HYDROFARM HOLDINGS GROUP, INC.

Previous wording

We are closely monitoring the recent tariff and trade policy actions changes taken by the United States and foreign governments. The situation remains fluid due to the rapidly changing global trade environment, and we are evaluating 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, could impact the cost of certain products and may negatively impact the Company's 2025 financial performance. For additional information, see the Item 1A. "Risk Factors" in our 2024 Annual Report, including the risk entitled “Potential tariffs or a global trade war could increase the cost of our products, which could adversely impact the competitiveness of our products and our financial results.”

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 are evaluating 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, could impact the cost of certain products and may negatively impact the Company's financial performance. For additional information, see the Item 1A. "Risk Factors" in our 2024 Annual Report, including the risk entitled “Potential tariffs or a global trade war could increase the cost of our products, which could adversely impact the competitiveness of our products and our financial results.”

Previous wording

In 2024, we entered into the Purchase Agreement with the Buyer to sell the inventories, and property, plant and equipment associated with our IGE branded products for approximately $8.7 million, while retaining our proprietary brand and customer relationships. In connection with the IGE Asset Sale, we entered into an exclusive supply agreement with the Buyer, pursuant to which the Buyer provides contract manufacturing and we continue to sell our proprietary branded durable products, which include horticulture benches, racking and LED lighting systems. After completion of the IGE Asset Sale and the aforementioned restructuring actions, we have now consolidated our manufacturing operations into two U.S. locations and our peat moss harvesting and processing operation in Canada.

Current wording

In 2024, we entered into the Purchase Agreement with CM Fabrication, LLC to sell the inventories, and property, plant and equipment associated with our IGE-branded products for approximately $8.7 million, while retaining our proprietary brand and customer relationships. In connection with the IGE Asset Sale, we entered into an exclusive supply agreement with the Buyer, pursuant to which the Buyer provides contract manufacturing and we continue to sell our proprietary branded durable products, which include horticulture benches, racking and LED lighting systems. After completion of the IGE Asset Sale and the aforementioned restructuring actions, we have now consolidated our manufacturing operations into two U.S. locations and our peat moss harvesting and processing operation in Canada.

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. We incurred estimated restructuring costs of $3.3 million during the second quarter of 2025, associated with non-cash inventory write-downs. We anticipate the 2025 Restructuring Plan and related actions may result in additional restructuring charges of approximately $2 million, and annual cost savings in excess of $3 million plus additional working capital benefits.

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. We incurred estimated restructuring costs of $0.9 million and $4.2 million during the three and nine months ended September 30, 2025, respectively, for the 2025 Restructuring Plan. 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 $2 million, primarily cash related, and annual cost savings of approximately $5 million plus additional working capital benefits.

Previous wording

Results of Operations—Comparison of three and six months ended June 30, 2025 and 2024

Current wording

Results of Operations—Comparison of three and nine months ended September 30, 2025 and 2024

Previous wording

The following table sets forth our unaudited interim condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024, 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 nine months ended September 30, 2025, and 2024, 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 28.4% decrease in net sales for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a 27.9% reduction in volume and mix of products sold and a 0.4% decrease in price. This decline was largely driven by the previously mentioned industry oversupply. The 26.8% decrease in net sales for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a 25.4% reduction in volume and mix of products sold and a 1.0% decrease in price. This decline was largely driven by the previously mentioned industry oversupply.

Current wording

The 33.3% decrease in net sales for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a 32.2% reduction in volume and mix of products sold and a 1.1% decrease in price. This decline was largely driven by the previously mentioned industry oversupply. The 28.7% decrease in net sales for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a 26.7% reduction in volume and mix of products sold and a 1.6% decrease in price. This decline was largely driven by the previously mentioned industry oversupply.

Previous wording

Gross profit for the three months ended June 30, 2025, was $2.8 million, a decrease of $8.1 million, or 74.3%, compared to the same period in 2024. Gross profit for the six months ended June 30, 2025, was $9.7 million, a decrease of $12.1 million, or 55.6%, compared to the same period in 2024.

Current wording

Gross profit for the three months ended September 30, 2025, was $3.4 million, a decrease of $5.1 million, or 60.0%, compared to the same period in 2024. Gross profit for the nine months ended September 30, 2025, was $13.1 million, a decrease of $17.2 million, or 56.8%, compared to the same period in 2024.

Previous wording

Our gross profit margin percentage decreased to 7.1% for the three months ended June 30, 2025, from 19.8% in the same period in 2024. Our gross profit margin percentage decreased to 12.1% for the six months ended June 30, 2025, from 20.0% in the same period in 2024.

Current wording

Our gross profit margin percentage decreased to 11.6% for the three months ended September 30, 2025, from 19.4% in the same period in 2024. Our gross profit margin percentage decreased to 12.0% for the nine months ended September 30, 2025, from 19.8% in the same period in 2024.

Previous wording

Gross profit and gross profit margin for the three and six months ended June 30, 2025, decreased as a result of lower net sales and a lower proportion of proprietary brand products sold. The three and six months ended June 30, 2025 were also negatively impacted by $3.3 million and $3.7 million, respectively, of restructuring charges primarily comprised of inventory markdowns.

Current wording

Gross profit and gross profit margin for the three and nine months ended September 30, 2025, decreased as a result of lower net sales and lower manufacturing production volume. Gross profit and gross profit margin for the nine months ended September 30, 2025 were also negatively impacted by a lower proportion of proprietary brand products sold. In addition, the three and nine months ended September 30, 2025 were negatively impacted by $0.8 million and $4.4 million, respectively, of restructuring charges primarily comprised of inventory markdowns, compared to $0.6 million and $1.6 million of restructuring charges incurred in the prior year comparable periods.

Previous wording

SG&A expenses for the three months ended June 30, 2025, were $16.1 million, a decrease of $2.5 million, or 13.5% compared to the same period in 2024. SG&A expenses for the six months ended June 30, 2025, were $34.0 million, a decrease of $4.3 million, or 11.2% compared to the same period in 2024.

Current wording

SG&A expenses for the three months ended September 30, 2025, were $16.4 million, a decrease of $1.2 million, or 6.8% compared to the same period in 2024. SG&A expenses for the nine months ended September 30, 2025, were $50.4 million, a decrease of $5.5 million, or 9.8% compared to the same period in 2024.

Previous wording

The decrease in SG&A expensesfor the three months ended June 30, 2025, wasprimarily a result of our cost saving and restructuring initiatives, as follows: (i) a $1.8 million decrease in employee compensation costs, including lower salaries and benefits, stock-based compensation, and performance bonus, (ii) a $0.3 million decrease in facility costs, and (iii) a $0.3 million decrease in insurance expenses. The decrease in SG&A expensesfor the six months ended June 30, 2025, was primarily a result of our cost saving and restructuring initiatives, as follows: (i) a $3.1 million decrease in employee compensation costs, including lower salaries and benefits, stock-based compensation, and performance bonus; and (ii) a $0.7 million decrease in facility costs.

Current wording

The decrease in SG&A expensesfor the three months ended September 30, 2025, wasprimarily a result of our cost saving and restructuring initiatives, as follows: (i) a $1.1 million decrease in employee compensation costs, including lower salaries and benefits, stock-based compensation, and performance bonus, and (ii) a $0.3 million decrease in facility costs. The decrease in SG&A expensesfor the nine months ended September 30, 2025, was primarily a result of our cost saving and restructuring initiatives, as follows: (i) a $4.2 million decrease in employee compensation costs, including lower salaries and benefits, stock-based compensation, and performance bonus, and (ii) a $1.1 million decrease in facility costs.

Previous wording

As previously reported, we entered into a Purchase Agreement with CM Fabrication, LLC to sell assets relating to the production of durable equipment products for $8.7 million. The IGE Asset Sale closed during the three months ended June 30, 2024 and we sold or disposed of inventories and other assets. We recorded a Loss on asset disposition of $11.5 million during the three and six months ended June 30, 2024. Refer to Note 3 – Restructuring and Asset Sales for a further description of the IGE Asset Sale

Current wording

As previously reported, we entered into a Purchase Agreement with CM Fabrication, LLC to sell assets relating to the production of durable equipment products for $8.7 million. The IGE Asset Sale closed during the three months ended June 30, 2024 and we sold or disposed of inventories and other assets. We recorded a Loss on asset disposition of $11.5 million during the nine months ended September 30, 2024. Refer to Note 3 – Restructuring and Asset Sales for a further description of the IGE Asset Sale.

Previous wording

Interest expense for the three months ended June 30, 2025, was $3.4 million, a decrease from $3.8 million of interest expense recorded in the same period in the prior year. Interest expense for the six months ended June 30, 2025, was $6.8 million, a decrease from $7.7 million of interest expense recorded in the same period in the prior year. The decreases for the three and six months ended June 30, 2025 were primarily due to lower debt outstanding due to principal repayments and lower variable interest rates on our Term Loan.

Current wording

Interest expense for the three months ended September 30, 2025, was $3.3 million, a decrease from $3.9 million of interest expense recorded in the same period in the prior year. Interest expense for the nine months ended September 30, 2025, was $10.1 million, a decrease from $11.7 million of interest expense recorded in the same period in the prior year. The decreases for the three and nine months ended September 30, 2025 were primarily due to lower debt outstanding due to principal repayments and lower variable interest rates on our Term Loan.

Previous wording

Other expense, net for the three months ended June 30, 2025, was $0.2 million, compared to other income, net of $0.1 million during the same period in the prior year. Other expense, net for the six months ended June 30, 2025, was $0.2 million, compared to other income, net of $0.3 million during the same period in the prior year. Other expense, net for the three and six months ended June 30, 2025, was primarily driven by a loss on debt extinguishment recorded in conjunction with the Term Loan prepayment.

Current wording

Other income, net for the three months ended September 30, 2025, was less than $0.1 million, compared to other income, net of $0.1 million during the same period in the prior year. Other expense, net for the nine months ended September 30, 2025, was $0.1 million, compared to other income, net of $0.4 million during the same period in the prior year. Other expense, net for the nine months ended September 30, 2025, was primarily driven by a loss on debt extinguishment recorded in conjunction with the Term Loan prepayment during the second quarter of 2025. Refer to Note 10 –Debt for additional details.

Previous 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.

Current wording

We recorded income tax expense of $0.1 million for the three and nine months ended September 30, 2025, representing effective tax rates of (0.8)% and (0.2)%, respectively. Our effective tax rates for the three and nine months ended September 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 expense for the three and nine months ended September 30, 2025, was primarily due to foreign taxes in certain jurisdictions and U.S. state taxes, partially offset certain benefits in Canadian jurisdictions.

Previous wording

We recorded income tax expense of $0.4 million and $0.6 million for the three and six months ended June 30, 2024, respectively, representing an effective tax rate of (1.7)% in both periods. Our effective tax rate for the three and six months ended June 30, 2024, differs from the federal statutory rate of 21% primarily due to US and foreign jurisdictions in full valuation allowance. The income tax expense for the three and six months ended June 30, 2024, was primarily due to foreign taxes in certain jurisdictions and U.S. state taxes.

Current wording

We recorded income tax expense of $0.3 million and $0.9 million for the three and nine months ended September 30, 2024, respectively, representing an effective tax rate of (2.2)% and (1.8)%, respectively. Our effective tax rate for the nine months ended September 30, 2024, 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 and nine months ended September 30, 2024, was primarily due to foreign taxes in certain jurisdictions and U.S. state taxes.

Previous wording

The following table summarizes our cash flows for the six months ended June 30, 2025, and 2024 (amounts in thousands):

Current wording

The following table summarizes our cash flows for the nine months ended September 30, 2025, and 2024 (amounts in thousands):

Previous 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. Compared to the prior year period, the Company had a larger cash usage from operating activities due to lower net cash profitability and a working capital cash outflow primarily from less inventory reductions compared to the six months ended June 30, 2024.

Current wording

Net cash used in operating activities was $10.1 million for the nine months ended September 30, 2025. The net cash usage was primarily due to a $47.6 million net loss, partially offset by net non-cash items of $35.6 million and a $2.0 million net cash inflow from a decrease in working capital. The $2.0 million net decrease in working capital was primarily comprised of a $5.7 million decrease of lease liabilities, a $3.1 million decrease in accrued expenses and other current liabilities, partially offset by a $7.7 million decrease in inventory. During the nine months ended September 30, 2025, we paid $9.5 million in cash interest. Compared to the prior year period, the Company had a larger cash usage from operating activities due to lower net cash profitability, partially offset by working capital cash inflows primarily from inventory reductions and accounts receivable collections.

Previous wording

Net cash from operating activities was $1.5 million for the six months ended June 30, 2024. The net cash from operating activities was primarily due to a $3.4 million net cash inflow from a reduction in working capital, partially offset by a net loss of $36.1 million, less net non-cash items of $34.2 million. The $3.4 million net reduction in working capital was primarily comprised of a $8.6 million decrease of inventories and a $1.8 million decrease of prepaid expenses and other current assets, partially offset by a $5.3 million decrease of lease liabilities and a $2.0 million increase of accounts receivable. As described in Note 3 –Restructuring and Asset Sales, in connection with the IGE Asset Sale, we estimated the amount of cash proceeds associated with the sale of inventories as $5.0 million and classified the amount within net cash from operating activities. In addition, the Company paid cash of $1.3 million to terminate the facility operating lease in connection with the IGE Asset Sale.

Current wording

Net cash used in operating activities was $3.0 million for the nine months ended September 30, 2024. The net cash usage was primarily due to a $0.8 million net cash inflow from a reduction in working capital, offset by a net loss of $49.2 million, less net non-cash items of $45.4 million. The $0.8 million net reduction in working capital was primarily comprised of a $8.9 million decrease of inventories, a $0.8 million decrease in accounts receivable, and a $0.8 million decrease of prepaid expenses and other current assets, partially offset by a $7.1 million decrease of lease liabilities and a $2.3 million decrease in accounts payable. As described in Note 3 –Restructuring and Asset Sales, in connection with the IGE Asset Sale, we estimated the amount of cash proceeds associated with the sale of inventories as $5.0 million and classified the amount within net cash from operating activities. In addition, the Company paid cash of $1.3 million to terminate the facility operating lease in connection with the IGE Asset Sale.

Previous wording

Net cash used in investing activities was $0.5 million for the six months ended June 30, 2025, compared to a cash inflow from investing activities of $2.3 million for the six months ended June 30, 2024. 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. During the six months ended June 30, 2024, we received cash proceeds from the IGE Asset Sale associated with the sale of property, plant and equipment of $3.7 million, along with other cash from investing activities of $0.4 million. These cash proceeds were partially offset by $1.8 million of capital expenditures of property, plant and equipment.

Current wording

Net cash used in investing activities was $0.6 million for the nine months ended September 30, 2025, compared to a cash inflow from investing activities of $1.5 million for the nine months ended September 30, 2024. The net cash used in investing activities for the nine months ended September 30, 2025, was primarily due to capital expenditures of property, plant and equipment. During the nine months ended September 30, 2024, we received cash proceeds from the IGE Asset Sale associated with the sale of property, plant and equipment of $3.7 million, along with other cash from investing activities of $0.4 million. These cash proceeds were partially offset by $2.6 million of capital expenditures of property, plant and equipment.

Previous 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.

Current wording

Net cash used in financing activities was $5.2 million for the nine months ended September 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 $0.3 million.

Previous wording

Net cash used in financing activities was $3.6 million for the six months ended June 30, 2024, primarily driven by (i) $2.3 million of Term Loan repayments relating to required quarterly payments of principal and payments made in conjunction with a sale-leaseback transaction, and (ii) finance lease principal payments of $1.2 million which included approximately $0.7 million relating to equipment finance lease payments made in connection with the IGE Asset Sale.

Current wording

Net cash used in financing activities was $4.3 million for the nine months ended September 30, 2024, primarily driven by (i) $2.9 million of Term Loan repayments relating to required quarterly payments of principal and prepayments made in conjunction with the sale-leaseback transaction, and (ii) finance lease principal payments of $1.3 million which included approximately $0.7 million relating to equipment finance lease payments made in connection with the IGE Asset Sale.

Previous wording

Our ability to make investments in our business, service our debt and maintain liquidity will primarily depend upon our ability to generate excess operating cash flows through our operating subsidiaries. We believe that our cash flows from operating activities, combined with current cash levels and borrowing availability under the Revolving Credit Facility, will be adequate to support our ongoing operations, and to fund debt service requirements, capital expenditures, lease obligations and working capital needs through the next twelve months of operations. However, we cannot guarantee that our business will generate sufficient cash flow from operating activities or that future borrowings will be available under our borrowing agreements in amounts sufficient to pay indebtedness or fund other working capital needs. Actual results of operations will depend 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 2024 Annual Report.

Current wording

Our ability to make investments in our business, service our debt and maintain liquidity will primarily depend upon our ability to generate excess operating cash flows through our operating subsidiaries. We believe that our cash flows from operating activities, combined with current cash levels, borrowing availability under the Revolving Credit Facility, and access to capital markets, will be adequate to support our ongoing operations, and to fund debt service requirements, capital expenditures, lease obligations and working capital needs through the next twelve months of operations. However, we cannot guarantee that our business will generate sufficient cash flow from operating activities or that future borrowings will be available under our borrowing agreements in amounts sufficient to pay indebtedness or fund other working capital needs. Actual results of operations will depend 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 2024 Annual Report.

Previous wording

As further described in Note 3 –Restructuring and Asset Sales and Note 10 –Debt, we closed on the IGE Asset Sale, whereby, in accordance with our Term Loan, the net proceeds, approximately $6.3 million, are required to be reinvested into certain permitted investments, such as capital expenditures, or offered to prepay Term Loan principal. In accordance with this provision, the Company made a prepayment of $4.5 million during the second quarter of 2025, and had $0.8 million of remaining contractual commitments as of the payment date. Refer to further discussion below, relating to Term Loan reinvestment provisions applicable to the net cash proceeds of the IGE Asset Sale.

Current wording

As further described in Note 3 –Restructuring and Asset Sales and Note 10 –Debt, we closed on the IGE Asset Sale in 2024, whereby, in accordance with our Term Loan, the net proceeds of approximately $6.3 million are required to be reinvested into certain permitted investments, such as capital expenditures, or offered to prepay Term Loan principal. In accordance with this provision, the Company made a prepayment of $4.5 million during the second quarter of 2025, and had $0.8 million of remaining contractual commitments as of the payment date. Refer to further discussion below, relating to Term Loan reinvestment provisions applicable to the net cash proceeds of the IGE Asset Sale.

Previous wording

We are also required to make mandatory prepayments in the event of (i) achieving certain excess cash flow criteria, including the achievement and maintenance of a specific leverage ratio, (ii) certain asset sales that are collateral, or (iii) upon the issuance, offering, or placement of new debt obligations. As described in Note 3 –Restructuring and Asset Sales and Note 10 –Debt, we received net cash proceeds of approximately $6.3 million in May 2024 from the IGE Asset Sale and are subject to a provision whereby such net cash proceeds can be reinvested into certain investments, such as capital expenditures. This provision of the Term Loan includes (i) cash investments made within a one-year period from the IGE Asset Sale, and (ii) investments which are contractually committed within one-year of the IGE Asset Sale, and paid within 180 days after entering into such contractual commitment. The amount of any net cash proceeds which are not reinvested would require us to make an offer to prepay the corresponding amount on the Term Loan in 2025. In accordance with this provision, we made a prepayment of $4.5 million during the second quarter of 2025, and had $0.8 million of remaining contractual commitments as of the payment date. We note that the $4.5 million prepayment reduced our required quarterly installment amounts to zero for the remaining term. The foregoing description of the reinvestment provision does not purport to be complete and is qualified in its entirety by reference to the provisions of the Term Loan.

Current wording

The principal amounts of the Term Loan are scheduled to be repaid in consecutive quarterly installments in amounts equal to 0.25% of the original principal amount of the Term Loan on the last day of each fiscal quarter commencing March 31, 2022, with the balance of the Term Loan payable on the Maturity Date. We are also required to make mandatory prepayments in the event of (i) achieving certain excess cash flow criteria, including the achievement and maintenance of a specific leverage ratio, (ii) certain asset sales that are collateral, or (iii) upon the issuance, offering, or placement of new debt obligations. As described in Note 3 –Restructuring and Asset Sales and Note 10 –Debt, we received net cash proceeds of approximately $6.3 million in May 2024 from the IGE Asset Sale and are subject to a provision whereby such net cash proceeds can be reinvested into certain investments, such as capital expenditures. This provision of the Term Loan includes (i) cash investments made within a one-year period from the IGE Asset Sale, and (ii) investments which are contractually committed within one-year of the IGE Asset Sale, and paid within 180 days after entering into such contractual commitment. The amount of any net cash proceeds which are not reinvested would require us to make an offer to prepay the corresponding amount on the Term Loan in 2025. In accordance with this provision, we made a prepayment of $4.5 million during the second quarter of 2025, and had $0.8 million of remaining contractual commitments as of the payment date. The $4.5 million prepayment reduced our required quarterly installment amounts to zero for the remaining term. The foregoing description of the reinvestment provision does not purport to be complete and is qualified in its entirety by reference to the provisions of the Term Loan.

Previous wording

The Revolving Credit Facility provides for various interest rate options including the Adjusted Term SOFR Rate, the Adjusted REVSOFR30 Rate, the CB Floating Rate, the Adjusted Daily Simple SOFR, or the CBFR. The rates that use SOFR as the reference rate (Adjusted Term SOFR Rate, the Adjusted REVSOFR30 Rate, the Adjusted Daily Simple SOFR and the CBFR rate) use the Term SOFR Rate plus 1.95%. Each rate has a 0.0% floor. A fee of 0.40% per annum is charged for available but unused borrowings. Our obligations under the Revolving Credit Facility are secured by a first priority lien (subject to certain permitted liens) in substantially all of our and our subsidiaries' respective personal property assets pursuant to the terms of a U.S. and Canadian Pledge and Security Agreement dated March 29, 2021 and other security documents, as amended to include additional subsidiaries.

Current wording

The Revolving Credit Facility provides for various interest rate options including the Adjusted Term SOFR Rate, the Adjusted REVSOFR30 Rate, the CB Floating Rate, the Adjusted Daily Simple SOFR, or the CBFR. The rates that use SOFR as the reference rate (Adjusted Term SOFR Rate, the Adjusted REVSOFR30 Rate, the Adjusted Daily Simple SOFR and the CBFR rate) use the Term SOFR Rate plus 1.95%. Each rate has a 0.0% floor. A fee of 0.40% per annum is charged for available but unused borrowings. Our obligations under the Revolving Credit Facility are secured by a first priority lien (subject to certain permitted liens) on substantially all of our and our subsidiaries' respective personal property assets pursuant to the terms of a U.S. and Canadian Pledge and Security Agreement dated March 29, 2021 and other security documents, as amended to include additional subsidiaries.

Previous wording

We were in compliance with all debt covenants as of June 30, 2025. As of June 30, 2025, approximately $9 million was available to borrow under the Revolving Credit Facility, before we would be required to comply with the minimum fixed charge coverage ratio of 1.1x.

Current wording

We were in compliance with all debt covenants as of September 30, 2025. As of September 30, 2025, approximately $4 million was available to borrow under the Revolving Credit Facility, before we would be required to comply with the minimum fixed charge coverage ratio of 1.1x.

Previous wording

The cash and cash equivalents balances of $11.0 million and $26.1 million at June 30, 2025, and December 31, 2024, respectively, included $6.6 million and $11.9 million, respectively, held by foreign subsidiaries.

Current wording

The cash and cash equivalents balances of $10.7 million and $26.1 million at September 30, 2025, and December 31, 2024, respectively, included $5.3 million and $11.9 million, respectively, held by foreign subsidiaries.