What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-09 compared with 2022-11-07 · 166 added, 374 removed, 418 unchanged (56% of the section changed)

3 unchanged sentences

(in thousands, except shares and per share amounts)

September 30,

2023 December 31,

2 unchanged sentences

Marketable securities 9,126 31,852

Accounts receivable, net of allowance for doubtful accounts of $ 1.1 million and $ 0.6 million at September 30, 2022 and December 31, 2021

Notes receivable, current, net of allowance for doubtful accounts of $ 1.3 million and $ 0.5 million at September 30, 2022 and December 31, 2021

Accounts receivable, net of allowance for credit losses of $ 0.7 million and $ 0.7 million at March 31, 2023 and December 31, 2022

Notes receivable, current, net of allowance for credit losses of $ 1.7 million and $ 1.3 million at March 31, 2023 and December 31, 2022

Inventory 75,581 77,091

19 unchanged sentences

Commitments and contingencies (Note 12)

Deferred tax liability 193 2,359

Operating lease liability, net of current maturities 38,130 40,659

Long-term debt, net of current portion — 66

Other long-term liabilities 627 593

3 unchanged sentences

$ 0.001 par value;

100,000,000 shares authorized, 60,859,674 and 59,928,564 shares issued and outstanding as of September 30, 2022 and December 31, 2021

100,000,000 shares authorized, 61,035,521 and 61,010,155 shares issued and outstanding as of March 31, 2023 and December 31, 2022

Additional paid-in capital 370,379 369,938

6 unchanged sentences

(in thousands, except shares and per share amounts)

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

2022 2021 2022 2021

Three Months Ended March 31,

Net sales $ 56,827 $ 81,767

6 unchanged sentences

Depreciation and amortization 3,932 4,506

Impairment loss — — 127,831 —

Total operating expenses 24,053 29,361

15 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(in thousands, except shares and per share amounts)

4 unchanged sentences

Shares Amount

Balances, June 30, 2022 60,782 $ 61 $ 368,077 $ ( 131,412 ) $ 236,726

Common stock issued for share based compensation 78 — — — —

Common stock withheld for employee payroll taxes — — ( 17 ) — ( 17 )

Share based compensation — — 1,104 — 1,104

Net income (loss) — — — ( 7,202 ) ( 7,202 )

Balances, September 30, 2022 60,860 $ 61 $ 369,164 $ ( 138,614 ) $ 230,611

Common Stock Additional

Paid-In Capital Retained

Earnings (Deficit) Total

Stockholders’ Equity

Shares Amount

Balances, June 30, 2021 59,562 $ 60 $ 353,575 $ 10,218 $ 363,853

Common stock issued upon cashless warrant exercise 5 — — — —

Common stock issued upon exercise of options 8 — 22 — 22

Common stock issued upon cashless exercise of options 47 — — — —

Common stock issued in connection with business combinations 87 — 3,063 — 3,063

Common stock issued for share-based compensation 61 — 220 — 220

Share based compensation — — 1,722 — 1,722

Net income (loss) — — — 4,027 4,027

Balances, September 30, 2021 59,770 $ 60 $ 358,602 $ 14,245 $ 372,907

Common Stock Additional

Paid-In Capital Retained

Earnings (Deficit) Total

Stockholders’ Equity

Shares Amount

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

Common stock issued in connection with business combination 650 1 5,749 — 5,750

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

1 unchanged sentence

Share based compensation — — 511 — 511

Common stock issued upon cashless exercise of options 12 — — — —

Common stock issued upon cashless exercise of warrants 14 — — — —

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

Balances, September 30, 2022 60,860 $ 61 $ 369,164 $ ( 138,614 ) $ 230,611

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

Common Stock Additional

4 unchanged sentences

Balances, December 31, 2021 59,929 $ 60 $ 361,087 $ 10,144 $ 371,291

Common stock issued upon warrant exercise 256 — 335 — 335

Common stock issued upon cashless warrant exercise 657 1 ( 1 ) — —

Common stock issued upon exercise of options 469 1 1,753 — 1,754

Common stock issued upon cashless exercise of options 325 — — — —

Common stock issued in connection with business combinations 650 1 5,749 — 5,750

Common stock issued for assets 300 — — — —

Common stock issued for services ( 90 ) — — — —

Common stock issued for share-based compensation 149 — — — —

Common stock withheld for employee payroll taxes — — ( 1,355 ) — ( 1,355 )

Share based compensation — — 1,583 — 1,583

Net income (loss) — — — ( 5,177 ) ( 5,177 )

Balances, September 30, 2021 59,770 $ 60 $ 358,602 $ 14,245 $ 372,907

Balances, March 31, 2022 60,728 $ 61 $ 367,064 $ 4,967 $ 372,092

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

2 unchanged sentences

(in thousands, except shares and per share amounts)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Bad debt expense, net of recoveries 317 714

Gain on asset disposition 629 —

Impairment loss 127,831 —

Gain (loss) on asset disposition ( 19 ) 20

Deferred taxes — ( 1,636 )

14 unchanged sentences

Purchase of property and equipment ( 3,476 ) ( 4,451 )

Purchase of intangibles — ( 2,311 )

Disposal of assets 63 —

Net cash provided by (used in) investing activities 19,313 9,501

2 unchanged sentences

Common stock withheld for employee payroll taxes ( 70 ) ( 1,355 )

Proceeds from the sale of common stock and exercise of warrants, net of expenses — 2,090

Net cash provided by (used in) financing activities ( 86 ) ( 1,378 )

6 unchanged sentences

Right of use assets acquired under new operating leases $ 1,310 $ 2,703

Indemnity holdback from business acquisition $ 875 0

Cash paid for income taxes $ — $ 4,275

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

1 unchanged sentence

Notes To Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

GrowGeneration Corp.

(the “Company”, “we”, or “our”) 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, ventilation systems, and accessories for hydroponic gardening.

As of September 30, 2022, the Company owns and operates a chain of 61 retail hydroponic/gardening stores across 15 states, an online e-commerce platform, and proprietary brands and private label brands that we market grow through our platforms and other wholesale customers.

The Company’s plan is to continue to acquire, open and operate hydroponic/gardening stores and related businesses throughout the United States.

(together with its direct and indirect wholly owned subsidiaries, collectively “GrowGeneration” or the “Company”) is a leading marketer and distributor of nutrients, growing media, lighting, benching and racking, environmental control systems, and other products for both indoor and outdoor hydroponic and organic gardening, including proprietary brands such as Charcoir, Drip Hydro, Power Si, MMI benching and racking, Ion lights, Durabreeze fans, and more.

Incorporated in Colorado in 2014, GrowGeneration is the largest chain of specialty retail hydroponic and organic garden centers in the U.S.

As of March 31, 2023, GrowGeneration has 59 retail locations across 16 states in the U.S.

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

GrowGeneration also provides facility design services to commercial growers.

Basis of Presentation

4 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”).

There were no significant changes to our significant accounting policies as disclosed in our 2022 Form 10-K.

1 unchanged sentence

All amounts included in the accompanying footnotes to the consolidated financial statements, except share and per share data, are in thousands (000).

Reclassifications

Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation.

These reclassifications had no effect on reported consolidated net income.

Use of Estimates

2 unchanged sentences

Actual results could vary from the estimates that were used.

Risk and Uncertainties

The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty, and volatility that may negatively affect our business operations and financial results.

As a result, if the pandemic or its effects persist or worsen, our accounting estimates and assumptions could be impacted in subsequent interim reports and upon final determination at year-end, and it is reasonably possible such changes could be significant (although the potential effects cannot be estimated at this time).

Although the COVID-19 pandemic to date has resulted in supply chain delays of our inventory, higher operating costs and increased shipping costs, among other impacts, we have experienced minimal business interruption as a result of the COVID-19 pandemic.

As events surrounding the COVID-19 pandemic can change rapidly we cannot predict how it may disrupt our operations or the full extent of the disruption.

Immaterial out-of-period adjustments

During the nine months ended September 30, 2022, the Company recorded an immaterial out-of-period adjustment that impacted the prior year Consolidated Balance Sheets.

The adjustment related to a change in the calculation of operating lease right-of-use assets and operating lease liabilities.

This adjustment corrected an understatement of operating lease right-of-use assets of $ 1.3 million and an understatement of operating lease liabilities of $ 1.3 million as of December 31, 2021 during the period ended September 30, 2022.

The Company assessed the materiality of this adjustment on the previously issued annual financial statements in accordance with SEC Staff Accounting Bulletin No.

The Company concluded that the changes were not material to any of the previously issued consolidated financial statements.

During the nine months ended September 30, 2022, the Company identified an omission regarding the disclosure of reportable segments under ASC 280 related to the year ended December 31, 2021.

During the year ended December 31, 2021 the Company inappropriately reported a single segment, aggregating multiple operating segments.

The impact at September 30, 2021 was that $ 41.0 million of revenue, $ 13.7 million of gross margin, and $ 3.1 million of operating income should have been reported as a separate “Distribution and other segment.

” The Company assessed the materiality of this omission on the previously issued interim and annual consolidated financial statements in accordance with SEC Staff Accounting Bulletin No.

The Company concluded that the omission was not material to any of the previously issued consolidated financial statements and began reporting segments results in accordance with ASC 280 on a prospective basis starting with the quarter ended March 31, 2022.

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

FAIR VALUE MEASUREMENTS

12 unchanged sentences

The fair value of impaired notes receivable is determined based on estimated future payments discounted back to present value using the notes' effective interest rate.

Level September 30,

Level March 31,

2023 December 31,

Cash equivalents 1 $ 36,296 $ 25,087

Marketable securities 2 $ 9,126 $ 31,852

1 unchanged sentence

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

RECENT ACCOUNTING PRONOUNCEMENTS

4 unchanged sentences

We have evaluated recently issued accounting pronouncements and determined that there is no material impact on our financial position or results of operations.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

2 unchanged sentences

2016-13 was effective January 1, 2020.

The Company is in the process of evaluating the impact of this standard.

Refer to Note 3 to the Consolidated Financial Statements reported in Form 10-K for the year ended December 31, 2021 for recently issued accounting pronouncements that are pending adoption.

The Company has adopted this standard effective January 1, 2023.

The adoption of this standard primarily applied to the valuation of the Company’s accounts receivable.

Based on the composition of the Company’s accounts receivable, investment portfolio, and other financial assets, including current market conditions and historical credit loss activity, the adoption of this standard did not have a material impact on the Company’s consolidated financial statements or disclosures.

Specifically, the Company’s estimate of expected credit losses as of March 31, 2023, using its expected credit loss evaluation process described above, resulted in no adjustments to the provision for credit losses and no cumulative-effect adjustment to accumulated deficit on the adoption date of the standard.

REVENUE RECOGNITION

The following table disaggregates revenue by source:

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Sales at company owned stores $ 47,948 $ 100,799 $ 167,598 $ 290,937

Distribution and other 19,829 4,696 44,076 12,519

E-commerce sales 3,073 10,508 12,036 28,454

Total Net Sales $ 70,850 $ 116,003 $ 223,710 $ 331,910

Disaggregation of Revenues

Sales are disaggregated by our segments, which represent our principal lines of business, as well as by our private label products versus distributed brands, or by commercial fixture revenue.

See Note 13, Segments , for disaggregated revenue by segment.

The opening and closing balances of the Company’s customer trade receivables and customer deposit liability are as follows:

1 unchanged sentence

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

Closing balance, September 30, 2022

Closing balance, March 31, 2023

Increase (decrease) $ ( 767 ) $ ( 422 )

Opening balance, January 1, 2022 $ 5,741 $ 11,686

Closing balance, September 30, 2021

Closing balance, March 31, 2022

Increase (decrease) $ 1,645 $ ( 4,496 )

Of the total amount of customer deposit liability as of January 1, 2022, $ 11.1 million was reported as revenue during the nine months ended September 30, 2022.

Of the total amount of customer deposit liability as of January 1, 2021, $ 3.7 million was reported as revenue during the nine months ended September 30, 2021.

Of the total amount of customer deposit liability as of January 1, 2023, $ 2.3 million was reported as revenue during the three months ended March 31, 2023.

Of the total amount of customer deposit liability as of January 1, 2022, $ 7.6 million was reported as revenue during the three months ended March 31, 2022.

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

PROPERTY AND EQUIPMENT

September 30,

2023 December 31,

8 unchanged sentences

Property and equipment, net $ 30,274 $ 28,669

Depreciation expense for the three and nine months ended September 30, 2022 was $ 1.7 million and $ 5.4 million.

Depreciation expense for the three and nine months ended September 30, 2021 was $ 0.9 million and $ 2.4 million.

Depreciation expense for the three months ended March 31, 2023 was $ 1.7 million.

Depreciation expense for the three months ended March 31, 2022 was $ 1.8 million.

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

GOODWILL AND INTANGIBLE ASSETS

14 unchanged sentences

The changes in goodwill are as follows:

September 30, 2022 December 31,

March 31, 2023 December 31,

Balance, beginning of period $ 15,978 $ 125,401

4 unchanged sentences

Retail E-commerce Distribution Total

Gross carrying value December 31, 2020 $ 55,180 $ 2,911 $ 4,860 $ 62,951

Gross carrying value at December 31, 2021 $ 101,811 $ 11,659 $ 11,931 $ 125,401

Acquisitions & measurement period adjustments 1,418 ( 341 ) 6,157 7,234

Gross carrying value December 31, 2021 102,763 11,659 10,979 125,401

Gross carrying value at December 31, 2022 103,229 11,318 18,088 132,635

Acquisitions & measurement period adjustments — — — —

Gross carrying value, September 30, 2022 $ 103,094 $ 11,318 $ 18,088 $ 132,500

Accumulated impairment losses December 31, 2020 $ — $ — $ — $ —

Gross carrying value, at March 31, 2023 $ 103,229 $ 11,318 $ 18,088 $ 132,635

Accumulated impairment losses at December 31, 2021 $ — $ — $ — $ —

Impairment ( 103,094 ) ( 9,848 ) ( 3,715 ) ( 116,657 )

Accumulated impairment losses December 31, 2021 — — — —

Accumulated impairment losses at December 31, 2022 ( 103,094 ) ( 9,848 ) ( 3,715 ) ( 116,657 )

Impairment — — — —

Accumulated impairment losses September 30, 2022 $ ( 103,094 ) $ ( 9,848 ) $ ( 3,715 ) $ ( 116,657 )

Accumulated impairment losses at March 31, 2023 $ ( 103,094 ) $ ( 9,848 ) $ ( 3,715 ) $ ( 116,657 )

Net carrying value at December 31, 2022 $ 135 $ 1,470 $ 14,373 $ 15,978

Net carrying value at September 30, 2022 $ — $ 1,470 $ 14,373 $ 15,843

Net carrying value at March 31, 2023 $ 135 $ 1,470 $ 14,373 $ 15,978

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

A summary of intangible assets is as follows:

2 unchanged sentences

of Intangible Assets

as of September 30, 2022

as of March 31, 2023

Trade names 2.99

3 unchanged sentences

Intangible assets consist of the following:

September 30, 2022

March 31, 2023

Amount Accumulated

17 unchanged sentences

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

Intangibles and impairment by segment are as follows:

Retail E-commerce Distribution Total

Gross carrying value December 31, 2020 17,635 — 3,481 21,116

Gross carrying value at December 31, 2021 $ 37,825 $ 2,501 $ 16,698 $ 57,024

Acquisitions & measurement period adjustments 230 — 3,182 3,412

Gross carrying value December 31, 2021 37,825 2,501 16,698 57,024

Gross carrying value at December 31, 2022 38,055 2,501 19,880 60,436

Acquisitions & measurement period adjustments — — — —

Gross carrying value, September 30, 2022 37,767 2,501 19,879 60,147

Accumulated amortization December 31, 2020 ( 540 ) — ( 27 ) ( 567 )

Gross carrying value at March 31, 2023 $ 38,055 $ 2,501 $ 19,880 $ 60,436

Accumulated amortization at December 31, 2021 $ ( 6,285 ) $ ( 354 ) $ ( 1,983 ) $ ( 8,622 )

Amortization ( 5,897 ) ( 460 ) ( 3,580 ) ( 9,937 )

Accumulated amortization December 31, 2021 ( 6,285 ) ( 354 ) ( 1,983 ) ( 8,622 )

Accumulated amortization at December 31, 2022 ( 12,182 ) ( 814 ) ( 5,563 ) ( 18,559 )

Amortization ( 1,205 ) ( 112 ) ( 907 ) ( 2,224 )

Accumulated amortization September 30, 2022 ( 11,005 ) ( 702 ) ( 4,655 ) ( 16,362 )

Accumulated impairment losses December 31, 2020 — — — —

Accumulated amortization at March 31, 2023 $ ( 13,387 ) $ ( 926 ) $ ( 6,470 ) $ ( 20,783 )

Accumulated impairment losses at December 31, 2021 $ — $ — $ — $ —

Impairments ( 11,079 ) ( 95 ) — ( 11,174 )

Accumulated impairment losses December 31, 2021 — — — —

Accumulated impairment losses at December 31, 2022 ( 11,079 ) ( 95 ) — ( 11,174 )

Impairments — — — —

Accumulated impairment losses September 30, 2022 ( 11,079 ) ( 95 ) — ( 11,174 )

Accumulated impairment losses at March 31, 2023 $ ( 11,079 ) $ ( 95 ) $ — $ ( 11,174 )

Net carrying value at December 31, 2022 $ 14,794 $ 1,592 $ 14,317 $ 30,703

Net carrying value at September 30, 2022 15,683 1,704 15,224 32,611

Amortization expense for the three and nine months ended September 30, 2022 was $ 2.2 million and $ 7.7 million.

Amortization expense for the three and nine months ended September 30, 2021 was $ 2.6 million and $ 6.1 million.

Net carrying value at March 31, 2023 $ 13,589 $ 1,480 $ 13,410 $ 28,479

Amortization expense for the three months ended March 31, 2023 was $ 2.2 million.

Amortization expense for the three months ended March 31, 2022 was $ 2.7 million.

Future amortization expense is as follows:

2 unchanged sentences

Total $ 28,479

For the three months ended September 30, 2022, the effective tax rate is 9.07 % which decreased from 21.39 % for the three months ended September 30, 2021.

For the nine months ended September 30, 2022, the effective tax rate is 1.74 %, which decreased from 24.80 % at September 30, 2021.

For the three months ended March 31, 2023, the effective tax rate is 0.00 % which decreased from 24.02 % for the three months ended March 31, 2022.

The decrease in the effective tax rate is primarily due to the Company recording a valuation allowance against deferred tax assets.

The effective tax rate for the nine months ended September 30, 2022 is lower than the US federal statutory rate of 21.0%, which is also primarily due to the Company recording a valuation allowance against deferred tax assets.

The effective tax rate for the three months ended March 31, 2023 is lower than the U.S.

federal statutory rate of 21.0%, which is also primarily due to the Company recording a valuation allowance against deferred tax assets.

The Company has evaluated positive and negative evidence and has concluded that its deferred tax assets are not expected to be realizable and has recorded a valuation allowance in the current period.

1 unchanged sentence

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

We determine if a contract contains a lease at inception.

13 unchanged sentences

Where assets are used to directly serve our customers, such as facilities dedicated to customer contracts, lease costs are recorded in “store operating costs.” Facilities and assets which serve management and support functions are expensed through general and administrative expenses.

September 30,

2023 December 31,

3 unchanged sentences

Total lease liability $ 46,134 $ 48,790

September 30,

2022 September 30,

2023 March 31,

Weighted average remaining lease term 6.46 years 6.85 years

Weighted average discount rate 5.8 % 5.5 %

Three Months Ended September 30,

Three Months Ended

Operating lease costs $ 2,893 $ 2,662

4 unchanged sentences

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

Nine Months Ended

September 30,

Operating lease costs $ 8,060 $ 5,687

Variable lease costs 2,004 —

Short-term lease costs 306 1,212

Total operating lease costs $ 10,370 $ 6,899

The following table presents the maturity of the Company’s operating lease liabilities as of September 30, 2022 :

March 31, 2023

The following table presents the maturity of the Company’s operating lease liabilities as of March 31, 2023 :

2023 (remainder of the year) $ 7,887

2 unchanged sentences

Imputed interest ( 9,476 )

Lease Liability at September 30, 2022

Lease Liability at March 31, 2023

SHARE BASED PAYMENTS

The Company maintains long-term incentive plans for employees, non-employee members of our Board of Directors and consultants.

The plans allows us to grant equity-based compensation awards, including stock options, stock appreciation rights, performance share units, restricted stock units, restricted stock awards, or a combination of awards (collectively, share-based awards).

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

The Company accounts for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors of the Company, including stock options and restricted shares.

The Company also issues share-based payments in the form of common stock warrants to non-employees.

The following table presents share-based payment expense for the three and nine months ended September 30, 2022 and 2021:

Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

The following table presents share-based payment expense for the three months ended March 31, 2023 and 2022:

Three months ended March 31,

Restricted stock $ 567 $ 1,201

2 unchanged sentences

Total $ 567 $ 1,583

As of September 30, 2022, the Company had approximately $ 5.7 million of unamortized share-based compensation for option awards and restricted stock awards, which is expected to be recognized over a weighted average period of approximately 3.3 years.

As of September 30, 2022, the Company also had approximately $ 1.5 million of unamortized share-based compensation for common stock warrants issued to consultants, which is expected to be recognized over a weighted average period of 1.3 years.

As of March 31, 2023, the Company had approximately $ 7.8 million of unamortized share-based compensation for option awards and restricted stock awards, which is expected to be recognized over a weighted average period of approximately 2.7 years.

Restricted Stock

2 unchanged sentences

Restricted stock is valued using market value on the grant date.

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

Restricted stock activity for the nine months ended September 30, 2022 is presented in the following table:

Restricted stock activity for the three months ended March 31, 2023 is presented in the following table:

Shares Weighted Average Grant Date Fair Value

4 unchanged sentences

Forfeited ( 164,500 ) $ 2.36

Nonvested, September 30, 2022

Nonvested, March 31, 2023

673,959 $ 7.97

The table below summarizes all option activity under all plans during the nine months ended September 30, 2022:

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

March 31, 2023

The table below summarizes all option activity under all plans during the three months ended March 31, 2023:

Options Shares Weighted -

6 unchanged sentences

Forfeited or expired — — — —

Outstanding at September 30, 2022

Outstanding at March 31, 2023

604,498 $ 3.97 1.63 $ 2.24

Options vested at September 30, 2022

Vested at March 31, 2023

604,498 $ 3.97 1.63 $ 2.24

A summary of the status of the Company’s outstanding stock purchase warrants for the nine months ended September 30, 2022 is as follows:

A summary of the status of the Company’s outstanding stock purchase warrants for the three months ended March 31, 2023 is as follows:

Warrants Weighted Average

4 unchanged sentences

Forfeited — —

Outstanding at September 30, 2022

Outstanding at March 31, 2023

32,500 $ 15.82

1 unchanged sentence

In August 2022, the Company issued certain stock awards classified as liabilities based on the guidance set forth at ASC 480-10-25 and ASC 718-10-25.

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

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

The awards generally vest over three years subject to the employee’s continued employment.

The aggregate face value of these awards as of September 30, 2022 amounted to $ 5.3 million.

The aggregate face value of these awards as of March 31, 2023 amounted to $ 3.7 million.

The Company recognizes compensation expense for these awards over the requisite service period.

The expense related to the liability awards for the period ended September 30, 2022 was $ 0.2 million;

the corresponding liability is included in accrued liabilities and other long-term liabilities on the Company’s balance sheet as of September 30, 2022.

The expense related to the liability awards for the period ended March 31, 2023 was $ 0.2 million;

the corresponding liability is included in accrued liabilities and other long-term liabilities on the Company’s balance sheet as of March 31, 2023.

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

March 31, 2023

EARNINGS (LOSS) PER SHARE

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computation for the nine months ended September 30, 2022 and 2021:

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computation for the three months ended March 31, 2023 and 2022:

Three Months Ended

September 30,

2022 September 30,

Net income (loss) $ ( 7,202 ) $ 4,027

Weighted average shares outstanding, basic 60,855 58,531

Effect of dilution — 959

Adjusted weighted average shares outstanding, dilutive 60,855 59,490

Basic earnings (loss) per share $ ( 0.12 ) $ 0.07

Dilutive earnings (loss) per share $ ( 0.12 ) $ 0.07

Nine Months Ended

September 30,

2022 September 30,

2023 March 31,

Net income (loss) $ ( 6,134 ) $ ( 5,177 )

6 unchanged sentences

Three Months Ended

September 30,

2022 September 30,

Restricted stock 646 —

Stock options 84 —

Nine Months Ended

September 30,

2022 September 30,

2023 March 31,

Restricted stock 2,069 1,336

Stock options 43 393

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

Warrants — 819

Total 2,112 2,548

Our acquisition strategy is 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;

3 unchanged sentences

The Company has made adjustments to the preliminary valuations of the acquisitions based on valuation analyses prepared by independent third-party valuation consultants.

During the nine months ended September 30, 2022 our measurement period adjustments included increasing goodwill by $ 1.3 million offset with intangible assets.

There have been no measurement periods during the current year.

During the three months ended March 31, 2022, our measurement period adjustments included increasing goodwill by $ 1.3 million offset with intangible assets.

As a result of these measurement period adjustments, we made an insignificant reduction in amortization expense.

All acquisition costs are expensed as incurred and recorded in general and administrative expenses in the Condensed Consolidated Statements of Operations.

Acquisition during the nine months ended September 30, 2022

Acquisition during the three months ended March 31, 2023

The Company had no material acquisitions during the three months ended March 31, 2023.

Acquisitions during 2022

On February 1, 2022, the Company purchased all of the assets of Horticultural Rep Group, Inc.

4 unchanged sentences

HRG is included in our Distribution and other segment.

The table below represents the allocation of the purchase price to the acquired net assets during the nine months ended September 30, 2022.

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

March 31, 2023

The table below represents the allocation of the purchase price to the acquired net assets during the three months ended March 31, 2022.

Inventory $ 4,170

8 unchanged sentences

Total $ 13,391

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

The table below represents the consideration paid for the net assets acquired in business combinations during the three months ended March 31, 2022.

Indemnity stock holdback 875

1 unchanged sentence

Total $ 13,391

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

The following table discloses the date of the acquisition noted above and the revenue and earnings included in the Condensed Consolidated Statement of Operations for the period ended September 30, 2022.

The following table discloses the date of the acquisition noted above and the revenue and earnings included in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2022.

Revenue and earnings amounts include other proprietary brands now being included under HRG for operations.

2 unchanged sentences

Net Income (loss) $ —

The following represents the pro forma Condensed Consolidated Statement of Operations as if the acquisition had been included in the consolidated results of the Company for the entire period for the three and nine months ended September 30, 2022 and 2021.

Three months ended September 30, 2021 Nine Months Ended September 30,

Three Months Ended March 31,

Revenue $ 83,603

Net income (loss) $ ( 5,176 )

Acquisitions during 2021

On January 25, 2021, the Company purchased all of 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 the assets of Garden & Lighting was approximately $ 1.7 million, including $ 1.2 million in cash and common stock valued at approximately $ 0.5 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 market for the Company.

Indoor Garden & Lighting, Inc.

is included in our Retail segment.

On February 1, 2021, the Company purchased all of 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 the assets of Grow Depot Maine was approximately $ 2.1 million, including $ 1.7 million in cash and common stock valued at approximately $ 0.4 million.

Acquired goodwill of approximately $ 0.9 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

Grow Depot Maine is included in our Retail segment.

On February 15, 2021, the Company purchased all of 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 the assets of Grow Warehouse LLC was approximately $ 17.8 million, including $ 8.1 million in cash and common stock valued at approximately $ 9.7 million.

Acquired goodwill of approximately $ 11.1 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

Grow Warehouse LLC is included in our Retail segment.

On February 22, 2021, the Company purchased all of 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 the assets of San Diego Hydroponics was approximately $ 9.3 million, including $ 4.8 million in cash and common stock valued at approximately $ 4.5 million.

Acquired goodwill of approximately $ 5.7 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

San Diego Hydroponics & Organics is included in our Retail segment.

On March 12, 2021, the Company purchased all of 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 the assets of Charcoir was approximately $ 16.4 million, including $ 9.9 million in cash and common stock valued at approximately $ 6.5 million.

Acquired goodwill of approximately $ 6.1 million represents the value expected to rise from organic growth and an

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

opportunity to expand into a well-established distribution market for the Company of a proprietary brand.

Charcoir is included in our Distribution and other segment.

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

The total consideration for the purchase of the assets of 55 Hydroponics was approximately $ 6.5 million, including $ 5.4 million in cash and common stock valued at approximately $ 1.1 million.

Acquired goodwill of approximately $ 3.9 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

55 Hydroponics is included in our Retail segment.

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

The total consideration for the purchase of the assets of Aquarius was approximately $ 3.6 million, including $ 2.4 million in cash and common stock valued at approximately $ 1.2 million.

Acquired goodwill of approximately $ 1.7 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

Aquarius is included in our Retail segment.

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

The total consideration for the purchase of the assets of Agron was approximately $ 11.3 million, including $ 6.0 million in cash and common stock valued at approximately $ 5.3 million.

Acquired goodwill of approximately $ 8.7 million 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.

Agron is included in our E-commerce segment.

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 the assets 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 of approximately $ 2.1 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

Down River Hydro is included in our Retail segment.

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 the assets 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 of approximately $ 4.6 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

Harvest is included in our Retail segment.

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 of approximately $ 7.0 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

Aqua Serene is included in our Retail segment.

On July 3, 2021, the Company purchased the assets of Mendocino Greenhouse & Garden Supply, Inc, ("Mendocino") 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 approximately $ 4.0 million in cash.

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

Acquired goodwill of approximately $ 2.1 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

Mendocino is included in our Retail segment.

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 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.

CGS is included in our Retail segment.

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 approximately $ 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

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

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.

Hoagtech is included in our Retail segment.

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

All Seasons is included in our Retail segment.

On December 31, 2021, the Company purchased the assets of Mobile Media, Inc and MMI Agriculture ("MMI"), a mobile shelving design and build 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 of approximately $ 1.2 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company.

The measurement of the intangible assets for MMI is still provisional and may be subject to future adjustments as the Company obtains additional information to finalize the accounting for the acquisition.

MMI is included in our Distribution and other segment.

The table below represents the allocation of the purchase price to the acquired net assets during 2021.

Agron Aquarius 55 Hydro Charcoir San Diego Hydro Grow Warehouse Grow Depot Maine Indoor Garden Downriver

Inventory $ — $ 957 $ 780 $ 839 $ 1,400 $ 2,450 $ 326 $ 372 $ 824

Prepaids and other current assets 46 12 29 534 36 30 3 — 3

Furniture and equipment 29 63 50 — 315 250 25 94 50

Liabilities — — — — — ( 169 ) — — —

Operating lease right of use asset 98 108 861 — 1,079 641 92 137 273

Operating lease liability ( 98 ) ( 108 ) ( 861 ) — ( 1,079 ) ( 641 ) ( 92 ) ( 137 ) ( 273 )

Customer relationships 832 339 809 5,712 605 1,256 549 210 634

Trade name 1,530 485 870 1,099 1,192 2,748 344 353 698

Non-compete 139 — 26 — 6 94 36 2 16

Intellectual property — — — 2,065 — — — — —

Goodwill 8,673 1,702 3,915 6,119 5,728 11,120 866 661 2,126

Total $ 11,249 $ 3,558 $ 6,479 $ 16,368 $ 9,282 $ 17,779 $ 2,149 $ 1,692 $ 4,351

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

Harvest Aquaserene Mendocino CGS Hoagtech All Seasons MMI Total

Inventory $ 1,204 $ 1,696 $ 753 $ 875 $ 751 $ 100 $ 3,530 $ 16,857

Prepaids and other current assets 7 2 1 1 37 1 — 742

Furniture and equipment 100 500 160 100 144 25 328 2,233

Liabilities — — — — ( 29 ) — ( 250 ) ( 448 )

Operating lease right to use asset 3,782 1,177 408 746 1,569 37 2,332 13,340

Operating lease liability ( 3,782 ) ( 1,177 ) ( 408 ) ( 746 ) ( 1,569 ) ( 37 ) ( 2,332 ) ( 13,340 )

Customer relationships 1,016 1,235 575 1,382 493 154 2,964 18,765

Trade name 1,392 1,231 414 852 428 117 1,039 14,792

Non-compete — 11 6 11 3 — 238 588

Intellectual property — — — — — — — 2,065

Goodwill 4,606 6,976 2,091 4,027 2,105 545 1,202 62,462

Total $ 8,325 11,651 4,000 $ 7,248 3,932 942 9,051 $ 118,056

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

Agron Aquarius 55 Hydro Charcoir San Diego Hydro Grow Warehouse Grow

Depot Maine Indoor Garden Downriver

Cash $ 5,973 $ 2,331 $ 5,347 $ 9,902 $ 4,751 $ 8,100 $ 1,738 $ 1,165 $ 3,177

Common stock 5,276 1,227 1,132 6,466 4,531 9,679 411 527 1,174

Total $ 11,249 $ 3,558 $ 6,479 $ 16,368 $ 9,282 $ 17,779 $ 2,149 $ 1,692 $ 4,351

Harvest Aquaserene Mendocino CGS Hoagtech All Seasons MMI Total

Cash $ 5,561 $ 9,860 $ 4,000 $ 5,976 $ 3,932 $ 701 $ 8,270 $ 80,784

Common stock 2,764 1,791 — 1,272 — 241 781 37,272

Total $ 8,325 $ 11,651 $ 4,000 $ 7,248 $ 3,932 $ 942 $ 9,051 $ 118,056

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

The following table discloses the date of the acquisitions noted above and the revenue and earnings included in the consolidated income statement for the period ended September 30, 2021.

Agron Aquarius 55 Hydro Charcoir San Diego Hydro Grow Warehouse Grow Depot Maine Indoor Garden Downriver

Acquisition date 3/19/2021 3/15/2021 3/15/2021 3/12/2021 2/22/2021 2/15/2021 2/1/2021 1/25/2021 3/31/2021

Revenue $ 10,587 $ 5,555 $ 4,482 $ 4,048 $ 5,525 $ 10,153 $ 4,660 $ 4,508 $ 2,460

Net Income $ 149 $ 1,145 $ 393 $ 723 $ 839 $ 1,812 $ 907 $ 520 $ 277

Harvest Aquaserene Mendocino CGS Hoagtech All Seasons MMI Total

Acquisition date 5/3/21 7/19/21 7/19/21 8/24/21 8/23/21 10/15/21 12/31/21

Revenue $ 4,444 1,590 1,085 447 483 — — $ 60,027

Net Income (loss) $ 756 331 158 ( 1 ) 36 — — $ 8,045

The following table discloses the pro forma consolidated statement of operations as if the acquisition had been included in the consolidated results of the Company for the nine months ended September 30, 2021.

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

(Unaudited) (Unaudited)

Revenue $ 146,030 $ 361,937

Net income $ 5,299 $ 23,276

March 31, 2023

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.

The Company is not presently a party to any litigation, and is not aware of any pending or threatened litigation, against the Company that it believes could have a material adverse effect on its business, operating results, financial condition, or cash flows.

We are involved in lawsuits and claims which arise in the normal course of our business, including the initiation and defense of proceedings related to contract and employment disputes.

In our opinion, these claims individually and in the aggregate are not expected to have a material adverse effect on our financial condition, results of operations or cash flows.

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

District Court for the Southern District of Texas related to a Promissory Note & Asset Acquisition Rights Option (“Note & Option”) with TGC Systems, LLC (“Total Grow”).

The case has been dismissed and the parties are currently engaged in arbitration pursuant to the arbitration clause of the Note & Option.

Among other claims, Total Grow alleges that the Company is liable to Total Grow based on promissory estoppel and breach of contract for failing to consummate the acquisition of Total Grow by the Company.

The Company believes that the claims against it are without merit and is vigorously defending against them.

The Company is also counterclaiming for repayment of $ 1.5 million principal plus interest loaned by the Company to Total Grow pursuant to the Note & Option.

The Company has accrued a reserve of $ 1.5 million against the Note & Option.

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.

We believe that our 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 our 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 September 30, 2022, the Company did not have any liabilities associated with indemnities.

As of March 31, 2023, the Company did not have any liabilities associated with indemnities.

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

3 unchanged sentences

No such losses have been recorded to date.

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

As discussed in Note 1, at December 31, 2021, the Company had two reportable segments which increased to three at March 31, 2022, based on quantitative and qualitative analyses.

The Company now also reports E-commerce as a reportable segment.

The Company has three primary reportable segments including retail operations, e-commerce and all other which includes the distribution of proprietary brands to wholesale accounts.

The Company has segmented its operations to reflect the manner in which management reviews and evaluates the results of its operations.

1 unchanged sentence

Shared services and other corporate costs are allocated to individual segments based on that segments profitability.

Retail – As of September 30, 2022, the Company owns and operates a chain of 61 hydroponic/gardening centers focused on serving growers and cultivators.

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 – 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.

The Company also sells and distributes product through third-party marketplaces.

Retail – The core of our business strategy is to operate the largest chain of retail garden centers in the U.S.

The hydroponic retail landscape is fragmented, which allows us to acquire “best of breed” hydroponic retail operations and leverage efficiencies of a centralized organization.

Some of our garden centers have multi-functions, with added capabilities that include warehousing, distribution and fulfillment for our online platforms and direct fulfillment to our commercial customers.

Our retail segment also includes our commercial sales organization, which is focused on selling products and services, including end-to-end solutions, for large commercial cultivators outside of the physical retail network.

When a commercial customers gain new cultivation licenses, they need lighting, benching, environmental control systems, irrigation, fertigation and other products to outfit their facilities.

Existing facilities also need consumable products for operations, as well as equipment updates from time to time.

Commercial customers typically purchase large dollar amounts and sizes of products.

We offer commercial customers volume pricing, terms and financing.

E-commerce – Our digital strategy is primarily focused on capturing the home, craft and commercial grower online.

GrowGeneration.com offers thousands of hydroponic products, all curated by our product team.

GrowGeneration.com offers

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

March 31, 2023

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

GrowGeneration also sells its products through its distribution website, HRGdist.com, and online marketplaces such as Amazon and Walmart.

Distribution and other – In December 2020, GrowGeneration purchased the business of Canopy Crop Management Corp., the developer of the popular PowerSi 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.

On December 31, 2021, the Company purchased the assets of Mobile Media, Inc.

("MMI"), a mobile shelving design and build facility.

On February 1, 2022, the Company purchased the assets of Horticultural Rep Group, Inc.

("HRG"), a specialty marketing and sales organization of horticultural products based in Ogden, Utah.

In March 2021, the Company purchased Charcoir, a line of premium coco pots, cubes and medium.

In December 2021, the Company purchased the assets of Mobile Media, Inc.

("MMI"), a mobile shelving and storage solutions developer and manufacturer.

In February 2022, the Company purchased the assets of Horticultural Rep Group, Inc.

("HRG"), a specialty marketing and sales organization of horticultural products.

The Company is in the process of combining the operations and management of these non-retail enterprises.

The products these companies provide are integrated into our retail, e-commerce, and direct sales activities and we receive incremental gross profit from the sale of these products.

The profit generated from those sales are recorded in our retail and e-commerce segments.

The products these companies provide are integrated into our retail, e-commerce, and direct sales activities and we receive incremental revenue from the sale of these products.

Disaggregated revenue by segment is presented in the following table:

Three Months Ended March 31,

Private label sales 6,601 7,096

Non-private label sales 32,800 57,200

Total retail 39,401 64,296

Private label sales 261 400

Non-private label sales 3,000 4,868

Total e-commerce 3,261 5,268

Distribution and other

Private label sales 2,165 2,800

Non-private label sales 4,300 4,203

Commercial fixture sales 7,700 5,200

Total distribution and other 14,165 12,203

Total 56,827 81,767

Selected information by segment is presented in the following tables:

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

2022 2021 2022 2021

Three Months Ended March 31,

Retail $ 39,401 $ 64,296

2 unchanged sentences

Total $ 56,827 $ 81,767

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

2022 2021 2022 2021

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

March 31, 2023

Three Months Ended March 31,

Retail $ 10,737 $ 15,493

2 unchanged sentences

Total $ 16,289 $ 22,140

GrowGeneration Corp.

Notes To Unaudited Condensed Consolidated Financial Statements

September 30, 2022

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

2022 2021 2022 2021

Three Months Ended March 31,

Income (Loss) from operations

3 unchanged sentences

Total $ ( 7,764 ) $ ( 7,221 )

SUBSEQUENT EVENTS

Subsequent Events

In October 2022, the Company invested approximately $ 32.0 million in three to six-month corporate bonds and treasury bills.

On October 12, 2022, the Company purchased certain assets from V&W Ag Consulting, LLC )(“VW”).

VW develops, formulates, procures, sells, and distributes products for the horticulture and agricultural industries.

The total consideration for the purchase was common stock worth approximately $ 0.3 million, including an indemnity holdback payment of common stock worth approximately $ 0.1 million.

On November 7, 2022, the Company purchased the inventory, customer list, and certain other assets of Warson Hydro Partners, LLC d/b/a St.

Louis Hydroponic Company (“St.

Louis Hydro”).

The Company also entered into a short-term license agreement to remain in St.

Louis Hydro’s current store location.

Louis Hydro operates a hydroponic and organic garden center in St.

Louis, Missouri.

The total consideration for the purchase was approximately $ 0.4 million cash.

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

What changed 10-Q

Item 1. Financial Statements