terms and weighted-average discount rates for operating leases were as follows: December 31, 2025 2024 Weighted average remaining lease term 4.9 years 5.5 years Weighted average discount rate 6.1 % 6.2 % The components of lease costs were as follows: Year Ended December 31, 2025 2024 2023 Operating lease costs $ 8,971 $ 9,880 $ 11,248 Variable lease costs 1,959 2,126 2,559 Short-term lease costs 341 373 268 Sublease income ( 1,777 ) ( 1,420 ) ( 1,148 ) Total operating lease costs $ 9,494 $ 10,959 $ 12,927 In conjunction with the Company's restructuring activities as discussed in Note 17, 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 year ended December 31, 2024. Refer to Note 17, Restructuring, for additional information on the restructuring activities. The Company also identified a $ 0.1 million impairment related to its operating lease right-of-use assets for the year ended December 31, 2023, which is included in Impairment loss on the Consolidated Statements of Operations. Future maturities of the Company's operating lease liabilities and receipts from subleases as of December 31, 2025 were as follows: Lease Payments Sublease Receipts 2026 $ 8,017 $ ( 2,175 ) 2027 6,476 ( 2,332 ) 2028 6,032 ( 2,533 ) 2029 5,402 ( 2,619 ) 2030 4,911 ( 2,309 ) Thereafter 3,259 ( 1,383 ) Total lease payments (receipts) 34,097 $ ( 13,351 ) Less: imputed interest ( 4,620 ) Operating lease liabilities as of December 31, 2025 $ 29,477 F-24 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Supplemental and other information related to leases was as follows: Year Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from operating leases $ 9,138 $ 10,024 $ 11,139 9. SHARE-BASED PAYMENTS Equity Incentive Plans Overview The Company maintains a long-term incentive plan, the Second Amended and Restated 2018 Equity Incentive Plan (collectively with all amendments referred to as the "2018 Plan"), for employees, non-employee members of its Board of Directors (the "Board"), and consultants. The plan, which is administered by the Board, 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 Board also has broad authority to determine the terms and conditions of each option or other kind of equity award, adopt, amend and rescind rules and regulations for the administration of the 2018 Plan and amend or modify outstanding options, grants and awards. On January 7, 2018, the Board adopted the 2018 Equity Incentive Plan, which was approved by shareholders on April 20, 2018. On February 7, 2020, the Board approved the amendment and restatement of the 2018 Equity Incentive Plan to increase the number of shares issuable thereunder from 2.5 million to 5.0 million, and the amendment was approved by the shareholders on May 11, 2020. On April 22, 2024, the Board approved another amendment to increase the number of shares issuable thereunder from 5.0 million to 6.5 million, which was approved by shareholders on June 20, 2024. As of December 31, 2025, there were 1.2 million shares available for issuance under the 2018 Plan. No options, stock purchase rights or awards may be made under the 2018 Plan on or after the ten-year anniversary of the adoption of the 2018 Plan by the Board, but the 2018 Plan will continue thereafter while previously granted options, stock appreciation rights or awards remain subject to the 2018 Plan. Options granted under the 2018 Plan may be either "incentive stock options" that are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or "non-statutory stock options" that do not meet the requirements of Section 422 of the Code. The Board will determine the exercise price of options granted under the 2018 Plan. The exercise price of stock options may not be less than the fair market value, on the date of grant, per share of the Company's common stock issuable upon exercise of the option (or 110 % of fair market value in the case of incentive options granted to a 10% stockholder). No option may be exercisable for more than ten years ( five years in the case of an incentive stock option granted to a 10% stockholder) from the date of grant. Share-Based Compensation 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 following table presents share-based compensation expense for the years ended December 31, 2025, 2024 and 2023. Year ended December 31, 2025 2024 2023 Restricted stock units $ 1,513 $ 2,421 $ 3,171 As of December 31, 2025, the Company had $ 1.7 million of unamortized share-based compensation for share-based awards, which are expected to be recognized over a weighted average period of 1.9 years. F-25 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Restricted Stock Units The Company issues shares of 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 year ended December 31, 2025 is presented in the following table: Shares Weighted Average Grant Date Fair Value Nonvested as of December 31, 2024 1,403 $ 2.57 Granted 623 $ 1.30 Vested ( 717 ) $ 2.55 Forfeited ( 173 ) $ 2.33 Nonvested as of December 31, 2025 1,136 $ 1.92 The weighted-average grant-date fair value per restricted stock unit granted during the years ended December 31, 2025, 2024 and 2023 was $ 1.30 , $ 2.14 and $ 3.73 , respectively. 10. 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 years ended December 31, 2025, 2024 and 2023. Year Ended December 31, 2025 2024 2023 Net loss $ ( 24,046 ) $ ( 49,510 ) $ ( 46,496 ) Weighted average shares outstanding, basic 59,671 60,176 61,181 Effect of dilutive outstanding restricted stock units and stock options — — — Weighted average shares outstanding, diluted 59,671 60,176 61,181 Basic loss per share $ ( 0.40 ) $ ( 0.82 ) $ ( 0.76 ) Diluted loss per share $ ( 0.40 ) $ ( 0.82 ) $ ( 0.76 ) Diluted loss per share calculations for the years ended December 31, 2025, 2024 and 2023 excluded 5.9 thousand, 0.5 million, and 0.6 million shares of common stock issuable upon exercise of stock options that would have been anti-dilutive, respectively. Diluted loss per share calculations for the years ended December 31, 2025, 2024 and 2023 excluded 1.3 million, 0.9 million and 1.0 million non-vested restricted stock units that would have been anti-dilutive, respectively. 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 year ended December 31, 2024, the Company repurchased 2.5 million shares of common stock at an average price of $ 2.38 per share, exclusive of incremental direct costs. The Company retired all 2.5 million shares of treasury stock F-26 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. EMPLOYEE BENEFIT PLAN The Company has a 401(k) Savings Retirement Plan that covers substantially all full-time employees who meet the plan's eligibility requirements and provides for an employee elective contribution. The Company made immaterial matching contributions to the plan in the years ended December 31, 2025 and 2024, and matching contributions of $ 0.6 million in the year ended December 31, 2023. 13. ACQUISITIONS 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. The Company accounts for acquisitions in accordance with ASC 805, Business Combinations . Assets acquired and liabilities assumed are recognized at their estimated fair values in accordance with ASC 820, Fair Value Measurements , as of the acquisition date. For all acquisitions, the preliminary allocation of the purchase price was based upon a preliminary valuation, and the Company's estimates and assumptions are subject to change as valuations are finalized within the measurement period, which cannot extend beyond one year from the acquisition date. Measurement period adjustments are recognized in the reporting period in which the adjustments were determined and calculated as if the accounting had been completed at the acquisition date. The process for estimating fair values requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of future cash flows and developing appropriate discount rates. Any changes to these estimates may have a material impact on the Company's operating results or financial position. During the year ended December 31, 2025, the Company recognized measurement period adjustments of $ 0.5 million resulting in a reduction to estimated fair value of acquired intangible assets and an increase to deferred equity compensation payments in excess of the initial holdback liability. As a result of this measurement period adjustments, the Company increased acquired goodwill, which represents the expected value of organic growth and an opportunity for the Company to expand into a new market. There were no measurement period adjustments during the years ended December 31, 2024 and 2023. All transaction costs are expensed as incurred and recorded in Selling, general and administrative expense in the Consolidated Statements of Operations. Acquisition costs were less than $ 0.1 million for the years ended December 31, 2025 and 2023. The Company incurred no acquisition costs in the year ended December 31, 2024. 2025 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 transferred for the purchase of Viagrow was $ 1.3 million including cash paid and common stock issued on the date of acquisition, with certain additional amounts to be paid in future periods. The purchase price included deferred equity consideration, which was issued in the fourth quarter of 2025 upon settling discrepancies of net assets acquired, and contingent consideration, which is to be paid in cash over three years dependent on the achievement of certain performance goals. As of December 31, 2025, the Company has finalized its purchase price allocation. F-27 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The table below details the acquisition-date fair value of consideration transferred and the purchase price allocation of acquired net assets during the year December 31, 2025. Viagrow Consideration Cash $ 1,013 Common stock 109 Contingent consideration 83 Deferred equity consideration 50 Total consideration 1,255 Assets and liabilities acquired Inventory 275 Prepaids and other current assets 10 Property and equipment 41 Intangible assets 470 Goodwill 475 Customer deposits ( 16 ) Total $ 1,255 The following table represents the estimated fair value of identified intangible assets and the related estimated remaining useful lives. Estimated Fair Value Estimated Useful Life Customer relationships $ 470 9.0 years The following table represents the revenue and earnings included in the Consolidated Statement of Operations from the date of acquisition for the year ended December 31, 2025. Viagrow Net sales $ 714 Net loss $ ( 134 ) The following table represents the pro forma Condensed Consolidated Statement of Operations as if the acquisition was completed on January 1, 2024. Year ended December 31, (Unaudited) 2025 2024 Net sales $ 163,015 $ 191,520 Net loss $ ( 23,740 ) $ ( 49,568 ) 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. 2024 Acquisitions The Company had no acquisitions during the year ended December 31, 2024. 2023 Acquisitions 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 $ 2.0 million, including $ 1.9 million in cash and an indemnity holdback of $ 0.1 million. The SGS asset acquisition also F-28 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS included acquired goodwill of $ 0.6 million, which represents the value expected to rise from organic growth and an opportunity for the Company to expand into a new market. SGS is included in the Company's Cultivation and Gardening segment. Additionally, the Company made other, individually immaterial acquisitions during the year ended December 31, 2023. Total consideration for these purchases was $ 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 $ 0.3 million, which represents the value expected to rise from organic growth and an opportunity for the Company to expand into a new market. These acquisitions are 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 year ended December 31, 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 the year ended December 31, 2023. SGS Other Total Cash $ 1,922 $ 1,128 $ 3,050 Indemnity holdback 107 40 147 Total $ 2,029 $ 1,168 $ 3,197 The following table discloses the date of the acquisitions noted above and the revenue and earnings included in the Consolidated Statement of Operations for the year ended December 31, 2023. SGS Other Total Acquisition date May 23, 2023 Net sales $ 2,040 3,167 5,207 Net income (loss) $ 41 ( 40 ) 1 The following represents the pro forma Consolidated Statement of Operations as if the acquisitions had been included in the consolidated results of the Company for the entire period for the year ended December 31, 2023. Year ended December 31, (Unaudited) 2023 Net sales $ 228,032 Net loss $ ( 46,524 ) F-29 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. 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 $ 0.3 million, $ 0.2 million and $ 0.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, 2024 and 2023, there was an immaterial amount outstanding due to the firm. 15. 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. The profit measure that is evaluated for each reportable segment is based on segment 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: Year ended December 31, Net sales 2025 2024 2023 Cultivation and Gardening Proprietary brand sales $ 43,986 $ 39,528 $ 36,473 Non-proprietary brand sales 90,252 123,982 157,991 Total Cultivation and Gardening 134,238 163,510 194,464 Storage Solutions Commercial fixture sales 27,503 25,356 31,418 Total Storage Solutions 27,503 25,356 31,418 Total $ 161,741 $ 188,866 $ 225,882 Year ended December 31, Net sales 2025 2024 2023 Cultivation and Gardening Consumables $ 96,470 $ 118,088 $ 139,431 Durables 37,768 45,422 55,033 Total Cultivation and Gardening 134,238 163,510 194,464 Storage Solutions Durables 27,503 25,356 31,418 Total Storage Solutions 27,503 25,356 31,418 Total $ 161,741 $ 188,866 $ 225,882 F-30 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Selected disaggregated information by segment, including significant segment expenses, is presented in the following tables for the years ended: Year ended December 31, 2025 Cultivation & Gardening Storage Solutions Total Net sales $ 134,238 $ 27,503 $ 161,741 Cost of sales 102,045 16,421 118,466 Gross profit 32,193 11,082 43,275 Operating expenses Store operations and other operational expenses: Employee costs 9,499 2,876 12,375 Facilities 10,256 1,450 11,706 External service providers 490 52 542 Other segment items (1) 5,255 854 6,109 Total store operations and other operational expenses 25,500 5,232 30,732 Segment income from operations 6,693 5,850 12,543 Other corporate operating expenses Selling, general, and administrative 26,266 Estimated credit losses 437 Depreciation and amortization 11,295 Impairment loss 130 Total other corporate expenses 38,128 Loss from operations ( 25,585 ) Other income 1,730 Net loss before taxes $ ( 23,855 ) (1) Other segment items for each reportable segment include travel expenses, transaction fees, and other miscellaneous expenses. F-31 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year ended December 31, 2024 Cultivation & Gardening Storage Solutions Total Net sales $ 163,510 $ 25,356 $ 188,866 Cost of sales 131,346 13,798 145,144 Gross profit 32,164 11,558 43,722 Operating expenses Store operations and other operational expenses: Employee costs 13,720 3,007 16,727 Facilities 12,850 1,270 14,120 External service providers 1,127 89 1,216 Other segment items (1) 7,246 889 8,135 Total store operations and other operational expenses 34,943 5,255 40,198 Segment (loss) income from operations ( 2,779 ) 6,303 3,524 Other corporate operating expenses Selling, general, and administrative 29,243 Estimated credit recoveries ( 58 ) Depreciation and amortization 19,436 Impairment loss 6,875 Total other corporate expenses 55,496 Loss from operations ( 51,972 ) Other income 2,620 Net loss before taxes $ ( 49,352 ) (1) Other segment items for each reportable segment include travel expenses, transaction fees, and other miscellaneous expenses. F-32 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year ended December 31, 2023 Cultivation & Gardening Storage Solutions Total Net sales $ 194,464 $ 31,418 $ 225,882 Cost of sales 147,060 17,564 164,624 Gross profit 47,404 13,854 61,258 Operating expenses Store operations and other operational expenses: Employee costs 18,208 2,962 21,170 Facilities 14,145 1,057 15,202 External service providers 1,290 61 1,351 Other segment items (1) 9,496 863 10,359 Total store operations and other operational expenses 43,139 4,943 48,082 Segment income from operations 4,265 8,911 13,176 Other corporate operating expenses Selling, general, and administrative 29,799 Estimated credit losses 955 Depreciation and amortization 16,607 Impairment loss 15,659 Total other corporate expenses 63,020 Loss from operations ( 49,844 ) Other income 3,380 Net loss before taxes $ ( 46,464 ) (1) Other segment items for each reportable segment include marketing costs, 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. Customer and supplier concentrations No customer accounted for more than 10% of the Company's sales for the years ended December 31, 2025, 2024 and 2023. As of December 31, 2025, the loss of any supplier or vendor would not have a severe impact on the Company's business. 16. 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. In accordance with ASC 450, Contingencies , the Company regularly evaluates the status of its legal proceedings and establishes a liability for litigation and loss contingencies when information related to those contingencies show both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Due to the unpredictable nature of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time is normally difficult to ascertain. Legal and loss contingency accruals are recorded within Accrued liabilities on the Consolidated Balance Sheets and within Selling, general, and administrative expense in the Consolidated Statements of Operations. During the year ended December 31, 2025, the Company was engaged in two ongoing legal matters related to a California employment class action dispute and a vendor contract dispute resulting in a loss contingency accruals of $ 1.1 million. F-33 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 year ended December 31, 2024. It is the Company's opinion that the legal proceedings disclosed above, in addition to the other legal proceedings and claims in which the Company has been involved, individually and in the aggregate are not expected to have a material adverse effect on its financial condition, results of operations or cash flows. 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 December 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. 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. 17. 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 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. 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, and $ 2.4 million, were incurred during the years ended December 31, 2025 and 2024, respectively. These costs are presented on the 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. F-34 Table of Contents GROWGENERATION CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year ended December 31, 2025 2024 Cultivation and Gardening segment: Cost of sales (1) $ — $ 1,048 Gross profit — ( 1,048 ) Store operations and other operational expenses (2) 765 842 Restructuring costs in segment income from operations ( 765 ) ( 1,890 ) Corporate expenses: Selling, general, and administrative (3) 376 205 Impairment loss (4) — 220 Other expense (income) (5) — 50 Total restructuring and restructuring related activities $ ( 1,141 ) $ ( 2,365 ) (1) Includes inventory disposal costs (2) Costs consist primarily of property and equipment disposals, lease contract termination costs and employee termination benefits (3) Costs consist of corporate operational and administrative contract terminations and employee termination benefits (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 a $ 5.3 million increase to depreciation and amortization expense related to property and equipment in the year ended December 31, 2024. These capitalized software assets became fully amortized and were retired during the year ended December 31, 2025. The liabilities associated with restructuring costs were included in Accrued liabilities and Payroll and payroll tax liabilities on the Consolidated Balance Sheets. Activities related to liabilities incurred under the restructuring plan were as follows: Retail Location Closures Termination Benefits Other Associated Costs Total Balance as of December 31, 2023 $ — $ — $ — $ — Additions 715 317 65 1,097 Payments and other adjustments ( 600 ) ( 308 ) ( 65 ) ( 973 ) Balance as of December 31, 2024 $ 115 $ 9 $ — $ 124 Additions 765 — — 765 Payments and other adjustments ( 880 ) ( 9 ) — ( 889 ) Balance as of December 31, 2025 $ — $ — $ — $ — F-35 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The information required by this Item 9 was previously reported in our Current Report on Form 8-K that was filed with the SEC on July 14, 2025.