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Item 9A. Controls and Procedures

2022-03-01 compared with 2021-03-30 · 114 added, 383 removed, 23 unchanged (96% of the section changed)

CONTROLS AND PROCEDURES

Evaluation of Disclosure

Controls and Procedures

Our management, with the

participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our

disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended

(the “Exchange Act”)) as of the end of the period covered by this Annual Report on Form 10-K.

Disclosure controls and procedures

are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted

under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and

Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed

in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and

Chief Financial Officer, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures,

no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily

applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Chief Executive Officer

and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2020

due to the material weaknesses previously disclosed in our registration statement on Form S-1 which was declared effective on December

A “material weakness”

is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility

that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Our management

determined that the previously disclosed material weaknesses have not been remediated as of December 31, 2020:

that (i) we did not maintain

a sufficient complement of personnel with an appropriate degree of technical knowledge commensurate with our accounting and reporting

requirements and (ii) our controls related to the preparation, review, and analysis of accounting information and financial statements

were not adequately designed or appropriately implemented to identify material misstatements in our financial reporting on a timely basis

entities and Eddi’s.

These material weaknesses could result in a misstatement of account balances or disclosures that

would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.

We have taken several

actions towards remediating these material weaknesses.

In particular, we (i) hired and continue to hire, additional qualified accounting

and financial reporting personnel with technical and/or public company experience, (ii) implemented new control procedures over certain

areas previously deemed ineffective related to the preparation, review, and analysis of accounting information and financial statements

and (iii) engaged and continue to engage an external advisor to assist management in completing a Sarbanes-Oxley Act compliant risk assessment,

creating detailed control documentation for in-scope business and information technology processes, identifying further control gaps

and providing assistance on remediation procedures, and designing and implementing a Sarbanes-Oxley Act sub-certification process.

we have taken steps to address the material weaknesses, we are still in the process of completing the remediation;

we cannot assure you

that the steps we are taking will be sufficient to remediate our material weaknesses or prevent future material weaknesses or significant

deficiencies from occurring.

We can give no assurance

that additional material weaknesses in our internal control over financial reporting will not be identified in the future.

to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that

could result in a restatement of our financial statements and cause us to fail to meet our reporting obligations.

Management’s Report

on Internal Control Over Financial Reporting

This Annual Report on Form

10-K does not include a report of management’s assessment regarding internal control over financial reporting due to a transition

period established by rules of the SEC for newly public companies.

Attestation Report of

the Registered Public Accounting Firm

This Annual Report on Form

10-K does not include an attestation report of our registered public accounting firm due to a transition period established by rules

of the SEC for newly public companies.

Additionally, our independent registered public accounting firm will not be required to opine

on our internal control over financial reporting until we are no longer an emerging growth company.

Changes in Internal Controls

over Financial Reporting

Other than disclosed above,

there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred

during the fourth quarter of 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over

financial reporting.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Annual Report on Form 10-K.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.

Our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective for the period covered by this Annual Report.

Management's Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In accordance with guidance issued by the Securities and Exchange Commission, companies are permitted to exclude acquisitions from their first assessment of internal control over financial reporting following the date of acquisition.

Based on those guidelines, management’s assessment of the effectiveness of our internal control over financial reporting excluded Heavy 16, House and Garden, Aurora, Greenstar and Innovative Growers Equipment, Inc., which were acquired on May 3, June 1, July 1, August 3 and November 1, 2021 respectively.

See Note 3 to the consolidated financial statements for additional information on our acquisitions.

We have included the financial results of these acquisitions in the consolidated financial statements from the date of the respective acquisitions.

These acquisitions represented 85% and 68% of net and total assets, respectively, 13% of revenues, and 37% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2021.

As a result of this assessment, management concluded that, as of December 31, 2021, our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Deloitte & Touche LLP has independently assessed the effectiveness of our internal control over financial reporting and its report is included above.

Changes in Internal Controls over Financial Reporting

During 2021, we remediated material weaknesses that were identified in 2020.

In particular, we (i) hired and continue to hire, additional qualified accounting and financial reporting personnel with technical and/or public company experience, (ii) implemented new control procedures over certain areas previously deemed ineffective related to the preparation, review, and analysis of accounting information and financial statements and (iii) engaged and continue to engage an external advisor to assist management in completing a Sarbanes-Oxley Act compliant risk assessment, creating detailed control documentation for in-scope business and information technology processes, identifying further control gaps and providing assistance on remediation procedures, and designing and implementing a Sarbanes-Oxley Act sub-certification process.

Other than disclosed above, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

On March 29, 2021, the Company

and certain of its subsidiaries entered into a Senior Secured Revolving Credit Facility (the “JPMorgan Credit Facility”)

with JPMorgan Chase Bank, N.A., as administrative agent, issuing bank and swingline lender (“JPMorgan”), and the lenders from

time to time party thereto.

The JPMorgan Credit Facility replaces the Encina Credit Facility.

There was no outstanding indebtedness under

the Encina Credit Facility when it was replaced.

All capitalized terms used in this Item 9B and not otherwise defined

in this Annual Report on Form 10-K shall have the meanings set forth in the JPMorgan Credit Facility.

The JPMorgan Credit Facility,

among other things, provides for an asset based senior revolving credit line (the “Senior Revolver”) with JPMorgan as the

initial lender.

The three-year Senior Revolver has a borrowing limit of $50 million.

The Company has the right to increase the amount

of the Senior Revolver in an amount up to $25 million by obtaining commitments from JPMorgan or from other lenders.

The loans are available

in both US and Canadian dollars.

Loans denominated in US dollars bear interest at the Eurodollar Rate plus 1.95% and those denominated

in Canadian dollars bear interest at the CDOR rate plus 1.95%.

Both rates are ultimately based on LIBOR and there is a floor of 0.0% for

Because the LIBOR rate may no longer be an appropriate reference rate commencing in 2022, the JPMorgan Credit Facility

contains benchmark replacement terms pursuant to which the LIBOR-based rates will convert to SOFR based rates or other alternative rates

upon the occurrence of certain events.

Interest is payable monthly.

Any outstanding principal is due at the end of the term.

The obligations of the

Company and its subsidiaries under the JPMorgan Credit Facility are secured by a first priority lien (subject to certain permitted

liens) in substantially all of their respective personal property assets pursuant to the terms of a U.S.

and a Canadian Pledge and

Security Agreement, dated March 29, 2021 and the other security

The JPMorgan Credit Facility

contains customary representations and warranties and restrictive covenants including prohibitions on indebtedness, liens, investments,

restricted payments and other items.

In addition, during any period when Excess Availability is less than 10%, the Company and its subsidiaries

must maintain a Fixed Charge Coverage Ratio in excess of 1.10 to 1.0.

The JPMorgan Credit Facility

contains customary events of default, including payment and covenant defaults (subject to grace and cure periods), breaches of representations

and warranties, defaults under certain other indebtedness, change of control, insolvency events, and the occurrence of a material adverse

If an event of default occurs, JPMorgan would be entitled to take various actions, including the acceleration of amounts due under

the JPMorgan Credit Facility and all actions permitted to be taken by a secured creditor.

The foregoing description of the JPMorgan Credit Facility is only a summary of its material terms and does not purport to be complete.

This summary is qualified in its entirety by reference to the description of the JPMorgan Credit Facility, a copy of which is filed as

an exhibit to this Annual Report on Form 10-K.

DIRECTORS, EXECUTIVE

OFFICERS AND CORPORATE GOVERNANCE

The information required

by this Item will be included in the 2021 Proxy Statement and is incorporated herein by reference.

The information required

by this Item will be included in the 2021 Proxy Statement and is incorporated herein by reference.

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required

by this Item will be included in the 2021 Proxy Statement and is incorporated herein by reference.

CERTAIN RELATIONSHIPS

AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required

by this Item will be included in the 2021 Proxy Statement and is incorporated herein by reference.

PRINCIPAL ACCOUNTING

FEES AND SERVICES

The information required

by this Item will be included in the 2021 Proxy Statement and is incorporated herein by reference.

Exhibits, Financial

Statement Schedules.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference.

EXECUTIVE COMPENSATION

The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference.

Exhibits, Financial Statement Schedules.

(1) Consolidated Financial Statements

See Index to Consolidated Financial Statements

at Item 8 herein.

See Index to Consolidated Financial Statements at Item 8 herein.

(2) Financial Statement Schedules

See Index to Consolidated Financial Statements at Item

The following is a list of exhibits filed

as part of this Annual Report on Form 10-K.

and Restated Agreement and Plan of Merger, dated August 28, 2018, by and among Hydrofarm Holdings Group, Inc., Hydrofarm Merger Sub,

See Index to Consolidated Financial Statements at Item 8 herein.

The following is a list of exhibits filed as part of this Annual Report on Form 10-K.

Exhibit Description

2.1+ Stock Purchase Agreement, dated as of May 21, 2021, by and among House & Garden Holdings, LLC, House & Garden, Inc., Humboldt Wholesale, Inc., Allied Imports & Logistics, Inc., South Coast Horticultural Supply, Inc., the Sellers (as defined therein), and Steven Muller, as Sellers’ Representative (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K (File No.

001-39773) filed with the SEC on May 26, 2021).

Securities Purchase Agreement, dated as of June 17, 2021, by and among Hydrofarm Holdings Group, Inc., Gotham Properties LLC, Aurora Innovations Inc., an Oregon corporation, Aurora International, Inc., and certain equity holders party thereto (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K (File No.

001-39773) filed with the SEC on June 21, 2021).

Share Purchase Agreement, dated as of August 3, 2021, by and among Hydrofarm Holdings Group, Inc., Greenstar Plant Products Inc., GSPP Investments Inc., Funance Productions Corp., Michael Nemirow, and 13213684 Canada Ltd.

(incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K (File No.

001-39773) filed with the SEC on August 3, 2021).

2.4 Amended and Restated Agreement and Plan of Merger, dated August 28, 2018, by and among Hydrofarm Holdings Group, Inc., Hydrofarm Merger Sub, Inc.

and Hydrofarm Investment Corp.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020)

and Restated Certificate of Incorporation of Hydrofarm Holdings Group, Inc.

(Incorporated by reference to the Company’s Registration

Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

of Amendment to the Amended and Restated Certificate of Incorporation of Hydrofarm Holdings Group, Inc.

(Incorporated

by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-250037), filed with the SEC on December 1,

of Designations, Preferences and Rights of the Series A Convertible Preferred Stock of Hydrofarm Holdings Group, Inc.

(Incorporated

by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12,

and Restated Bylaws (Incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

filed with the SEC on December 1, 2020).

Common Stock Certificate of the Hydrofarm Holdings Group, Inc.

(Incorporated by reference to the Company’s Registration Statement

on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

of Warrant To Purchase Common Stock (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

of Capital Stock.

of Placement Agent Warrant to Purchase Common Stock (Incorporated by reference to the Company’s Registration Statement on Form

S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

of Registration Rights Agreement from Private Placement (Incorporated by reference to the Company’s Registration Statement

on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

1 to Investor Rights Agreement, dated November 10, 2020, by and among Hydrofarm Holdings LLC and certain of its stockholders

identified on the signature pages thereto (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File

333-250037), filed with the SEC on November 12, 2020).

Loan And Security Agreement, dated March 12, 2017, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, WJCO LLC, EHH Holdings, LLC, SunBlaster

LLC, and Bank of America, N.A.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

filed with the SEC on November 12, 2020).

Amended And Restated Loan And Security Agreement, dated November 8, 2017, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, WJCO LLC,

EHH Holdings, LLC, SunBlaster LLC, GS Distribution Inc., SunBlaster Holdings ULC, EWGS Distribution Inc.

Eddi’s Wholesale Garden

Supplies Ltd., and Bank of America, N.A.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Forebearance Agreement and First Amendment to Amended And Restated Loan And Security Agreement, dated May 18, 2018, by and among Hydrofarm

Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, WJCO, LLC, Hydrofarm Canada, LLC, GS Distribution Inc., SunBlaster Holdings

ULC, Eddi’s Wholesale Garden Supplies Ltd., and Bank of America, N.A.

(Incorporated by reference to the Company’s Registration

Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

First Amendment to Forebearance Agreement and Second Amendment to Amended And Restated Loan And Security Agreement, dated July 16, 2018,

by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, WJCO, LLC, Hydrofarm Canada, LLC, GS Distribution

Inc., SunBlaster Holdings ULC, Eddi’s Wholesale Garden Supplies Ltd., and Bank of America, N.A.

(Incorporated by reference to the

Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Waiver and Third Amendment to Amended And Restated Loan And Security Agreement, dated August 24, 2018, by and among Hydrofarm Holdings

LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, GS Distribution Inc., SunBlaster Holdings ULC, Eddi’s

Wholesale Garden Supplies Ltd., and Bank of America, N.A.

(Incorporated by reference to the Company’s Registration Statement on

Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Amendment To Amended And Restated Loan And Security Agreement, dated March 15, 2019, by and among Hydrofarm Holdings

LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd.,

SunBlaster Holdings ULC, and Bank of America, N.A.

(Incorporated by reference to the Company’s Registration Statement on Form

S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Amendment To Amended And Restated Loan And Security Agreement, dated May 31, 2019, by and among Hydrofarm Holdings LLC,

Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster

Holdings ULC, and Bank of America, N.A.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File

333-250037), filed with the SEC on November 12, 2020).

Amendment To Amended And Restated Loan And Security Agreement, dated June 10, 2019, by and among Hydrofarm Holdings LLC,

Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster

Holdings ULC, and Bank of America, N.A.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File

333-250037), filed with the SEC on November 12, 2020).

Amendment To Amended And Restated Loan And Security Agreement, dated June 27, 2020, by and among Hydrofarm Holdings LLC,

Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster

Holdings ULC, and Bank of America, N.A.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File

333-250037), filed with the SEC on November 12, 2020).

Letter, dated July 11, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, WJCO LLC, GS

Distribution, Inc., EWGS Distribution, Inc., Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC, and Bank of America,

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC

on November 12, 2020).

Credit Agreement, dated March 12, 2017, by and between Hydrofarm Holdings LLC (to be succeeded as Borrower by Hydrofarm, LLC, WJCO, LLC,

EHH Holdings, LLC, and SunBlaster LLC) and Brightwood Loan Services LLC (Incorporated by reference to the Company’s Registration

Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Forbearance Agreement and Amendment to Credit Agreement, dated March 18, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, Hydrofarm

Canada, LLC, WJCO, LLC, EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services LLC (Incorporated by reference to the Company’s

Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Amendment No.

1 to Forbearance Agreement, dated July 16, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, Hydrofarm Canada,

LLC, WJCO, LLC, EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services LLC (Incorporated by reference to the Company’s

Registration Statement on Form S-1 (File No.

(Incorporated by reference to the Company's Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Waiver and Amendment No.

1 to Credit Agreement, dated September 21, 2017, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, WJCO, LLC,

EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services LLC (Incorporated by reference to the Company’s Registration Statement

on Form S-1 (File No.

Stock Purchase and Contribution Agreement, dated as of October 25, 2021, by and among Hydrofarm Holdings Group, Inc., Hydrofarm, LLC, Bruce Zierk and Christopher Mayer (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K (File No.

001-39773) filed with the SEC on November 3, 2021).

2.6 Amendment No.

2 to Credit Agreement, dated November 8, 2017, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, WJCO, LLC, EHH Holdings,

LLC, SunBlaster LLC, and Brightwood Loan Services LLC (Incorporated by reference to the Company’s Registration Statement on Form

S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Waiver and Amendment No.

3 to Credit Agreement, dated August 24, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings,

LLC, SunBlaster LLC, and Brightwood Loan Services LLC (Incorporated by reference to the Company’s Registration Statement on Form

S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

4 to Credit Agreement, dated March 15, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster

LLC, and Brightwood Loan Services LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File

333-250037), filed with the SEC on November 12, 2020).

5 to Credit Agreement, dated July 11, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster

LLC, and Brightwood Loan Services LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1

333-250037), filed with the SEC on November 12, 2020).

6 to Credit Agreement, dated October 15, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster

LLC, and Brightwood Loan Services LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File

333-250037), filed with the SEC on November 12, 2020).

Loan And Security Agreement, dated July 11, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster

LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit, LLC (Incorporated

by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Intercreditor Agreement, dated July 11, 2019, by and between Brightwood Loan Services, LLC and and Encina Business Credit, LLC (Incorporated

by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

First Amendment to Loan And Security Agreement, dated October 15, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings,

LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit,

LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on

November 12, 2020).

Second Amendment to Loan And Security Agreement, dated November 26, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings,

LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit,

LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on

November 12, 2020).

Third Amendment to Loan And Security Agreement, dated April 3, 2020, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings,

LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit,

LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on

November 12, 2020).

Fourth Amendment to Loan And Security Agreement, dated May 29, 2020, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings,

LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit,

LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on

November 12, 2020).

Fifth Amendment to Loan And Security Agreement, dated May 30, 2020, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings,

LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit,

LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on

November 12, 2020).

Sixth Amendment to Loan And Security Agreement, dated September 30, 2020, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings,

LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit,

LLC (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on

November 12, 2020).

Agreement, dated January 1, 2019, by and between Hydrofarm Holdings Group, Inc.

and William Toler (Incorporated by reference to the

Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Agreement, dated March 4, 2019, by and between Hydrofarm Holdings Group, Inc.

and Terence Fitch (Incorporated by reference to the

Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Letter, dated February 26, 2020, by and between Hydrofarm Holdings Group, Inc.

John Lindeman (Incorporated by reference to

the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Holdings Group, Inc.

2018 Equity Incentive Plan (Incorporated by reference to the Company’s Registration Statement on Form

S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

of Hydrofarm Holdings Group, Inc.

2018 Equity Incentive Plan Stock Option Grant Notice (Incorporated by reference to the Company’s

Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Holdings Group, Inc.

2019 Equity Incentive Plan (Incorporated by reference to the Company’s Registration Statement on Form

S-1 (File No.

1 to Stock Purchase and Contribution Agreement, dated as of November 1, 2021, by and among Hydrofarm Holdings Group, Inc., Hydrofarm, LLC, Bruce Zierk and Christopher Mayer (incorporated by reference to Exhibit 2.2 of the Company’s Current Report on Form 8-K (File No.

001-39773) filed with the SEC on November 3, 2021).

of Hydrofarm Holdings Group, Inc.

2019 Equity Incentive Plan Stock Option Grant Notice (Incorporated by reference to the Company’s

Registration Statement on Form S-1 (File No.

3.1 Amended and Restated Certificate of Incorporation of Hydrofarm Holdings Group, Inc.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

Holdings Group, Inc.

2020 Equity Incentive Plan (Incorporated by reference to the Company’s Registration Statement on Form

S-1/A (File No.

3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Hydrofarm Holdings Group, Inc.

(Incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-250037), filed with the SEC on December 1, 2020).

of Hydrofarm Holdings Group, Inc.

2020 Equity Incentive Plan Stock Option Notice (Incorporated by reference to the Company’s

Registration Statement on Form S-1/A (File No.

3.3 Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock of Hydrofarm Holdings Group, Inc.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

3.4 Amended and Restated Bylaws (Incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-250037), filed with the SEC on December 1, 2020).

of Indemnification Agreement (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

4.1 Specimen Common Stock Certificate of the Hydrofarm Holdings Group, Inc.

(Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

4.2* Description of Capital Stock .

10.1 Credit Agreement, dated March 29, 2021, by and among Hydrofarm Holdings Group, Inc., Hydrofarm, LLC, and JPMorgan Chase Bank, N.A.

from MNP LLP regarding statements made in the registration statement concerning its dismissal (Incorporated by reference to the Company’s

Registration Statement on Form S-1 (File No.

333-250037), filed with the SEC on November 12, 2020).

of Hydrofarm Holdings Group, Inc.

(Incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-250037), filed with the SEC on December 1, 2020).

of Deloitte & Touche LLP, independent registered public accounting firm.

MNP LLP, independent registered public accounting firm.

Power of Attorney (included on signature page

to this Annual Report on Form 10-K).

Certification

of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification

of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification

of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant Section 302 of the Sarbanes-Oxley Act of 2002

Certification

of Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant Section 302 of the Sarbanes-Oxley Act of 2002

+ Indicates a

management contract or compensatory plan.

schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

A copy of any omitted schedule and/or exhibit

will be furnished to the Securities and Exchange Commission upon request.

(incorporated by referenced to Exhibit 10.38 to the Company's Annual Report on Form 10-K filed with the SEC on March 30, 2021).

Exhibit Description

10.2+ Unit Purchase and Contribution Agreement, dated as of April 26, 2021, by and among Hydrofarm Holdings Group, Inc., Field 16, LLC, F16 Holding LLC and the members of F16 Holding LLC (incorporated by reference to Exhibit 10.38 of the Company’s Registration Statement on Form S-1 (File No.

333-255510) filed with the SEC on April 26, 2021).

10.3+ First Amendment and Joinder to Credit Agreement, dated as of August 31, 2021, by and among Hydrofarm Holdings Group, Inc., Hydrofarm, LLC, Hydrofarm Investment Corp., Hydrofarm Holdings LLC, EHH Holdings LLC, Sunblaster LLC, Hydrofarm Canada, LLC, Sunblaster Holdings ULC, Eddi’s Wholesale Garden Supplies Ltd., Field 16, LLC, House & Garden, Inc., Humboldt Wholesale, Inc., Aurora Innovations, LLC, House & Garden Holdings, LLC, Gotham Properties LLC, Aurora International, LLC, Allied Imports & Logistics, Inc., Aurora Peat Products ULC, Greenstar Plant Products Inc., the lenders party thereto and JPMorgan Chase Bank, N.A.

(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No.

001-39773) filed with the SEC on September 7, 2021).

10.4+ Second Amendment to Credit Agreement, dated as of October 25, 2021, by and among Hydrofarm Holdings Group, Inc., Hydrofarm, LLC, Field 16, LLC, House & Garden, Inc., Humboldt Wholesale, Inc., Aurora Innovations, LLC, Hydrofarm Investment Corp., Hydrofarm Holdings LLC, EHH Holdings LLC, Sunblaster LLC, Hydrofarm Canada, LLC, Sunblaster Holdings ULC, Eddi’s Wholesale Garden Supplies Ltd., House & Garden Holdings, LLC, Gotham Properties LLC, Aurora International, LLC, Allied Imports & Logistics, Inc., Aurora Peat Products ULC, Greenstar Plant Products Inc., the lenders party thereto and JPMorgan Chase Bank, N.A.

(incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 15, 2021).

10.5+ Credit and Guaranty Agreement, dated as of October 25, 2021, by and among Hydrofarm Holdings Group, Inc., the other credit parties party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A.

(incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 15, 2021).

10.6** Form of Restricted Stock Unit Award Agreement under the 2020 Employee, Director and Consultant Equity Incentive Plan.

10.7** Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 13, 2021)

21.1* Subsidiaries of Hydrofarm Holdings Group Inc.

23.1* Consent of Deloitte & Touche LLP, independent registered public accounting firm.

31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*# Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.2*# Certification of Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Schema Linkbase Document.

101.CAL Inline XBRL Taxonomy Calculation Linkbase Document.

101.DEF Inline XBRL Taxonomy Definition Linkbase Document.

101.LAB Inline XBRL Taxonomy Labels Linkbase Document.

101.PRE Inline XBRL Taxonomy Presentation Linkbase Document.

104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Denotes management contract or compensatory plan or arrangement.

# The certifications attached as Exhibits 32.1 and 32.2 accompany this Annual Report on Form 10-K pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

+ Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.

† Certain confidential portions (indicated by brackets and asterisks) have been omitted from this exhibit.

FORM 10-K SUMMARY

Not applicable.

Pursuant to the requirements

of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf

by the undersigned, thereunto duly authorized .

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Hydrofarm Holdings Group, Inc.

4 unchanged sentences

(Principal Executive Officer)

ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints William Toler and B.

John Lindeman, and

each of them, as his or her true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him or her and

in his or her name, place or stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and

to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting

unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite

and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby

ratifying and confirming all that said attorneys-in-fact and agents, or their or his or her substitute or substitutes, may lawfully do

or cause to be done by virtue hereof.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities indicated below and on the dates indicated.

/s/ William Toler

Chief Executive Officer and Chairman of the Board

March 30, 2021

William Toler

(Principal Executive Officer)

John Lindeman

Chief Financial Officer

March 30, 2021

John Lindeman

(Principal Financial and Accounting Officer )

/s/ Susan Peters

March 30, 2021

/s/ Patrick Chung

March 30, 2021

Patrick Chung

/s/ Renah Persofsky

March 30, 2021

Renah Persofsky

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, on behalf of the registrant and in the capacities indicated below and on the dates indicated.

Signatures Title Date

/s/ William Toler Chief Executive Officer and Chairman of the Board March 1, 2022

William Toler ( Principal Executive Officer )

John Lindeman Chief Financial Officer March 1, 2022

John Lindeman ( Principal Financial Officer )

/s/ Joseph D.

Rumley Chief Accounting Officer March 1, 2022

Rumley ( Principal Accounting Officer )

/s/ Susan Peters March 1, 2022

Susan Peters Director

/s/ Patrick Chung March 1, 2022

Patrick Chung Director

/s/ Renah Persofsky March 1, 2022

Renah Persofsky Director

/s/ Richard D.

March 30, 2021

/s/ Melisa Denis

March 30, 2021

Moss March 1, 2022

Moss Director

/s/ Melisa Denis March 1, 2022

Melisa Denis Director

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

What changed 10-K

Item 9A. Controls and Procedures