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Risks Relating to Our Business
−Removed: • competitive industry pressures;
+Added: • our ability to meet our current working capital needs and contractual obligations;
+Added: • possible difficulties in raising sufficient capital to fund our operations;
+Added: • our ability to continue as a going concern;
+Added: • our proprietary brand offerings expose us to various risks;
• expenses and risks associated with our restructuring activities;
−Removed: • long-lived assets and inventories represent a significant portion of our total assets and we may be required to record impairments or write-downs in future periods;
+Added: • competitive industry pressures;
+Added: • long-lived assets and inventories represent a significant portion of our total assets and we may be required to record additional impairments or write-downs in future periods;
• if we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affected;
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• the risk of product defects;
−Removed: • our proprietary brand offerings expose us to various risks;
• our ability to keep pace with technological advances;
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• acquisitions, other strategic alliances and investments could result in operating difficulties, dilution and other harmful consequences that may adversely impact our business and results of operations;
−Removed: • possible difficulties in raising sufficient capital to fund our operations;
• the potential for product liability lawsuits.
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• significant risks associated with our outstanding and future indebtedness of certain of our subsidiaries;
−Removed: • our ability to make our debt service payments pursuant to the Credit Facilities;
−Removed: • restrictions imposed by our Credit Facilities, including on our ability to sell products directly to the cannabis industry.
+Added: • our ability to make our debt service payments pursuant to the Term Loan;
+Added: • restrictions imposed by the Term Loan, including on our ability to sell products directly to the cannabis industry.
Risks Relating to Third Parties
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• we may incur indebtedness or issue capital stock that ranks senior or equally to our common stock with certain liquidation preference and other rights, which may dilute our stockholders’ ownership interest;
−Removed: • certain provisions in the Credit Facilities, our corporate charter documents and under Delaware law could make an acquisition of our company more difficult and may prevent attempts by our stockholders to replace or remove current management or to obtain a favorable judicial forum for disputes with directors, officers or employees;
−Removed: • our ability to meet the continued listing standards of The Nasdaq Capital Market;
+Added: • certain provisions in the Term Loan, our corporate charter documents and under Delaware law could make an acquisition of our company more difficult and may prevent attempts by our stockholders to replace or remove current management or to obtain a favorable judicial forum for disputes with directors, officers or employees;
+Added: • our ability to meet the continued listing standards of the Nasdaq;
• the market price of our common stock may be volatile.
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Risks Relating to Our Business
−Removed: Our competitors and potential competitors may develop products and technologies that are more effective or commercially attractive than our products.
−Removed: Our products compete against national and regional products and private label products produced by various suppliers, many of which are established companies that provide products that perform functions similar to our products.
−Removed: Our competitors may develop or market products that are more effective or commercially attractive than our current or future products.
−Removed: Some of our competitors have substantially greater financial, operational, marketing and technical resources than we do.
−Removed: Moreover, some of these competitors may offer a broader array of products and sell their products at prices lower than ours, and may have greater name recognition.
−Removed: In addition, we may face competition from new entrants into our field.
−Removed: Due to this competition, we may encounter difficulties in generating revenues and capturing market share.
−Removed: In addition, increased competition may lead to reduced prices and/or margins for products we sell.
−Removed: We may not have the financial resources, relationships with key suppliers, technical expertise or marketing, distribution or support capabilities to compete successfully in the future.
+Added: We are not able to meet our current working capital needs and contractual obligations.
+Added: We face significant liquidity constraints that raise substantial uncertainty regarding our ability to meet our current obligations as they become due and as previously disclosed, we elected to defer making the interest payment of approximately $2.8 million on the Term Loan in February 2026.
+Added: Our operating cash flows have been insufficient to fully support our working capital needs and contractual obligations, and we require additional sources of liquidity to satisfy upcoming payment obligations, including vendor payables, debt service requirements, lease commitments, and other contractual liabilities.
+Added: If our cash flows from operations do not improve, or if we are unable to obtain additional financing on acceptable terms, we are unable to meet these obligations when due.
+Added: Management has developed and is implementing a plan intended to improve our liquidity position.
+Added: These actions include cost‑reduction and restructuring initiatives, efforts to improve operating efficiency, negotiations with lenders and key vendors, and the pursuit of additional financing or strategic alternatives.
+Added: While we believe these actions, if successfully executed, could provide sufficient liquidity to meet our obligations for the foreseeable future, there can be no assurance that these plans will be achieved within the necessary timeframes or at all.
+Added: Our ability to execute these plans depends on factors that are outside of our control, including market conditions, lender and vendor cooperation, and the performance of our business.
+Added: If we are unable to generate sufficient liquidity or successfully implement our plans, we may need to delay or reduce expenditures, restructure or refinance existing obligations, seek additional debt or equity financing, or pursue other strategic alternatives.
+Added: Failure to meet our obligations as they come due could have a material adverse effect on our business, financial condition, and results of operations.
+Added: We may not be able to obtain sufficient capital and may be forced to limit the scope of our operations.
+Added: As of the date of this Annual Report on Form 10-K, we are experiencing increased capital needs and accordingly, we do not have sufficient capital to fund our future operations without additional capital investments.
+Added: There can be no assurance that additional capital will be available to us to fund our operations and the execution of our strategies.
+Added: Due to our recurring operating losses and negative cash flows from operations, there is substantial doubt as to our ability to continue as a going concern.
+Added: We may need additional financing to execute our business plan, to fund our operations, and to continue as a going concern.
+Added: Our disclosure regarding the substantial doubt as to our ability to continue as a going concern may hinder our ability to obtain further financing.
+Added: Due to our recurring operating losses, negative cash flows from operations, and our $114.4 million reclassification of Term Loan principal to current portion of long-term debt, management has determined that our present capital resources may not be sufficient to fund our planned operations for at least one year from the date of this Annual Report on Form 10-K, and there is substantial doubt as to our ability to continue as a going concern.
+Added: Our ability to continue as a going concern will depend on our ability to generate cash from operations and obtain additional financing to fund our operations after our current resources are exhausted, and no assurances can be given that additional financing will be available to us on commercially reasonable terms, or at all.
+Added: If we are unable to raise sufficient capital when needed, our business, financial condition, and results of operations will be materially and adversely affected, and we will need to modify our operational plans to continue as a going concern.
+Added: Moreover, the reaction of investors to the inclusion of a going concern statement in our financial statements and our potential inability to continue as a going concern could adversely affect the price of our common stock and our ability to raise new capital or enter into strategic or other transactions.
+Added: Our proprietary brand offerings expose us to various risks.
+Added: We have invested in acquisition and development of our proprietary brand offerings.
+Added: Although we believe that our proprietary brand products offer value to our customers and generally provide us with higher gross margins than comparable
+Added: third-party branded products we sell, the expansion of our proprietary brand offerings also subjects us to certain specific risks in addition to those discussed elsewhere in this section, such as:
+Added: • potential mandatory or voluntary product recalls;
+Added: • supply chain disruptions;
+Added: • our ability to successfully obtain, maintain, protect and enforce our intellectual property rights (including defending against counterfeit, knock offs, grey-market, infringing or otherwise unauthorized goods);
+Added: • our ability to successfully navigate and avoid claims related to the proprietary rights of third parties.
+Added: An increase in sales of our proprietary brands may also adversely affect our sales of our vendors’ products, which may, in turn, adversely affect our relationship with our vendors.
+Added: Our failure to adequately address some or all of these risks could have a material adverse effect on our business, results of operations and financial condition.
Our restructuring activities may increase our expenses and cash expenditures, and may not have the intended effects.
In connection with our restructuring plans, we have implemented a number of restructuring initiatives designed to streamline our operations, reduce costs, and improve efficiencies during the industry recession.
−Removed: Management’s Discussion and Analysis of Financial Condition And Results of Operations – Market Conditions" below for more information regarding our restructuring plans.
+Added: See Item 7, Management’s Discussion and Analysis of Financial Condition And Results of Operations – Market Conditions included elsewhere in this Annual Report on Form 10-K for more information regarding our restructuring plans.
Restructuring actions typically result in charges and cash expenditures that may adversely affect financial results for one or more periods, and efforts to minimize or eliminate such expenditures may not be successful.
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If we are unable to structure our operations in light of evolving market conditions, this could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: We may not successfully develop new products or improve existing products or maintain our effectiveness in reaching consumers through rapidly evolving communication vehicles.
+Added: Further, if we are unsuccessful with our restructuring and other cost-saving initiatives, improving our profitability or raising capital, it will have a material adverse effect on our business and financial position and we may choose to pursue a filing under Chapter 11 under the U.S.
+Added: Bankruptcy Code or access receivership or similar processes, or otherwise wind-up our business and liquidate.
+Added: See the risk factor titled “ We are subject to a number of risks, directly and indirectly through Cannabis Industry Participants, because cannabis is illegal under federal law ” for further information on risks related to our access to federal bankruptcy protection as a cannabis-related businesses.
+Added: Seeking bankruptcy court protection, accessing receivership or similar processes or otherwise winding up our business and liquidating could have a material adverse effect on our business, financial condition, results of operations and liquidity.
+Added: While these proceedings or processes continue, our management would spend substantial time and effort on the reorganization instead of our business operations.
+Added: These proceedings or processes also could make it more difficult to retain management and other key personnel necessary to the success and operation of our business.
+Added: In addition, while we are involved in a bankruptcy proceeding, or similar process, our customers might lose confidence in our ability to reorganize our business successfully and seek to establish alternative commercial relationships.
+Added: Because our indebtedness is senior to our common stock in our capital structure, a bankruptcy proceeding or similar process, could result in a limited recovery, if any, for our stockholders, and would place our stockholders at significant risk of losing all of their investment in our common stock.
+Added: We may not successfully develop new products, improve existing products, or maintain our effectiveness in reaching consumers through rapidly evolving communication vehicles.
Our future success depends, in part, upon our ability to improve our existing products and to develop, manufacture and market new products to meet evolving consumer needs.
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If we fail to successfully develop, manufacture and market new products or product innovations, or if we fail to reach existing and potential consumers, our ability to maintain or grow our market share may be adversely affected, which in turn could materially adversely affect our business, financial condition and results of operations.
−Removed: In addition, the development and introduction of new products and product innovations require substantial research, development and marketing expenditures.
+Added: In addition, the development and introduction of
+Added: new products and product innovations require substantial research, development and marketing expenditures.
We may be unable to invest in new products and innovations, and may be unable to recoup any such investments if our new products or innovations do not achieve market acceptance.
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The need to obtain such approval or registration could delay the launch of new products or product innovations that contain such ingredients or otherwise prevent us from developing and manufacturing certain products and product innovations.
−Removed: Failure to properly register
−Removed: and maintain these registrations for these products could result in significant penalties, additional costs, product stop-sales or recalls.
−Removed: Long-lived assets and inventories represent a significant portion of our total assets and we may be required to record impairments or write-downs in future periods.
−Removed: Our consolidated balance sheet as of December 31, 2024 includes $249.0 million of intangible assets, net, $50.6 million of inventories, $37.5 million of property, plant, and equipment, net, and $42.9 million of operating lease right-of-use assets.
−Removed: During the years ended December 31, 2024 and 2023, we recorded significant allowances for obsolete inventory and restructuring charges associated with inventory write-downs.
+Added: Failure to properly register and maintain these registrations for these products could result in significant penalties, additional costs, product stop-sales or recalls.
+Added: Our competitors and potential competitors may develop products and technologies that are more effective or commercially attractive than our products.
+Added: Our products compete against national and regional products and private label products produced by various suppliers, many of which are established companies that provide products that perform functions similar to our products.
+Added: Our competitors may develop or market products that are more effective or commercially attractive than our current or future products.
+Added: Some of our competitors have substantially greater financial, operational, marketing and technical resources than we do.
+Added: Moreover, some of these competitors may offer a broader array of products and sell their products at prices lower than ours, and may have greater name recognition.
+Added: In addition, we may face competition from new entrants into our field.
+Added: Due to this competition, we may encounter difficulties in generating revenues and capturing market share.
+Added: In addition, increased competition may lead to reduced prices and/or margins for products we sell.
+Added: We may not have the financial resources, relationships with key suppliers, technical expertise or marketing, distribution or support capabilities to compete successfully in the future.
+Added: Long-lived assets and inventories represent a significant portion of our total assets and we may be required to record additional impairments or write-downs in future periods.
+Added: Our consolidated balance sheet as of December 31, 2025 includes $33.3 million of inventories, $37.8 million of operating lease right-of-use assets, $30.3 million of property, plant, and equipment, net, and $2.8 million of intangible assets, net.
+Added: We have experienced sales declines, which we believe are primarily a result of agricultural oversupply impacting our market.
+Added: The extent to which these market conditions will continue to impact our business, results of operations, and cash flows are uncertain and difficult to predict at this time, and may result in lower margins, inventory write-downs, accounts receivable allowances, and additional impairments of our long-lived assets which could have a material adverse effect on our business, financial condition and results of operations.
+Added: During the year ended December 31, 2025, we recorded impairment charges of $232.2 million.
+Added: Of the impairment charge, $228.4 million was related to finite-lived intangible assets and $3.8 million was related to property, plant, and equipment.
Long-lived assets, such as intangible assets, property, plant and equipment and operating lease right-of-use assets are reviewed for impairment whenever events, changes or circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
If we were to conclude that a future write-down of our long-lived assets is necessary, we would have to record the appropriate charge, which could result in a material adverse effect on our results of operations.
+Added: During the years ended December 31, 2025 and 2024, we recorded significant allowances for obsolete inventory and restructuring charges associated with inventory write-downs.
Inventories consist of manufactured goods, goods acquired for resale, and materials consumed in business operations.
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The estimate for excess and obsolete inventory is based upon assumptions about current and anticipated demand, customer preferences, business strategies, and market conditions.
−Removed: We have experienced sales declines, which we believe are primarily a result of agricultural oversupply impacting our market.
−Removed: The extent to which these market conditions will continue to impact our business, results of operations, and cash flows are uncertain and difficult to predict at this time, and may result in lower margins, inventory write-downs, accounts receivable allowances, and impairments of our long-lived assets which could have a material adverse effect on our business, financial condition and results of operations.
If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affected.
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From time to time in the normal course of business, we enter into agreements with our suppliers pursuant to which we are required to purchase minimum amounts of inventory over a defined time period.
−Removed: We receive favorable pricing terms in exchange for this arrangement, but such agreements could lead to an oversupply of inventory.
+Added: We receive favorable pricing terms in exchange for this arrangement, but such agreements could lead to an
+Added: oversupply of inventory.
If we fail to manage our inventory effectively or negotiate favorable credit terms with third-party suppliers, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory values, and significant inventory write-downs or write-offs.
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We are exposed to manufacturing risks generally and there is no assurance that our manufacturing activities will not cause us to incur material unexpected costs or liabilities.
−Removed: Our manufacturing processes may experience problems including equipment malfunctions, facility contamination, labor problems, raw material shortages or contamination, natural disasters,
−Removed: power outages, terrorist activities, safety and certification issues, or disruptions in the operations of our suppliers which could result in product defects, product recalls, product liability claims and insufficient inventory or supply of product for our customers.
+Added: Our manufacturing processes may experience problems including equipment malfunctions, facility contamination, labor problems, raw material shortages or contamination, natural disasters, power outages, terrorist activities, safety and certification issues, or disruptions in the operations of our suppliers which could result in product defects, product recalls, product liability claims and insufficient inventory or supply of product for our customers.
For example, the nutrient and fertilizer manufacturing operations may expose us to handling potentially hazardous or explosive chemicals.
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This could damage our relationships with our customers.
−Removed: A product recall would be particularly harmful to us because it could potentially consume significant financial and administrative resources to effectively manage a product recall and it would detract management’s attention from implementing our core business strategies.
+Added: A product recall would be particularly harmful to us because it could potentially consume significant financial and administrative resources to effectively manage a product recall and it would detract management’s attention from implementing our core business
As a result, a significant product defect or product recall could cause a decline in our sales and profitability and could reduce or deplete our financial resources.
−Removed: Our proprietary brand offerings expose us to various risks.
−Removed: We have invested in acquisition and development of our proprietary brand offerings.
−Removed: Although we believe that our proprietary brand products offer value to our customers and generally provide us with higher gross margins than comparable third-party branded products we sell, the expansion of our proprietary brand offerings also subjects us to certain specific risks in addition to those discussed elsewhere in this section, such as:
−Removed: • potential mandatory or voluntary product recalls;
−Removed: • supply chain disruptions;
−Removed: • our ability to successfully obtain, maintain, protect and enforce our intellectual property rights (including defending against counterfeit, knock offs, grey-market, infringing or otherwise unauthorized goods);
−Removed: • our ability to successfully navigate and avoid claims related to the proprietary rights of third parties.
−Removed: An increase in sales of our proprietary brands may also adversely affect our sales of our vendors’ products, which may, in turn, adversely affect our relationship with our vendors.
−Removed: Our failure to adequately address some or all of these risks could have a material adverse effect on our business, results of operations and financial condition.
Potential tariffs or a global trade war could increase the cost of our products, which could adversely impact the competitiveness of our products and our financial results.
−Removed: The United States has imposed tariffs on certain imports from China, including on lighting and environmental control equipment manufactured in China, as well as tariffs on steel and aluminum products produced in other countries.
−Removed: In addition, the United States announced tariffs on products from Canada and Mexico before pausing such tariffs prior to going into effect.
+Added: The United States has imposed tariffs on certain imports from China, Canada, Mexico, and Europe, including on lighting and environmental control equipment manufactured in China, as well as tariffs on steel and aluminum products produced in other countries.
administration imposes additional tariffs, or if additional tariffs or trade restrictions are implemented by the United States or other countries the cost of our products manufactured in China and imported into the United States or other countries could increase, which in turn could adversely affect the demand for these products and have a material adverse effect on our business and results of operations.
−Removed: Furthermore, tariffs on products imported into the United States from Canada, including relating to our peat business, could adversely affect the demand for these products.
+Added: Furthermore, should new tariffs be enacted on products imported into the United States from Canada, including relating to our peat business, they could adversely affect the demand for these products.
In addition, political tensions between and among the United States and China and certain other countries have escalated in recent years.
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There is current uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations, and tariffs and we cannot predict whether, and to what extent, U.S.
−Removed: trade policies will change in the future, including as a result of changes by the incoming U.S.
−Removed: presidential administration.
+Added: trade policies will change in the future.
Any of these factors could have a material adverse effect on our business, prospects, financial condition and results of operations.
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It is also possible that governments and regulatory agencies will increase regulation, including the adoption of further regulations relating to the transportation, storage or use of certain ingredients, to enhance homeland security or protect the environment and such increased regulation could negatively impact our ability to obtain raw materials, components and/or finished goods or could result in increased costs.
−Removed: In particular, legislators, consumers, investors and other stakeholders are increasingly focusing on climate change, petroleum usage, waste, recycled material content, and other sustainability concerns pertaining to companies’ ESG policies.
−Removed: Concern over climate change may result in new or increased legal and regulatory requirements to reduce or mitigate negative impacts to the environment or may result in new reporting and disclosure requirements.
+Added: In particular, certain legislators, consumers, investors and other stakeholders are focusing on climate change, petroleum usage, waste, recycled material content, and other sustainability concerns pertaining to companies’ ESG policies.
+Added: Their concerns over climate change may result in new or increased legal and regulatory requirements to reduce or mitigate negative impacts to the environment or may result in new reporting and disclosure requirements.
In the event that such
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The remediation of the Company's peat bog sites is under provincial oversight.
+Added: In addition, permitting to develop additional peat bogs may be subject to challenges from communities that are purportedly affected by such development as part of the regulatory approval process for such development.
Failure by the Company to comply with such oversight could result in fines, current or future loss of peat bog leases, or other penalties.
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Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations, and may require additional resources to restore our supply chain.
−Removed: Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
−Removed: Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their ESG practices and disclosure.
+Added: Scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
+Added: Companies are facing scrutiny from certain customers, regulators, investors, and other stakeholders related to their ESG practices and disclosure.
Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, climate change, health and safety, supply chain management, diversity, labor conditions and human rights, both in our own operations and in our supply chain.
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We are also required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis.
−Removed: In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Capital Market and other applicable securities rules and regulations impose various requirements on public companies.
+Added: In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq and other applicable securities rules and regulations impose various requirements on public companies.
Our management and other personnel devote a substantial amount of time to compliance with these requirements.
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Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations.
−Removed: In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may
−Removed: raise concerns for investors.
−Removed: Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.
−Removed: We are a "smaller reporting company" and, because we have opted to use the reduced reporting requirements available to us, certain investors may find investing in our securities less attractive.
−Removed: We are a "smaller reporting company" under the SEC’s disclosure rules, and as such, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
−Removed: We have elected to adopt certain of the accommodations available to smaller reporting companies.
−Removed: Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies.
−Removed: If investors consider our common stock less attractive as a result of our election to use the scaled-back disclosure permitted for smaller reporting companies, there may be a less active trading market for our common stock and our share price may be more volatile.
+Added: In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors.
+Added: Any actual or perceived weaknesses and conditions that need to be addressed in our internal
+Added: control over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.
Damage to our reputation could have an adverse effect on our business.
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Any operational failure or breach of security from these increasingly sophisticated cyber threats could lead to the loss or disclosure of both our and our customers’ financial, product, and other confidential information, as well as personally identifiable information about our employees or customers, result in negative publicity and expensive and time-consuming regulatory or other legal proceedings, damage our relationships with our customers and have a material adverse effect on our business and reputation.
−Removed: In addition, we may incur significant costs and operational consequences in connection with investigating, mitigating, remediating, eliminating and putting in place additional tools and devices designed to prevent future actual or perceived security incidents, as well as in connection with complying with any notification or other
−Removed: obligations resulting from a security incident.
+Added: In addition, we may incur significant costs and operational consequences in connection with investigating, mitigating, remediating, eliminating and putting in place additional tools and devices designed to prevent future actual or perceived security incidents, as well as in connection with complying with any notification or other obligations resulting from a security incident.
Because we do not control our third-party vendors, or the processing of data by our third-party vendors, our ability to monitor our third-party vendors’ data security is limited and we cannot ensure the integrity or security of the measures they take to protect and prevent the loss of our or our consumers’ data.
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In particular, the carrying value of deferred tax assets is dependent on our ability to generate future taxable income of the appropriate character in the relevant jurisdiction.
−Removed: From time to time, tax proposals are introduced or considered by the U.S.
+Added: From time to time, tax proposals are introduced, considered, or implemented by the U.S.
Congress or the legislative bodies in local, state and foreign jurisdictions that could also affect our tax rate, the carrying value of our deferred tax assets, or our tax liabilities.
+Added: For example, in July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted.
+Added: The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, along with additional changes to certain U.S.
+Added: corporate tax provisions.
+Added: The Company is currently evaluating the impact of OBBBA, but does not believe that the tax provisions of the legislation will have a material impact on the Company's results of operations.
Our tax liabilities are also affected by the amounts we charge for inventory, services, licenses and funding.
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Similar provisions of state tax law may also apply to our state NOL carryforwards.
−Removed: In addition, future changes in
−Removed: our stock ownership, some of which may be beyond our control, could result in additional ownership changes under Section 382 of the Code.
+Added: In addition, future changes in our stock ownership, some of which may be beyond our control, could result in additional ownership changes under Section 382 of the Code.
Acquisitions, other strategic alliances and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations.
−Removed: Acquisitions have been an important element of our overall corporate strategy, and these transactions entailed material investments by us that are material to our financial condition and results of operations.
−Removed: We may evaluate and enter into discussions regarding potential strategic transactions.
+Added: Acquisitions have been an important element of our overall corporate strategy, and these transactions entailed investments by us that are material to our financial condition and results of operations.
+Added: We may evaluate and enter into
+Added: discussions regarding potential strategic transactions.
The process of integrating an acquired company, business, or product has created, and will continue to create, unforeseen operating difficulties and expenditures.
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There can be no assurance that we will be able to identify appropriate acquisition targets or potential strategic transactions, successfully execute such potential transactions, or successfully integrate the business of acquired companies to realize the full, anticipated benefits of such acquisitions.
−Removed: If we need additional capital to fund our operations, we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations.
−Removed: We may experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments.
−Removed: There can be no assurance that additional capital will be available to us to fund our operations and the execution of our strategies.
If product liability lawsuits are brought against us, we may incur substantial liabilities.
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(v) substantial monetary awards to trial participants or patients;
−Removed: (vi) product recalls, withdrawals or labeling, marketing or promotional restrictions;
+Added: (vi) product recalls,
+Added: withdrawals or labeling, marketing or promotional restrictions;
or (vii) a decline in our stock price.
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Risks Relating to Our Indebtedness
−Removed: The Credit Facilities contain, and future debt facilities may contain, restrictions that limit our flexibility in operating our business;
−Removed: we fund interest and amortization payments from cash flows generated in our operations, and to the extent that cash flows deteriorate, it could be difficult or impossible to timely make our debt service payments or obtain additional debt financing.
+Added: Substantially all of our and our Subsidiary Obligors’ assets are pledged to secure obligations under the Term Loan.
+Added: On February 4, 2026, we elected to defer making an interest payment of approximately $2.8 million on the Term Loan.
+Added: As a result of our failure to pay the interest within the grace period, an event of default occurred with respect to the Term Loan.
+Added: On February 11, 2026, the lenders, through the administrative agent, notified us of such event of default and informed us that the administrative agent or the collateral agent may exercise any rights and remedies provided under the Term Loan agreement and related financing documents, but it did not seek to enforce such remedies as of such time.
+Added: We and our Subsidiary Obligors have granted a continuing security interest in substantially all of our assets to JPMorgan.
+Added: As we have received a notice of default from JPMorgan, we note that they are entitled to exercise remedies available to them resulting from such default, including increasing the applicable interest rate on all amounts outstanding to the stated default rate, declaring all amounts due thereunder immediately due and payable, assuming possession of the secured assets, and exercising all other rights and remedies of a secured party under the Uniform Commercial Code, as applicable then in the United States, or the Personal Property Security Act, as applicable then in Canada.
+Added: Our ability to conduct our business may be materially harmed as a result of the exercise of any remedies, in the event that such remedies are exercisable, by JPMorgan.
+Added: Servicing our debt may require a significant amount of cash and is dependent on the performance of our business.
+Added: If our business does not provide sufficient cash flow from operations or our business does not perform as we expect, our lenders may not refinance or restructure our debt on the terms that we find attractive, or at all.
+Added: Our ability to make scheduled payments of the principal of, to pay special interest, if any, on or to refinance the existing Term Loan depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
+Added: Our business may not generate sufficient cash flow from operations to service our debt and make necessary capital expenditures.
+Added: If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.
+Added: Our ability to refinance the existing Term Loan will depend on the capital markets and our financial condition at such time.
+Added: We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
+Added: In addition, any of our future debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives.
+Added: Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt repayment.
+Added: Our Term Loan contains, and future debt facilities may contain, restrictions that limit our flexibility in operating our business;
+Added: we intend to fund interest payments from cash flows generated in our operations, and to the extent that cash flows deteriorate, it could be difficult or impossible to timely make our debt service payments or obtain additional debt financing.
We maintain a substantial amount of debt, and we may incur additional debt in the future to help fund our business.
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• limiting our ability to use a substantial portion of our cash flow from operations in other areas of our business, including for working capital, expanding our infrastructure, capital expenditures and other general business activities and investment opportunities in our company, because we must dedicate a substantial portion of these funds to pay interest and/or service our debt and because the documents contain restrictions on certain of those actions;
−Removed: • impacting our cash flows, results of operations and financial condition as interest rates fluctuate, as our Credit Facilities incur interest at a floating rate;
+Added: • impacting our cash flows, results of operations and financial condition as interest rates fluctuate, as our Term Loan incurs interest at a floating rate;
• requiring us to seek to incur further indebtedness in order to make the capital expenditures and other expenses or investments necessary to operate the business to the extent our future cash flows are insufficient;
−Removed: • requiring us to refinance the Revolving Credit Facility if the lenders do not agree to extend the maturity date beyond June 30, 2026;
• limiting our ability to obtain additional financing in the future for working capital, capital expenditures, debt service requirements, acquisitions and the execution of our strategy, and other expenses or investments planned by us;
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• increasing our vulnerability to a downturn in our business and to adverse economic and industry conditions generally.
−Removed: The existing Credit Facilities (as discussed in more detail in "Item 7.
−Removed: Management’s Discussion And Analysis of Financial Condition and Results of Operations – the Revolving Credit Facility and Term Loan") contain, and any documents governing our or our subsidiaries’ future indebtedness may contain, numerous financial and operating covenants that limit the discretion of management with respect to certain business matters.
+Added: The existing Term Loan (as discussed in more detail in Item 7, Management’s Discussion And Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report on Form 10-K) contains, and any documents governing our or our subsidiaries’ future indebtedness may contain, numerous financial and operating covenants that limit the discretion of management with respect to certain business matters.
Such restrictive covenants include restrictions on, among others, our and our subsidiaries’ ability to:
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and (10) alter the business that we currently conduct.
−Removed: The existing Credit Facilities also require us, and any documents governing our and our subsidiaries’ future indebtedness may require, to meet certain financial ratios and tests in order to enter into certain transactions, incur additional indebtedness, pay dividends and other actions.
−Removed: In addition, if we become subject to the financial ratios and tests that are specified in the Revolving Credit Facility, noncompliance with such ratios and tests would be an event of default.
−Removed: We and our Subsidiary Obligors’ ability to comply with these and other provisions of the existing Credit Facilities is dependent on our future performance, which will be subject to many factors, some of which are beyond our control.
+Added: The existing Term Loan also requires us, and any documents governing our and our subsidiaries’ future indebtedness may require us to meet certain financial ratios and tests in order to enter into certain transactions, incur additional indebtedness, pay dividends and take other actions.
+Added: We and our Subsidiary Obligors’ ability to comply with these and other provisions of the existing Term Loan is dependent on our future performance, which will be subject to many factors, some of which are beyond our control.
The breach of any of these covenants or noncompliance with any applicable financial ratios and tests could result in an event of default under the existing debt agreements, which, if not cured or waived, could result in acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may also contain cross-acceleration or cross-default provisions.
Variable rate indebtedness subjects us and the Subsidiary Obligors to the risk of higher interest rates, which could cause our future debt service obligations to increase significantly.
−Removed: The Credit Facilities have restrictions on our ability to sell our products directly to the cannabis industry.
−Removed: Our Credit Facilities each contain customary covenants, restrictions and defaults.
−Removed: The Credit Facilities prohibit us and the Subsidiary Obligors from selling our products, inventory or services directly to cannabis growers operating in any country that prohibits the sale and use of cannabis products other than in accordance with the applicable laws of such country.
−Removed: We are in compliance with the terms set forth in the Revolving Credit Facility and the Term Loan and maintain policies and procedures that are designed to promote and achieve continued compliance with such requirements.
+Added: The Term Loan has restrictions on our ability to sell our products directly to the cannabis industry.
+Added: Our Term Loan contains customary covenants, restrictions and defaults.
+Added: The Term Loan prohibits us and the Subsidiary Obligors from selling our products, inventory or services directly to cannabis growers operating in any country that prohibits the sale and use of cannabis products other than in accordance with the applicable laws of such country.
+Added: We are in compliance with the relevant terms set forth in the Term Loan and maintain policies and procedures that are designed to promote and achieve continued compliance with such requirements.
These compliance requirements may require that we be more selective than our competitors when selecting to whom we sell our products, and in certain situations, may afford our competitors a competitive advantage if we are not able to sell our products to a certain customer, and may negatively impact our marketing efforts, sales and reputation in the market.
−Removed: Moreover, the breach of any of these compliance requirements may result in the occurrence of an event of default under each of the Revolving Credit Facility and the Term Loan, which would entitle JPMorgan, as administrative agent on behalf of the lenders party to such agreements, to terminate the commitments thereunder and declare all loans then outstanding to be due and payable.
+Added: Moreover, the breach of any of these compliance requirements may result in the occurrence of an event of default under the Term Loan, which would entitle the administrative agent on behalf of the lenders party to such agreements, to terminate the commitments thereunder and declare all loans then outstanding to be due and payable.
The foregoing events would have a material adverse effect on our business, results of operations and financial condition.
−Removed: Substantially all of our and our Subsidiary Obligors’ assets are pledged to secure obligations under the Credit Facilities.
−Removed: We and our Subsidiary Obligors have granted a continuing security interest in substantially all of our assets to JPMorgan.
−Removed: If we or the Subsidiary Obligors default on any of our obligations under such agreements, JPMorgan will be entitled to exercise remedies available to them resulting from such default, including increasing the applicable interest rate on all amounts outstanding to the stated default rate, declaring all amounts due thereunder immediately due and payable, assuming possession of the secured assets, and exercising all other rights and remedies of a secured party under the Uniform Commercial Code, as applicable then in the United States, or the Personal Property Security Act, as applicable then in Canada.
−Removed: Our ability to conduct our business may be materially harmed as a result of the exercise of any remedies, in the event that such remedies are exercisable, by JPMorgan.
Risks Relating to Third Parties
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Our proprietary technologies can limit our ability to locate or utilize alternative inputs for certain products.
−Removed: For certain inputs, new sources of supply may have to be qualified under regulatory standards, which can require additional investment and delay bringing a product to market.
+Added: For certain inputs, new
+Added: sources of supply may have to be qualified under regulatory standards, which can require additional investment and delay bringing a product to market.
If our suppliers that currently, or will in the future, sell directly to the retail market in which we conduct our current or future business, or if our customers that currently, or will in the future, manufacture and sell competitive products, our ability to sell certain products could be harmed.
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Risks Relating to the Cannabis Industry
−Removed: It is evident to us that the movement towards the legalization of cannabis in the United States and its legalization in Canada has ultimately had a significant, positive impact on our industry.
−Removed: Accordingly, the risks referred to below, to the extent they relate to our customers could impact us indirectly.
+Added: The risks referred to below, to the extent they relate to our customers could impact us indirectly.
In addition, if our business is deemed to transact with companies in the United States involved in the cannabis business, these risks could apply directly to us.
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We are subject to a number of risks, directly and indirectly through Cannabis Industry Participants, because cannabis is illegal under federal law.
−Removed: Cannabis is illegal under U.S.
+Added: As of the date of this Annual Report on Form 10-K, cannabis is illegal under U.S.
Federal law and enforcement may adversely affect the implementation of medical cannabis and/or adult use cannabis laws, and may negatively impact our revenues and profits.
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For example, on August 29, 2013, the DOJ under the Obama administration issued the Cole Memorandum, characterizing strict enforcement as an inefficient use of federal investigative and prosecutorial resources.
−Removed: The Cole Memorandum provided guidance to all federal prosecutors indicating that federal enforcement of the CSA against cannabis-related conduct should be focused on specific priorities, including cannabis distribution to minors, violence in connection with cannabis distribution, cannabis cultivation on federal property, and collection of cannabis-derived revenue by criminal
−Removed: enterprises, gangs and cartels.
+Added: The Cole Memorandum provided guidance to all federal prosecutors indicating that federal enforcement of the CSA against cannabis-related conduct should be focused on specific priorities, including cannabis distribution to minors, violence in connection with cannabis distribution, cannabis cultivation on federal property, and collection of cannabis-derived revenue by criminal enterprises, gangs and cartels.
On January 4, 2018, the DOJ under the Trump administration issued the Sessions Memorandum, which effectively rescinded the Cole Memorandum and directed federal prosecutors to enforce the CSA and to follow well-established principles when pursuing prosecutions related to cannabis activities.
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On October 6, 2022, former President Biden issued an executive order pardoning all persons convicted of simple possession of cannabis under the CSA.
−Removed: In the same executive order, former President Biden also directed the Secretary of HHS and the Attorney General to initiate an administrative process to review the scheduling of cannabis under the CSA, and on August 29, 2023, the Department of HHS officially recommended that the DEA reschedule cannabis from Schedule I to Schedule III, although the DEA is not obligated to follow this recommendation.
+Added: In the same executive order, former President Biden also directed the Secretary of HHS and the Attorney General to initiate an administrative process to review the scheduling of cannabis under the CSA, and on August 29, 2023, the
+Added: Department of HHS officially recommended that the DEA reschedule cannabis from Schedule I to Schedule III, although the DEA is not obligated to follow this recommendation.
Further, on December 2, 2022, former President Biden signed into law the Medical Marijuana and Cannabidiol Research Expansion Act, which streamlines and expands the process for researching the medical use of cannabis.
On May 16, 2024, the DOJ announced that the Attorney General submitted a notice of proposed rulemaking process for rescheduling cannabis.
−Removed: The DEA held a preliminary hearing on the proposed rescheduling of cannabis on December 2, 2024.
−Removed: We cannot predict how the current administration or future administrations will enforce the CSA or other laws against cannabis activities.
+Added: The DEA held a preliminary hearing on the proposed rescheduling of cannabis on December 2, 2024, and was scheduled to have another hearing on January 21, 2025.
+Added: On January 15, 2025, the DEA indefinitely postponed this hearing regarding pending resolution of an appeal filed by a party in the proceedings.
+Added: On December 18, 2025, President Trump issued an executive order instructing the Attorney General to expedite the rulemaking process related to rescheduling cannabis from a Schedule 1 to a Schedule III controlled substance under the CSA.
+Added: Despite these advancements in rescheduling, we cannot predict how the current administration or future administrations will enforce the CSA or other laws against cannabis activities.
Any change in the federal government’s enforcement of current federal laws could cause significant financial damage to us.
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Such risks include, but are not limited to, the following:
−Removed: • Cannabis is currently a Schedule I drug under the CSA and regulated by the DEA as an illegal substance.
+Added: • As of the date of this Annual Report on Form 10-K, cannabis is a Schedule I drug under the CSA and regulated by the DEA as an illegal substance.
The FDA, in conjunction with the DEA, licenses cannabis research and drugs containing active ingredients derived from cannabis.
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Cannabis Industry Participants may be required to obtain separate state registrations, permits or licenses in order to be able to obtain, handle and/or distribute controlled substances in a state.
−Removed: Such state regulatory requirements may be costly and, the failure of such Cannabis Industry Participants to meet such regulatory requirements could lead to enforcement and sanctions by the states in addition to
−Removed: any from the DEA or otherwise arising under federal law.
+Added: Such state regulatory requirements may be costly and, the failure of such Cannabis Industry Participants to meet such regulatory requirements could lead to enforcement and sanctions by the states in addition to any from the DEA or otherwise arising under federal law.
We could be implicated in such enforcement or sanctions because of the purchase of our products by such Cannabis Industry Participants.
• The failure of our Cannabis Industry Participants to comply with applicable controlled substance laws and regulations, or the cost of compliance with these laws and regulations, may adversely affect the demand for our products and, as a result, the financial results of our business operations and our financial condition.
−Removed: Furthermore, the Credit Facilities restrict our ability and the ability of the Subsidiary Obligors to sell our products directly to U.S.
−Removed: cannabis growers.
+Added: Furthermore, the Term Loan restricts our ability and the ability of the Subsidiary Obligors to sell our products directly to U.S.
+Added: Cannabis Industry Participants.
Our growth is highly dependent on the U.S.
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However, regulation of the cannabis industry does impact those that we believe represent many end-users for our products and, accordingly, there can be no assurance that changes in regulation of the industry and more rigorous enforcement by federal authorities will not have a material adverse effect on us.
+Added: For example, legalization of cannabis in the United States may invite into the market for hydroponic equipment and supplies for the CEA industry additional competitors who are better resourced than us.
Legislation and regulations pertaining to the use and cultivation of cannabis are enacted on both the state and federal government level within the United States.
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We sell products, including hydroponic gardening products, through third-party retailers and resellers.
−Removed: End users may purchase these products for use in new and emerging industries, including the growing of cannabis that may not achieve market
−Removed: acceptance in a manner that we can predict.
−Removed: The demand for these products is dependent on the growth of these industries, which is uncertain, as well as the laws governing the growth, possession, and use of cannabis by adults for both adult and medical use.
+Added: End users may purchase these products for use in new and emerging industries, including the growing of cannabis that may not achieve market acceptance in a manner that we can predict.
+Added: The demand for these products is dependent on the growth of these industries,
+Added: which is uncertain, as well as the laws governing the growth, possession, and use of cannabis by adults for both adult and medical use.
Laws and regulations affecting the U.S.
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The FinCEN Memo outlines circumstances under which banks may provide services to cannabis businesses without risking federal prosecution for violation of U.S.
−Removed: federal money laundering laws and
−Removed: outlines extensive due diligence and reporting requirements.
−Removed: On June 29, 2020, FinCEN issued additional guidance for financial institutions conducting due diligence and filing suspicious activity reports in connection with hemp-related business customers.
+Added: federal money laundering laws and outlines extensive due diligence and reporting requirements.
+Added: On June 29, 2020, FinCEN issued additional guidance for financial
+Added: institutions conducting due diligence and filing suspicious activity reports in connection with hemp-related business customers.
While these guidelines clarify that financial institutions are not required to file suspicious activity reports solely based on a customer’s hemp-related business operations that comply with applicable state law and regulations, these requirements can still present challenges for certain end users of our products in establishing and maintaining banking relationships, and restrictions on cannabis-related banking activities remain.
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The CPRA came into effect on January 1, 2023, and significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain personal information and creating a new state agency to oversee implementation and enforcement efforts.
−Removed: In total, twenty states have enacted comprehensive data privacy laws similar to the CCPA, with several additional state privacy laws planned to take effect in 2025.
+Added: As of the date of this Annual Report on Form 10-K, approximately 20 states have enacted comprehensive data privacy laws similar to the CCPA.
In addition, laws in all 50 U.S.
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Internationally, laws, regulations and standards in many jurisdictions apply broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information.
−Removed: For example, the European Union ("EU") General Data Protection Regulation ("GDPR"), which became effective in May 2018, greatly increased the jurisdictional reach of the
−Removed: European Commission's laws and added a broad array of requirements for handling personal data.
−Removed: EU member states are tasked under the GDPR to enact, and have enacted, certain implementing legislation that adds to and/or further interprets the GDPR requirements and potentially extends our obligations and potential liability for failing to meet such obligations.
+Added: For example, the European Union ("EU") General Data Protection Regulation ("GDPR"), which became effective in May 2018, greatly increased the jurisdictional reach of the European Commission's laws and added a broad array of requirements for handling personal data.
+Added: EU member states are tasked
+Added: under the GDPR to enact, and have enacted, certain implementing legislation that adds to and/or further interprets the GDPR requirements and potentially extends our obligations and potential liability for failing to meet such obligations.
The GDPR, together with national legislation, regulations and guidelines of the EU member states and the United Kingdom governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, use, retain, protect, disclose, transfer and otherwise process personal data.
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The costs of compliance, noncompliance, investigation, remediation, combating reputational harm or defending civil or criminal proceedings, products liability, personal injury or other lawsuits could have a material adverse impact on our reputation, businesses, financial position, results of operations and cash flows.
+Added: We are a "smaller reporting company" and, because we have opted to use the reduced reporting requirements available to us, certain investors may find investing in our securities less attractive.
+Added: We are a "smaller reporting company" under the SEC’s disclosure rules, and as such, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
+Added: We have elected to adopt certain of the accommodations available to smaller reporting companies.
+Added: Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies.
+Added: If investors consider our common stock less attractive as a result of our election to use the scaled-back disclosure permitted for smaller reporting companies, there may be a less active trading market for our common stock and our share price may be more volatile.
Risks Relating to Our Intellectual Property
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If we are unable to obtain, maintain, protect and enforce our intellectual property rights, including our information and/or brand names, we could suffer a material adverse effect on our business, financial condition and results of operations.
−Removed: The steps we take to obtain, maintain, protect and enforce our intellectual property rights may be deemed inadequate and despite our efforts to protect these rights, unauthorized third parties, including our competitors, may duplicate, reverse
−Removed: engineer, access, obtain, use or copy the proprietary aspects of our technology, processes, products or services without our permission.
+Added: The steps we take to obtain, maintain, protect and enforce our intellectual property rights may be deemed inadequate and despite our efforts to protect these rights, unauthorized third parties, including our competitors, may duplicate, reverse engineer, access, obtain, use or copy the proprietary aspects of our technology, processes, products or services without our permission.
In addition, we cannot guarantee that we have entered into confidentiality agreements with each party that has or may have had access to our proprietary information, know-how and trade secrets.
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Our success depends upon our ability to develop, manufacture, market and sell our products, and to use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property rights of third parties.
−Removed: We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including interference or derivation proceedings and various other post-grant
−Removed: proceedings before the USPTO and/or non-U.S.
+Added: We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including interference or derivation proceedings and various other post-grant proceedings before the USPTO and/or non-U.S.
opposition proceedings.
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Though these license agreements may provide guidelines for how our trademarks, trade names and service marks may be used, a breach of these agreements or misuse of our trademarks, trade names and service marks by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names.
−Removed: Our efforts to enforce or protect our intellectual property rights related to trademarks, trade names and service marks may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and prospects.
+Added: Our efforts to enforce or protect our intellectual property rights related to trademarks, trade names and service
+Added: marks may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and prospects.
Risks Relating to Our Capital Stock
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Shares of our common stock are common equity interests in us and, as such, will rank junior to all of our existing and future indebtedness and other liabilities.
−Removed: Additionally, our amended and restated certificate of incorporation (the "Certificate of Incorporation") does not prohibit us from issuing any series of preferred stock that would rank senior or equally to our common stock as to dividend payments and liquidation preference.
+Added: Additionally, our restated certificate of incorporation (the "Certificate of Incorporation") does not prohibit us from issuing any series of preferred stock that would rank senior or equally to our common stock as to dividend payments and liquidation preference.
Our Certificate of Incorporation allows for our board of directors to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.
−Removed: We have the authority to issue up to 50,000,000 shares of our preferred stock without further
−Removed: stockholder approval.
+Added: We have the authority to issue up to 50,000,000 shares of our preferred stock without further stockholder approval.
The issuances of any series of preferred stock could have the effect of reducing the amounts available to our holders of common stock in the event of our liquidation.
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Various provisions of our lending agreements with JPMorgan, in addition to our Certificate of Incorporation, Bylaws and other corporate documents, could delay or prevent a change of control.
−Removed: The Credit Facilities prohibit us from undergoing a change of control.
+Added: The Term Loan prohibits us from undergoing a change of control.
Any takeover attempt could be delayed, or prevented, if an amendment or waiver is not provided by the respective lenders.
See Risks Relating to Our Indebtedness .
−Removed: Moreover, certain provisions of our Certificate of Incorporation and Bylaws and provisions of DGCL could delay or prevent a change of control or may impede the ability of the holders of our common stock to change our management.
+Added: Moreover, certain provisions of our Certificate of Incorporation and Bylaws and provisions of DGCL could delay or prevent a
+Added: change of control or may impede the ability of the holders of our common stock to change our management.
In particular, our Certificate of Incorporation and Bylaws, among other things will regulate how stockholders may present proposals or nominate directors for election at stockholders’ meetings and authorize our board of directors to issue preferred stock in one or more series, without stockholder approval.
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Because we conduct our operations through our subsidiaries, we depend on those entities for dividends and other payments to generate the funds necessary to meet our financial obligations.
−Removed: Legal and contractual restrictions in the Credit Facilities and other agreements which may govern future indebtedness of our subsidiaries, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries.
+Added: Legal and contractual restrictions in the Term Loan and other agreements which may govern future indebtedness of our subsidiaries, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries.
The earnings from, or other available assets of, our subsidiaries might not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or other obligations.
−Removed: Any of the foregoing could materially and adversely affect our
−Removed: business, financial condition, results of operations and cash flows.
−Removed: In addition, our ability to pay dividends is restricted by the terms of the Credit Facilities and, in addition, future debt financing, if any, may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our securities.
+Added: Any of the foregoing could materially and adversely affect our business, financial condition, results of operations and cash flows.
+Added: In addition, our ability to pay dividends is restricted by the terms of the Term Loan and, in addition, future debt financing, if any, may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our securities.
We currently intend to retain any future earnings for use in the operation and expansion of our business.
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The declaration and payment of all future dividends to holders of our common stock, if any, will be at the sole discretion of our board of directors, which retains the right to change our dividend policy at any time.
−Removed: In addition, our ability to pay dividends is restricted by the terms of the Credit Facilities and, in addition, future debt financing, if any, may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our securities.
+Added: In addition, our ability to pay dividends is restricted by the terms of the Term Loan and, in addition, future debt financing, if any, may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our securities.
Consequently, capital appreciation, if any, of our common stock may be the sole source of gain on investment for the foreseeable future.
−Removed: We may not meet continued listing requirements, our common stock may be delisted from the Nasdaq Capital Market, which could affect the market price and liquidity for our common stock and reduce our ability to raise additional capital.
−Removed: On March 14, 2024, we received written notice (the “Notification Letter”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we were not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market.
−Removed: Nasdaq Listing Rule 5550(a)(2) requires listed securities maintain a minimum closing bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum closing bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
−Removed: Based on the closing bid price of our common stock for the 30 consecutive business days prior to the date of the Notification Letter, we did not meet the minimum closing bid price requirement.
−Removed: To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days at any time prior to September 10, 2024.
−Removed: On August 9, 2024, we submitted a request to Nasdaq for a 180-day extension to regain compliance with the Minimum Bid Price Requirement.
−Removed: We indicated to Nasdaq that we met the continued listing requirement for market value of publicly-held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provided notice of our intention to cure the deficiency during the extended compliance period by effecting a reverse stock split, if necessary.
−Removed: On June 6, 2024, our stockholders approved an amendment to our Certificate of Incorporation to effect a reverse stock split of our issued and outstanding common stock at a ratio between 1-for-1.1 and 1-for-25, with the decision of whether to implement such split being subject to the discretion of the board of directors.
−Removed: On September 12, 2024, Nasdaq notified us that it had approved our application to transfer our listing from Nasdaq’s Global Select Market tier to the Capital Market tier.
−Removed: This transfer was effective at the opening of business on Friday, September 13, 2024.
−Removed: Nasdaq also approved an additional 180-day extension to March 10, 2025 to regain compliance with the Minimum Bid Price Requirement, in accordance with Nasdaq Listing Rule 5810(c)(3)(A).
−Removed: On February 6, 2025, the board of directors approved a ratio of 1-for-10 for the Reverse Stock Split and on February 12, 2025, we filed the Charter Amendment, with the Secretary of State of the State of Delaware to effect a 1-for-10 reverse stock split (the “Reverse Stock Split”) of the Common Stock, effective February 12, 2025 at the Effective Time and our shares of Common Stock began trading on a split-adjusted basis on Nasdaq at the commencement of trading on February 13, 2025, under our existing trading symbol “HYFM”.
−Removed: On February 27, 2025, we regained compliance with the applicable continued listing requirements for Nasdaq Capital Market.
−Removed: There can be no assurance that we will be able to maintain compliance with the Minimum Bid Requirements or otherwise be in compliance with other Nasdaq listing criteria.
−Removed: Delisting from Nasdaq could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our common stock.
+Added: We are currently not in compliance with the continued listing standards of Nasdaq, and if we are unable to regain compliance, our common stock will be delisted from the exchange.
+Added: Our common stock is currently listed for trading on the Nasdaq under the symbol “HYFM”.
+Added: The continued listing of our common stock on Nasdaq is subject to our compliance with a number of listing standards, including Nasdaq Listing Rule 5550(b)(1) to maintain a minimum of $2.5 million in stockholders’ equity (the “Minimum Stockholders’ Equity Requirement”) or the alternative requirements of Nasdaq Listing Rule 5550(b)(2)-(3) of having a market value of listed securities of at least $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or two of the last three most recently completed fiscal years (the “Alternative Requirement”).
+Added: As of December 31, 2025, we had a stockholder’s deficit of approximately $(63) million, the market value of our listed securities was below $35 million as of the date of this Annual Report on Form 10-K, and we realized a net loss in each of the past three fiscal years.
+Added: Accordingly, we do not meet the requirements of the Minimum Stockholders’ Equity Requirement or Alternative Requirement.
+Added: As such we anticipate the Listing Qualifications Staff of Nasdaq will notify us that we no longer meet the requirements of Nasdaq Listing Rule 5550(b)(1).
+Added: Upon notice from the Nasdaq noncompliance with Listing Rule 5550(b)(1), we may be granted 45 calendar days from the date of any notification letter to submit a plan to regain compliance with the Minimum Stockholders’ Equity Requirement and while there is no certainty we will be granted additional time, we may receive a compliance period, typically of no more than 180 days, to regain compliance with the Minimum Stockholder’s Equity Requirement.
+Added: If we fail to regain compliance with the Nasdaq continued listing standards, after any compliance period, if granted, or we fail to comply with other continued listing requirements, Nasdaq will provide notice that our common stock will be subject to delisting, which could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our common stock.
Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.
If our common stock is delisted by Nasdaq, the price of our common stock may decline and our common stock may be eligible to trade on the OTC Bulletin Board, another over-the-counter quotation system, or on the pink sheets where an investor may find it more difficult to dispose of their common stock or obtain accurate quotations as to the market value of our common stock.
+Added: A delisting from Nasdaq and failure to obtain listing on another market or exchange would subject our common stock to so-called penny stock rules that impose additional sales practice and market-making requirements on broker-dealers who sell or make a market in such securities.
Further, if we are delisted, we would incur additional costs under requirements of state “blue sky” laws in connection with any sales of our securities.
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If our existing stockholders, our directors, their affiliates, or our executive officers, sell a substantial number of shares of our common stock in the public market, the market price of our common stock could decrease significantly.
−Removed: The perception
−Removed: in the public market that these stockholders might sell our common stock could also depress the market price of our common stock and could impair our future ability to obtain capital, especially through an offering of equity securities.
+Added: The perception in the public market that these stockholders might sell our common stock could also depress the market price of our common stock and could impair our future ability to obtain capital, especially through an offering of equity securities.
The price of our common stock has been, and may continue to be, volatile and may fluctuate substantially, which could result in substantial losses for purchasers of our common stock.
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• the public’s reaction to our press releases, other public announcements and filings with the SEC;
−Removed: • rumors and market speculation involving us or other companies in our industry;
+Added: • rumors and market speculation involving us or other companies in our industry and the cannabis industry, including the legalization of cannabis in the United States;
• actual or anticipated changes in our results of operations or fluctuations in our results of operations;
10 unchanged sentences
This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
+Added: If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares .
+Added: The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.
+Added: Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system.
+Added: If we do not retain a listing on Nasdaq and if the price of our common stock is less than $5.00, our common stock will be deemed a penny stock.
+Added: The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information.
+Added: In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement;
+Added: (ii) a written agreement to transactions involving penny stocks;
+Added: and (iii) a signed and dated copy of a written suitability statement.
+Added: These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.
Our Certificate of Incorporation provides that the doctrine of "corporate opportunity" will not apply with respect to any director or stockholder who is not employed by us or our affiliates.
−Removed: The doctrine of corporate opportunity generally provides that a corporate fiduciary may not develop an opportunity using corporate resources, acquire an interest adverse to that of the corporation or acquire property that is reasonably incident to
−Removed: the present or prospective business of the corporation or in which the corporation has a present or expectancy interest, unless that opportunity is first presented to the corporation and the corporation chooses not to pursue that opportunity.
+Added: The doctrine of corporate opportunity generally provides that a corporate fiduciary may not develop an opportunity using corporate resources, acquire an interest adverse to that of the corporation or acquire property that is reasonably incident to the present or prospective business of the corporation or in which the corporation has a present or expectancy interest, unless that opportunity is first presented to the corporation and the corporation chooses not to pursue that opportunity.
The doctrine of corporate opportunity is intended to preclude officers or directors or other fiduciaries from personally benefiting from opportunities that belong to the corporation.
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In light of recent inflation, we may be required to increase the compensation we offer to current and prospective employees in order to compete for talent, and any wage increases may make it more difficult for us maintain general operating expenses at desired levels.
+Added: Additionally, in November 2025, we completed a Chief Executive Officer transition.
+Added: Management transitions may create uncertainty and involve a diversion of resources and management attention, be disruptive to our daily operations or impact public or market perception, any of which could negatively impact our ability to operate effectively or execute our strategies and result in a material adverse impact on our business, financial condition, and results of operations.
Litigation may adversely affect our business, financial condition and results of operations.
18 unchanged sentences
Foreign Corrupt Practices Act, which generally prohibits U.S.
−Removed: companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business.
+Added: companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining
Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in countries in which we conduct our business.
5 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.