What changed in this filing

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Item 1. Business

2022-03-10 compared with 2021-03-29 · 231 added, 412 removed, 30 unchanged (96% of the section changed)

GrowGeneration Corp.

(together with all

of its wholly owned subsidiaries, collectively “GrowGeneration”

or the “Company”) was incorporated in Colorado

in 2014 and is the largest chain of hydroponic garden centers in North America and is a leading marketer and distributor of nutrients,

growing media, advanced indoor and greenhouse lighting, environmental control systems and accessories for hydroponic gardening.

Currently, the Company owns and operates a chain of fifty two (52) retail hydroponic/gardening stores across 12 states, with eighteen

(18) in the state of California, six (6) in the state of Michigan, eight (8) located in the state of Colorado, five (5) in the

State of Oklahoma, five (5) in Maine, two (2) in the state of Nevada, two (2) in the state of Washington, two (2) in the state

of Oregon, one (1) in the state of Rhode Island, one (1) in the state of Florida, one (1) in the state of Arizona, one (1) in the

state of Massachusetts, one (1) in the state of Arizona, an online e-commerce store, GrowGeneration.com and a commercial e-commerce

platform, Agron.io.

We recently announced the signing of two leases in Los Angeles and Rancho Dominguez, CA, which are our 53 rd

and 54 th locations.

Proprietary brands owned by the Company include Canopy Crop Management Corp, CharCoir Inc, and the

Company introduced several private-label brands across multiple product categories from LED lighting to nutrients and additives

and other products for indoor cultivation.

Our plan is to continue to acquire, open

and operate hydroponic/gardening stores and related businesses throughout North America.

GrowGeneration sell thousands of products,

including nutrients, growing media, advanced indoor and greenhouse lighting, environmental control systems, vertical benching and

accessories for hydroponic gardening, as well as other indoor and outdoor growing products, that are designed and intended for

growing a wide range of plants.

Hydroponics is a specialized method of growing plants using mineral nutrient solutions in a water

solvent, as opposed to soil.

This method is typically used for indoor cultivation to give growers the ability to better regulate

and control nutrient delivery, light, air, water, humidity, pests, and temperature.

Hydroponic growers benefit from these techniques

by producing crops faster and with higher crop yields per acre as compared to traditional soil-based growers.

Indoor growing techniques

and hydroponic products are being utilized in new and emerging industries or segments, including the growing of cannabis and hemp.

In addition, vertical farms producing organic fruits and vegetables also utilize hydroponics due to a rising shortage of farmland

as well as environmental vulnerabilities including drought, other severe weather conditions and insect pests.

GrowGeneration serves a new, yet sophisticated

community of commercial and urban cultivators growing specialty crops including organics, greens and plant-based medicines.

the traditional agricultural industry, these cultivators use innovative indoor and outdoor growing techniques to produce specialty

crops in highly controlled environments.

This enables them to produce crops at higher yields without having to compromise quality,

regardless of the season or weather and drought conditions.

Controlled-environment

agriculture (CEA) is a technology-based approach to maintain optimal growing conditions throughout the development of the

(together with all of its direct and indirect wholly owned subsidiaries, collectively “GrowGeneration” or the “Company”), incorporated in Colorado in 2014, is the largest chain of hydroponic garden centers in North America and is a leading marketer and distributor of nutrients, growing media, advanced indoor and greenhouse lighting, vertical benching, environmental control systems and accessories for hydroponic gardening.

GrowGeneration owns and operates specialty retail hydroponic and organic gardening stores.

Currently, GrowGeneration has 63 stores, which include 23 locations in California, 8 locations in Colorado, 7 locations in Michigan, 5 locations in Maine, 5 locations in Oklahoma, 4 locations in Oregon, 3 locations in Washington, 2 locations in Nevada, 1 location in Arizona, 1 location in Rhode Island,1 location in Florida, 1 location in Massachusetts and 1 location in New Mexico.

GrowGeneration also operates an online superstore for cultivators at growgeneration.com.

GrowGeneration carries and sells thousands of products, including organic nutrients and soils, advanced lighting and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers.

Our plan is to continue to acquire, open and operate hydroponic/gardening stores and related businesses throughout North America.

GrowGeneration sells thousands of products, including nutrients, growing media, advanced indoor and greenhouse lighting, environmental control systems, vertical benching and accessories for hydroponic gardening, as well as other indoor and outdoor growing products, that are designed and intended for growing a wide range of plants.

Hydroponics is a

specialized method of growing plants using mineral nutrient solutions in a water solvent, as opposed to soil.

This method is typically used for indoor cultivation to give growers the ability to better regulate and control nutrient delivery, light, air, water, humidity, pests, and temperature.

Hydroponic growers benefit from these techniques by producing crops faster and with higher crop yields per acre as compared to traditional soil-based growers.

Indoor growing techniques and hydroponic products are being utilized in new and emerging industries or segments, including the growing of cannabis and hemp.

Vertical farms producing organic fruits and vegetables also utilize hydroponics due to a rising shortage of farmland as well as environmental vulnerabilities, including drought, other severe weather conditions and pests.

GrowGeneration serves a new, yet sophisticated community of commercial and urban cultivators growing specialty crops, including organics, greens and plant-based medicines.

Unlike the traditional agricultural industry, these cultivators use innovative indoor and outdoor growing techniques to produce specialty crops in highly controlled environments.

This enables them to produce crops at higher yields without having to compromise quality, regardless of the season or weather and drought conditions.

Controlled-environment agriculture (CEA) is a technology-based approach to maintain optimal growing conditions throughout the development of the crop.

Production takes place within an enclosed growing structure such as a greenhouse or building.

Plants are often

grown using hydroponic methods in order to supply the proper amounts of water and nutrients to the root zone.

Plants are often grown using hydroponic methods in order to supply the proper amounts of water and nutrients to the root zone.

CEA optimizes the use of resources such as water, energy, space, capital and labor.

Different techniques are available for growing

in controlled environment agriculture.

Different techniques are available for growing in controlled environment agriculture.

The more viable option is vertical farming.

Vertical farming has the ability to produce

crops all year round in a controlled environment, with the possibility of increased yield by adjusting the amount of carbon and

nutrients the plants receive.

Our target customer segments include the

commercial growers in the plant-based medicine market, the craft grower and vertical farms who grow organically grown herbs and

leafy green vegetables.

The landscape for hydroponic retail stores is very fragmented, with numerous single stores which we consider

“targets”

for our acquisition strategy.

Further, the products we sell are in demand due to the ever-increasing legalization

of plant-based medicines, primarily cannabis and hemp, and the increasing number of licensed cultivation facilities in North America.

Vertical farming has the ability to produce crops all year round in a controlled environment, with the possibility of increased yield by adjusting the amount of carbon and nutrients the plants receive.

Our target customer segments include the commercial growers in the plant-based medicine market, the craft grower and vertical farms who grow organically grown herbs and leafy green vegetables.

The landscape for hydroponic retail stores is very fragmented, with numerous single stores which we consider “targets” for our acquisition strategy.

Further, the products we sell are in demand due to the ever-increasing legalization of plant-based medicines, primarily cannabis and hemp, and the increasing number of licensed cultivation facilities in North America.

Total sales for the hydroponic equipment industry are projected to surpass $16 billion by 2025.

The Company believes there are

over 15,000 active cannabis cultivation licenses in North America.

The Company believes there are over 15,000 active cannabis cultivation licenses in North America.

The average cultivation facility is approximately 36,000 sq.

and over 34,000,000 pounds of cannabis is projected to be cultivated by 2025.

Our retail operations are driven by a wide

selection of all hydroponic products, service and solutions driven staff and pick, pack and ship distribution and fulfillment capabilities.

We employ approximately 590 employees, a majority of them we have branded as “Grow Pros”.

Currently, our operations

span over 800,000 square feet of retail and warehouse space.

We operate our business through the following

business units:

Our retail operations are driven by a wide selection of all hydroponic products, service and solutions driven staff and pick, pack and ship distribution and fulfillment capabilities.

We employ approximately 702 employees, a majority of them we have branded as “Grow Pros”.

Currently, our operations span over 895,000 square feet of retail and warehouse space.

We operate our business through the following business units:

62 hydroponic/gardening centers focused on serving growers and cultivators.

Sales to commercial customers, including large multi-state operators and cultivators.

E-Commerce/Omni-channel :

Our e-commerce operation, includes GrowGeneration.com and Agron.io, a business-to-business (B2B) online portal for commercial

GrowGeneration.com is currently adding “Buy online/Pick up in store”

same day pick up service.

Distribution/Supply Chain :

Inclusive of commercial sales organizations selling directly to customers outside of the physical retail network.

Some of our garden centers have multi-functions, with added capabilities that include warehousing, distribution and fulfillment for direct shipments of products to garden center locations, pick, pack and ship for our online platforms and direct fulfillment to our commercial customers.

• E-Commerce/Omni-channel :

Our e-commerce operation includes GrowGeneration.com a business-to-business (B2B) online portal for commercial growers.

• Proprietary Brands and Private Label:

GrowGeneration

sells a variety of products, including nutrients, growing media, advanced indoor and greenhouse lighting, ventilation systems,

vertical benching, environmental control systems and accessories for hydroponic gardening.

Our supply chain includes thousand’s

stock keeping units (“SKUs”) across 16 product departments.

Over 60% of our products are consumables, that feed the

plants, generating recurring orders by our customers.

Our strategy is to supply products to two groups of customers:

growers and craft growers that require a local center to fulfill their daily and weekly growing needs.

We have developed a line

of private label products that we are selling through our garden centers under proprietary brands we own and trademarked.

strategy is to deliver a one-stop shopping experience, through selection, service and solutions for our customers.

Store Acquisitions and New Store Openings

Core to our growth strategy is to expand

the number of our retail garden centers throughout North America.

The hydroponic retail landscape is fragmented, which allows us

to acquire the “best of breed”

hydroponic operations.

In addition to the 12 states we are currently operating in, we

have identified new market opportunities in states that include Ohio, Illinois, Pennsylvania, New York, New Jersey, Mississippi

and Missouri.

In 2020, we opened a second hydroponic/gardening center in Tulsa, Oklahoma, a 40,000 square feet store operation

and fulfillment center, and completed eight (8) acquisitions, adding 14 new locations in 2020.

The Company acquired 14 new locations

in the first quarter of 2021 and has an active target pipeline of acquisitions which are planned to close in 2021.

Commercial Sales Division

Our commercial division is focused on selling

end to end solutions for large commercial cultivators.

When a commercial customer gains a new cultivation license, they will need

to purchase lighting, benching, environmental control systems, irrigation, fertigation and other products to outfit their cultivation

We have developed a line of private label products that we are selling through our garden centers under proprietary brands we own and trademark.

Our strategy is to deliver a one-stop shopping experience, through selection, service and solutions for our customers.

Core to our growth strategy is to expand the number of our retail garden centers throughout North America.

The hydroponic retail landscape is fragmented, which allows us to acquire the “best of breed” hydroponic retail operations.

In addition to the 13 states we are currently operating in, we have identified new market opportunities in states that include Ohio, Illinois, Pennsylvania, New York, New Jersey, Mississippi, Missouri and Virginia.

During 2021, the Company acquired 23 new locations.

Our commercial sales organization is focused on selling end to end solutions for large commercial cultivators.

When a commercial customer gains a new cultivation license, they will need to purchase lighting, benching, environmental control

systems, irrigation, fertigation and other products to outfit their cultivation facility.

Commercial customers typically purchase in larger dollar amounts and sizes of products.

We offer commercial customers

volume pricing, terms and financing.

We offer commercial customers volume pricing, terms and financing.

Our commercial team manages thousands of commercial accounts across North America.

Our commercial

division collectively contributed approximately $49 million in revenue for 2020 compared to approximately $17 million for 2019,

a 189% year over year increase.

We have identified over 15,000 active licensed growers in North America and believe there is significant

room for us to expand our base of commercial customers.

E-Commerce/Omni-Channel Division

Our digital strategy is focused on capturing

the home, craft and commercial grower online.

GrowGeneration.com offers over 10,000 hydroponic products, all curated by our product

GrowGeneration.com offer customers the option to have their orders shipped directly to their locations, anywhere in North

America or alternatively customers can buy online and pick up in store.

Revenue for 2020 was approximately $10.6 million compared to

approximately $4.8 million for 2019, an increase of 123%.

New visitors to our website were 1.2 million in 2020 versus 477,000 in

2019, an increase of 152% year over year.

Our online garden center closed 17,000 transactions in 2020 versus 6,300 in 2019, an

increase of 170%.

On March 19, 2021, the Company purchased, Agron.io.

a leading wholesale agriculture portal that allows commercial

growers to manage their purchasing and logistics in one platform.

pricing, real-time inventory and one of the largest product catalog in the industry, with over 10,000 products in over 60

categories, including greenhouses, extraction, hemp, and commercial equipment.

The platform manages real-time product updates,

tier-pricing changes, case quantities, pallet quantities, profit margin projections, hazmat fees, ETL/UL listings and state chemical

regulations, as well as guarantees the latest shipping rates using API Pallet.

Our supply chain currently spans 800,000

of retail and warehouse space, across 52 locations and 12 states.

Today, we operate distribution and fulfillment out of

our 60,000 sq.

ft location in Sacramento, CA and 40,000 sq.

in Tulsa, OK.

The Company announced on March,9, 2021 the addition

of a total of 122,000 sq.

ft., including 52,000 sq.

in downtown Los Angeles, CA and 70,000 sq.

in Rancho Dominguez, CA,

that will serve as warehousing for our private-label products, distribution and fulfillment for the Company.

We are in the process

of building several additional locations that will serve as fulfillment service centers, that include a 25,000 sq.

in Phoenix, AZ.

and a 58,000 sq.

location in Medley, FL.

The Company expects these locations to be open by the summer of 2021.

E-Commerce/Omni-Channel

Our digital strategy is focused on capturing the home, craft and commercial grower online.

GrowGeneration.com offers over 10,000 hydroponic products, all curated by our product team.

GrowGeneration.com offers customers the option to have their orders shipped directly to their locations, anywhere in North America.

Proprietary Brands and Private Label

GrowGeneration purchased Canopy Crop Management

Corp., in December 2020, the developer of the popular Power Si line of monosilicic acid products, a widely used nutrient additive

On March 12, 2021, the Company purchased Char Coir, a line of premium coco pots, cubes and medium.

Both Power Si and

Char Coir are brands that generate over $10,000,000 in annual sales.

We believe that expanding our private label offerings will

have a positive impact on our margins and profitability in the near term.

We use various trademarks, trade names in our private-

label business, including Ion Lighting, Sunleaves, powder nutrients and additive line, Optilime Bulbs, Blueprint controllers and

timers, Growxcess pots and containers, Harvest Edge, pruners, trellis and other gardening accessories, and Durabreeze fans and

dehumidifiers.

Both “GrowGeneration”

and “Where the Pros Go to Grow”

are trademarks used to brand and market our garden centers across

North America.

In December 2020, GrowGeneration purchased the business of Canopy Crop Management Corp., the developer of the popular Power Si line of monosilicic acid products, a widely used nutrient additive for plants.

On March 12, 2021, the Company purchased CharCoir, a line of premium coco pots, cubes and medium.

We believe that expanding our private label offerings will have a positive impact on our margins and profitability in the near term.

We use various trademarks and trade names in our private- label business, including Ion Lighting, Sunleaves powder nutrients and additive line, Optilime Bulbs, Blueprint controllers and timers, Growxcess pots and containers, Harvest Edge pruners, trellis and other gardening accessories, Durabreeze fans and dehumidifiers, and Drip Hydro nutrients.

Both “GrowGeneration” and “Where the Pros Go to Grow” are trademarks used to brand and market our garden centers across North America.

Competitive Advantages

As the largest chain of hydroponic garden

centers by revenue and number of stores in the United States based on management’s estimates, we believe that we have the

following core competitive advantages over our competitors:

We offer a one-stop shopping experience to all types of growers by providing “selection, service, and solutions”;

As the largest chain of hydroponic garden centers by revenue and number of stores in the United States based on management’s estimates, we believe that we have the following core competitive advantages over our competitors:

• We offer a one-stop shopping experience to all types of growers by providing “selection, service, and solutions”;

• We provide end-to-end solutions for our commercial customers from capex built-out to consumables to nourish their plants;

2 unchanged sentences

• We consider ourselves to be a leader of the products we offer, from launching new technologies to the development of our private label products;

We have a professional team for mergers and acquisitions to acquire and open new locations and successfully add them to our company portfolio;

We offer a program of issuing credit to licensed commercial customers based on a credit evaluation process.

• We have an experienced professional team to acquire and open new locations, products and technologies and successfully add them to our company portfolio.

Community Service and Charity

The Company has recently announced its

partnership with Whole Cities Foundation.

Founded by Whole Foods Market in 2014, the independent, nonprofit organization is based

in Austin, Texas, and has partnered with more than 190 community organizations in 100 cities across the U.S.

to build thriving

local food systems and improve health.

The first project, with Whole Cities, through its Fresh, Healthy Food Access Grant program,

has been with Newark Science & Sustainability and Greater Newark Conservancy over the past 4 years.

Both organizations

had identified hydroponic growing as a goal for their community plans.

Each group will benefit from an equipment grant.

first two opportunities are part of a pilot that we expect will yield learnings over the course of the year.

GrowGeneration will

provide equipment and expertise and partner with Whole Cities to evaluate community impact.

As we have built a national chain of hydroponic

garden centers, it has always been our mission to give back to the local communities.

In our day-to-day operations, we see the

results growing hydroponically.

We could not be prouder to partner with Whole Cities to donate hydroponic equipment and supplies

to their local communities to help them with their gardens and increase the quality of their food production.

Our staff of approximately

590 dedicated team members, the majority of whom are experienced in how to grow hydroponically, are energized to lend a hand and

their personal time to support Whole Cities.

It is rewarding to watch a community, come together, parents and children, and produce

the largest tomatoes and produce in their community!

Further, in December 2020, the Company

donated $10,000 to the Make- A- Wish Foundation to grant “a wish”

The Company is an active contributor

and supporter of the Make-A-Wish Foundation.

GrowGeneration, together with Harvest 360 Technologies, LLC (H360), has launched a new program to support education and training for social equity license applicants.

Regulations in both New York and New Jersey seek to create a framework to regulate cannabis in these states in a manner that promotes social equity and economic development, placing an emphasis on promoting inclusion of diverse populations in the medicinal and recreational cannabis industries.

GrowGeneration is committed to delivering solutions to these operators and supporting their communities.

This program with H360 gives GrowGeneration a direct method to help new companies grow their businesses.

As part of this program, GrowGeneration and H360 have established the NEXTGEN Micro Cultivation competition for applicants seeking micro grow licenses in the New Jersey adult-use cannabis market.

GrowGeneration has committed up to $500,000 to provide education and training scholarships for 25 cultivation teams participating in the competition.

GrowGeneration will also provide access to equipment packages and market resources.

All contestants will get access to an online cultivation portal with valuable resources to assist in the preparation of an application and to be educated and informed about best practices in the New Jersey program.

The 25 finalist teams that make it to the second round will also receive complete planning and engineering services for their facilities from GrowGeneration, as well as access to a compliant business services package from H360 worth thousands of dollars.

Five winning teams will then be selected by a panel of judges to receive a comprehensive package, including financing, advanced training, business service packages, and direct operational support.

How We Evaluate Our Operations

The Company generates sales primarily from

the sale of hydroponic garden products, including nutrients, growing media, advanced indoor and greenhouse lighting, environmental

control systems, vertical benching, and accessories for hydroponic gardening, as well as other indoor and outdoor growing products.

The Company recognizes revenue, net of estimated returns and sales tax, at the time the customer takes possession of merchandise

or receives services at which point, the performance obligation is satisfied.

Sales and other taxes collected concurrent with revenue

producing activities are excluded from revenue.

Customer deposits and lay away sales are not reported as revenue until final payment

is received and the merchandise has been delivered.

Our sales depend on the type of products

we sell and the mix between consumables and non-consumables.

Due to their nature, purchases of consumables result in repeat orders

as customers seek to replenish their supplies.

In 2020, approximately 60% of our sales were consumables.

Generally, in new markets

where legalization of plant-based medicines is recent and licensors are ramping up their grow operations, there are more purchases

of non-consumables for buildouts compared to purchases of consumables.

In more mature markets, there are generally more purchases

of consumables than non-consumables.

Our sales are also impacted by our customer mix of commercial and non-commercial customers,

as larger commercial customers may receive volume discounts.

More than a majority of our sales are derived from our commercial

We calculate gross profit as sales less

cost of goods sold.

Cost of goods sold consists of cost of product sold and freight.

Gross profit excludes depreciation and amortization,

which are presented separately in our consolidated statement of operations.

Our overall gross profit margin varies

with our product mix, in particular the percentage of sales of consumable products versus non-consumables, such as in connection

with buildouts, during a particular quarter.

In addition, our customer mix impacts gross profit margin due to larger commercial

customers receiving discounts.

The Company generates sales primarily from the sale of hydroponic garden products, including nutrients, growing media, advanced indoor and greenhouse lighting, environmental control systems, vertical benching, and accessories for hydroponic gardening, as well as other indoor and outdoor growing products.

The Company recognizes revenue, net of estimated returns and sales tax, at the time the customer takes possession of merchandise or receives services, at which point the performance obligation is satisfied.

Sales and other taxes collected concurrent with revenue producing activities are excluded from revenue.

Customer deposits and lay away sales are not reported as revenue until final payment is received and the merchandise has been delivered.

Our sales depend on the type of products we sell and the mix between consumables and non-consumables.

Due to their nature, purchases of consumables result in repeat orders as customers seek to replenish their supplies.

Generally, in new markets where legalization of plant-based medicines is recent and licensors are ramping up their grow operations, there are more purchases of non-consumables for buildouts compared to purchases of consumables.

In more mature markets, there are generally more purchases of consumables than non-consumables.

Our sales are also impacted by our customer mix of commercial and non-commercial customers, as larger commercial customers may receive volume discounts and other promotions.

A majority of our sales are derived from our commercial customers.

We calculate gross profit as sales less cost of goods sold.

Cost of goods sold consists of cost of product sold, freight, and tariffs.

Gross profit excludes depreciation and amortization, which are presented separately in our consolidated statements of operations.

Our overall gross profit margin varies with our product mix, in particular the percentage of sales of consumable products versus non-consumables, such as in connection with buildouts.

In addition, our customer mix impacts gross profit margin due to larger commercial customers receiving discounts.

Operating Expenses

Operating expenses are comprised of store

operations, primarily payroll, rent and utilities, and corporate overhead.

Corporate overhead is comprised of share-based compensation,

depreciation and amortization, general and administrative costs and corporate salaries and related expenses.

General and administrative

expenses (“G&A”) consist mainly of advertising and promotions, travel & entertainment, professional fees and

Operating expenses are comprised of store operations, primarily payroll, rent and utilities, and corporate overhead.

Corporate overhead is comprised of share-based compensation, depreciation and amortization, general and administrative costs and corporate salaries and related expenses.

General and administrative expenses (“G&A”) consist mainly of advertising and promotions, travel & entertainment, professional fees, and insurance.

G&A as a percentage of sales does not increase commensurate with an increase in sales.

Our largest expenses are

payroll and rent and these are largely fixed and not variable.

Our advertising and marketing expenses are controllable and variable

depending on the particular market.

Our largest expenses are payroll and rent and these are largely fixed and not variable.

Our advertising and marketing expenses are controllable and variable depending on the particular market.

Same-Store Sales

We assess the organic growth of our sales

on a same-store basis.

We believe that our assessment on a same-store basis represents an important indicator of comparative financial

results and provides relevant information to assess our performance.

New and acquired stores become eligible for inclusion in the

comparable store base if the store has been under our ownership for the entire period in the same-store base periods for which

we are including the store.

For example, our same store sales for the full year 2020 and 2019 includes 21 stores that operated

for the entire year.

We do not include any stores that were closed or consolidated during a particular period.

We assess the organic growth of our sales on a same-store basis.

We believe that our assessment on a same-store basis represents an important indicator of comparative financial results and provides relevant information to assess our performance.

New and acquired stores become eligible for inclusion in the comparable store base if the store has been under our ownership for the entire period in the same-store base periods for which we are including the store.

Research and Development

The Company has not incurred any research

and development expenses during the period covered by this report.

The Company has not incurred any research and development expenses during the period covered by this report.

Customers and Suppliers

Our key customers vary by state and are

expected to be more defined as the Company moves from its retail walk-in purchasing sales strategy to serving cultivation facilities

directly and under predictable purchasing activity.

Currently, none of our customers accounted for more than 5% of our sales in

2020 or 2019.

Our key suppliers include several manufacturers

and distributors such as Hawthorne Garden Supply, Hydrofarm, Fluence Engineering, Advanced Nutrients, House and Gardens, FoxFarm

Fertilizer, Canna, USA, and others.

All the products purchased and sold are applicable to indoor and outdoor growing for organics,

greens, and plant-based medicines.

As of December 31, 2020, two suppliers represented 41% of all our purchases, a decrease of 18%

The Company is of the opinion that the loss of either supplier would not have a material adverse impact on our business.

The Company maintains direct manufacturing agreements with many vendors.

The Company purchased a total of 14 stores

in 2020 and 14 stores through March 12, 2021.

The Company also completed the acquisitions of two leading product companies, Canopy

Crop Management in December 2020 and Char Coir, on March 14, 2021.

Acquisition completed in 2021, Subsequent

to year-end December 31, 2020

On March 19, 2021 the Company purchased

the assets of Agron, LLC, an online seller of growing equipment.

The total consideration for the purchase of Agron was approximately

$11.3 million, including $6 million in cash and common stock valued at approximately $5.3 million.

On March 15, 2021 the Company purchased

the assets of 55 Hydroponics, a hydroponic and organic superstore located in Santa Ana, CA.

The total consideration for the purchase of 55 Hydroponics was approximately $6.1 million, including $5 million in cash and common

stock valued at approximately $1.1 million.

On March 15, 2021 the Company purchased

the assets of Aquarius, a hydroponic and organic garden store in Springfield, MA.

The total consideration for the purchase of Aquarius was approximately $3.6 million, including $2.4 million in cash and common

stock valued at approximately $1.2 million.

On March 12, 2021 the Company purchased

the assets of Charcoir Corporation, who sells an RHP-certified growing medium made from the

highest-grade coconut fiber.

The total consideration for the purchase of Charcoir was approximately $16.3 million, including

$9.8 million in cash and common stock valued at approximately $6.5 million.

On February 22, 2021 the Company purchased

the assets of San Diego Hydroponics & Organics, a four-store chain of hydroponic and

organic garden stores in San Diego, CA.

The total consideration for the purchase of San Diego Hydroponics was approximately

$9.3 million, including $4.8 million in cash and common stock valued at approximately $4.5 million.

On February 15, 2021 the Company purchased

the assets of Grow Warehouse LLC, a four-store chain of hydroponic and organic garden stores

in Colorado (3 stores) and Oklahoma (1 store).

The total consideration for the purchase of Grow Warehouse LLC was approximately

$17.8 million, including $8.1 million in cash and common stock valued at approximately $9.7 million.

On February 1, 2021 the Company purchased

the assets of J.A.R.B., Inc d/b/a Grow Depot Maine, a two-store chain in Auburn and Augusta,

The total consideration for the purchase of Grow Depot Maine was approximately $2.1 million, including $1.7 million

in cash and common stock valued at approximately $411,000.

On January 25, 2021 the Company purchased

the assets of Indoor Garden & Lighting, Inc, a two-store chain of hydroponic and equipment

and indoor gardening supply stores serving the Seattle and Tacoma, Washington area.

The total consideration for the purchase

of Garden & Lighting was approximately $1.63 million, including $1.1 million in cash and common stock valued at approximately

Acquisitions completed in 2020

On December 23, 2020, the Company acquired

the assets of Canopy Crop Management and its complete portfolio of products including the Power SI brand of momo-silicic acid-enriched

The total consideration for the purchase of Canopy Crop was approximately $9.2 million, including $5.4 million in

cash and common stock valued at approximately $3.8 million.

On December 14, 2020, the Company acquired

the assets of Grassroots, a three-store chain in California.

The total consideration for the purchase of Grassroots was approximately

$10 million, including $7.5 million in cash and common stock valued at approximately $2.5 million.

On November 17, 2020, the Company acquired

the assets of The GrowBiz, a five-store chain with four stores in California and one store in Oregon.

The total consideration for

the purchase of The GrowBiz was approximately $44.7 million, including $17.4 million in cash and common stock valued at approximately

$27.3 million.

On October 20, 2020 the Company acquired

the assets of Big Green Tomato (“BGT”), a two-store chain in Battle Creek and Taylor,

The total consideration for the purchase of BGT was approximately $9.1 million, including $6.0

in cash and common stock valued at approximately $3.1 million.

On October 12, 2020, the Company acquired

the assets of Hydroponics Depot, LLC, a single store located in Phoenix Arizona.

consideration for the purchase of Hydroponics Depot, LLC was approximately $1.54 million,

including $987,500 in cash and common stock valued at approximately $548,000.

On August 10, 2020 the Company acquired

certain assets of Benzakry Family Corp, d/b/a Emerald City Garden, in a transaction valued at $1 million.

Acquired goodwill of

approximately $618,000 represents the value expected to rise from organic growth and an opportunity to expand into a well-established

market for the Company.

Cash consideration was funded from the Company’s existing working capital.

On June 16, 2020 the Company acquired certain

assets of H2O Hydroponics, LLC in a transaction valued at approximately $1.99 million.

Acquired goodwill of approximately $1 million

represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

Cash consideration was funded from the Company’s existing working capital.

On February 26, 2020, the Company entered

into an asset purchase agreement through its wholly-owned subsidiary, GrowGeneration Florida Corp, to purchase the assets of Healthy

& Harvest, LLC, with one location in Pembroke Pines, FL.

The total consideration for the purchase of Healthy Harvest was approximately

$2.9 million, including $1.8 million in cash and common stock valued at approximately $1.1 million.

In connection with the purchase

of the assets, the Company also entered a three-year commercial lease for warehouse space, effective February 26, 2020 and subleased

the store space whose current lease expires July 31, 2021.

Our business is subject to some seasonal

Historically, our highest volume of sales occurs in our second and third fiscal quarters, and the lower volume occurs

during our first or fourth fiscal quarter.

The markets in which we sell our products

are highly competitive.

Our key competitors include many local and national vendors of gardening supplies, local product resellers

of hydroponic and other specialty growing equipment, as well as online product resellers and large online marketplaces such as

Amazon.com and eBay.

Our key customers vary by state and are expected to be more defined as the Company increases focus on serving cultivation facilities directly and under predictable purchasing activity, compared to its retail walk-in purchasing sales strategy.

Currently, none of our customers accounted for more than 5% of our sales in 2021, 2020, or 2019.

Our key suppliers include several manufacturers and distributors such as Hawthorne Garden Supply, Hydrofarm, Fluence Engineering, Advanced Nutrients, House and Gardens, FoxFarm Fertilizer, Canna Gradening, and others.

All the products purchased and sold are applicable to indoor and outdoor growing for organics, greens, and plant-based medicines.

As of December 31, 2021, one supplier represented 28% of all of our purchases.

As of December 31, 2020 and 2019, two suppliers represented 41% and 51%, respectively, of all our purchases.

The Company is of the opinion that the loss of

either supplier would not have a material adverse impact on our business.

The Company also maintains direct manufacturing agreements with certain vendors.

2021 Acquisitions

On January 25, 2021, the Company purchased the assets of Indoor Garden & Lighting, Inc, a two-store chain of hydroponic and indoor gardening equipment and supply stores serving the Seattle and Tacoma, Washington area.

The total consideration for the purchase of Indoor Garden & Lighting was approximately $1.7 million, including approximately $1.2 million in cash and common stock valued at approximately $0.5 million.

Acquired goodwill represents the value expected to arise from organic growth and an opportunity to expand into a well-established market for the Company.

On February 1, 2021, the Company purchased the assets of J.A.R.B., Inc d/b/a Grow Depot Maine, a two-store chain in Auburn and Augusta, Maine.

The total consideration for the purchase of Grow Depot Maine was approximately $2.1 million, including approximately $1.7 million in cash and common stock valued at approximately $0.4 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On February 15, 2021, the Company purchased the assets of Grow Warehouse LLC, a four-store chain of hydroponic and organic garden stores in Colorado (3) and Oklahoma (1).

The total consideration for the purchase of Grow Warehouse LLC was approximately $17.8 million, including approximately $8.1 million in cash and common stock valued at approximately $9.7 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On February 22, 2021, the Company purchased the assets of San Diego Hydroponics & Organics, a four-store chain of hydroponic and organic garden stores in San Diego, California.

The total consideration for the purchase of San Diego Hydroponics was approximately $9.3 million, including approximately $4.8 million in cash and common stock valued at approximately $4.5 million.

Acquired goodwill of approximately represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On March 12, 2021, the Company purchased the assets of Charcoir Corporation, which sells an RHP-certified growing medium made from the highest-grade coconut fiber.

The total consideration for the purchase of Charcoir was approximately $16.4 million, including approximately $9.9 million in cash and common stock valued at approximately $6.5 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established distribution market for the Company of a proprietary brand.

On March 15, 2021, the Company purchased the assets of 55 Hydroponics, a hydroponic and organic superstore located in Santa Ana, California.

The total consideration for the purchase of 55 Hydroponics was approximately $6.5 million, including approximately $5.3 million in cash and common stock valued at approximately $1.1 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On March 15, 2021, the Company purchased the assets of Aquarius Hydroponics, a hydroponic and organic garden store in Springfield, Massachusetts.

The total consideration for the purchase of Aquarius was approximately $3.6 million, including approximately $2.3 million in cash and common stock valued at approximately $1.2 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On March 19, 2021, the Company purchased the assets of Agron, LLC, an online seller of growing equipment.

The total consideration for the purchase of Agron was approximately $11.2 million, including approximately $6.0 million in cash and common stock valued at approximately $5.3 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established e-commerce market for the Company targeting the commercial customer.

On April 19, 2021, the Company purchased the assets of Grow Depot LLC ("Down River Hydro"), a hydroponic and indoor gardening supply store in Brownstown, Michigan.

The total consideration for the purchase of Down River Hydro was approximately $4.4 million, including approximately $3.2 million in cash and common stock valued at approximately $1.2 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On May 24, 2021, the Company purchased the assets of The Harvest Company ("Harvest"), a northern California-based hydroponic supply center and cultivation design innovator with stores in Redding and Trinity Counties.

The total consideration for the purchase of Harvest was approximately $8.3 million, including approximately $5.6 million in cash and common stock valued at approximately $2.8 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On July 19, 2021, the Company purchased the assets of Aqua Serene, Inc., ("Aqua Serene"), an Oregon corporation which consists of an indoor/outdoor garden center with stores in Eugene and Ashland, Oregon.

The total consideration for the purchase was approximately $11.7 million, including approximately $9.9 million in cash and common stock valued at approximately $1.8 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On July 3, 2021, the Company purchased the assets of Mendocino Greenhouse & Garden Supply, Inc, a Northern California-based hydroponic garden center located in Mendocino, California.

The purchase agreement was modified on July 19, 2021 to amend the purchase price.

The total consideration for the purchase was $4.0 million in cash.

This acquisition allows the Company to expand its footprint in the Northern California.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On August 24, 2021, the Company purchased the assets of Commercial Grow Supply, Inc.

("CGS"), a hydroponic superstore located in Santa Clarita, California.

The total consideration for the purchase was approximately $7.2 million, including approximately $6.0 million in cash and common stock valued at approximately $1.3 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On August 23, 2021 the Company purchased the assets of Hoagtech Hydroponics, Inc.

("Hoagtech"), a Washington -based corporation consisting of a hydroponic and garden supply center serving the Bellingham, Washington area.

The total consideration for the purchase was approximately $3.9 million in cash.

The Asset Purchase Agreement contains a contingent payment equal to $0.6 million to be settled in common stock of the Company if this garden supply center reaches $8.0 million in revenue within a 12-month calendar period from the date of close.

The Company used a third-party specialist to value this contingent consideration.

The probability that the target will be reached was determined to be 5% which resulted in a value of approximately $28.5 thousand of contingent consideration which was added to goodwill.

This acquisition expands our footprint in the Pacific Northwest.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On October 15, 2021, the Company purchased the assets of Indoor Store, LLC ("All Seasons Gardening"), an indoor-outdoor garden supply center specializing in hydroponics systems, lighting, and nutrients.

All Seasons Gardening is the largest hydroponics retailer in New Mexico.

The total consideration for the purchase was approximately $0.9 million, including approximately $0.7 million in cash and common stock valued at approximately $0.2 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On December 31, 2021, the Company purchased the assets of Mobile Media, Inc and MMI Agriculture ("MMI"), a mobile shelving manufacturing and warehouse facility.

The total consideration for the purchase was approximately $9.1 million, including approximately $8.3 million in cash and common stock valued at approximately $0.8 million.

Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

2020 Acquisitions

On February 26, 2020 the Company purchased the assets of Health & Harvest LLC.

The total consideration for the purchase was approximately $2.9 million, including approximately approximately $1.8 million in cash and common stock valued at approximately $1.1 million.

Acquired goodwill represents the value expected to rise from organic growth and the opportunity to expand into a well-established market for the Company.

On June 16, 2020, we acquired certain assets of H2O Hydroponics, LLC (“H2O Hydro”).

The total consideration for the purchase was approximately $2.0 million, including approximately $1.3 million in cash and common stock valued at approximately $0.7 million.

Acquired goodwill represents the value expected to rise from organic growth and the opportunity to expand into a well-established market for the Company.

On August 10, 2020 we acquired certain assets of Benzakry Family Corp, d/b/a Emerald City Garden (“Emerald City”).

The total consideration for the purchase was approximately $1.0 million.

Acquired goodwill represents the value expected to rise from organic growth and the opportunity to expand into a well-established market for the Company.

On October 12, 2020, the Company acquired the assets of Hydroponics Depot, LLC (“Hydro Depot”), a single store located in Phoenix, AZ.

The total consideration for the purchase was approximately $1.5 million, including approximately $1.0 million in cash and common stock valued at approximately $0.5 million.

Acquired goodwill represents the value expected to rise from organic growth and the opportunity to expand into a well-established market for the Company.

On October 20, 2020 the Company acquired the assets of Big Green Tomato (“BGT”), a two-store chain in Battle Creek and Taylor, Michigan.

The total consideration was approximately $9.0 million, including approximately $6.0 million in cash and shares of common stock valued at approximately $3.1 million.

Acquired goodwill of approximately $4.0 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On November 17, 2020, the Company acquired the assets of The GrowBiz (“GrowBiz”), a five-store chain with four stores in California and one store in Oregon.

The total consideration for the purchase of GrowBiz was approximately $44.8 million, including approximately $17.5 million in cash and common stock valued at approximately $27.3 million.

Acquired goodwill of approximately $28.5 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On December 14, 2020, the Company acquired the assets of Grassroots Hydroponics, Inc., a three-store chain in California.

The total consideration for the purchase of Grassroots was approximately $10.0 million, including approximately $7.5 million in cash and common stock valued at approximately $2.5 million.

Acquired goodwill of approximately $4.5 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On December 23, 2020, the Company acquired the assets of Canopy Crop Management (“Canopy”) and its complete portfolio of products including the Power SI brand of silicic acid-enriched fertilizers.

The total consideration for the purchase of Canopy Crop was approximately $9.2 million, including approximately $5.4 million in cash and common stock valued at approximately $3.8 million.

Acquired goodwill of approximately $4.9 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established product distribution market for the Company.

2019 Acquisitions

On January 21, 2019, the Company acquired the assets of Chlorophyll, Inc., a single store in Colorado.

The total consideration for the purchase of Chlorophyll, Inc., was approximately $4.2 million, including approximately $3.7 million in cash and common stock valued at approximately $0.5 million.

Acquired goodwill of approximately $2.6 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established product distribution market for the Company.

On February 7, 2019, the Company acquired the assets of Palm Springs Hydroponics, a 21-store chain in California.

The total consideration for the purchase of Palm Springs Hydroponics was approximately $1.0 million, including approximately $800 in cash an common stock valued at approximately $0.2 million.

Acquire goodwill of approximately $0.6 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

On February 11, 2019, the Company acquired the assets of Reno Hydroponics ("Reno"), a single store in Reno, Nevada.

The total consideration for the purchase of Reno was approximately $0.8 million, including approximately $0.5 million in cash and common stock valued at approximately $0.3 million.

Acquired goodwill of approximately $0.5 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established product distribution market for the Company.

On May 14, 2019, the Company acquired the assets of GreenLife Garden Supply ("GreenLife"), a three-store in New England.

The total consideration for the purchase of GreenLife was approximately $3.5 million, including approximately $2.6 million in cash and common stock valued at approximately $0.8 million.

Acquired goodwill of approximately $2.3 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established product distribution market for the Company.

On September 3, 2019, the Company acquired the assets of Grand Rapids Hydroponics ("GRH"), a single store in Michigan.

The total consideration for the purchase of GRH was approximately $3.9 million, including approximately $2.4 million in cash and common stock valued at approximately $1.5 million.

Acquired goodwill of approximately $2.4 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established product distribution market for the Company.

On December 16, 2019, the Company acquired the assets of Grow World LLC ("Grow World"), a single store in Oregon.

The total consideration for the purchase of Grow World was approximately $1.3 million, including approximately $1.0 million in cash and common stock valued at approximately $0.3 million.

Acquired goodwill of approximately $0.7 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established product distribution market for the Company.

For further detail on all acquisitions please see Footnote 16 in the Notes to Consolidated Financial Statements.

Our business is subject to some seasonal influences.

Historically, our highest volume of sales occurs in our second and third fiscal quarters, and the lower volume occurs during our first or fourth fiscal quarter.

The markets in which we sell our products are highly competitive.

Our key competitors include many local and national vendors of gardening supplies, local product resellers of hydroponic and other specialty growing equipment, as well as online product resellers and large online marketplaces such as Amazon.com and eBay.

Our industry is a highly fragmented industry with over 1,000 retail hydroponic retailers throughout the U.S.

Notwithstanding the foregoing, we are the

largest chain of hydroponic garden centers in North America and our pricing, inventory and product availability and overall customer

service, provide us with the ability to compete in our industry.

In addition, as we continue to increase the number of garden centers

and inventory per store, we expect to be able to continue to purchase inventory at lower volume prices, which we expect will enable

us to price competitively and deliver the products that our customers are seeking.

The Company competes by delivering the widest

selection of hydroponics products, end to end solutions for all types of cultivation environments, in-store sales and product support,

direct manufacturer pricing and world-class customer service.

Intellectual Property and Proprietary

Our intellectual property consists of our

brands and their related trademarks, domain names and websites, customer lists and affiliations, product knowledge and technology,

and marketing intangibles.

We also hold rights to website addresses related to our business including websites that are actively

used in our day-to-day business such as www.GrowGeneration.com.

We own the federally registered trademark for “GrowGeneration®”

“Where the Pros Go to Grow®”.

In addition, we own several registered trademarks acquired in March 2019.

Notwithstanding the foregoing, we are the largest chain of hydroponic garden centers in North America and our pricing, inventory and product availability and overall customer service provide us the ability to compete in our industry.

In addition, as we continue to increase the number of garden centers, we expect to be able to continue to purchase inventory at lower volume prices, which we expect will enable us to price competitively and deliver the products that our customers are seeking.

The Company competes by delivering the widest selection of hydroponics products, end to end solutions for all types of cultivation environments, in-store sales and product support, direct manufacturer pricing and world-class customer service.

Intellectual Property and Proprietary Rights

Our intellectual property includes our brands and their related trademarks, domain names and websites, customer lists and affiliations, product knowledge and technology, patents, and marketing intangibles.

We also hold rights to website addresses related to our business including websites that are actively used in our day-to-day business such as www.GrowGeneration.com.

We own several the federally registered trademarks, including for “GrowGeneration®” and “Where the Pros Go to Grow®” as well as our proprietary brands.

Government Regulation

We sell products, including hydroponic

gardening products, that end users may purchase for use in new and emerging industries or segments, including the growing of cannabis

and hemp, that may not grow or achieve market acceptance in a manner that we can predict.

The demand for these products depends

on the uncertain growth of these industries or segments.

In addition, we sell products that end

users may purchase for use in industries or segments, including the growing of cannabis and hemp, that are subject to varying,

inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations,

and consumer perceptions.

We sell products, including hydroponic gardening products, that end users may purchase for use in new and emerging industries or segments, including the growing of cannabis and hemp, that may not grow or achieve market acceptance in a manner that we can predict.

The demand for these products depends on the uncertain growth of these industries or segments.

In addition, we sell products that end users may purchase for use in industries or segments, including the growing of cannabis and hemp, that are subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions.

For example, certain countries and 36 U.S.

states have adopted frameworks that authorize, regulate,

and tax the cultivation, processing, sale, and use of cannabis for medicinal and/or non-medicinal use, while the U.S.

Substances Act and the laws of other U.S.

states have adopted frameworks that authorize, regulate, and tax the cultivation, processing, sale, and use of cannabis for medicinal and/or non-medicinal use, while the U.S.

Controlled Substances Act and the laws of other U.S.

states prohibit growing cannabis.

In addition, with the passage of the Farm Bill in December

2018, hemp cultivation is now broadly permitted.

The Farm Bill explicitly allows the transfer of hemp-derived products across state

lines for commercial or other purposes.

It also removes restrictions on the sale, transport, or possession of hemp-derived products,

so long as those items are produced in a manner consistent with the law.

We believe the recent passage of the 2018 Farm Bill will

allow the Company to expand its marketplace opportunities.

Our gardening products, including our hydroponic

gardening products, are multi-purpose products designed and intended for growing a wide range of plants and are purchased by cultivators

who may grow any variety of plants, including cannabis and hemp.

Although the demand for our products may be negatively impacted

depending on how laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions

develop, we cannot reasonably predict the nature of such developments or the effect, if any, that such developments could have

on our business.

As of December 31, 2020, we had 360 full

time employees and 47 part-time employees.

No employees are subject to collective bargaining agreements.

As of March 19, 2021,

the Company has 590 employees.

In addition, with the passage of the Farm Bill in December 2018, hemp cultivation is now broadly permitted.

The Farm Bill explicitly allows the transfer of hemp-derived products across state lines for commercial or other purposes.

It also removes restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced in a manner consistent with the law.

We believe passage of the 2018 Farm Bill will continue to allow the Company to expand its marketplace opportunities.

Our gardening products, including our hydroponic gardening products, are multi-purpose products designed and intended for growing a wide range of plants and are purchased by cultivators who may grow any variety of plants, including cannabis and hemp.

Although the demand for our products may be negatively impacted depending on how laws (including federal legalization of cannabis), regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions develop, we cannot reasonably predict the nature of such developments or the effect, if any, that such developments could have on our business.

We strive to foster a collaborative and team-oriented culture and view our human capital resources as an ongoing priority.

As of February 23, 2022, we employ 687 employees:

634 full-time employees, 49 part-time employees, 4 independent contractors, no temporary or seasonal workers.

None of our employees are subject to collective bargaining agreements, and we have had no labor-related work stoppages.

We believe we offer competitive terms and incentives to attract and retain employees.

Our retention rate for our full-time employees is approximately three years, and we employ various initiatives to attract new employees and retain existing employees, including employer contributions to health and welfare benefits, 401(k) plan matching, bonus programs and training opportunities.

In late 2021, we also engaged a compensation consultant to ensure our key employee compensation packages are competitive.

Principal Offices

Our principal offices are located at 930

W 7 th Ave, Suite A., Denver, CO 80204.

Currently, we lease ten (10) facilities in the State of Colorado, twenty (20)

in the State of California, three (3) in the State of Nevada, two (2) in the State of Washington, two (2) in the State of Oregon,

two (2) in the state of Arizona, one (1) in the State of Rhode Island, six (6) in the State of Oklahoma, six (6) in the State of

Michigan, five (5) in the State of Maine, three (3) in the State of Florida, all for our corporate and retail operations.

the Company currently leases approximately 800,000 square feet of space, which consists primarily of 9,000 feet of corporate office

space, 100,000 square feet of warehouse space and approximately 700,000 square feet of store space.

Our principal offices are located at 5619 DTC Parkway, Suite 900, Greenwood Village, CO 80111.

Currently, we lease 11 facilities in the State of Colorado, 26 in the State of California, 2 the State of Nevada, 3 in the State of Washington, 4 in the State of Oregon, 1 in the state of Arizona, 1 in the State of Rhode Island, 5 in the State of Oklahoma, 7 in the State of Michigan, 5 in the State of Maine, 2 in the State of Florida, 1 in the State of New Mexico, and 1 in the State of Massachusetts, all for our corporate and retail operations.

In total the Company currently leases approximately 900,000 square feet of space, which consists primarily of 7,000 feet of corporate office space, 100,000 square feet of warehouse space and 800,000 square feet of store space.

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

What changed 10-K

Item 1. Business