grwg-20240930

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended: September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number: 333-207889

GROWGENERATION CORP.

(Exact name of registrant as specified in its charter)


Colorado						46-5008129
(State of other jurisdiction of incorporation)						(IRS Employer ID No.)

5619 DTC Parkway, Suite 900

Greenwood Village, Colorado 80111

(Address of principal executive offices)

(800) 935-8420

(Issuer's Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

GRWG

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Smaller reporting company	☐
Non-accelerated filer	☐	Emerging growth company	☐
Accelerated filer	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 6, 2024 there were 59,244,518 shares of the registrant's common stock issued and outstanding.

TABLE OF CONTENTS


		Page No.

	PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders' Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
	Signatures	35

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

GROWGENERATION CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except shares)


	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	27,436	$	29,757
Marketable securities	27,787		35,212
Accounts receivable, net of allowance for credit losses of $1,800 and $1,363 at September 30, 2024 and December 31, 2023, respectively	10,324		8,895
Notes receivable, current, net of allowance for credit losses of $— and $1,732 at September 30, 2024 and December 31, 2023, respectively	1,106		193
Inventory	48,025		64,905
Prepaid income taxes	201		516
Prepaid and other current assets	7,688		7,973
Total current assets	122,567		147,451

Property and equipment, net	21,119		27,052
Operating leases right-of-use assets, net	36,453		39,933
Notes receivable, long-term	—		106
Intangible assets, net	11,152		16,180
Goodwill	7,525		7,525
Other assets	823		843
TOTAL ASSETS	$	199,639	$	239,090

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	8,183	$	11,666
Accrued liabilities	2,536		2,530
Payroll and payroll tax liabilities	2,354		2,169
Customer deposits	2,631		5,359
Sales tax payable	1,310		1,185
Current maturities of operating lease liabilities	7,523		8,021
Total current liabilities	24,537		30,930

Operating lease liabilities, net of current maturities	31,620		34,448
Other long-term liabilities	317		317
Total liabilities	56,474		65,695
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock; $0.001 par value; 100,000,000 shares authorized, 59,242,200 and 61,483,762 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	59		61

Additional paid-in capital	375,407		373,433
Accumulated deficit	(232,301)		(200,099)
Total stockholders' equity	143,165		173,395
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	199,639	$	239,090

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

GROWGENERATION CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net sales	$	50,006	$	55,678	$	151,430	$	176,430
Cost of sales (exclusive of depreciation and amortization shown below)	39,196		39,490		113,835		126,816
Gross profit	10,810		16,188		37,595		49,614

Operating expenses:
Store operations and other operational expenses	10,032		11,658		30,876		36,288
Selling, general, and administrative	7,405		7,582		22,417		21,923
Estimated credit losses (recoveries)	272		257		(210)		681
Depreciation and amortization	4,972		4,721		12,329		12,477
Impairment loss	220		—		220		—
Total operating expenses	22,901		24,218		65,632		71,369

Loss from operations	(12,091)		(8,030)		(28,037)		(21,755)

Other income (expense):
Other (expense) income	(50)		(23)		(13)		786
Interest income	663		705		2,002		1,886
Interest expense	—		(1)		(70)		(6)
Total other income	613		681		1,919		2,666

Net loss before taxes	(11,478)		(7,349)		(26,118)		(19,089)

Benefit (provision) for income taxes	43		—		(50)		(93)

Net loss	$	(11,435)	$	(7,349)	$	(26,168)	$	(19,182)

Net loss per share, basic	$	(0.19)	$	(0.12)	$	(0.43)	$	(0.31)
Net loss per share, diluted	$	(0.19)	$	(0.12)	$	(0.43)	$	(0.31)

Weighted average shares outstanding, basic	59,268		61,272		60,479		61,127
Weighted average shares outstanding, diluted	59,268		61,272		60,479		61,127

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

GROWGENERATION CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, in thousands)

Common Stock

Treasury Stock

Additional
Paid-In Capital

Accumulated Deficit

Total
Stockholders' Equity

Amount

Balances, December 31, 2023

61,484