| | Page |
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| Part I - Financial Information |
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| Item 1. | Unaudited Financial Statements | 1 |
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| Condensed Consolidated Balance Sheets | 1 |
| Condensed Consolidated Statements of Operations | 2 |
| Condensed Consolidated Statements of Comprehensive Loss | 3 |
| Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) | 4 |
| Condensed Consolidated Statements of Cash Flows | 5 |
| Notes to the Condensed Consolidated Financial Statements | 6 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 38 |
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| Item 4. | Controls and Procedures | 39 |
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| Part II - Other Information |
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| Item 1. | Legal Proceedings | 40 |
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| Item 1A. | Risk Factors | 40 |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 41 |
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| Item 3. | Defaults Upon Senior Securities | 41 |
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| Item 4. | Mine Safety Disclosures | 41 |
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| Item 5. | Other Information | 41 |
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| Item 6. | Exhibits | 42 |
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| Signatures | 43 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements concerning our business strategy and plans, future operating results and financial position, as well as our objectives and expectations for our future operations, are forward-looking statements.
In some cases, you can identify forward-looking statements by such terminology as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes, although not all forward-looking statements contain these words. Forward-looking statements include, but are not limited to, statements about:
| • | our ability to continue as a going concern; |
| • | our current level of indebtedness and compliance with requirements of our existing credit agreement; |
| • | our liquidity and our ability to resolve claims from unsecured creditors in the ordinary course of business; |
| • | our ability to regain compliance with the continued listing standards of The Nasdaq Capital Market ("Nasdaq"); |
| • | the results of and expectations regarding our acquisitions, dispositions and strategic alliances, and our ability to effect strategic transactions in the future; |
| • | industry conditions, including oversupply and decreasing prices of our customers' products which, in turn, have materially adversely impacted our sales and other results of operations and which may continue to do so in the future; |
| • | potential tariffs or interruptions to global trade; |
| • | the potential for future charges associated with the impairment of our long-lived assets, inventory allowances and purchase commitment losses, and accounts receivable reserves; |
| • | our ability and intent to access bankruptcy courts, receivership or similar processes, or otherwise wind-up our business and liquidate; |
| • | the anticipated impact of our restructuring activities on our expenses and cash expenditures; |
| • | potential dilution that may result from equity financings while our stock prices are depressed; |
| • | the conditions impacting our customers, including related crop prices and other factors impacting growers; |
| • | the adverse effects of public health epidemics, including the COVID-19 pandemic, on our business, results of operations and financial condition; |
| • | interruptions in our supply chain; |
| • | federal and state legislation and regulations pertaining to agricultural products and the use and cultivation of cannabis in the United States and Canada; |
| • | public perceptions and acceptance of cannabis use; |
| • | fluctuations in the price of various crops and other factors affecting growers; |
| • | our long-term non-cancellable leases under which many of our facilities operate, and our ability to renew or terminate our leases; |
| • | our reliance on, and relationships with, a limited base of key suppliers for certain products; |
| • | our ability to keep pace with technological advances; |
| • | our ability to execute our e-commerce business; |
| • | the costs of being a public company; |
| • | our ability to successfully identify appropriate acquisition targets, successfully acquire identified targets or successfully integrate the business of acquired companies; |
| • | the success of our marketing activities; |
| • | the potential for a disruption or breach of our information technology systems or cyber-attack; |
| • | our dependence on third parties, or the performance of third parties on which we depend; |
| • | any change to our reputation or to the reputation of our products; |
| • | the fluctuation in the prices of the products we distribute; |
| • | competitive industry pressures; |
| • | the consolidation of businesses within our industry; |
| • | compliance with environmental, health and safety laws; |
| • | our ability to protect and defend against litigation, including claims related to intellectual property rights; |
| • | product shortages and relationships with key suppliers; |
| • | our ability to attract and retain key employees; |
| • | the volatility of the price of our common stock; |
| • | the marketability of our common stock; and |
| • | other risks and uncertainties, including those listed herein as well as under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 27, 2026 (the “2025 Annual Report”). |
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, and financial needs. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements for any reason or to conform such statements to actual results or revised expectations, except as required by law.
SPECIAL NOTE REGARDING USE OF TRADE NAMES AND TRADEMARKS
“Hydrofarm” and other trade names and trademarks of ours appearing in this Quarterly Report on Form 10-Q are our property. This Quarterly Report on Form 10-Q contains trade names and trademarks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
SPECIAL NOTE REGARDING CERTAIN TERMINOLOGY IN THIS QUARTERLY REPORT ON FORM 10-Q
Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to the terms “Hydrofarm,” “the Company,” “we,” “our” and “us” refer to Hydrofarm Holdings Group, Inc. and its subsidiaries.
