HYDROFARM HOLDINGS GROUP, INC.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
HYFM$0.82+12.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001437749-26-017373
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001437749-26-028012
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 69 previous paragraphs and 73 current paragraphs.
37 unchanged; 28 reworded; 7 added; 4 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
On April 30, 2026, the Company completed the closing of the previously announced agreement with Quality Horticulture, a family-owned Canadian garden center and horticultural distribution company, pursuant to which Quality Horticulture will serve as the exclusive Canadian distributor of our proprietary portfolio of nutrients, plant additives, grow media, horticultural lighting and environmental control products, including House & Garden, Grotek, Gaia Green, PHOTOBIO, SunBlaster and Active Aqua. The transaction is part of our strategic plan to streamline our operations and improve the focus on our proprietary brands and core product categories.
Current report
Net sales for the three months ended June 30, 2026, were $23.2 million, a decrease of $16.0 million, or 40.9% compared to the same period in 2025. Net sales for the six months ended June 30, 2026, were $51.7 million, a decrease of $28.0 million, or 35.2% compared to the same period in 2025.
Current report
Gross profit for the three months ended June 30, 2026, was $2.6 million, a decrease of $0.2 million, or 5.7%, compared to the same period in 2025. Our gross profit margin percentage increased to 11.3% for the three months ended June 30, 2026, from 7.1% in the same period in 2025. The increase in gross profit margin for the three months ended June 30, 2026 was largely driven by a $2.3 million decrease in restructuring charges from the prior year period, as well as selling a higher proportion of proprietary brand products. The gross profit margin percentage increase was partially offset by higher freight and labor costs as a percentage of net sales and lower manufacturing production volumes in certain grow media products.
Current report
Gross profit for the six months ended June 30, 2026, was $4.5 million, a decrease of $5.2 million, or 53.8%, compared to the same period in 2025. Our gross profit margin percentage decreased to 8.6% for the six months ended June 30, 2026, from 12.1% in the same period in 2025. Our gross profit margin percentage for the six months ended June 30, 2026 decreased primarily due to higher freight and labor costs as a percentage of net sales and the aforementioned lower manufacturing production volumes in certain grow media products, which more than offset a $0.9 million decrease in restructuring charges from the prior year period and the benefit from selling a higher proportion of proprietary brand products.
Current report
The decreases in gross profit for all periods presented were primarily due to the aforementioned lower net sales.
Current report
Other income (expense), net
Current report
During the second quarter of 2026, we sold approximately 38 acres of the 120 acres of excess owned land at the Goshen, New York location for $1.4 million. On July 31, 2026, the Company, through its wholly owned subsidiaries Aurora International, LLC, an Oregon limited liability company and Aurora Peat Products ULC, an Alberta unlimited liability corporation, entered into a Share Purchase Agreement with 2817049 Alberta Ltd., an Alberta corporation. Pursuant to the terms of the Share Purchase Agreement, Seller sold to Buyer and Buyer purchased from Seller all the issued and outstanding shares of APP for $16 million, subject to adjustments set forth in the Share Purchase Agreement. The net proceeds from the Transaction will be applied to reduce outstanding debt, including outstanding interest, under the Term Loan. The Share Purchase Agreement contains customary representations and warranties of the parties, covenants and indemnification provisions. The representations, warranties and covenants contained in the Share Purchase Agreement were made solely for the benefit of the parties to the Share Purchase Agreement and may be subject to limitations agreed upon by the contracting parties. In connection with the Share Purchase Agreement, the Seller and Buyer entered into a secured promissory note on the Closing Date, pursuant to which the Buyer issued, in favor of the Seller, a promissory note in the principal amount of $5 million, representing a deferred portion of the purchase price payable to the Seller under the Share Purchase Agreement. The secured promissory note was assigned to the lenders of the Company's Term Loan. Cash obligations in connection with the close of the transaction are estimated to be up to $3.1 million.
Removed paragraphs (4)
Previous report
Net sales for the three months ended March 31, 2026, were $28.5 million, a decrease of $12.0 million, or 29.6% compared to the same period in 2025.
Previous report
Gross profit for the three months ended March 31, 2026, was $1.8 million, a decrease of $5.0 million, or 73.3%, compared to the same period in 2025. Our gross profit margin percentage decreased to 6.4% for the three months ended March 31, 2026, from 17.0% in the same period in 2025. Gross profit and gross profit margin for the three months ended March 31, 2026, decreased as a result of lower net sales, lower production volumes and productivity at our manufacturing facilities, and a $1.3 million increase in restructuring charges primarily comprised of inventory markdowns, facility shutdown costs, and severance.
Previous report
Other (expense) income, net
Previous report
If necessary, we believe that we could supplement our cash position through additional asset sales or divestiture of one or more of our brands or lines of business. During May 2026, subsequent to the end of the fiscal quarter ended March 31, 2026, we sold approximately 38 acres of the 120 acres of excess owned land at the Goshen, New York location. The carrying value of the property was reclassified from property, plant and equipment, net to assets held for sale as of March 31, 2026, in the amount of $1,415, consistent with the sale price less costs to sell. We believe it is prudent to be prepared if required and, accordingly, continue to be engaged in the process of evaluating and preparing to implement one or more of the aforementioned activities. Any potential such event may be subject to provisions referenced in our Term Loan, such as subjecting us to make mandatory prepayments.
Reworded paragraphs (28)
Previous wording
The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operations and financial condition. You should read this analysis in conjunction with our audited and unaudited consolidated financial statements and the notes contained elsewhere in this Quarterly Report on Form 10-Q and our 2025 Annual Report. This discussion and analysis contains statements of a forward-looking nature relating to future events or our future financial performance. Actual events or results may differ materially from forward-looking statements. In evaluating such statements, you should carefully consider the various factors identified in this Quarterly Report on Form 10-Q, which could cause actual results to differ materially from those expressed in, or implied by, any forward-looking statements, including those set forth in Item 1A.“Risk Factors”* in our 2025 Annual Report. See*“Special Note Regarding Forward-Looking Statements.”
Current wording
The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operations and financial condition. You should read this analysis in conjunction with our audited and unaudited condensed consolidated financial statements and the notes contained elsewhere in this Quarterly Report on Form 10-Q and our 2025 Annual Report. This discussion and analysis contains statements of a forward-looking nature relating to future events or our future financial performance. Actual events or results may differ materially from forward-looking statements. In evaluating such statements, you should carefully consider the various factors identified in this Quarterly Report on Form 10-Q, which could cause actual results to differ materially from those expressed in, or implied by, any forward-looking statements, including those set forth in Item 1A.“Risk Factors”* in our 2025 Annual Report. See*“Special Note Regarding Forward-Looking Statements.”
Previous wording
We reach commercial farmers and consumers through a broad and diversified network of over 1,800 wholesale customer accounts, who we connect with primarily through our proprietary online ordering platform. Our products are distributed across the United States and Canada through a diversified range of retailers of commercial and home gardening equipment and supplies. Our customers include specialty hydroponic retailers, commercial resellers and greenhouse builders, garden centers, hardware stores, and e-commerce retailers. Specialty hydroponic retailers can provide growers with specialized merchandise assortments and knowledgeable staff.
Current wording
We reach commercial farmers and consumers through a broad and diversified network, who we connect with primarily through our proprietary online ordering platform. Our products are distributed across the United States and Canada through a diversified range of retailers of commercial and home gardening equipment and supplies. Our customers include specialty hydroponic retailers, commercial resellers and greenhouse builders, garden centers, hardware stores, and e-commerce retailers. Specialty hydroponic retailers can provide growers with specialized merchandise assortments and knowledgeable staff. Our logistics services business manages the receipt, warehousing, and distribution of multiple customer accounts, leveraging our warehouse space in multiple distribution centers in the U.S. and Canada. These logistics agreements and operating subleases are accounted for as an offset and reduction to facility expense within SG&A.
Previous wording
We have incurred recurring operating losses, negative cash flows from operations, and have significant debt obligations due within the next twelve months due to an event of default on the Company's outstanding Term Loan. These conditions and events, considered in the aggregate, raise substantial doubt about our ability to continue as a going concern.
Current wording
We have incurred recurring operating losses, negative cash flows from operations, have significant debt obligations due within the next twelve months due to an event of default on the Company's outstanding Term Loan and are not currently in compliance with certain Nasdaq listing requirements. These conditions and events, considered in the aggregate, raise substantial doubt about our ability to continue as a going concern.
Previous wording
On the Forbearance Effective Date, the Company entered into the Forbearance Agreement with the other Obligors, the Lenders, and FEAC, in connection with the Term Loan. Pursuant to the Forbearance Agreement, during the Forbearance Period (as defined in Note 11 –Debt to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), solely with respect to the Specified Event of Default, neither the Administrative Agent nor any Lender shall, upon the terms and conditions expressly specified therein, take any action, commence any proceedings against any Obligor or any other person with respect to the enforcement of any of its or their rights or remedies under the Credit Documents or applicable law, other than as expressly described in the Forbearance Agreement. As of the date of the Quarterly Report on Form 10-Q, the Forbearance Period is continuing.
Current wording
On April 8, 2026, the Company entered into the Forbearance Agreement with the other Obligors, the Lenders, and FEAC, in connection with the Term Loan. Pursuant to the Forbearance Agreement, during the Forbearance Period (as defined in Note 11 –Debt to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), solely with respect to the Specified Event of Default, neither the Administrative Agent nor any Lender shall, upon the terms and conditions expressly specified therein, take any action, commence any proceedings against any Obligor or any other person with respect to the enforcement of any of its or their rights or remedies under the Credit Documents or applicable law, other than as expressly described in the Forbearance Agreement. The Company, the Lenders, and FEAC agreed to extend the Forbearance Period under the Forbearance Agreement through and including August 31, 2026.
Previous wording
During the second quarter of 2025, we initiated the 2025 Restructuring Plan to reduce our product portfolio and operational footprint to decrease costs and improve efficiency. The 2025 Restructuring Plan actions entail (i) eliminating a significant portion of our product portfolio, primarily underperforming distributed brands, to improve supply chain and operational focus, (ii) further reductions in our distribution center network and manufacturing footprint, and (iii) corresponding headcount reductions. Since the 2025 Restructuring Plan's inception, we have incurred estimated restructuring costs of $7.7 million. The charges were primarily associated with non-cash inventory write-downs, which were recorded in cost of goods sold on the condensed consolidated statements of operations, and cash charges which primarily comprised of charges incurred to relocate and terminate certain facilities. We anticipate the 2025 Restructuring Plan and related actions may result in additional restructuring charges of up to $4 million, and annual cost savings of over $5 million plus additional working capital benefits. The 2025 Restructuring Plan is expected be completed by the end of 2026.
Current wording
During the second quarter of 2025, we initiated the 2025 Restructuring Plan to reduce our product portfolio and operational footprint to decrease costs and improve efficiency. The 2025 Restructuring Plan actions entail (i) eliminating a significant portion of our product portfolio, primarily underperforming distributed brands, to improve supply chain and operational focus, (ii) further reductions in our distribution center network and manufacturing footprint, and (iii) corresponding headcount reductions. Since the 2025 Restructuring Plan's inception, we have incurred estimated restructuring costs of $11.1 million. The charges were primarily associated with non-cash inventory write-downs, which were recorded in cost of goods sold on the condensed consolidated statements of operations, and cash and non-cash charges which primarily comprised of charges incurred to relocate and terminate certain facilities. We do not anticipate the 2025 Restructuring Plan and related actions will result in additional material restructuring charges, and anticipate annual cost savings of over $5 million plus additional working capital benefits. The 2025 Restructuring Plan is expected to be completed during 2026.
Previous wording
We maintain an allowance for excess and obsolete inventory that is based upon assumptions about future demand and market conditions. While we believe our estimates of charges relating to our 2025 Restructuring Plan, long-lived assets, inventory obsolescence, and accounts receivable allowances are reasonable, it is possible that we may incur additional charges in the future and actual results may differ significantly from these estimates and assumptions. Depending on the length and severity of the industry and market conditions impacting our business, it is possible we may execute additional restructuring plan actions and incur future associated charges, and we may not be able to realize the full extent of our anticipated cost savings.
Current wording
We maintain an allowance for excess and obsolete inventory that is based upon assumptions about future demand and market conditions. While we believe our estimates of charges relating to our 2025 Restructuring Plan, long-lived assets, inventory obsolescence, and accounts receivable allowances are reasonable, it is possible that we may incur additional charges in the future and actual results may differ significantly from these estimates and assumptions.
Previous wording
We are closely monitoring the recent tariff and trade policy actions taken by the United States and foreign governments. The situation remains fluid due to the rapidly changing global trade environment, and we continue to evaluate the potential implications of these actions on our business including net sales and profitability. High tariffs on imported products from China or other countries, or new tariffs from other countries, have impacted and could impact the cost of certain products and may negatively impact our financial performance. We have been able to help mitigate the impacts of tariffs through negotiations with vendors, and through passing nominal price increases to our customers, but we may be unable to quickly and effectively react to additional tariff and trade policy actions which may impact our business
Current wording
We are closely monitoring the recent tariff and trade policy actions taken by the United States and foreign governments. The situation remains fluid due to the rapidly changing global trade environment, and we continue to evaluate the potential implications of these actions on our business including net sales and profitability. High tariffs on imported products from China or other countries, or new tariffs from other countries, have impacted and could impact the cost of certain products and may negatively impact our financial performance. We have been able to help mitigate the impacts of tariffs through filing for refunds to the extent available to us, negotiations with vendors, and through passing nominal price increases to our customers, but we may be unable to quickly and effectively react to additional tariff and trade policy actions which may impact our business.
Previous wording
Results of Operations—Comparison of three months ended March 31, 2026 and 2025
Current wording
Results of Operations—Comparison of three and six months ended June 30, 2026 and 2025
Previous wording
The following table sets forth our unaudited interim condensed consolidated statements of operations for the three months ended March 31, 2026, and 2025, including amounts and percentages of net sales for each period and the period-to-period change in dollars and percent (amounts in thousands):
Current wording
The following table sets forth our unaudited interim condensed consolidated statements of operations for the three and six months ended June 30, 2026, and 2025, including amounts and percentages of net sales for each period and the period-to-period change in dollars and percent (amounts in thousands):
Previous wording
The 29.6% decrease in net sales for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to a 27.8% reduction in volume and mix of products sold and a 2.7% decrease in price. This decline was largely driven by the previously mentioned industry oversupply.
Current wording
The 40.9% decrease in net sales for the three months ended June 30, 2026, as compared to the same period in 2025, was primarily due to a 37.0% reduction in volume and mix of products sold and a 4.0% decrease in price. This decline was largely driven by the previously mentioned industry oversupply and discontinuation of certain distributed brands. The 35.2% decrease in net sales for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily due to a 31.9% reduction in volume and mix of products sold and a 3.8% decrease in price. This decline was largely driven by the previously mentioned industry oversupply and discontinuation of certain distributed brands.
Previous wording
SG&A expenses for the three months ended March 31, 2026, were $10.6 million, a decrease of $7.3 million, or 40.8% compared to the same period in 2025. SG&A expenses decreased in several areas, including as a result of our cost saving and restructuring initiatives: (i) a $6.0 million decrease in amortization and depreciation primarily due to intangible asset impairments in 2025, and (ii) a $1.2 million decrease in employee compensation costs, including lower salaries and benefits, stock-based compensation, and performance bonus.
Current wording
SG&A expenses for the three months ended June 30, 2026, were $10.1 million, a decrease of $6.1 million, or 37.7% compared to the same period in 2025. SG&A expenses decreased in several areas, including as a result of our cost-saving and restructuring initiatives: (i) a $6.0 million decrease in amortization and depreciation primarily due to intangible asset impairments in 2025, (ii) a $1.2 million decrease in facility expenses, and (iii) a $1.1 million decrease in employee compensation costs, including lower salaries and benefits, stock-based compensation, and performance bonus. The SG&A savings were partially offset by restructuring charges of $2.3 million during the period and costs associated with the Company's strategic alternatives.
Previous wording
Interest expense for the three months ended March 31, 2026, was $5.9 million, an increase from $3.4 million of interest expense recorded in the same period in the prior year. The increase for the three months ended March 31, 2026 was primarily acceleration of our Term Loan discount and deferred financing costs costs triggered by the Specified Event of Default.
Current wording
Interest expense for the three months ended June 30, 2026, was $3.5 million, an increase from $3.4 million of interest expense recorded in the same period in the prior year. Interest expense for the six months ended June 30, 2026, was $9.3 million, an increase from $6.8 million of interest expense recorded in the same period in the prior year. The increase for the six months ended June 30, 2026, was primarily due to the acceleration of our Term Loan discount and deferred financing costs triggered by the Specified Event of Default.
Previous wording
Other expense, net for the three months ended March 31, 2026, was $0.1 million, compared to other income, net of $0.1 million during the same period in the prior year.
Current wording
Other income, net for the three months ended June 30, 2026, was less than $0.1 million, compared to other expense, net of $0.2 million during the same period in the prior year. Other expense, net for the six months ended June 30, 2026, was $0.1 million, compared to other expense, net of $0.2 million during the same period in the prior year.
Previous wording
We recorded an income tax expense of $0.1 million for the three months ended March 31, 2025, representing an effective tax rate of (0.6)%. Our effective tax rate for the three months ended March 31, 2025, differs from the federal statutory rate of 21% primarily due to U.S. and foreign jurisdictions in full valuation allowance. The income tax expense for the three months ended March 31, 2025, was primarily due to foreign taxes in certain jurisdictions and U.S. state taxes.
Current wording
We recorded income tax benefits of $0.2 million and $0.3 million for the three and six months ended June 30, 2026, respectively, representing effective tax rates of 2.1% and 1.3%, respectively. Our effective tax rates for the three and six months ended June 30, 2026, differ from the federal statutory rate of 21% primarily due to U.S. and foreign jurisdictions in full valuation allowance. The income tax benefit for the three and six months ended June 30, 2026, was primarily due to certain benefits in Canadian jurisdictions, partially offset by foreign taxes in Spain and U.S. state taxes.
Previous wording
We recorded an income tax benefit of $0.1 million for the three months ended March 31, 2026, representing an effective tax rate of 0.7%. Our effective tax rate for the three months ended March 31, 2026, differs from the federal statutory rate of 21% primarily due to U.S. and foreign jurisdictions in full valuation allowance. The income tax benefit for the three months ended March 31, 2026, was primarily due to foreign taxes in certain jurisdictions [and known return to provision items in Canada], partially offset by certain U.S. state taxes.
Current wording
We recorded income tax benefits of $0.1 million and less than $0.1 million for the three and six months ended June 30, 2025, respectively, representing effective tax rates of 0.6% and 0.1%, respectively. Our effective tax rates for the three and six months ended June 30, 2025, differ from the federal statutory rate of 21% primarily due to U.S. and foreign jurisdictions in full valuation allowance. The income tax benefit for the three and six months ended June 30, 2025, was primarily due to certain benefits in Canadian jurisdictions, partially offset by foreign taxes in certain jurisdictions and U.S. state taxes.
Previous wording
Comparison of the three months ended March 31, 2026, and March 31, 2025
Current wording
Comparison of the six months ended June 30, 2026, and June 30, 2025
Previous wording
The following table summarizes our cash flows for the three months ended March 31, 2026, and 2025 (amounts in thousands):
Current wording
The following table summarizes our cash flows for the six months ended June 30, 2026, and 2025 (amounts in thousands):
Previous wording
Net cash used in operating activities was $0.8 million for the three months ended March 31, 2026. The net cash usage was primarily due to a $14.6 million net loss, partially offset by net non-cash items of $7.0 million and a $6.8.million net cash inflow from a decrease in working capital. The $6.8 million net decrease in working capital was primarily comprised of a $4.8 million increase of accounts payable, a $4.5 million increase in accrued expenses and other current liabilities, and a $3.3 million decrease of inventories, partially offset by a $3.9 million increase in accounts receivable and a $1.9 million decrease of lease liabilities. The Company is continuing to consolidate its operations in connection with restructuring and related cost saving initiatives which has contributed to the aforementioned decrease in inventory.
Current wording
Net cash used in operating activities was $0.7 million for the six months ended June 30, 2026. The net cash usage was primarily due to a $25.2 million net loss, partially offset by net non-cash items of $12.3 million and a $12.2 million net cash inflow from a decrease in working capital. The $12.2 million net decrease in working capital was primarily comprised of a $9.0 million decrease of inventories, a $6.3 million increase in accrued expenses and other current liabilities, a $1.1 million decrease in prepaid expenses and other current assets, and a $1.0 million increase of accounts payable, partially offset by a $3.7 million decrease of lease liabilities and a $1.8 million decrease in deferred revenue. The increase in accrued expenses and other current liabilities was primarily attributable to accrued interest, which increased to $8.3 million as of June 30, 2026 from $1.9 million as of December 31, 2025. The Company is continuing to consolidate its operations in connection with restructuring and related cost saving initiatives which has contributed to the aforementioned decrease in inventory.
Previous wording
Net cash used in operating activities was $11.8 million for the three months ended March 31, 2025. The net cash usage was primarily due to a $14.4 million net loss and an $8.3 million net cash outflow from an increase in working capital, partially offset by net non-cash items of $10.9 million. The $8.3 million net increase in working capital was primarily comprised of a $6.8 million increase in accounts receivable, a $3.2 million decrease in accrued expenses and other current liabilities, and a $1.8 million decrease of lease liabilities, partially offset by a $3.8 million decrease in accounts payable. During the three months ended March 31, 2025, we paid $5.2 million in cash interest.
Current wording
Net cash used in operating activities was $10.0 million for the six months ended June 30, 2025. The net cash usage was primarily due to a $31.2 million net loss and a $3.8 million net cash outflow from an increase in working capital, partially offset by net non-cash items of $25.0 million. The $3.8 million net increase in working capital was primarily comprised of a $3.9 million decrease of lease liabilities, a $2.3 million decrease in accrued expenses and other current liabilities, partially offset by a $2.9 million decrease in inventory. During the six months ended June 30, 2025, we paid $6.9 million in cash interest.
Previous wording
Net cash used in investing activities was less than $0.1 million for the three months ended March 31, 2026, compared to $0.2 million for the three months ended March 31, 2025. The net cash used in investing activities for both periods, was primarily due to capital expenditures of property, plant and equipment.
Current wording
Net cash from investing activities was $1.4 million for the six months ended June 30, 2026, compared to net cash used in investing activities of $0.5 million for the six months ended June 30, 2025. The net cash from investing activities for the six months ended June 30, 2026 was primarily due to the sale of property, plant and equipment. We did not have any significant capital expenditures of property, plant and equipment during the six months ended June 30, 2026. The net cash used in investing activities for the six months ended June 30, 2025 was primarily due to capital expenditures of property, plant and equipment.
Previous wording
Net cash used in financing activities was $0.1 million for the three months ended March 31, 2026, primarily driven by finance lease principal payments.
Current wording
Net cash used in financing activities was $0.3 million for the six months ended June 30, 2026, primarily driven by finance lease principal payments.
Previous wording
Net cash used in financing activities was $0.4 million for the three months ended March 31, 2025, primarily driven by (i) $0.3 million of Term Loan repayments relating to required quarterly payments of principal, and (ii) finance lease principal payments of $0.1 million.
Current wording
Net cash used in financing activities was $5.1 million for the six months ended June 30, 2025, primarily driven by (i) $4.9 million of Term Loan repayments relating to required quarterly payments of principal and payments made in conjunction with the IGE Asset Sale reinvestment provision, and (ii) finance lease principal payments of $0.2 million.
Previous wording
As of March 31, 2026, we had $5.3 million in cash, cash equivalents and restricted cash and a working capital deficit of $98.0 million. We have incurred recurring operating losses, negative cash flows from operations, and has significant debt obligations due within the next twelve months. These conditions and events, considered in the aggregate, raise substantial doubt about our ability to continue as a going concern.
Current wording
As of June 30, 2026, we had $6.6 million in cash, cash equivalents and restricted cash and a working capital deficit of $108.1 million. We have incurred recurring operating losses, negative cash flows from operations, and have significant debt obligations due within the next twelve months. These conditions and events, considered in the aggregate, raise substantial doubt about our ability to continue as a going concern.
Previous wording
Our plans to address these conditions include reducing costs through restructuring and other initiatives, including facility consolidations, headcount reductions, and focusing on our proprietary brand offerings. To improve liquidity we are negotiating with lenders and key vendors, and are pursuing additional financing or strategic alternatives including the sale of assets or businesses, or through an offering of equity securities. Any potential such event may be subject to provisions referenced in the Term Loan, such as subjecting us to make mandatory repayments prior to the originally stated maturity date. Although we believe such plans, if executed, should provide us with liquidity to meet our needs, successful completion of such plans is dependent on numerous factors, many of which are beyond our control as further discussed in*Item 1A. "Risk Factors"included in this Quarterly Report on Form 10-Q and *in our 2025 Annual Report.
Current wording
Our plans to address these conditions include reducing costs through restructuring and other initiatives, including facility consolidations, headcount reductions, and focusing on our proprietary brand offerings. To improve liquidity, we are negotiating with lenders and key vendors, and are pursuing additional financing or strategic alternatives including the sale of assets or businesses, or through an offering of equity securities. Any potential such event may be subject to provisions referenced in the Term Loan, such as subjecting us to make mandatory prepayments prior to the originally stated maturity date. Although we believe such plans, if executed, should provide us with liquidity to meet our needs, successful completion of such plans is dependent on numerous factors, many of which are beyond our control as further discussed in*Item 1A. "Risk Factors"included in this Quarterly Report on Form 10-Q and *in our 2025 Annual Report.
Previous wording
On October 25, 2021, we and certain of our direct and indirect subsidiaries entered into the Term Loan with JPMorgan Chase Bank, N.A., as administrative agent for the lenders, pursuant to which we borrowed a $125 million senior secured term loan. The Term Loan was amended by Amendment No. 1 effective as of June 27, 2023, to replace the LIBOR referenced rates with SOFR referenced rates. Pursuant to Amendment No. 1, any Term Loan that constitutes a Eurodollar Rate Loan that is outstanding as of the Amendment No. 1 closing date shall continue until the end of the applicable interest period for such Eurodollar Rate Loan and the provisions of the Term Loan applicable thereto shall continue and remain in effect (notwithstanding the occurrence of the Amendment No. 1 closing date) until the end of the applicable interest period for such Eurodollar Rate Loan, after which such provisions shall have had no further force or effect. Such Eurodollar Rate Loan shall subsequently either be an ABR Loan or a Term Benchmark Loan. The ABR Loans shall bear interest at the Alternate Base Rate (with a 2.0% floor) plus 4.50%, and Term Benchmark Loans shall bear interest at the Adjusted Term SOFR Rate (with a 1.0% floor) plus 5.50%. As of the date of filing this Annual Report on Form 10-K, the ABR Loan and Term Benchmark Loan credit spreads of 4.50% and 5.50%, respectively, within the Amendment No. 1 have not changed from the credit spreads in the original Term Loan. On April 8, 2026, we, the Lenders and the Agents entered into Amendment No. 2 to the Credit and Guaranty Agreement. Amendment No. 2 amends the Term Loan to, among other things, (i) replace JPMorgan with FEAC as the administrative agents; and (ii) require each credit party to covenant and agree to (A) regularly provide certain liquidity reports and cash flow forecasts, (B) regularly provide certain aging reports and inventory reports, and (C) maintain a minimum liquidity of $1 million.
Current wording
On October 25, 2021, we and certain of our direct and indirect subsidiaries entered into the Term Loan with JPMorgan Chase Bank, N.A., as administrative agent for the lenders, pursuant to which we borrowed a $125 million senior secured term loan. The Term Loan was amended by Amendment No. 1 effective as of June 27, 2023, to replace the LIBOR referenced rates with SOFR referenced rates. Pursuant to Amendment No. 1, any Term Loan that constitutes a Eurodollar Rate Loan that is outstanding as of the Amendment No. 1 closing date shall continue until the end of the applicable interest period for such Eurodollar Rate Loan and the provisions of the Term Loan applicable thereto shall continue and remain in effect (notwithstanding the occurrence of the Amendment No. 1 closing date) until the end of the applicable interest period for such Eurodollar Rate Loan, after which such provisions shall have had no further force or effect. Such Eurodollar Rate Loan shall subsequently either be an ABR Loan or a Term Benchmark Loan. The ABR Loans shall bear interest at the Alternate Base Rate (with a 2.0% floor) plus 4.50%, and Term Benchmark Loans shall bear interest at the Adjusted Term SOFR Rate (with a 1.0% floor) plus 5.50%. As of the date of filing the 2025 Annual Report, the ABR Loan and Term Benchmark Loan credit spreads of 4.50% and 5.50%, respectively, within the Amendment No. 1 had not changed from the credit spreads in the original Term Loan. On April 8, 2026, we, the Lenders and the Agents entered into Amendment No. 2 to the Credit and Guaranty Agreement. Amendment No. 2 amends the Term Loan to, among other things, (i) replace JPMorgan with FEAC as the administrative agents; and (ii) require each credit party to covenant and agree to (A) regularly provide certain liquidity reports and cash flow forecasts, (B) regularly provide certain aging reports and inventory reports, and (C) maintain a minimum liquidity of $1 million.
Previous wording
On April 8, 2026 (the “Forbearance Effective Date”), the Company entered into the Forbearance Agreement with the other Obligors, the Lenders, and FEAC, in connection with the Term Loan. Pursuant to the Forbearance Agreement, during the Forbearance Period (as defined in Note 11 –Debt to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), solely with respect to the Specified Event of Default, neither the Administrative Agent nor any Lender shall, upon the terms and conditions expressly specified therein, take any action, commence any proceedings against any Obligor or any other person with respect to the enforcement of any of its or their rights or remedies under the Credit Documents or applicable law, other than as expressly described in the Forbearance Agreement. [As of the date of the Quarterly Report on Form 10-Q, the Forbearance Period is continuing.]
Current wording
On the Forbearance Effective Date, the Company entered into the Forbearance Agreement with the other Obligors, the Lenders, and FEAC, in connection with the Term Loan. Pursuant to the Forbearance Agreement, during the Forbearance Period (as defined in Note 11 –Debt to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), solely with respect to the Specified Event of Default, neither the Administrative Agent nor any Lender shall, upon the terms and conditions expressly specified therein, take any action, commence any proceedings against any Obligor or any other person with respect to the enforcement of any of its or their rights or remedies under the Credit Documents or applicable law, other than as expressly described in the Forbearance Agreement. The Company, the Lenders, and FEAC agreed to extend the Forbearance Period under the Forbearance Agreement through and including August 31, 2026.
Previous wording
The aforementioned financing arrangements and other transactions are more fully described in the notes to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
The aforementioned financing arrangements and other transactions are more fully described in the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
The cash and cash equivalents balances of $4.8 million and $6.3 million at March 31, 2026, and December 31, 2025, respectively, included $2.1 million and $2.9 million, respectively, held by foreign subsidiaries.
Current wording
The cash, cash equivalents and restricted cash balances of $6.6 million and $6.3 million at June 30, 2026, and December 31, 2025, respectively, included $3.7 million and $2.9 million, respectively, held by foreign subsidiaries.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
SG&A expenses for the six months ended June 30, 2026, were $20.6 million, a decrease of $13.4 million, or 39.3% compared to the same period in 2025. SG&A expenses decreased in several areas, including as a result of our cost saving and restructuring initiatives: (i) a $11.9 million decrease in amortization and depreciation primarily due to intangible asset impairments in 2025, (ii) a $2.4 million decrease in employee compensation costs, including lower salaries and benefits, stock-based compensation, and performance bonus, and (iii) a $1.7 million decrease in facility expenses. The SG&A savings were partially offset by restructuring charges of $3.1 million during the period and costs associated with the Company's strategic alternatives.