Financial Data and Key Metrics Changes - The company reported first quarter net revenue of $35.7 million, down from $47.9 million in the prior year, reflecting the impact of 19 fewer retail locations [14][15] - Gross profit margin improved to 27.2%, up from 25.8% year over year, indicating a stronger product mix and improved procurement execution [10][16] - The net loss for the first quarter was $9.4 million, or negative $0.16 per share, compared to a net loss of $8.8 million, or negative $0.14 per share, in the same period last year [18] Business Line Data and Key Metrics Changes - Net sales in the cultivation and gardening segment were $30.9 million, down from $43.1 million year over year [15] - Proprietary brand sales accounted for 32% of cultivation and gardening sales, up from 22.6% in the prior year, reflecting increased brand penetration [9][16] - The storage solutions segment remained flat year over year at $4.8 million in revenue, facing some margin pressure [11][16] Market Data and Key Metrics Changes - The company experienced softness in durables and consumable demand due to regulatory and tariff concerns, particularly noted in March [6][12] - The company anticipates revenue in excess of $40 million for the second quarter, while withdrawing full-year guidance due to macroeconomic uncertainties [13][19] Company Strategy and Development Direction - The company is transitioning from a legacy retail model to a more agile fulfillment-centric model, repurposing former stores into regional fulfillment centers [7][10] - The launch of the GrowGen Pro portal aims to migrate commercial transactions from brick-and-mortar stores to a digital platform, enhancing operational efficiencies [9][10] - The focus is on transforming GrowGen into a high-margin product-centric commercial business powered by a digital platform and a simplified physical footprint [14] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic challenges and tariff-related uncertainties impacting consumer behavior and demand [12][19] - The company remains committed to achieving profitability and is focused on expanding margins, controlling costs, and exploring growth opportunities [20][21] Other Important Information - The company ended the quarter with $52.6 million in total liquidity and no debt, providing flexibility for operations and potential acquisitions [11][19] - The company is actively managing costs and pricing strategies to protect margins in the storage solutions segment while diversifying product offerings [11][12] Q&A Session Summary Question: Insights on tariffs and proprietary products - Less than 10% of proprietary brands come from China, with products sourced from India and Mexico [25][26] Question: Potential for store closures - Store closures will likely be spread out, with half coinciding with lease expirations [30][31] Question: Incremental distribution opportunities for proprietary brands - The company is exploring distribution outside the U.S. and working with large stores for distribution [36][38] Question: Positioning proprietary brands amid cannabis challenges - The company has a strong commercial team conducting extensive trials to encourage product adoption [40][41] Question: Consumer pressures and macro environment impact - There is significant weakness in the cannabis industry, particularly affecting durable goods, while consumables remain strong [50][51] Question: Capital position and acquisitions - The company maintains a strong cash position and is actively looking for acquisitions that are accretive to shareholders [57][58]

Financial Data and Key Metrics Changes - The company reported first quarter net revenue of $35.7 million, down from $47.9 million in the same period last year, reflecting the impact of 19 fewer retail locations [13][14] - Gross profit margin improved to 27.2%, up from 25.8% year-over-year, indicating a 140 basis point improvement primarily due to increased proprietary brand penetration [14][15] - The net loss for the first quarter was $9.4 million, or negative $0.16 per share, compared to a net loss of $8.8 million, or negative $0.14 per share, in the prior year [17] Business Line Data and Key Metrics Changes - Net sales in the cultivation and gardening segment were $30.9 million, down from $43.1 million year-over-year [13] - Proprietary brand sales accounted for 32% of cultivation and gardening sales, up from 22.6% in the previous year, reflecting strong growth in proprietary products [14][8] - The storage solutions segment remained flat year-over-year at $4.8 million in revenue, facing some margin pressure [10] Market Data and Key Metrics Changes - The company experienced softness in durables and consumable demand due to regulatory and tariff concerns, particularly noted in March [6] - The company anticipates revenue in excess of $40 million for the second quarter of 2025, while withdrawing full-year guidance due to macroeconomic uncertainties [12][18] Company Strategy and Development Direction - The company is transitioning from a legacy retail model to a more agile fulfillment-centric model, repurposing former stores into regional fulfillment centers [7] - The launch of the GrowGen Pro portal aims to migrate more commercial transactions from brick-and-mortar stores to a digital platform, enhancing operational efficiencies [9] - The focus is on transforming GrowGen into a high-margin product-centric commercial business powered by a digital platform and a simplified physical footprint [13] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing volatility in the market due to tariff-related uncertainties but expressed confidence in the company's ability to return to profitability [11][19] - The company is actively managing costs and exploring tuck-in acquisitions aligned with its brand portfolio, maintaining a strong liquidity position with $52.6 million in cash and no debt [10][18] - Management emphasized the importance of proprietary brand penetration and servicing commercial customers as key to future growth [30] Other Important Information - The company incurred approximately $1.1 million in restructuring costs during the first quarter, impacting operating expenses [16] - The company is evaluating the closure of an additional 10 stores to streamline operations and strengthen margin performance [12] Q&A Session Summary Question: Insights on tariffs and proprietary products - Management indicated that less than 10% of proprietary brands come from China, with efforts to diversify sourcing and negotiate pricing with vendors [24][25] Question: Potential for store closures - Management expects store closures to be spread out, primarily aligned with lease expirations, as consumer traffic has decreased significantly [29][30] Question: Incremental distribution opportunities for proprietary brands - Management highlighted efforts to expand distribution outside the U.S. and work with large stores for distribution, despite store closures [35][36] Question: Consumer pressures and market conditions - Management noted significant weakness in the cannabis industry, particularly in durable goods, while consumables remain strong [48][49] Question: Capital position and future acquisitions - Management emphasized the importance of maintaining capital on the balance sheet while actively seeking acquisitions that are accretive to shareholders [55][56]

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) For the three months ended March 31, 2025, GrowGeneration reported a net loss of $9.4 million on net sales of $35.7 million, compared to a net loss of $8.8 million on net sales of $47.9 million in the prior year period, with total assets decreasing to $164.2 million from $174.4 million at year-end 2024, while cash and cash equivalents increased to $32.7 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $32,742 | $27,471 | | Inventory | $42,129 | $40,295 | | Total current assets | $109,161 | $113,208 | | **Total Assets** | **$164,232** | **$174,352** | | **Current Liabilities** | | | | Accounts payable | $9,959 | $8,146 | | Total current liabilities | $24,912 | $24,274 | | **Total Liabilities** | **$53,073** | **$54,259** | | **Total Stockholders' Equity** | **$111,159** | **$120,093** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations | Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net sales | $35,703 | $47,888 | | Gross profit | $9,707 | $12,364 | | Loss from operations | $(9,874) | $(9,432) | | Net loss | $(9,377) | $(8,837) | | Net loss per share, basic & diluted | $(0.16) | $(0.14) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,829) | $(3,646) | | Net cash provided by investing activities | $9,160 | $4,967 | | Net cash used in financing activities | $(60) | $(28) | | **Net increase in cash and cash equivalents** | **$5,271** | **$1,293** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business structure, accounting policies, and financial statement components, including segment performance where Cultivation and Gardening revenue declined while Storage Solutions remained flat, and the completion of a significant restructuring plan incurring $1.1 million in charges during the quarter, with total charges reaching $3.5 million and expected annualized savings of $12.0 million - The company operates two major lines of business: the Cultivation and Gardening segment and the Storage Solutions segment, with **31 retail locations** in **12 states** as of March 31, 2025[22](index=22&type=chunk)[23](index=23&type=chunk) Segment Revenue | Segment Revenue (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cultivation and Gardening | $30,911 | $43,108 | | Storage Solutions | $4,792 | $4,780 | | **Total Net Sales** | **$35,703** | **$47,888** | Segment Operating Income (Loss) | Segment Operating Income (Loss) (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cultivation & Gardening | $535 | $1,064 | | Storage Solutions | $380 | $666 | | Corporate | $(10,789) | $(11,162) | | **Total Loss from Operations** | **$(9,874)** | **$(9,432)** | - The company incurred **$1.1 million** in restructuring charges in Q1 2025, bringing the total aggregate cost to **$3.5 million** since the plan was announced in July 2024, with the restructuring now substantially complete[78](index=78&type=chunk)[79](index=79&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **25.4%** year-over-year decline in net sales to the closure of **19 retail locations** in 2024 as part of a strategic restructuring, which is now substantially complete with expected annualized cost savings of approximately **$12.0 million**, while gross profit margin improved to **27.2%** from **25.8%** due to a higher mix of proprietary brand sales, and the company reported an Adjusted EBITDA loss of **$4.0 million** for the quarter, maintaining a solid liquidity position with **$52.6 million** in cash and marketable securities - Net sales decreased by **25.4%** year-over-year, primarily due to the Cultivation and Gardening segment, which was impacted by the closure of **19 retail locations** during 2024[102](index=102&type=chunk)[103](index=103&type=chunk) - Gross profit margin increased by **140 basis points** to **27.2%**, largely driven by strategic initiatives to increase the sales mix of higher-margin proprietary brands[108](index=108&type=chunk) - The strategic restructuring plan, initiated in July 2024, is now substantially complete, incurred a total cost of **$3.5 million**, and is expected to generate annualized cost savings of approximately **$12.0 million**[89](index=89&type=chunk)[90](index=90&type=chunk) Reconciliation to Net Loss | Reconciliation to Net Loss (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(9,377) | $(8,837) | | EBITDA | $(6,289) | $(5,643) | | **Adjusted EBITDA** | **$(4,030)** | **$(2,871)** | - As of March 31, 2025, the company had **$52.6 million** in cash, cash equivalents, and marketable securities, and management believes it is adequately funded for the next twelve months[117](index=117&type=chunk)[118](index=118&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company directs investors to its Annual Report on Form 10-K for the year ended December 31, 2024, for a summary of its quantitative and qualitative disclosures about market risk - For information regarding market risk, the company refers to Item 7A of its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting related to the Storage Solutions segment's separate ERP system, for which a remediation plan is underway, including transitioning this segment to the company's primary NetSuite ERP system - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025[127](index=127&type=chunk) - The ineffectiveness is due to a material weakness in internal control over financial reporting within the Storage Solutions segment's separate ERP system (Navision), which had segregation of duties conflicts[130](index=130&type=chunk)[133](index=133&type=chunk) - A remediation plan is in progress to address the material weakness, with a key initiative being the transition of the Storage Solutions (MMI) business from the Navision system to the company-wide NetSuite ERP system[135](index=135&type=chunk) [PART II OTHER INFORMATION](index=31&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings for the period - The company reports no legal proceedings[137](index=137&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) For a summary of risk factors, the company refers to its Annual Report on Form 10-K for the year ended December 31, 2024 - The company refers to its Form 10-K for the year ended December 31, 2024, for a summary of risk factors[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - The company reports none[139](index=139&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and Interactive Data Files (XBRL) - The report includes standard exhibits such as CEO and CFO certifications (Rule 13a-14(a) and Section 1350) and XBRL Interactive Data Files[145](index=145&type=chunk)

Core Insights - GrowGeneration Corp. reported a first quarter net sales of $35.7 million, a decrease from $47.9 million in the same period last year, primarily due to the closure of 19 retail locations in 2024 [4][6] - Proprietary brand sales increased to 32.0% of total Cultivation and Gardening revenue, up from 22.6% year-over-year, reflecting the strength of the company's product portfolio [5][6] - The gross profit margin improved to 27.2%, compared to 25.8% in the first quarter of 2024, indicating operational efficiency [7][9] Financial Performance - The company reported a net loss of $9.4 million for the first quarter of 2025, compared to a net loss of $8.8 million in the same quarter of 2024 [9][10] - Adjusted EBITDA loss was $4.0 million, worsening from a loss of $2.9 million in the prior year [10][26] - Cash, cash equivalents, and marketable securities totaled $52.6 million with no debt, providing financial flexibility for future growth initiatives [6][10] Operational Strategy - The company is transitioning to a regional fulfillment center model and focusing on B2B engagement, moving away from same-store sales as a key performance metric [3][12] - Store and other operating expenses decreased by approximately 17.3% to $8.8 million compared to $10.6 million in the first quarter of 2024 [8][9] - The company has withdrawn its full-year 2025 financial outlook due to macroeconomic uncertainties and is exploring strategies to mitigate risks [12] Future Outlook - For the second quarter of 2025, GrowGeneration expects total consolidated net sales to exceed $40 million [13]

Group 1: Core Insights - GrowGeneration Corp. (GRWG) has launched its B2B Pro Portal, a state-of-the-art e-commerce platform aimed at streamlining purchasing for commercial cultivators and retailers, emphasizing a B2B customer-centric approach [1][2] - The Pro Portal features automated quoting, direct ordering capabilities, and real-time inventory tracking, which are expected to enhance the procurement process for commercial growers [2][4] - The platform aims to drive operational efficiencies across the supply chain, reducing expenses and boosting margins to enhance profitability [4] Group 2: Customer Benefits - The B2B Portal allows commercial growers, including cultivators, greenhouses, and vertical farms, to minimize administrative tasks and improve user experience, fostering customer loyalty and retention [5] - Customers can access real-time inventory and pricing, check availability and bulk pricing on thousands of products, and utilize self-service tools for faster decision-making [6] - The portal also offers convenient shipping options and tailored financing solutions to assist in purchasing high-value equipment [6] Group 3: Market Performance - Over the past year, GRWG's stock has decreased by 62.5%, contrasting with a 10.1% decline in the industry [7] - GRWG currently holds a Zacks Rank of 4 (Sell), indicating a less favorable outlook compared to other stocks in the basic materials sector [9]

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GrowGeneration Corp. (GRWG) reported an adjusted loss per share of 27 cents in the fourth quarter of 2024, wider than the Zacks Consensus Estimate of a loss of 18 cents. The company reported a loss of 18 cents in the fourth quarter of 2023.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The company had recorded $6.7 million non-cash impairment of goodwill and intangible assets related to prior acquisitions in the quarter. Including this, GRWG reported a loss per share of 39 cents in t ...

Financial Data and Key Metrics Changes - Full year 2024 net revenue was $188.9 million, consistent with preliminary results reported in early February [8] - Gross profit margin for Q4 2024 was 16.4%, down from 23.5% in Q4 2023, primarily due to one-time inventory disposal costs [14][26] - Net loss for Q4 2024 was $23.3 million, an improvement from a net loss of $27.3 million in Q4 2023 [29] - Full year 2024 net loss was $49.5 million, compared to a net loss of $46.5 million in 2023 [32] Business Line Data and Key Metrics Changes - Proprietary brand sales for 2024 were $39.5 million, representing 24.2% of total net sales, up from 18.8% in 2023 [9][31] - Cultivation and Gardening net sales for Q4 2024 were $32.9 million, down from $41.7 million in Q4 2023 [25] - Storage Solutions segment revenue decreased 41% to $4.5 million in Q4 2024 compared to $7.7 million in the same period last year [26] Market Data and Key Metrics Changes - Same-store sales rose 1% year-over-year in Q4 2024, marking the second consecutive quarter of positive growth [24] - The company ended 2024 with 31 operational stores and 2 regional distribution centers [13] Company Strategy and Development Direction - The company executed a strategic transformation to become a product-driven business with a focus on B2B customers [9] - The goal for proprietary brands is to reach 35% of Cultivation and Gardening net sales by the end of 2025 [10] - A new B2B e-commerce platform was launched in Q4 2024, receiving positive customer feedback [11] Management's Comments on Operating Environment and Future Outlook - Management expects net revenue for 2025 to be in the range of $170 million to $180 million, with adjusted EBITDA ranging from a $2 million loss to a positive $2 million profit [18][35] - The company anticipates gross margins for 2025 to be between 29% and 31% [35] - Management remains optimistic about potential regulatory changes in the cannabis industry that could positively impact the business [74] Other Important Information - The company completed a $6 million share repurchase program in 2024 [15][34] - The company has no debt and a strong cash position of $56.5 million as of December 31, 2024 [14][34] Q&A Session Summary Question: Can you discuss the expected cadence of gross margin improvement? - Management expects an immediate lift in gross margin in Q1, with continued improvements throughout the year, targeting 30% for the full year [45] Question: What initiatives are being taken to transition sales to e-commerce? - The company is transferring commercial customers to the new B2B portals and focusing on operational efficiencies [48] Question: Can you elaborate on sales within different channels for proprietary brands? - Proprietary brands are seeing growth across retail, commercial, and e-commerce channels, with a focus on Amazon [55] Question: Is there any remaining inventory that needs to be cleaned up? - The heavy lifting on inventory has been completed, with continuous improvements expected moving forward [59] Question: What are the growth and demand assumptions for 2025? - Management anticipates a rebound in the MMI business and growth driven by proprietary brands and B2B customer service [66][70] Question: Any updates on the regulatory environment regarding cannabis? - Management remains optimistic about potential rescheduling and banking policy changes that could benefit the industry [74]

Financial Performance - GrowGeneration reported a quarterly loss of $0.27 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.18, representing an earnings surprise of -50% [1] - The company's revenues for the quarter ended December 2024 were $37.44 million, missing the Zacks Consensus Estimate by 2.36%, and down from $49.45 million a year ago [2] - Over the last four quarters, GrowGeneration has not surpassed consensus EPS estimates, and it has topped consensus revenue estimates three times [2] Stock Performance - GrowGeneration shares have declined approximately 39.1% since the beginning of the year, contrasting with the S&P 500's decline of -4.8% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.13 on revenues of $39.96 million, and for the current fiscal year, it is -$0.36 on revenues of $182.94 million [7] Industry Outlook - The Agriculture - Products industry, to which GrowGeneration belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, indicating a challenging environment [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact GrowGeneration's stock performance [5][6]

Financial Performance - Net sales for the year ended December 31, 2024, were $188.9 million, a decrease of $37.0 million, or 16.4% compared to $225.9 million in 2023[174]. - The company reported a net loss of $49.5 million for 2024, compared to a net loss of $46.5 million in 2023, marking an increase in loss of $3.0 million or 6.5%[173]. - Gross profit for 2024 was $43.7 million, representing a gross profit margin of 23.1%, down from 27.1% in 2023, reflecting a decrease of $17.5 million or 28.6%[173]. - Operating expenses for 2024 totaled $95.7 million, a decrease of $15.4 million or 13.9% compared to $111.1 million in 2023[173]. - Net sales for the year ended December 31, 2024 decreased by $0.9 million due to inventory sales discounts related to the restructuring of 12 retail locations, while same-store sales increased by approximately 0.9% driven by commercial sales growth[176]. - Gross profit fell to $43.7 million for the year ended December 31, 2024, a decrease of $17.5 million or 28.6% from $61.3 million in 2023, primarily due to a decline in sales volume[179]. - The company reported a net loss of $49.510 million for 2024, compared to a net loss of $46.496 million in 2023, indicating a worsening of 4.3%[244]. Restructuring and Cost Management - The company incurred aggregate restructuring costs of $2.4 million, with expected total restructuring costs reaching $2.7 million, aimed at improving gross profit margin and generating annualized cost savings of approximately $12.0 million[158][160]. - The restructuring plan included closing 12 underperforming retail locations, in addition to 7 locations closed in the first half of 2024[156]. - Cost of sales decreased by $19.5 million or 11.8% to $145.1 million for the year ended December 31, 2024, compared to $164.6 million in 2023[178]. - Operating expenses decreased by $15.4 million or 13.9% to $95.7 million for the year ended December 31, 2024, compared to $111.1 million in 2023[181]. Asset and Equity Changes - Total current assets decreased to $113.208 million in 2024 from $147.451 million in 2023, representing a decline of 23.2%[242]. - Stockholders' equity fell to $120.093 million in 2024, down 30.7% from $173.395 million in 2023[242]. - The company’s property and equipment, net, decreased to $15.493 million as of December 31, 2024, from $27.052 million in 2023[334]. - Total intangible assets on the balance sheet as of December 31, 2024, were $8.779 million, down from $16.180 million as of December 31, 2023[346]. Impairment Losses - Impairment loss was $6.9 million in 2024, down from $15.7 million in 2023, primarily related to goodwill and intangible assets[185]. - The Company recorded a goodwill impairment loss of $5.9 million for the year ended December 31, 2024, following a quantitative assessment of its reporting units[338]. - The recoverability assessment of long-lived assets identified impairment losses of $6.2 million and $0.7 million for the years ended December 31, 2023 and 2024, respectively[211]. - The Company recorded a total impairment loss of $127.8 million related to goodwill and intangible assets for the year ended December 31, 2022[342]. Cash Flow and Liquidity - Net cash used in operating activities was $1.8 million for the year ended December 31, 2024, compared to net cash provided of $1.4 million in 2023[197]. - Cash, cash equivalents, and marketable securities totaled $56.5 million as of December 31, 2024, with no extraordinary demands or commitments anticipated[192]. - Total cash and cash equivalents at the end of 2024 were $27.47 million, down from $29.76 million in 2023 and $40.05 million in 2022[250]. - The fair value of cash equivalents as of December 31, 2024, was $16.945 million, down from $17.300 million in 2023, reflecting changes in liquidity[303]. Internal Controls and Audit - The company identified material weaknesses in internal control over financial reporting, affecting the reliability of financial statements[228]. - The audit opinion expressed an adverse opinion on the effectiveness of internal control over financial reporting as of December 31, 2024[233]. Market and Strategic Initiatives - The company’s growth strategy focuses on consolidating assets within the fragmented hydroponics industry to leverage efficiencies and enhance profitability[162]. - The Storage Solutions segment aims to expand its customer base and penetrate new industries, including controlled environment agriculture and country clubs[164]. - Proprietary brand sales as a percentage of Cultivation and Gardening net sales increased to 24.2% for the year ended December 31, 2024, up from 18.8% in 2023, reflecting strategic initiatives to boost sales volume[176].