Grove laborative (US:GROV)2025-05-14 20:52PART I - FINANCIAL INFORMATION Financial Statements The company's Q1 2025 financial statements reflect decreased assets and revenue, a net loss, and improved operating cash flow, alongside two acquisitions Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $59.8 million from $65.0 million, driven by reduced cash, while stockholders' deficit widened Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $9,605 | $19,627 | | Inventory | $22,039 | $19,351 | | Total current assets | $38,153 | $44,941 | | Total assets | $59,838 | $65,010 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $25,810 | $27,064 | | Debt, noncurrent | $7,500 | $7,500 | | Total liabilities | $46,714 | $48,787 | | Total stockholders' deficit | $(11,648) | $(8,549) | Condensed Consolidated Statements of Operations Q1 2025 net revenue decreased to $43.5 million, leading to a wider operating loss of $3.5 million and a net loss of $3.5 million Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue, net | $43,547 | $53,545 | | Gross profit | $23,064 | $29,740 | | Operating loss | $(3,508) | $(533) | | Interest expense | $346 | $4,129 | | Net loss | $(3,547) | $(3,391) | | Net loss per share | $(0.10) | $(0.10) | Condensed Consolidated Statements of Cash Flows Q1 2025 saw improved operating cash flow at $6.9 million used, but total cash decreased by $10.8 million due to acquisitions Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,872) | $(12,380) | | Net cash used in investing activities | $(3,389) | $(518) | | Net cash used in financing activities | $(536) | $(381) | | Net decrease in cash | $(10,797) | $(13,279) | | Cash at end of period | $13,507 | $81,584 | - Cash paid for acquisitions totaled $2.8 million in Q1 2025, with no similar activity in Q1 202416 Notes to the Condensed Consolidated Financial Statements Notes detail the strategic shift to DTC, $2.8 million in acquisitions, a credit facility amendment, and a probable loss from a regulatory investigation - In Q3 2024, the company made a strategic decision to wind down sales through its retail channel to focus on its direct-to-consumer (DTC) platform22 - The company acquired Grab Green for $2.2 million and 8Greens for $0.6 million in cash during Q1 2025585960 - The company is under investigation by the California Autorenewal Task Force (CART) for compliance with California's Automatic Renewal Law. A loss is considered probable, but an estimate of the amount cannot be made at this time85 - Subsequent to the quarter end, on May 8, 2025, the company amended its Siena Revolver credit facility, extending the maturity date to April 10, 2028130 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the 19% revenue decline due to lower DTC orders and platform migration, gross margin decrease, and confirms sufficient liquidity for the next 12 months - The company is exiting the brick-and-mortar retail channel, a process expected to be completed in 2025, to improve profitability with an insignificant impact on revenue140 - In March 2025, the company began migrating its e-commerce platform from an in-house solution to third-party providers, which has caused temporary operational disruptions and adversely affected operating results148175 Key Operating Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | DTC Total Orders (thousands) | 622 | 773 | | DTC Active Customers (thousands) | 678 | 807 | | DTC Net Revenue Per Order | $66.49 | $66.27 | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(3,547) | $(3,391) | | Adjusted EBITDA | $(1,598) | $1,893 | | Net loss margin | (8.1)% | (6.3)% | | Adjusted EBITDA margin | (3.7)% | 3.5% | - Management believes that currently available resources, including cash and availability under the Siena Revolver and SEPA, will provide sufficient funds for at least one year191 Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Grove is not required to provide quantitative and qualitative disclosures about market risk207 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The company's Certifying Officers concluded that disclosure controls and procedures were effective as of March 31, 2025208 - No material changes to the company's internal control over financial reporting occurred during the quarter ended March 31, 2025209 Part II - OTHER INFORMATION Legal Proceedings The company faces an ongoing investigation by California authorities regarding Automatic Renewal Law compliance, with a probable but unestimable loss - The company is being investigated by a task force of California district attorneys (CART) regarding its compliance with California's Automatic Renewal Law, Unfair Competition Law, and False Advertising Law. A loss is probable, but the amount is not yet estimable85211 Risk Factors The company faces significant business, financial, operational, cybersecurity, and securities ownership risks, including potential NYSE delisting and public benefit corporation challenges - Business Risks: The company faces risks from reliance on consumer discretionary spending, potential advertising inaccuracies, challenges in achieving profitable growth, and disruptions from its e-commerce platform migration214 - Financial & Operational Risks: The company has a history of losses, may require additional financing, faces intense competition, and is dependent on its supply chain and third-party providers214232 - Cybersecurity and Data Privacy Risks: The company is vulnerable to cybersecurity attacks and must comply with evolving data privacy laws like the CCPA, with failures potentially harming the business215303309 - Securities Ownership Risks: Risks include stock price volatility, potential dilution from warrants, NYSE delisting risk, and restrictive covenants in its loan agreements216333351 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the reporting period - None366 Defaults Upon Senior Securities The company reported no defaults upon senior securities during the reporting period - None366 Mine Safety Disclosures This item is not applicable to the company's operations - None366 Other Information The company reported no other material information for the period - None366 Exhibits This section lists exhibits filed with the Form 10-Q, including merger agreements, corporate governance documents, and officer certifications